Obama's Socialist Fantasy Tale - Jobs

In the State of the Union address before Congress, some of the Justices of the Supreme Court, and a number of top military leaders, Obama made the claim to them and to the American People, that he has created 3.1 million new jobs in the private sector.  Let us examine this claim.

First, we should look at some employment numbers.  In December 2007, before the recession hit the United States, we had 146,334,000 people employed according to the household survey that covers all jobs.  At the depth of the jobs recession in January 2010, we had only 136,809,000 jobs, for a loss of 9,525,000 jobs!  In December 2011, when Obama was in the White House for 3 years and two years after the bottom in the employment market, we have had an increase of 3,872,000 jobs since the bottom with 140,681,000 people employed.  Great, but the number of people of working age has also increased during that time.  Strangely enough, many of the additional 3,752,000 people want jobs.

Note that in December 2011 we actually still had 5,653,000 fewer jobs than we had in December 2007.  Meanwhile, the working age population grew by 7,428,000 people over the course of that 4 year period.  This is a monthly average growth rate in the working age population of about 154,750 people.  Back in January 2000, when jobs were plentiful, 67.49% of the working age population had or wanted jobs.  If we use that figure to calculate how many of the added 154,750 people a month in the working age population want jobs, we get 104,441 people/month want a job.

During this Obama recovery between the bottom in January 2010 and December 2011, we would have needed 23(104,441) = 2,402,143 new jobs just to keep up with population growth.  Since 3,872,000 were added in that time, we did a bit better than keep up with population growth.  Over and above those wanting new jobs due to the working age population growth, 1,469,857 jobs were created.  We can count these new jobs against the 9,525,000 jobs lost from before the recession to that low month of January 2010.  At this rate, in 6.5 years we can re-employ all the people who lost their jobs in this recession.  Thus, this recovery will take a total of 10.5 years from December 2007.  A truly lost decade that only the Great Depression exceeds.

The jobs situation is much more grim than Obama would have us believe.  He is not lying about the 3 million new jobs, but he is using the fact that the number sounds impressive to misdirect our attention from a real understanding of the magnitude of the problem.  He is assuming, as Progressive Elitists so often do, that most of the People are too ignorant or too busy to notice how he is misdirecting them.

His prescription for creating new jobs is more of the same old failed policies of his administration to date.  The reason he will not learn from his past mistakes, which were dumb in the first place, is because his policies are really all about politics and giving his core supporters what they want.  He is not really motivated by solving the jobs problem and most certainly is not motivated to let the private sector create jobs.  He wants to reward teachers with more federal funds, despite the fact that the present huge federal fund expenditures on education have not improved student knowledge.  He wants to throw more money at infrastructure despite such projects doing little to revive the economy.  Since those getting infrastructure money have to go through long environmental studies, which provide jobs for many government workers, and contractors have to use union labor, this is really just another scheme to give taxpayer money to his supporters.  His other big claim to fame is funding so-called green energy.  As we have seen, that is just a means to provide his rich supporters with tons of money as their companies fail because even with government grants, subsidies, and mandates to use their energy, that energy is so expensive and unreliable that it cannot compete except in niche markets. 

Meanwhile, Obama continues to threaten most businesses with volume after volume of new and expensive regulations, with ObamaCare, with Dodd-Frank, and plans to pick more losers from among businesses.  This will never be a successful approach to creating jobs.  We desperately need a new man in the White House who realizes that jobs are best created by the private sector with little government interference.

Obama's Socialist Fantasy Tale - Regulations

In his State of the Union speech, Obama claimed to have reduced the number of new regulations each year compared to President George W. Bush.  This may be true in one respect, but it is a matter of sad misdirection in most respects.  Let us examine this issue.

First off, there may be more important measures for the effects of new regulations than the number of them.  Not that the number is unimportant.  It is and it is bewildering, especially for business owners at whom most are aimed and for whom little tolerance exists.  Homeowners and employees have it easy compared to business owners and managers.  So what other measures are important.  One that is easy to establish is the number of pages of the regulations newly added to the Code of Federal Regulations.  Another is the number of new regulations costing more than $100,000,000 to implement annually.

We need some historical background and perspective.  In 1970, the Code of Federal Regulations (CFR) had 54,834 pages of regulations.  That would be a good many more pages of regulations than any businessman would have time to read and study.  Remember that the Congress was unable and unwilling to read the over 2,000 pages of the ObamaCare bill, but they have no hesitation of expecting businessmen to know many tens of thousands of pages of regulations.  By 1998, the number of pages of regulations had grown to 134,723 pages and the 201 volumes containing them required 19 feet of shelf space.  I wonder of any businessman alive ever read through that complete set of volumes to find out which regulations applied to his operations.  The General Accountability Office (GAO) says that in fiscal years 1996 to 1999, a total of 15,286 new regulations went into effect.  222 of these cost more than $100,000,000 a year to implement.  In those 4 years, the cost of operating US businesses went up by more than $22.2 billion a year due to these regulations.  No doubt that is a very low-ball figure.

As a candidate for President, Obama blamed the recession on Bush because he failed to regulate the economy enough.  Nothing could have been more untrue.  Government controls tended to push the financial institutions hard toward making sub-prime mortgages and toward supplying the easy credit bubble that collapsed the economy when the sudden price increase in oil in 2007 put the economy under strain and pin-pricked the balloon.  As for regulation in general, George W. Bush was a champion of regulations.  The great economist Veronique de Rugy documented that fact very well in a Reason Magazine article in the January 2009 issue called Bush's Regulatory Kiss-Off.  Examine the graph of the regulatory budget increases by President from de Rugy's article:

George W. Bush loved regulations even more than Clinton did in his second term or his father or Nixon.  Republicans in general do not have a good record of minimizing regulations.  It is one of the many shortcomings of Republicans and generally flies in the face of the rhetoric they use honoring individual rights and respecting business activity.  So let us bear this in mind when Obama claims to have implemented fewer regulations than Bush.  That is like saying that I love graft just a bit less than Tammany Hall did.

But by other measures, Obama is no regulatory saint.  Wayne Crews, of the invaluable Competitive Enterprise Institute, anticipated regulatory claims by Obama in his State of the Union address and tells us much more about his regulatory regime in an article called President Obama's State of the Union?  Hyper-Regulated.  He notes that Obama has claimed to be reducing ineffective regulations, but he is strengthening the National Labor Relations Board to prevent plant relocations, he is not allowing speedy energy infrastructure building (Keystone XL Pipeline), he has not allowed oil and gas drilling on federal lands, and the EPA is going forward with "maximum technology" requirements for utilities, cement plants, and industrial boilers.  The Dodd-Frank Too-Big-To-Fail Bill requires tremendous numbers of new regulations, most of which have missed their statutory deadlines.  Hey, when the Senate cannot produce a statutory required budget for any of three years, why should the bureaucracy of the Obama Administration have to meet the deadlines they are required to meet by law?  And Crews notes that despite widespread opposition, the FCC is proceeding with net neutrality, even without congressional authorization.

General metrics such as the number of new pages added to the regulatory law are literally horrifying.  In 2011, 82,351 pages of regulations were added and in 2010 Obama added 81,405 pages.  In these two years, Obama added 163,756 pages of regulations which we should compare to the total pages of regulations in 1998 of 134,723 pages.  The 19 feet of shelf space needed in 1998 for the regulation volumes, grew by 23 feet of additional shelf space in two years under Obama!  Unfortunately, those years between 1998 and 2010 saw huge increases in the necessary shelf space also.  There is surely no lack of regulations now.  In fact, it is a travesty of law to have so many regulations that no one can know them and no one understands them.  In fact, no one could obey them, because such a volume of regulations will have many contradictions in them and there will be many cases in which obeying one regulation will put one in conflict with another.  Such a body of law cannot be self-consistent.

Wayne Crews also examined the number of new regulations with major impact upon businesses.  In 2008, the Democrat Congress and Bush put out 180 new regulations with major economic impact.  Obama put out 212 in 2011 and 224 in 2010.  The highest number of such important regulations added prior to 1998 was 159.  The government is really going for major impact on our weak economy!  The number of regulations in the pipeline for implementation was 4,004 rules in 2008, but in 2010, Obama had increased this to 4,225 and in 2011 it was 4,128.  So, there will be no future shortage of new regulations unless a very determined President and Congress act to stop them.

Rules in the pipeline affecting small businesses, who create so many new jobs, are now 822, compared to the 2008 number of 753.  Crews says that about 21% of all rules affect small businesses directly.  Most regulatory rules affect small businesses by increasing their costs or by using up the money of big businesses so they are unable to do as much business with small businesses as they otherwise would.

As we know, Obama has a special reverence for environmentalism.  The EPA is especially threatening under his regime.  The EPA has 318 new rules in the pipeline and 18 of these are economically significant, meaning that they admit that they will cost more than $100,000,000 annually to implement.  Some will cost much, much more.  93 of these rules will affect small businesses directly.  Of these, 14 are economically significant.

Almost every time there is a complaint that something went wrong because we had too few regulations, careful thought and research reveals that regulations caused the problem or that regulations already in place were not used to prevent the problem.  This is not surprising given the massive regulatory structure already in place.  No one understands the regulations and it is not reasonable to have sufficient regulators to see if companies are obeying the regulations.  The first law of good law is that the laws should be knowable, reasonable, and enforceable.  Our regulatory structure massively defies this simple common sense.  Nonetheless, governments all over the US believe it is their primary function to give us more laws and more regulations.  This is otherworldly wrongheaded.

Unemployment, the Lie by Misdirection

With the publication of the Bureau of Labor Statistics unemployment numbers for December 2011, we have generally been told that there is good news for employment.  We have been told that unemployment is down to 8.5% based on seasonally adjusted numbers.  This is a very big lie by misdirection, though it may be fully consistent with the usual practice by which unemployment is defined.  As I have said many times, during a long recession or depression, the usual practice produces a meaningless number.  Let us search for some real meaning in the job statistics of the BLS.

Because of the tendency for people to give up on searching for jobs when they have been long unemployed and unable to find employment, the number of people listed as unemployed and in the job market tends to drop or at least not to keep up with the growth of the population.  As a result, the usual unemployment number becomes meaningless.  One has to start looking at the actual numbers of people employed and the percent of the working age population that has a job.  This is where the real story is.  To do this, we must look at the numbers given in the following table:

Note that this table does not use the seasonally adjusted numbers which I suspect may not be realistically adjusted using normal seasonal swings when one is in a long-term recession.  In this table, we can follow the actual numbers of civilian work age people, the actual employed, the percentage of people employed, and we can calculate the number of people who would want jobs if good jobs were as plentiful as they were in January 2000 and for several years prior to that.  Note that in December 2005, 142.779 million Americans were employed, but in December 2011, only 140.681 million Americans were employed.  The number of employed Americans in that 6 years dropped by 2.098 million even as the working age population grew by 13.159 million.  The Obama economy of December 2011 is indeed in a very sorry state.  But this does not keep Obama from crowing at the top of his lung power that the economy is healing due to his policies.

The number of people unemployed is only 12.692 million now and it was 15.137 million in July 2010.  That looks like good news!  Ahhh......, but how disappointing it is to see that there were only 0.547 million fewer people employed in July 2010 than in December 2011.  In that year and a half of "recovery" from the recession, the working age population grew by 2.694 million while the number employed grew by only 0.547 million.  The percent of the working age people employed fell from 58.91% to 58.47%.

What happened to the number of missing jobs?  Not much.  In fact the number increased from the November 2011 report.  To be sure, month to month variations are not very meaningful, so we should look at longer trends.  Note that in seasonally adjusted numbers, the Obama administration is claiming that the number of jobs increased by 200,000!  The actual numbers of employed show no such increase.  In December 2011 the number of missing jobs was 21.689 million.  This is 378,000 fewer missing jobs than in December 2010.  At this rate of recovery, we can have as few missing jobs as in December 2007 in 28.2 years.  Yes, that is years, not months!  Obama should crow really loud about that.  With this Obama rate of recovery from the recession we can achieve the January 2000 number of missing jobs in 42.3 years!

Since May of 2011, the number of missing jobs is almost flat.  There is no sign of improvement.  Indeed, there is very little change over the last two years of supposed recovery.  This is totally unlike any recovery from a recession since WWII.

The wonder is that we have an economy which is stagnated in job growth.  Given the impending ObamaCare and Dodd-Frank regulatory controls onslaughts, the totally union-boss controlled NLRB thanks to unconstitutional despot appointments, the soaring costs of gasoline with central planning help, the soaring cost of electricity, the government refusal to allow oil and gas drilling, the upcoming cost increases for vehicles forced to go 54.5 mpg, the increased costs for food and drugs thanks to heavy-handed Obama regulations and added taxes, the money extracted from the private sector to be wasted on green energy developments, the increased state taxes in many states, the failure of the federal government to reduce our highest in the developed world corporate income tax and very high capital gains tax, and a never-ending threat by the President and Senate leadership to punitively tax the most productive members of society, it is a wonder that the private sector is keeping pace with the population growth at all in its job creation rate.  One can only imagine what the private sector could do if the governments, federal, state, and local, were to get off the backs of businessmen.

Can Two People be Friends Who Disagree Greatly Politically?

This question was asked on a discussion forum in which I am a frequent participant.  This discussion group has a very broad cross-section of mostly American contributors.

There are still values in America which are not predominantly dictated and controlled by government and friendships between individuals on the basis of such shared values are still possible.  But it is a serious impediment to friendship when your supposed friend or relative wants government to create and enforce numerous laws and regulations which trample your sovereign individual rights. Any noble man is obliged to defend his individual rights with his very life, just as was the case for the Founders.  When a man of sound moral principle is committed to defending his sovereign rights and the Constitution which is supposed to keep the government from trampling his rights, the response of the Progressive Elitist, the welfare queen, and the crony mercantilitst is to have government agents put a gun to his head and threaten to blow him away.  The government does not tolerate the man who responds to the government use of force to deprive him of his rights by exercising his right of self-defense.  This is the nature of the Rule of Law, but it is also why the morality of the Rule of Law depends upon a minimal government of very limited powers and scope, such as was provided Americans by our Constitution when the Constitution was honored.

This brutality and constant resort to threats of violence by proponents of big government today belies the claim of friendship.  It is the act of a brutal  enemy who refuses to acknowledge the fact that the right to choose values and the freedom to act upon those values resides in the sovereign individual, not in the state and not in any collective gang.  The very concept of friendship presupposes that individuals have values and are allowed the essential freedom of association to voluntarily acknowledge those others who share their values as friends.  Our present government refuses to acknowledge our very individuality, our individual values choices, and our broad freedom of association in a dominant and thriving private sector.  Those who support such government tyranny denigrate the very basis for friendship between individuals.