Thursday, May 19, 2011

Two Americas?

2 comments:

Patrick_L said...

a) The dollar's weakening, which the Obama administration is allowing but Paul Ryan is denouncing, is contributing to the United States' recent strong export growth.

b) Yay for manufacturing job growth. How about that pay?
http://www.washingtonpost.com/business/economy/in-rust-belt-manufacturers-add-jobs-but-factory-pay-isnt-what-it-used-to-be/2011/05/17/AFDmL55G_story.html?wprss=rss_homepage

c) I would be very hesitant to even try to attribute the health care sector's job growth on government. It may not be definitive, but it's certainly suggestive to point out that our country actually has less government subsidization of health care than other industrialized nations, which have much smaller health care sectors as a share of their economy.
The shot at state and local-government being the problem is also weak here. Medicaid expansions are not primarily due "Productivity growth in high-end services and manufacturing translated into income gains for high-skilled workers and asset-rich households" swelling government coffers that were then channeled into politically popular things like Medicaid. Medicaid's problems are primarily a result of changing demographics and rising health care costs system (which to prevent having an impact on spending, you'd actually have to cut people or benefits from the program).

d) What state and local government job growth? According to BLS, this group went from 59 workers per 1,000 residents in 1980 to 62 per 1,000 residents in 2010.

e) Is anyone surprised that in a competitive global economy where developing nations with far lower labor costs are now actually competitive, that U.S. tradable job levels would have remained steady, while nontradable jobs increased (don't forget that the population increases are necessitating job growth). Duh!?! There isn't any public-sector evilness going on. In fact, it's healthy that we have so many nontradable jobs- because they're NONTRADABLE.

Patrick_L said...

f) Maybe government workers are concerned that massive state spending reductions (ex: Texas) is going to cut hundreds of thousands of jobs (this process has already begun) while unemployment is around 9% and we have over 4 people looking for work for every job opening- a number well above normal conditions. Having hundreds of thousands of additional people unemployed when the problem is that there isn’t enough jobs to go around for the people currently unemployed who don’t want to be unemployed is bad economics. Having millions of people desperate for a job doesn’t create jobs. It destroys jobs, because these families dramatically contract on their household spending and don’t engage in the economy fully so business sales decline, profits decline, and firms respond by cutting costs by cutting jobs. The only way having this many people unemployed is good for job growth is that it drives down wage rates across the economy, including particularly the private sector. JEC Republicans have actually advocated this- get job growth by reducing wages. This is after decades of stagnant wages for many Americans. There are limits to how low and quickly you can drive wage rates, and you’d never get enough of an effect to approach the needs of the millions unemployed.

g) (I’m reading his article and making responses as I go along) Just was reminded that construction is in the nontradable category, which means the housing bubble (which was disastrous economically) explains significant portions of the nontradable job growth and inflated them (since the bubble distorted economic efficiency across sectors).

h) I’ll end here. Let me say, I actually like Reihan’s work and frequently read it. He’s my favorite NRO writer. However, in this case his line of argument is inadequately supported or rigorous in its approach. In fact, there seems to be a great deal of evidence and arguments against the casual stories he is suggesting, how he characterizes certain phenomenon, and the desirability of the solutions he proposes. I say “back-to-the-drawing-board,” though I appreciate the fact that he is bringing attention to a serious and under-discussed issue.