So the other day, on his 936th day in office, President Obama, who has refocused his laser like attentions and efforts on jobs at least 15 times during his Presidency, has done so again. Let us peek at the first glimmerings of his bold plan to bring us out of our economic malaise. The plan, which is a State Secret right now, will be unveiled some time in September. The wonderful idea, a brand spanking new federal bureaucracy, is being dubbed the Department of Jobs. (I actually had to stop typing here, as I could not stop the giggles.) Putting aside for the moment the small fact that we already have a Department of Commerce and a Department of Labor, has anyone from team Obama seen fit to check on the efficacy of other federal Departments recently added to the already out of control public largess. Since the addition of the Department of Education, our public school systems have deteriorated in quality and shown an alarming drop in test scores, graduation rates, and world standing of ability of our student population. Since the creation of the Department of Energy, our domestic productive capability has dropped like the proverbial 16 ton weight employed in Monty Python sketches. I shudder to think of what the effects of a Department of Jobs would be upon our current fragile economic state.
I know that this is a stretch, but here is my bold prediction for what the Obama Economic Plan will be, when he unveils it in the upcoming months. First, I predict that the plan will be so wonderful that it will not be shown to us until his Presidency is past its 1000 day mark. When it is unleashed, it will consist of the aforementioned Department of Jobs, (brief laughing spell here,) another round of purposeful inflation consisting of QE whatever number we will happen to be on at the time, class warfare and wealth redistribution from America’s taxpayers to America’s chosen victim classes, heavy government subsidy for, “green jobs,” allowing us to take full advantage of the mythical unicorn sector of our economy, and preparation for the impending Space Aliens.
Space aliens!? A fair question to be sure, but there is a story behind it. Whenever the left wishes to posit the meme that most economists agree with them, what they mean is that Paul Krugman agrees with them. Krugman is a Nobel Winner in the field of economics, but my personal opinion is that this fact merely serves to diminish the Nobel brand. Cases in point, former winners also include Yasser Arafat, Jimmy Carter, Al Gore, and my personal favorite, Barack Obama for things he might possibly accomplish. Krugman it seems believes that the theory of John Maynard Keynes could be interpreted to mean that we could solve our economic woes by preparing for a space alien invasion which of course will never happen. You have to see this to believe it.
Lord Keynes, for all of the discussion about his theory should in no way be equated with the modern day school of Keynesian Economics. The father of aggregate demand and macro economics never, in his wildest dreams advocated the kind of idiotic applications being undertaken in his name today. Keynes even professed deep regret for ever having discussed his theory FDR, because FDR used the theory as an excuse to act in an irresponsible manner. The Keynesian Theory was that with very small increases in autonomous spending, aggregate demand and subsequently GDP would grow very quickly to produce tax revenues to pay off the deficits before they would become too large. Krugman makes some idiotic assertions which are unfortunately accepted as given fact in our national narrative. WWII did not bring us out of the Depression of the 30’s. FDR’s deficit spending did not speed up our recovery. Our economy in fact remained in very rough shape until the mid 1950’s. Our top marginal tax rate in 1946 was over 90%, I have never heard a single liberal when faced with the overwhelming evidence of the failure of their policies who did not retort with the, “we just needed to do it bigger,” response. Our $1 Trillion stimulus package for instance. It failed miserably to stimulate anything beyond our mounting debt. When presented with this evidence, Krugman et al, created a new labor statistic called saved jobs. When we didn’t go for that idiocy, they came back with the claim that they argued for a larger spending bill, which if we had agreed to that, would certainly have saved us from our ills.
Now for the fun, here are two economists who have taken the time to dissect the ramblings of Paul Krugman. Yesterday, Paul Krugman gave us the number 5 argument on yesterday’s list. He told us of the reasons why the success of Texas is actually a failure, and NRO took apart his analysis and did a masterful job of pointing out the dishonesty. Click the link to read the article.
Destroying the economics of Paul Krugman.
What, indeed, does population growth have to do with job growth? Professor Krugman is half correct here — but intentionally only half correct: A booming population leads to growth in jobs. But there is another half to that equation: A booming economy, and the jobs that go with it, leads to population growth. Texas has added millions of people and millions of jobs in the past decade; New York, and many other struggling states, added virtually none of either. And it is not about the weather or other non-economic factors: People are not leaving California for Texas because Houston has a more pleasant climate (try it in August), or leaving New York because of the superior cultural amenities to be found in Nacogdoches and Lubbock. People are moving from the collapsing states into the expanding states because there is work to be had, and opportunity.
Houston, like Brooklyn and Boston, is a mixed bag: wealthy enclaves, immigrant communities rich and poor, students, government workers — your usual big urban confluence. In Harris County, the median household income is $50,577. In Brooklyn, it is $42,932, and in Suffolk County (which includes Boston and some nearby communities) it was $53,751. So, Boston has a median household income about 6 percent higher than Houston’s, while Brooklyn’s is about 15 percent lower than Houston’s.
Brooklyn is not the poorest part of New York, by a long shot (the Bronx is), and, looking at those income numbers above, you may think of something Professor Krugman mentions but does not really take properly into account: New York and Boston have a significantly higher cost of living than does Houston, or the rest of Texas. Even though Houston has a higher median income than does Brooklyn, and nearly equals that of Boston, comparing money wages does not tell us anything like the whole story: $50,000 a year in Houston is a very different thing from $50,000 a year in Boston or Brooklyn.
How different? Let’s look at the data: In spite of the fact that Texas did not have a housing crash like the rest of the country, housing remains quite inexpensive there. The typical owner-occupied home in Brooklyn costs well over a half-million dollars. In Suffolk County it’s nearly $400,000. In Houston? A whopping $130,100. Put another way: In Houston, the median household income is 39 percent of the cost of a typical house. In Brooklyn, the median household income is 8 percent of the cost of the median home, and in Boston it’s only 14 percent. When it comes to homeownership, $1 in earnings in Houston is worth a lot more than $1 in Brooklyn or Boston. But even that doesn’t really tell the story, because the typical house in Houston doesn’t look much like the typical house in Brooklyn: Some 64 percent of the homes in Houston are single-family units, i.e., houses. In Brooklyn, 85 percent are multi-family units, i.e. apartments and condos.
Thomas Sowell attacks another piece of Krugman’s dishonesty.
The reason I call Krugman dishonest is because he, as a Nobel winning economist should know of the substantive omissions of relevant factors in the statistics he uses to make his case. Using household income rather than per capita income as a measuring stick is perhaps the most egregious of these purposeful errors.
There is no mystery to some very fast acting remedies we can utilize to get our economy going again. Put an end to the regulatory reign of terror being inflicted by the Obama White House. Roll back the damaging regulations passed into law prior to Obama’s turn as President, (yes there were plenty of guilty parties prior the little Barry.) Stop the punitive taxation system which is currently designed to demotivate American businesses from growing and succeeding. Close off the system of tax credits and loopholes and subsidies which allows bureaucrats to pick winners and losers based on personal interests rather than those winners and losers being chosen by an objective free market system. (For everyone on the left who whines about GE not paying any taxes, the current system of tax credits for government approved behaviors and subsidy for the green economy fiasco is the perfect example of this.) Stop the government’s wealth redistribution scheme. This has always had the exact opposite effect from what it was intended to do, and actually harmed the very victim classes which the left claims to care so passionately about anyhow.
Cross Posted at Musings of a Mad Conservative.
