Friday, December 24, 2010

Yes, It Gets Worse

Krugman today points out how disingenuous conservatives claim that the government has exploded in size during Obama's presidency by ignoring data (or calendars for that matter).  I'd like to briefly point out the thought process behind these attacks and the inhuman end game that would come in to play should even minded policymakers accede to extremism.

One of the basic conservative arguments in this regard is that public sector employment crowds out the private sector.  But if that was true, why wouldn't the private sector be hiring people now that there is so much excess labor in the economy?  With near 10% unemployment, private industry should be able to hire workers without having to compete too voraciously with the pesky government, right?  Well, the answer the winking conservative will give you is that more of today's unemployment is structural; that, whereas the natural rate of unemployment just a few years ago was 4-5%, today's target unemployment rate should be around 7-8%.  This is of course can be easily debunked by looking at the widespread depression in employment among other data.  The natural rate of unemployment may have incrementally increased over the past few years, as it tends to do, but there is no evidence to suggest such a massive jump.  I may revisit this in another post to be a little more clear here, but structural unemployment is not the point of this post.

So, what's the BFD?  A little further thought into this line of reasoning exposes just how cynical it is.  "If", the line of thought might continue, "we're near the natural rate of unemployment, then there's no reason to do anything to stimulate the economy and, instead, we should really be focusing on cutting the deficit and paying down debt."  And we all know what cutting the deficit and paying down debt means: cutting any services that might help poor people or educate kids.  It's really paradoxical: more unemployment means we should help less.  But it gets worse once you think of the long term implications.

Two major drivers in any increase in structural unemployment in this country, recently and going forward, are high labor costs and the education gap between the US and our competitors, especially in math and science.  Well, conservatives are doing their best to bring the former down (in doing so lowering the standard of living for the vast majority of Americans) with their union busting and demagoguing of government employment, but 30 years under conservative policies of underfunding public education have virtually ensured the downward trajectory of the latter.  No single person embodies the relentless attacks on public education more than New Jersey Governor Chris Christie and if you look at the glowing reviews the (conservative) media gives him, it's not too hard to guess that more of this is coming.  It is safe to assume that the countries flying by us in terms of quality of education are not embracing policies such as these.

So, even if conservatives would admit that the structural unemployment argument at this point is bunk, they're doing what they can to make it a self-fulfilling prophecy.  Remember, the higher the natural rate of employment, the less support the unemployed need... or something.

Merry Christmas.

1 comment:

  1. One possible conclusion with Christies "austerity agenda" would be the privatization of infrastructure like roadways. It will start with NJTPK & GSP, minimum wage, no benefit jobs to collect tolls that will skyrocket when private companies own said roads. How much longer until secondary roadways become privatized because municipal governments do not have the tax money to fund upkeeps or improvements?

    How much longer before only the wealthy can afford to send their children to school because 40 students per class doesn't allow for students to learn at all?