Where Are the New Jobs?

Why bigger government isn't working

"Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments."

So writes The Washington Post about the recession's stubborn refusal to go away. The statisticians at the National Bureau of Economic Research declared the Great Recession over—but tell that to people who can't find jobs. Today, businesses replace equipment and inventory, but they are reluctant to hire new workers. Investment that does occur aims at replacing the use of labor by adopting advanced technology. In a growing economy, that's a sign of progress. Freed-up workers are then available for new projects. But lately, those new projects aren't being launched.

The two wings of the establishment offer their usual remedies. Government-oriented types want more tax-financed "stimulus" spending, claiming last year's nearly trillion-dollar dose wasn't enough. That's dubious. As economist Mark Skousen writes, "(P)roduction and investment lead the economy into and out of a recession; retail demand is the most stable component of economic activity."

Business-oriented types want tax cuts. I'm sympathetic, but cuts should be accompanied by spending cuts, or the deficit will grow even uglier. There's no free lunch. Deficit spending must be covered by government borrowing, which takes capital that could be used for investment out of the private sector.

Why isn't the economy recovering? After previous recessions, unemployment didn't get stuck at close to 10 percent. If left alone, the economy can and does heal itself, as the mistakes of the previous inflationary boom are corrected.

The problem today is that the economy is not being left alone. Instead, it is haunted by uncertainty on a hundred fronts. When rules are unintelligible and unpredictable, when new workers are potential threats because of Labor Department regulations, businesses have little confidence to hire. President Obama's vaunted legislative record not only left entrepreneurs with the burden of bigger government, it also makes it impossible for them to accurately estimate the new burden.

In at least three big areas—health insurance, financial regulation, and taxes—no one can know what will happen.

New intrusive rules for health insurance are yet to be written, and those rules will affect hiring, since most health insurance is provided by employers.

Thanks to the new 2,300 page Dodd-Frank finance regulatory act, The Wall Street Journal reports, there will be "no fewer than 243 new formal rule-makings by 11 different federal agencies." These as-yet unknown rules will govern lending to business and other key financial activity.

The George W. Bush tax cuts might be allowed to expire. But maybe not. Social Security and Medicare are dangerously shaky. Will Congress raise the payroll tax? A "distinguished" deficit commission is meeting. What will it do? Recommend a value-added tax?

Who knows? But few employers will commit to a big investment with those clouds hanging over our heads.

"As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government," Michael Fleischer, president of Bogen Communications Inc., wrote in The Wall Street Journal.

Nothing more effectively freezes business in place than what economist and historian Robert Higgs calls "regime uncertainty."

"(A)ll of these unsettling possibilities and others of substantial significance must give pause to anyone considering a long-term investment, because any one of them has the potential to turn what seems to be a profitable investment into a big loser. In short, investors now face regime uncertainty to an extent that few have experienced in this country—to find anything comparable, one must go back to the 1930s and 1940s, when the menacing clouds of the New Deal and World War II darkened the economic horizon."

Uncertainty created by Obama's legislative "successes" are comparable to the Depression and World War II? This does not bode well for job growth.

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  • ||

    Why Big Government Isn't Creating New Jobs

    Alternate title:

    Why Dogs Don't Give Birth To Alligators

  • CatoTheElder||

    Contrary to Stossel's assertion that the NBER has declared the Great Recession over, their latest memo says such a finding would be premature. You can easily confirm this at nber.org.

    The economists at NBER aren't as stupid as our bonehead politicians and other knucklehead Obama cheerleaders.

  • HISTORY||

    Either learn from me or repeat me.

  • PRESENT DAY||

    We'll get it right THIS time! Pinky Promise!

  • FUTURE||

    Really thought the outcome would be different this time.

  • INSANITY||

    It can be, I promise!! Just try the same thing again!!

  • REALITY||

    Fuck.

  • SARCASM||

    Wow, this is so clever.

    *sigh*

  • REALITY||

    Thanks!

  • Barrack Obama||

    Last stimulus didn't work and its Bush's fault. Stimulus will work if we give it one more try. Trust me.

  • product of government schools||

    If it happened before color tv I don't want to know about it.

  • ||

    You mean there was a time before color TV?

  • poopy||

    In an old Calvin and Hobbes cartoon Calvin asks his dad why some pictures are black and white while others are in color.
    His dad explains that the world used to be black and white, but in the early 1900s it started turning color. So black and white photos are color photos of a black and white world. So Calvin asked about paintings, and why they were color. His dad explained that as the world turned color, so did the paintings, because rather than being color images of a black and white world, they were part of the black and white world that turned color. At this point Calvin screamed for his mother.

    I hope that answers your question.

  • Jen||

    Racist.

  • People Power Hour||

    Bigot.

  • poopy||

    http://www.cooperativeindividu.....bes-1.html

    Fourth one down. I got it mostly right.

  • ||

    Love it!

  • ||

    The relevant history is in the book "The Forgotten Man" by Amity Schlaes (spelling?).

    Businesses did under FDR what they are doing under President Hussein: holding onto their cash and worrying about what surprise the government might spring on them next.

    At one point FDR threw a downright tantrum about it. He accused business leaders of "going on strike." The reality is that business leaders didn't want to commit their companies' resources to ventures that the government might suddenly make unprofitable.

  • ||

    The relevant history is in the book "The Forgotten Man" by Amity Schlaes (spelling?).

    Businesses did under FDR what they are doing under President Hussein: holding onto their cash and worrying about what surprise the government might spring on them next.

    At one point FDR threw a downright tantrum about it. He accused business leaders of "going on strike." The reality is that business leaders didn't want to commit their companies' resources to ventures that the government might suddenly make unprofitable.

  • Sam Grove||

    Waiting for proclamation that regime uncertainty has no basis.

  • Max||

    Yeah, if left alone, flood waters gradually recede. Why should the fucking economy be the only thing humans don't intervene in? Because you right-wing asshole fucks have turned the market into a deity? Shove your stupid ideology up your fat asses.

  • kinnath||

    Wonderful analogy. There are many studies that show that flood prevention measures make big floods much worse than they would be withouth the flood prevention measures.

  • Louis Farakan||

    Only when the racist CIA blows the levy to flood the Black man.

  • CONCERNED CITIZEN||

    This is your brain on liberalism. Any questions?

  • Old Mexican||

    Re: Max,

    Because you right-wing asshole fucks have turned the market into a deity?

    The market can be turned into a deity? Next thing I know, evolution will become a demigod, and embedded networks will become angels.

    You are an idiot, Max.

  • SPREAD THE WEALTH||

    I am the one true deity.

  • Max||

    And you are a brain-dead market-worshiping true believer, asshole.

  • Old Mexican||

    Re: Max,

    And you are a brain-dead market-worshiping true believer, asshole.

    "Market worshipper"?

    Wow. Go outside and play with the other little children, and leave the adult conversation with us the adults, Max.

  • the right does too||

    Which makes you what, max...an Obama-worshiping pole-rider with color-envy and feelings of guilt?

  • ||

    I suspect he took that as a compliment.

  • JohnD||

    Thanks old Mex. I was all set to call Max an idiot, but you said it for me.

  • ||

    How's that philosophy working for you?

  • President Obama||

    Its not a philosophy its a way of life.

  • Death Panelist||

    Why should the fucking economy be the only thing humans don't intervene in?

    Isn't the market humans intervening in the economy enough?

  • Pip||

    Have you stopped fucking your mother?

  • Max||

    I did for a while because she died, but I've got her back from St. Charles Cemetery.

  • Liberal Genius||

    Max is right. Governments have an excellent track record of economic management. Just look at the success of collectivized agriculture in China or how Zimbabwe's government stabilized its currency. And US home loan programs not only put everyone in a house, but spurred economic growth to unprecedented levels.

  • Old Mexican||

    Re: Liberal Genius,

    Max is right. Governments have an excellent track record of economic management. Just look at the success of collectivized agriculture in China or how Zimbabwe's government stabilized its currency.

    Plus, people in those places were saved from deifying the market. That made it all worth it. Max should be proud of them.

  • Avs||

    Yea the home loan programs have given everyone a house... and the rest of us a recession to deal with... great evidence...see Fanny, Freddy and the CRA's influence on our booming real estate market

  • Drosz||

    I think he's being sarcastic.

  • Max||

    Blow me, you shriveled loser. Why not take your market-based economy home with you and poke it up its dump-hole. Twice.

  • GheyGuy||

    Jesusssss Chrisssst! What's with your fascination with having people shove sssstuff up their asses? I ssswear! Another in-your-face fecalpheliac on prozac!

  • Drosz||

    "Yeah, if left alone, flood waters gradually recede."

    Um, yep, they do...unless you've built a City below sea level with government-built dikes surrounding it. Then you're screwed.

  • ||

    What asshole would build a city below sea level.

  • Slim Pickins||

    The French.

  • Jen||

    I thought the French Quarter was the only part above sea-level? Isn't that why the French Quarter was left relatively unscathed?

  • Bill||

    Half the city is above sea-level and half is below. Most of the houses built before 1930 were raised enough (even if the property itself was a bit below sea-level) that they did NOT flood after Katrina. The parts of the city built before about 1850 were on high ground (above sea level). When that was all gone, swamps were drained and most of the city built after 1850 is on lower ground which is ok, if you build it raised high enough. Most houses built after WW2 were built (often by idiot northerners) who built them without raising them or not raising them nearly as high. These did flood. The flooding in Iowa is above sea level so that is not the most important criteria. Most cities on the coasts of most countries have to be at sea level so this whole argument is a mistaken one.

    Most of the shit you read and saw on TV about New Orleans was nonsense. Think about how well the media covers everything else.

  • Jen||

    Thanks for the info!

  • Drosz||

    Sea level in Iowa is not an important criteria, because it's Iowa and the oceans are 2,000 miles away. Being within the floodplain is what's important. On the coasts, if you're below sea level, that's one hell of a floodplain.

  • Joe||

    No, it's because the gods of the sea like Mardi Gras as much has the rest of us.

  • ||

    New Orleans is not on the coast, its about 90 miles away from the ocean.

  • Drosz||

    Well, I suppose the founders didn't think millions of tons of steel and concrete would make land surrounded by water and swamps sink. And they were French...it coincides perfectly with The Asshole Theory.

  • ||

    Nobody has mentioned Holland?

    Am I the first one to point out that half the country is below sea level?

  • ||

    Right on, Max! It was the Republicans who drove us into this ditch in the first place! Something George W. Bush something something can't have the keys back! Summer of recovery hope and change yes we can!

  • Max||

    Thank gawd for you, Barack! I kneel before your righteous anti-market genius and worship your mighty Rod of Government.

  • ||

    Haha, Max! I'll pass along your thanks to Dad!

  • irishpoetry||

    Agreed,Max, but you shouldn't get carried away with foul language in trying to express your anger. We all know it's frustrating.

  • Max||

    irishpoetry, you shouldn't worry about me expressing myself however I choose, or does the first amendment only apply to libertardians?

  • DK||

    Max, Max, Max. Yet again you betray your ignorance. You should start by asking yourself what an economy is. Your analogy leads me to believe that you think an economy is something that just exists out there. No! An economy is necessarily dependent on human action. Therefore, it is necessarily something which humans intervene in. No one here is arguing that humans should not intervene in the economy - they do so every single time they make a value decision about some good or service. We don't deify the market, because some of us are enlightened enough to realize that religions built around institutions are prima facie ridiculous. That said, how's your worship of government going?

  • CatoTheElder||

    Just as important, Max should also consider what "the market" is. It is conceptual, a concept that comprises the entirety of voluntary transactions among individual human beings. Those who argue against "the market" are actually arguing that human behavior should be compulsory rather than voluntary.

    Though libertarians are careful students of the market, they do not worship it. In fact, libertarians are quite critical of certain market participants, especially those who collude with government. However, those who argue against the market do seem to worship the State.

  • Chad||

    Careful students of anything, my ass. You guys spew the same few lines and random data points over and over.

    Markets only work well under a set of assumptions that are practically never true in the real world. In practice, markets behave sub-optimally in almost all circumstances, and in many of these cases, the problems can be corrected. I know this really irks you, but the facts are the facts, jack.

  • Eric||

    "In practice, markets behave sub-optimally in almost all circumstances, and in many of these cases, the problems can be corrected."

    The first part of that sentence is true, relative to perfect competition. The second is completely and utterly untrue. The extent of the ridiculousness of your post depends on the economist you ask, but none of them, even the most liberal, will say that your statement is close to being true without enough qualifications around that statement to render the original statement inert. Even in cases where economists have known that markets consistently fail, such as in the case of externalities and public goods, and have the general format for the "answer" to the problem, countless questions abound. You would know this if you were an economist, or if you even had a casual, genuine academic interest in the subject. Alas, you're simply a pendulous dick who thinks the economy and its laws exist as Chad's confirmation bias, writ large.

  • Anti-Chad||

    Careful students of anything, my ass. You guys spew the same few lines and random data points over and over.

    Governments only work well under a set of assumptions that are practically never true in the real world. In practice, governments behave sub-optimally in almost all circumstances, and in many of these cases, the problems can be corrected. I know this really irks you, but the facts are the facts, jack.

  • Max||

    DK, DK, DK, how's your worship of my Mighty Genius working? Have you knelt at the alter of my Rod of Knowledge yet? Please do soon.

  • Bill||

    Max,

    The government is not all humans. Let "humans" interacting through the "market" make the decisions, not politicians and their corporatist lackeys. Why do you always want to make corporations larger and more powerful?

  • ||

    What do you mean? I thought humans were the only species that did intervene in their fucking economy. Or do chimpanzees have tribal taboos against prostitution or something?

  • the right does too||

    .

  • LarryA||

    Why should the fucking economy be the only thing humans don't intervene in?

    Humans intervene in the market every time they invent new products or services, invest in the production of those items, offer them for sale, or purchase a product or service someone else has produced. Then the government gets in the way of all those free exchanges and screws things up.

  • ||

    "Corporate profits are soaring"
    First, there is some question whether profits are "soaring" merely due to accounting legerdermain. Second, if there are profits, they are frequently due to cost cutting (getting rid of people - start hiring and poof go your profits).
    More than anything, "extend and pretend" - not letting assets held by banks (houses) equilibrate at prices and normal interest rates for normal buyers (i.e., buyers who can put down a meaningful down payment, spend only 30% of their income on a mortgage, etc.) is what a good portion of the problem is.
    But that would involve pain - and Americans, who can't go without snacks for more than 2 seconds or fifty feet, just cannot handle it.

  • LUXURY TAX||

    Bring me back! All I did was kill the domestic yacht building industry.

  • ||

    American built yachts are not good enough for me anyway, I had to buy from Kiwiland.

    http://www.tradeonlytoday.com/.....atbuilders

    Reporting for duty,

    John

  • CONCERNED CITIZEN||

    At ease, soldier. BTW, how's that legislation banning the exporting of jobs coming?

  • ||

    CC,

    That is a very good question and I want to answer that, but first let me say this .................................................................................................................and I still have that hat to this very day!

  • Phone drone||

    I heard you served in Viet Nam, is it true?

  • Fist of Etiquette||

    Go, Team Stossel!

    Is this post a ploy to get us (yes, there's an "us" now) to live blog a repeat of the show again this week?

  • Fiscal Meth||

    I didn't see "In my show tonight, we'll take a look at..." anywhere in the article. Low Hopes

  • sarcasmic||

    Read this one off realclearpolitics yesterday.

    You're late.

  • ||

    LOL, I see John Stossel is still WAY full of himself.

    www.anonymity.th.tc

  • Bee Tagger||

    Agreed! Why won't he do his show anonymously?

  • Bingo||

    You know, a death star really is the ultimate Keynesian stimulus/jobs program. Has anyone mentioned this to Pelosi yet?

  • Jason||

    The stormtrooper's sign should be changed to "Call the Galactic Senate and tell them to build the Death Star!"

  • ||

    Do you really think the US Gov't hasn't spent enough on military contracts to build a death star by now?

  • ||

    Boeing put in a bid to build the Death Star, but Airbus beat them out. Boeing got all uppity and sent an indignant Sen. Patty Murray to the Imperial flagship to open up a can on Darth Vader. Well, you can guess where that went.

    And that's why there's no Death Star.

  • Adolph ||

    Ve have bases on ze moon and ve vill blow your Death Star to pieces with our vunder veapon.

  • ||

    "President Obama's vaunted legislative record

    How can the president have a legislative record?

  • ♥♥♥||

    You must be new to American politics. See, the president, even though he is the head of the executive branch, actually has way more power than the constitution grants him these days. So even though he can't have a legislative record (ignore the fact that he actually was a legislator in Illinois since it goes against your 'point') he can certainly influence legislation that passes through the Congress. So, when Stossel says "legislative record," he actually means, "President Obama's agenda for which he used his influence as president over congress to accomplish."

    TL;DR: you're a pedantic asshat.

  • ||

    Excellent article John.

  • ||

    To summarize, we are being offered two solutions to fix the economy:

    1. stimulus spending financed by deficits.
    2. tax cuts financed by deficits

    As long as the big spenders (those would be Rs as well as Ds) control Washington, get used to things as they are.

  • sarcasmic||

    bzzzt!

    To summarize, businesses are not hiring because of uncertainty over:

    1) How much will the impending health insurance reform regulations increase the cost of employing people?

    2) How much will the impending finance reform regulations increase the cost of borrowing money?

    3) Will the Bush tax cuts expire or not, or, to phrase it differently, how much of their income will Congress allow them to keep at the end of the year?

    With all that uncertainty businesses are understandably freezing staff and hoarding cash.

  • ||

    Spoken like a true "R." Extending the tax cuts would be irresponsible and would further increase the deficit. We got where we are because of cheap loans: increasing the cost of borrowing money I see as a good thing.

    As for health insurance...the industry should have behaved itself and served its customers. The market tends to work when customers have an actual choice, but with employer-based healthcare the consumer of the product isn't the one making the purchasing decision, which helped insulate the industry from market forces. Some free-market-ness needed to be re-injected into healthcare. There's a difference between pro-business and pro-free-market. I stand for the latter, as should any true Libertarian.

  • ||

    Free-market-ness??? I don't see any "free" or "market" based reform in Obamacare. Just the opposite, buddy.

  • sarcasmic||

    I was correcting your summary of Stossel's piece, not advancing an argument of my own.

    I will not argue with you because I do not entertain false dichotomy like 'Spoken like a true "R."' and 'as should any true Libertarian'.

    http://en.wikipedia.org/wiki/No_true_Scotsman

  • Jen||

    Not that the point is wrong or anything, but you really have a thing for nonconformist Scotsmen today, don't you?

  • poopy||

    "Extending the tax cuts would be irresponsible and would further increase the deficit."

    That's not what he's talking about. The problem is that businesses are uncertain as to whether or not the cuts will expire, and that makes them reluctant to hire or invest.

    "increasing the cost of borrowing money I see as a good thing."
    That's not the point, and I agree with you if you are arguing against artificially low interest rates. But again you're missing the point.
    The problem is that there are thousands and thousands of pages of yet to be written financial regulation, and because of uncertainty over the impact of that regulation businesses are reluctant to hire or invest.

    "Some free-market-ness needed to be re-injected into healthcare."
    No disagreement, but you persist in missing the point.
    Same as with financial regulation, the unknown impact of yet to be written health care regulation is that businesses are reluctant to hire or invest.

  • poopy||

    Last sentence should read "has businesses reluctant" instead of "is that businesses are reluctant".

    Should have used the preview function, duh-oh!

  • Old Mexican||

    Nothing more effectively freezes business in place than what economist and historian Robert Higgs calls "regime uncertainty."

    In other words, the fear of what the government will think of doing next.

  • John Boner(sic)||

    If all goes well this Nov defund, defund, defund and in 2013 repeal, repeal, repeal. It gives me a hardon just thinking about it.

  • THE GREAT DEPRESSION||

    It's deja vu all over again.

  • ||

    He had me until "consuming wealth that might otherwise have been invested"

    This is the big paradox everyone seems to assume when they say that rich people are wasting money that could help the economy. Unless rich people are hiding money under their mattresses, their money is helping the economy, regardless of whether they spend it on yachts, prostitutes, stocks, or gold.

  • Fat Rucker||

    Or rodent-sized fetish wear

  • ChrisO||

    Surely there's some local SWAT squad that would gladly hire that unemployed stormtrooper.

  • ||

    Oh, now I get it. There's a Star Wars tie-in with the picture. Didn't realize it until I read your post. I assumed it was one of those laid-off cops from Oakland protesting in uniform.

  • ChrisO||

    It is hard to tell the difference, sometimes.

  • EasyPeasy||

    Hmmm... made me think of this.

    Empire Urban Regeneration Program.
    Promoting new communities and creating jobs.

    http://www.snorgtees.com/empir.....fd5ee8c776

  • Dakotian||

    "As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government," Michael Fleischer, president of Bogen Communications Inc., wrote in The Wall Street Journal.

    I like this quote because it concisely says it all.

  • Mike the Grouch||

    Oh boo hoo!

    Seriously. Prove it. Unless hiring pushes the company to a size that is now subject to different/more regulation this is absolute balderdash.

  • CatoTheElder||

    Stossel says: The statisticians at the National Bureau of Economic Research declared the Great Recession over..."

    However, according to the NBER website, the most recent (4/12/10) memo on the current recession reads:

    "The Business Cycle Dating Committee of the National Bureau of Economic Research met at the organization’s headquarters in Cambridge, Massachusetts, on April 8, 2010. The committee reviewed the most recent data for all indicators relevant to the determination of a possible date of the trough in economic activity marking the end of the recession that began in December 2007. The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature." [Emphasis added]
    http://www.nber.org/cycles/april2010.html

    NBER's home page lists the last four recessions and their durations as follows:

    12/07 - ?
    3/01 - 11/01 ... 8 months
    7/90 - 3/91 ... 8
    7/81 - 11/82 ... 16

    http://www.nber.org/

    Bozo politicians, talking heads, and hack economists have declared that this is Recovery Summer, but the NBER has not declared an end to this business cycle. A bare minimum of fact-checking could have prevented this obvious error.

  • Jerkstore||

    Using Stossel's line of reasoning, the best course of action would be to keep the current group in Washington, because if you change the current balance of power it will take even longer to create any "certainty" as it is unlikely that there will be enough votes to overcome a certain veto of a repeal of, among other things, Obamacare.

    ***head explodes***

  • Tony||

    No, no. With Republicans you get the certainty that they will do whatever the Chamber of Commerce commands them to do. That's what they mean by certainty.

  • Mr. FIFY||

    Maybe the government should "command" that all businesses hire new employees...

  • Chad||

    For the fourth time, I am going to challenge you guys with a simple question:

    Can you provide any QUANTITATIVE data that demonstrates that there is more "regulatory uncertainty" now than in the past, or that it correlates at all with economic performance.

    The answer, of course, is no. You just spew anecdotes and foam at the mouth every time I ask. Please don't fail so epically as you have the last few times.

    Good luck!

  • ||

    I guess what you're asking for is some kind of poll we can site where people in charge of hiring give an indication of their personal relative uncertainty, and I imagine you're right that no poll like that exists, but if you can find it, please post link.

    In the meantime, I don't think there's any disputing that a major healthcare reform, a major financial regulation reform and a fairly large change to the tax code all in the course of one year is a lot of stuff to think about -- Obama knows its unprecedented, why can't we? -- and when you have to think about something, pretty much by definition that's uncertainty. Add to those things the possibility of a cap and trade bill and god knows what else; I don't think you need any more data than just the recent legislative record and future agenda to make a pretty good case for uncertainty. Does stuff that congress has verifiably done count as "data"?

  • ||

    The sand on the beach doesn't exist until somebody counts it.

  • Chad||

    In the meantime, I don't think there's any disputing that a major healthcare reform, a major financial regulation reform and a fairly large change to the tax code all in the course of one year is a lot of stuff to think about

    Let's go back to, say, 2003. We had uncertainty about the Iraq war, the second round of Bush tax cuts, and Medicare Part D. Each of these is bigger than any of the policies you discussed. Therefore, we clearly had more uncertainty then than we do now. Yet the economy actually did pretty well then.

    I'd agree that there is more uncertainty than normal, but not when it comes to new laws being passed. Indeed, with one party holding the veto and hell-bent on saying "No" to everything, you can be quite certain that no policy of any substance will change. Business owners are not hiring because they are worried about some tweak to a health care provision, they are not hiring because they don't have enough customers to create the demand that would justify new staff.

  • ||

    Let's go back to, say, 2003. We had uncertainty about the Iraq war, the second round of Bush tax cuts, and Medicare Part D. Each of these is bigger than any of the policies you discussed. Therefore, we clearly had more uncertainty then than we do now. Yet the economy actually did pretty well then.

    Assuming those things were all "bigger" than the stuff stossel ref'ed, which may be so since I don't exactly know what "bigger" means in this context (more expensive? more evil?), it's possible that there really was more general uncertainty back then than there is now. But we're talking about uncertainty specifically with regard to hiring, and there the linkages seem a little tenuous. Iraq really has been troubling, and for a long time, and maybe if we hadn't gone into an expensive and ethically questionable war the economy would have actually been much better over the last ten years than it was, but all anyone can do is speculate on that. As for tax cuts...like them or no, it's a little hard to see how the looming possibility of a tax cut would dissuade someone from hiring. I don't think you're making much sense.

    Indeed, with one party holding the veto and hell-bent on saying "No" to everything, you can be quite certain that no policy of any substance will change.

    Health care reform, wall street reform, $800 billion stimulus, none of them have any substance? I don't think you're making much sense.

    We all know there's a lot of stuff going on in the economy and the unemployment picture has a lot of contributing parts. I'm sure a lot of it is rich spite or that government hasn't yer resorted to using stimulus to pay people to play video games as their full time job. But I wouldn't be surprised if uncertainty plays a part in the whole deal -- it seems like a plausible contributor. And actually when it comes to economics I'm not sure if the science gets any tighter than just plausibility and implausibility.

  • Chad||

    Health care reform, wall street reform, $800 billion stimulus, none of them have any substance? I don't think you're making much sense.

    All of these bills were utterly watered down in order to win the votes of people like Snowe and Brown. The health-care bill only moved us from "by far, the most utterly and incredibly right-wing system on earth" to "by far, the most right-wing system on earth". It hardly changes anything, actually, especially with respect to employer-based insurance. How that compares to the Iraq war, which not only involved ~1% of the GDP, but could have spun off in any of a host of alternative histories, is beyond me. The war was far more uncertain, no matter which way you look at it. The stimulus was just a tax cut (which according to Republicans somehow didn't work, because Obama passed it) along with keeping a few cops, teachers and construction workers employed. Where is the uncertainty there? I'd be much more worried as a business owner if these people WEREN'T working and my customers had a few less bucks a week to spend than I would be concerned about Krugman's invisible bond vigilantes in some imagined future. And the financial reform bill? My god, was there anything left after it was neutered to hell?

  • Eric||

    Well, Chad, if you noticed, Iraq hasn't been rife with business investment over the years, and the same can be said to an even greater extent in Afghanistan. Uncertainty certainly played a huge role in those two countries. In the US? Not so much, because Iraq and all its woes, as horrifying as they were, only really affected the US economy indirectly. The Bush tax cuts did greatly affect incentives, and may have been unwise, but not in ways that would mitigate investment. Medicare Pt D massively affected the pharmaceutical industry, but was generally "certain" (Bush campaigned on it as a "compassionate conservative"), and specific to the pharmaceutical industry. In contrast, Obama came in as something of an enigma: much of what he promised his supporters was thrown out the window, and much of what he supported in office was out of left field, so to speak. In the case of the Affordable Care Act, the uncertainty was caused by both the fact that the bill's content and scope was not certain at any point in the process (and sure, Republicans/conservatives had something to do with that), and the fact that the final product left a great deal of latitude and discretion to those who would be running the program. Stimulus II wasn't really a cause of uncertainty, but certainly, talk of future stimulus, austerity measures, some frankly schizophrenic dialogue on our transfer programs coming from the WH, and potential tariffs/taxes make this a bad environment to invest in.

  • benji||

    Holy shit, I don't think I've ever seen you throw out more complete bullshit in a single post as you did in this one.

    And that's saying a lot.

  • Tony||

    So the market is simultaneously the most innovative, creative force the world has ever known and also a delicate flower that wilts at the merest breeze of uncertainty or change in public policy.

  • Chad||

    I agree, Tony. It's funny watching libertarians simultaneously argue that we need not have any concern for future generations, because the market will innovate a way out of any bind we put them in, yet claim that markets can't handle the least bit of government without crumbling into dust.

  • Eric||

    Oh, markets are very resilient: there are even some in N Korea. The economic question is, how effective are they in such constrained environs? Keynes often compared the economy to the human body, and it's a valid comparison: just like the human body, economies can take a lot of abuse. They can even "recover" from economic maladies in the long-run, just like humans do. So of course, in the long run, the market will be left standing in some form. To continue the analogy, you and Tony are like doctors who apply leeches to a wound, then sneer at people when they have an inkling that something is wrong, by saying "isn't a person's body strong stuff, anyways?"

  • ||

    Except that nobody says the market will wither and die. We're looking at whether 5%, 10%, 15% or 20% of those who need jobs can't find them. Even at 20% unemployment, I guess 80% are okay (at least in a simplistic model).

    For some reason, we've decided that 80% isn't good enough. Are we spoiled rotten, or is a hobbled economy really not good enough?

    I suspect most people would not like 20% unemployment, and wouldn't call that "good enough."

    You don't have to destroy the market entirely, to produce a situation that nobody wants. Not even close.

    So yes, market efficiency DOES matter, a lot, to real people on "Main Street", no matter how corrupt "Wall Street" (with the help of those in DC) may be.

  • Bill||

    A market is just the interaction of people and their various institutions.
    A market can be more or less free of non-voluntary rules. The government becomes part of and influences the market in various ways. The rules need to be clear and somewhat constant in order for longer range decisions to be made. Since the world is such a complex place, no one individual or even small group of individuals has enough knowledge to really understand the whole picture. This is why we would like as little interference and as few regulations as possible. You seem to agree that this is a good idea in people's private lives and for academic freedom for example. But when it comes to economics you think that the government needs to intervene to help people and make things more fair. There are places like 3rd party externalities like pollution where the gov.'t has an important role to play and you need the courts, etc.

    But there are at least two problems. One is the information problem stated earlier. There are 3rd party effects from the gov.'t regulations due to this knowledge problem. The 2nd is that once the gov't becomes part of the market, the logical thing for people and institutions to do is to learn to play by the new rules and take advantage of gov't connections and get the govt to pass laws and regulations favorable to them (maybe by making campaign contributions, duh)
    This means you have a society based on the power of pull as someone once said. A form of organized class warfare where the connected and politically savvy do well. So these policies often do not have the good effects you intended.

    As far as the uncertainty question, the Iraq war was and is a source of uncertainty but now that it has gone on for so long and we are in the middle of a deep recession, the effects are worse. And the health care plan is not settled, whether the cuts will continue or not is not settled and the recession is still going on and after cash for clunkers, buyouts of GM, the "stimulus", and the bailouts, and we are STILL in a deep recession, you REALLY can't see why there would be uncertainty? The evidence of the uncertainty might be that the recovery is much slower than anyone had hoped for, especially if all these GREAT moves on the part of this administration had worked as YOU thought they would. Asking why the fact the the original Bush tax cuts would not be a source of uncertainty as great as not knowing what will happen is very silly (as I'm sure you will admit). In one case there is no recession and they KNOW there will be tax cuts coming which will help their bottom line. In the current case, NO ONE knows when the recession will end or what will be the effect of our huge deficit that has tripled in such a short time (yes Bush helped, save you some typing there). The UNCERTAINTY of NOT knowing exactly how much the health care bill will cost or IF the tax cuts will remain or be lost has to lead to UNCERTAINTY about companies bottom line. How could it not? If you don't know how much money you will have next year and you have 5 new things and several old ones going on that ALL lead to ADDITIONAL uncertainty this year compared to a few years ago, of course it has an effect? This is common in recessions in general, even when you don't have so much new and far-reaching legislation passed. Asking for evidence of why/how uncertainty in your future costs could possible lead to uncertainty in spending money is asinine. And the previous comment is correct. The only kind of evidence might be a survey of people saying they weren't hiring due to uncertainty. Even this is quite obvious if you think about it. Why aren't you hiring? I'm not sure if we can afford it. Would it be correct to say you are "uncertain" about whether to hire someone?

    Really. Think about it. Why are you even arguing this point?

    Let me reiterate. Things are uncertain in recessions. This one is a bad one. More uncertainty even with NO new legislation. Extensive, novel regulation in the huge health care industry is passed and huge stimulus and bailout packages, also novel (hmmm, might new, strange things lead to uncertainty??). Congressman freely admit they don't understand or we will not know the full effects of both the health care and the stimulus (hmmm, they were UNCERTAIN of what they even passed).
    And you want to disagree with the obvious statement that a possible reason the recovery is taking longer than usual is that we are in a novel situation and you want to disagree that added uncertainty caused by NEW programs is causing MORE uncertainty about whether to hire than in an alternate reality where this new legislation was not passed? Let me ask you this: Would it have been better or worse to try to reform health care in a recession or when there was not one? (as far as causing economic uncertainty, not the likelihood of passing it). Please be honest with yourself and us in answering. It's ok to admit you over-reacted or did not think it through. We all have times when we have a knee-jerk reaction. This was yours.

  • Soonerliberty||

    A shop owner is delicate, too, when the mafia comes in with guns and threats. Yet, he, too, still finds ways to go around mafia rule. See Soviet Union system of blat and samizdat' for reference to how resilient markets are.

  • Insane Clown Stossel||

    Will Congress raise the payroll tax? A "distinguished" deficit commission is meeting. What will it do? Recommend a value-added tax?

    Who knows?

  • ||

    Cross yer balls for a new episode...bitches

  • ||

    Oh. My. Gawd! Ain't Tony and Chad just the cutest fucking couple you have ever seen^...

  • ||

    I think this may be a rerun, but I have never seen it before.

  • Fist of Etiquette||

    What a gyp. Total repeat.

  • ||

    If I were a girl, then private roads would make me wet.

  • ||

    Governor Daniels needs to provatize his frikkin forehead put some lazers up on that bitch YEEHAww

  • ||

    And privatize it as well

  • ||

    I'll pull out Gov Daniels, I promise.

  • ||

    HOLY FUCK! It's the goddamn Kernel...where's my chicken bitch?!

  • ||

    Wait, the colonel would never wear a fucking broach.

  • Fist of Etiquette||

    Yeah, the stage coaches were always backing up on his way to the cotton field, before the war of northern aggression.

  • ||

    Fiscal meth, true to his name, will be on a 4am...be patient kiddies.

  • Fiscal Meth||

    Sorry, my computer asplode! BOOM!

  • ||

    Dude, your gettin' a Dell!

  • Fiscal Meth||

    Fuck you dell-spam-bot-body-snatcher! Leave cappy alone!

  • Fist of Etiquette||

    A billion dollars from out of the clear blue sky.

  • Fist of Etiquette||

    I'm trying to come up with different material for this REPEAT.

  • ||

    It's Wile...Fuck man I got nuthin

    Maybe Stossel will fight this dude or something...

  • Fist of Etiquette||

    How much you want to bet that John Stosstionette is living it up in Spain right now while I'm sitting here watching a goddamned rerun.

  • ||

    Are you at least drunk?

  • Fist of Etiquette||

    Drunk on life, my friend. Drunk of life. And Yuengling.

  • Fist of Etiquette||

    I don't think I want traffic shitting on my freshly washed car.

  • ||

    I like Stossel's sneering smug imitation... a little too good.

  • ||

    That dude would be sooo dead in the south side.

  • Fist of Etiquette||

    Get the fuck out of the way, you old limey fart.

  • Fist of Etiquette||

    "Traffic lights treat you as a zombie..."

    That's why they always try to take my head off.

  • Fist of Etiquette||

    What about the highway to the danger zone? Would we need stop lights on that?

  • ||

    Or, Electric Avenue?

  • Fist of Etiquette||

    That's dumb. And you're dumb for saying it.

  • Fist of Etiquette||

    Or, you could leave the traffic lights there and remove the traffic. That should cut way down on accidents.

  • Fist of Etiquette||

    You know what doesn't need traffic lights? High speed rail.

  • ||

    Dude is totally stoned...fer sure

  • ||

    "I live in California"

    You poor bastard.

  • ||

    As much as I hate to say it trains are awesome transportation.

    Until they get their own tsa.

  • Fist of Etiquette||

    They do have their own TSA, and they couldn't be more respectful.

  • ||

    I meant Amtrak, which I took across the country in 2005 and it was scary permissive.

  • ||

    By scary, I mean awesome...lots of sneaked on booze and stuff.

  • Fist of Etiquette||

    There was probably a murder on board which you had to help solve. Or at least escaped convicts and a covert government team transporting a nuclear device, right? Disabled brakes?

  • ||

    He's going to push the train with a bus?

  • ||

    Why are dying children so fucking depressing...

    Now...Glen "Batshit Crazy" Beck!

  • ||

    Oh, he has glasses, now he's sane.

  • ||

    He's still not a libertarian.

  • Fiscal Meth||

    He's a televangelist on some shows and an anarchist on Stossel. I submit "AD-Lib-ertarian" or maybe "Mad-Lib-ertarian" when his glasses are off.

  • Fist of Etiquette||

    He's gotten more libertarian the more democrat the president has become.

  • ||

    Just like John has.

  • ||

    Not Stossel.

  • Fist of Etiquette||

    Great, now I'm hungry for brownies.

  • Fist of Etiquette||

    Olive drab brownies.

  • ||

    The park is not much nicer...nicer for RAPING!

  • Fist of Etiquette||

    Figures. Stossel lives with a view of Central Park. Probably drives around the park in that fancy new golf cart he's always bragging about.

  • ||

    That WE bought...Fucking parasite.

  • ||

    If Donald Trump and Glenn Beck met a douchy singularity would occur.

  • Fiscal Meth||

    So that's what's at the center of a black-hole...Dilusions of grandeur.

  • Fiscal Meth||

    Don't worry, I got it...AHEM....RAAAACISSSSTT!!!!

  • Fist of Etiquette||

    Government is better at giving out a thousand bucks.

  • ||

    Pay the man, 'Stache.

  • Fist of Etiquette||

    BY NOT PAYING ME HE PROVES ME RIGHT!

  • ||

    I should "liveblog" Futurama and really fuck up this thread.

  • Fist of Etiquette||

    Fox Business Channel's aquarium screensaver kicked in.

  • Fist of Etiquette||

    Totally made that joke last time.

  • ||

    Like anybody's going to check.

    Just reuse 'em

  • Fiscal Meth||

    Recycling, how green of you.

  • ||

    Everybody that tuned in tonight is in for a very special treat.

    Fiscal meth will be on a 4 am, and if you sync your ice smoking with his liveblogging ... then your neighbors really will be able to hear through your walls ...

    They do mean you ill, only one thing to do about that, 'eh. Yeah you know.
    Yep, that's the cops they're calling...ON YOU!

    Night Kiddies

  • Fiscal Meth||

    Sorry I'm late. My neighbors were plotting against me and I had to take care of business.

  • Fist of Etiquette||

    Fiscal Meth was my after-the-fact buddy on this episode last time, so who knows if he'll day show his face again on it here.

    Now on to new Futurama, which I will record and watch later.

  • Fiscal Meth||

    He sees you while you're sleeping...he knows when you re-run jokes...

  • Fiscal Meth||

    You guys really re-shattered some conventional wisdom lastnight. Ya dun me proud fellas.

  • biz owner||

    I would assume that I am not the only business owner reading this board, but I will speak from my personal and professional perspective. I could go on with a diatribe of greater length than the original article, but a couple of simple statements would easily make my point and generally concur with Stossel's article. However, there is one element that I have not seen anywhere in the media.

    I do agree that there is uncertainty in the marketplace that is largely brought on by the government. Regardless of anyone's confidence in the GOP, I do see a major shift in Congress following the mid term election. And I do believe that business and consumer confidence will resume in the second and thrid quarters of 2011. Whether this translates into business and consumer spending and an eventual recovery....who knows.

    To my point that seems to be evading the media. As a business owner, I have always operated in a lean fashion. My employees are paid handsomely with excellent benefit packages - much better than the market value. I haven't made any substantial changes to the business's day-to-day operations or staffing in five years. I operate without extensive borrowing, although we do use a line of credit only when needed. In other words, I am proud to say that I operate a fiscally prudent business: limited debt, no cash draining overhead, reinvest profits into the business and fair and practical executive compensation (my partner and I don't pay ourselves dividends).

    With this in mind, I see other business of all kinds operating in a similar fashion. Businesses are seeing that they are able to profit wihtout borrowing - what a concept. Up to 2008, businesses in every sector were heavily leveraged and had extreme redundancy in the employee ranks, i.e. dead weight. I have talked to other business owners and they are comfortable with their companys' performances, comfortable with managing cash and they are seeing profits. But the uncertainty in pending legislation is actually and inadvertantly creating better performance and internal efficiencies.

    In short, businesses are operating better and smarter now than they were over the course of the last decade.

  • fendibags||

    The economists at NBER aren't as stupid as our bonehead politicians and other knucklehead Obama cheerleaders.

  • fendibags||

    The economists at NBER aren't as stupid as our bonehead politicians and other knucklehead Obama cheerleaders.

  • burberry scarf||

    BY NOT PAYING ME HE PROVES ME RIGHT!

  • burberry scarf||

    That WE bought...Fucking parasite.

  • bags||

    Government is better at giving out a thousand bucks.

  • bags||

    Now on to new Futurama, which I will record and watch later.

  • Mr. FIFY||

    Note above how Tony and Chad are stroking each other with their government-is-good/private-sector-is-bad mutual masturbation... no wonder Democrats have such a solid voter base - they're made up of Tonys and Chads.

  • Tadcf||

    When is the last time the right-wing reduced the size of government?

    tadcf@prescienceblog.com

  • Ekim||

    "...consuming wealth that might otherwise have been invested."

    That's what the Keynesians want to happen. They think consumption produces jobs.

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