The ‘Not Enough Jobs’ Scenario: An Economic Fallacy (But Possibly An Accurate Forecast)

Editor’s note: This article first appeared at Forbes.com.

Once again, a scholar with impressive credentials is broadcasting the gloomy notion that Americans face a job-poor future. The insufficient-jobs scenario appeared in George Mason University economist Tyler Cowen’s book “Average Is Over a couple of years ago. It resurfaced again recently in the Pittsburgh Tribune-Review. Vivek Wadhwa, “a fellow … director of research … and distinguished scholar” at several prestigious universities, wrote that we need “a new version of capitalism” for “dealing with our jobless future.”

The crux of Wadhwa’s argument is his belief that technological progress will result in a society divided between a technologically savvy elite, who will prosper mightily, and a larger number of Americans whose jobs will be rendered obsolete and won’t be able to find new jobs. There’s an obvious fallacy here: If technological progress reduces employment opportunities, then why are hundreds of millions of people still working in the technologically and economically advanced countries of the world? What is it with these intellectuals and the recurring nightmare that progress results in a dearth of jobs?

An incident that the late economist Milton Friedman related comes to mind: While visiting a populous but undeveloped Asian country several decades ago, Friedman saw a gang of workers using shovels to excavate a hole where a building’s foundation would be laid. Friedman noted that the job would be completed much more quickly if a modern excavating machine were used. His host replied that a deliberate decision had been made not to use such a machine because the government wanted to maximize employment. Friedman’s rejoinder was to the effect that if the goal were to maximize employment in the country, they should ban the use of shovels and equip a far larger number of laborers with spoons. It doesn’t require great vision to realize that a fully employed nation of spoon-wielding ditch diggers would remain a very poor place.

Can anyone doubt that technological progress has led to economic advancement? The economic principle is elementary: As worker productivity increases (that is, as more wealth is produced from fewer units of labor) prosperity rises, too. When improved agricultural productivity has bankrupted farmers and resulted in our food supply being produced by an ever-smaller percentage of Americans, what has happened to all those ex-farmers? They found employment in new fields, thereby increasing the number and variety of goods and services produced. In other words, more wealth was created; and that is how a society achieves higher standards of living for the masses.

What has just been described is Schumpeter’s process of creative destruction. Old jobs that produce things of less value become obsolete, and new jobs producing things of higher value take their place. This is the natural evolutionary course of free markets.

Any notion that there is a ceiling to the number of potential jobs ignores an elementary and undeniable economic truth—namely, that there is no limit to the potential number of jobs because there is no limit to mankind’s wants. As technology makes it possible to produce what are considered the modern necessities of life (cars and cell phones in addition to the traditional necessities of food, clothing, and shelter), more workers will be available to produce and provide new goods and services that entrepreneurs are dreaming up every day of the year.

Is there anything that can inhibit or halt the natural tendency of entrepreneurs in market economies to generate new job opportunities? Yes, indeed. Government intervention—excessive and costly regulations, wealth-and capital-depleting taxation, misallocation of resources via government spending programs, depreciating currency, etc.—can stifle economic activity, discourage business formation, and cause job opportunities to dry up.

What is scary about Wadhwa’s thesis and related plans (such as Hillary Clinton’s proposal for government to lay a heavier, more controlling hand on American entrepreneurs and businesses) is that their ill-conceived policies will produce results opposite to what they claim to be seeking. There will be less employment instead of more.

When Wadhwa says we need a new “capitalism” that redistributes more wealth and provides everyone with a taxpayer-supported guaranteed income, he is doing two destructive things: First, he is perpetrating a pernicious lexicographical hoax, proposing a new form of statism that is a repudiation of free markets—i.e., that is anything but “capitalism.” A more honest statement would be “It is time to replace capitalism with greater government control of economic activity.” The second destructive aspect of his suggestion is his apparent blindness to the fact that maximum economic freedom—true capitalism—is the world’s best hope for expanding job opportunities. To jettison capitalism and replace it with a greater degree of statism will impede economic growth, squelch the growth of businesses, and consequently hinder job creation, to the economic detriment of those who are hoping for jobs.

There will be enough jobs for Americans only if the political planners surrender their mad ambition to direct the economy from Washington.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Is Obama Really To Blame For Weak Economic Growth?

Editor’s note: This article first appeared at Forbes.com.

A political science colleague sent me an article documenting President Obama’s dismal economic record, and he asked me for added details and perspective. Here goes:

True, economic growth under Obama has been sluggish, fitful, faltering, historically weak, etc. However, if you look at the charts in the article—especially the second and third—you can see that U.S. economic growth has been trending downward for several decades. Conclusion: Our economic woes did not begin with Barack Obama. However, he has done nothing to reverse the trend; on the contrary, he has doubled down on the very policies that have hampered economic growth.

The headwinds opposing economic growth are generated by what Ronald Reagan referred to as “the government disease.” No president has advocated, championed, and imposed more harmful government intervention than Barack Obama.

Here’s a short list of those interventions:

1.) Government spending. Economists as far back as Adam Smith have noted that the true burden of government is what it spends, not what it taxes. When political decisions about where to allocate scarce economic resources supplant market decisions, production inevitably is diverted from the most highly valued needs to less valued things. Thus, less wealth is produced, economic growth is suboptimal, and the people are poorer than they otherwise would be.

While not having increased federal spending by as large a percentage as his predecessor, Obama undeniably has presided over more market-distorting government spending that any of his predecessors. To be fair, some of this spending was already baked into the cake—particularly the rising spending on Social Security and Medicare. Because federal entitlements operate on a “pay as you go” basis, these increasing expenditures to seniors do not consist of real economic returns on capital invested. Instead, they transfer hundreds of billions of dollars from current workers to mostly retirees. Entitlement expenditures artificially inflate GDP and overstate the real wealth of the country because those dollars represent purchasing power that does not arise from the production of actual goods or services.

2.) Rising debt. The greater the debt load, the more present income is diverted from present consumption to pay for past consumption. After a brief downturn following the 2008-9 financial crisis, total debt has risen by over 15 percent to a shade over $59 trillion, according to the Federal Reserve. Over half of the $7.35 trillion increased (some $4.84 trillion) is government debt stemming from Obama’s budgets.

Obama’s policy of encouraging and facilitating loans to college students has seen student debt soar to over $1 trillion with devastating economic consequences for the recipients. Young graduates struggling under the burden of debt have delayed marriage, child bearing, home buying, etc. In too many cases, college debt has stunted young American lives.

3.) Suffocating regulation. The Obama administration has burdened Americans with a record amount of federal regulation as measured by the number of new rules promulgated and pages in the Federal Register. The annual cost of the federal regulatory burden is now approximately $1.9 trillion (only nine countries’ GDPs are larger). As reported in Investor’s Business Daily, “the cost of enforcing federal economic regulations is … up 31 percent since Obama took office, and the ‘Code of Federal Regulations’ is 17,294 pages longer.”

Furthermore, as noted by Obama’s Council on Jobs and Competitiveness, the Sarbanes-Oxley law (which Obama inherited, but has not revised) and Dodd-Frank (which a Democratic Congress passed in 2010 with Obama’s approval) have “placed significant burdens on the large number of small companies.” Consequently, we are in the unusual and worrisome situation of businesses closing at a faster rate than they are opening, thereby shrinking employment opportunities and slowing economic growth.

4.) Tax policy. Business tax rates have remained unchanged under Obama, and that has had negative consequences in a world that has been shifting toward lower corporate profit taxes. By allowing the United States to have the highest corporate tax rate in the developed world, American businesses are migrating abroad via the corporate inversion maneuver.

5.) The war on work. While constantly professing concern for workers, Obama has consistently supported and implemented policies—ranging from a higher minimum wage to federal jobs programs to anti-business policies—that have shrunk the number of jobs (see the Labor Force Participation Rate). Obama’s prize legislative achievement, the Affordable Care Act, has shrunk the number of hours worked (and consequently the amount of wealth created) by incentivizing employers to reduce the number of full-time jobs. According to David Stockman, the United States has two million fewer full-time workers now than it did in 2007.

Bottom line: President Obama’s policies have crippled the American economy.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Exposed: How Obama And The EPA Imperil Minorities

The Obama Environmental Protection Agency and environmental activists frequently claim that climate change will disproportionately affect poor and minority communities. In their view, this justifies unprecedented environmental regulations, like the EPA’s pending “Clean Power Plan” (CPP) to reduce carbon dioxide and other greenhouse gas emissions from coal and gas-fueled power plants 30% by 2030.

But what effect will the regulation itself have on poor and minority communities?

The plan will result in higher electricity costs for businesses and families, lost jobs, lower incomes, higher poverty rates, reduced living standards, and diminished health and welfare, our exhaustive recent study found. This damage will be inflicted at the national level and in all 50 states. The CPP will impact all low-income groups, but hit America’s 128 million Blacks and Hispanics especially hard.

The EPA rules will: 1) more than double the cost of natural gas and electricity, adding over $1 trillion to family and business energy bills; 2) require average families to pay $1,225 more in inflation-adjusted dollars for power and gas in 2030 than in 2012; 3) destroy millions of jobs in companies and industries that can no longer compete, here or internationally; and 4) significantly reduce U.S. economic growth every year for the next two decades, causing more than $2.3 trillion in total lost gross domestic product.

Compared to whites, blacks and Hispanics already spend 50% and 10% more of their incomes on utilities, respectively, 20% and 90% more on food, and 10% and 5% more on housing. The EPA regulations will significantly increase the minority family “energy burden” – the percentage of annual household incomes they must pay for residential energy bills – and thus the number of families driven into energy poverty. Inability to pay energy bills is second only to inability to pay rent as the leading cause of homelessness, so increasing numbers of poor and minority families will become homeless.

Black and Hispanic household incomes will decline by increasing amounts every year, while their food and healthcare costs will climb significantly, since those business sectors will also have to pay much more for energy. The poverty rate will increase by more than 23% for blacks and more than 26% for Hispanics.

EPA’s rule will force poor and minority families to choose between buying food, putting gas in the car, going to the doctor, buying medicines, giving to their church, saving for retirement, or making mortgage, rent, and car payments. Small businesses will have to find thousands more just to keep the heat, lights, and air conditioning on, without laying people off or closing their doors. Factories, malls, school districts, hospitals, and cities will have to pay millions more for energy.

By 2035, cumulative job losses resulting from the rule will total 7 million for blacks and 12 million for Hispanics. Most of these losses will occur in localities where blacks and Hispanics are most heavily concentrated. The rule will especially harm residents of seven states with the highest concentrations of blacks and Hispanics: Arizona, California, Florida, Georgia, Illinois, New York, and Texas.

Entire communities could sink into poverty. Bread winners lucky enough to find work will be forced to take multiple jobs, commute longer distances, and suffer severe sleep deprivation. Families will have to cope with more stress, depression, drug and alcohol abuse, and spousal and child abuse. Nutrition and medical care will suffer. More people will have strokes and heart attacks.

Senator Joe Manchin (D-WV) bluntly summed up the effects of the EPA’s “clean power” rules. “A lot of people on the lower end of the socioeconomic spectrum are going to die,” he said.

Ironically, these are the very people that Obama and the EPA claim to care about the most. As African-American author and news analyst Deneen Borelli observes, President Obama “is rewarding his overwhelming support by black voters with an energy policy that will significantly reduce their disposable income.” Indeed, she says, climate change is “the green movement’s new Jim Crow law.”

National Black Chamber of Commerce President Harry Alford accurately called the EPA’s carbon dioxide regulation “a slap in the face to poor and minority families.”

Blacks and Hispanics work hard to provide better futures for their children. The EPA regulations will push the American dream even further out of reach for them. Their incomes will be less, their unemployment rates will increase substantially, and it will take those who are out of work longer to find another job. Blacks and Hispanics are often the “last hired and the first fired.”

These are real impacts. However, the EPA refuses to consider them, much less tabulate them and compare them to supposed regulatory benefits. It won’t even acknowledge that the health and climate risks that its costly regulations will allegedly prevent are in fact speculative, exaggerated, and even fabricated.

For almost 20 years, average planetary temperatures have barely budged, even as carbon dioxide levels “soared” from 0.03% all the way to 0.04% of Earth’s atmosphere. No category 3-5 hurricane has hit the United States for a record 9-1/2 years. Tornadoes, floods, droughts, polar bears, polar ice, sea levels, and wildfires are all in line with, or better than, historic patterns and trends. Meanwhile, the Sahel is green again, thanks to that extra plant-fertilizing carbon dioxide, without which life on Earth would end.

Moreover, even if CO2 does drive climate change, slashing US greenhouse gas emissions would bring no benefits, since China, India, and other developing nations will not be reducing their enormous emissions.

Other EPA rules are equally suspect. Its mercury regs are based on an imaginary group of US women who catch and eat 300 pounds of fish annually – and whose children would supposedly improve their IQs by an un-measurable 0.00209 points if coal-fired power plants are shut down. As to soot, the EPA’s illegal experiments on 296 people found that even “dangerous” or “lethal” exposures harmed no one.

Our air is clean. We don’t need these job-killing, health-impairing EPA regulations. But our governing elites will not give up their power or perks – or their propensity for playing with people’s livelihoods, living standards, health, and well-being, for virtually no climate stability, air quality, or other benefits.

The good news is that all of this is not inevitable. A recent Supreme Court decision held that the EPA should have considered these and other enormous costs from its “mercury and air toxics” regulations, before imposing the rules. The decision should give governors and federal and state lawmakers every incentive to resist the EPA’s harmful and dictatorial actions, and not wait for the CPP regulation to go into effect.

A dozen states have already sued the EPA over its Clean Power Plan, which is opposed by experts on both sides of the aisle – and even noted liberal constitutional scholar Laurence Tribe. Other states should join the suit, demand a full accounting of regulatory costs, and simply refuse to implement the plan.

As currently written, the regulation calls on unelected state environmental agencies to draft their own state plans and submit them directly to the EPA for review and approval. Oklahoma Governor Mary Fallin has signed an executive order blocking her state’s environmental agency from submitting a plan. Other states have introduced legislation to the same effect. More should follow them into battle.

The grim reality is that the EPA wants states to do their dirty work for them. By submitting a plan, states will become complicit in the agency’s plan to shut down affordable, reliable power generation, destroy jobs and livelihoods, and plunge minority families deeper into poverty, hardship, and ill health.

For the sake of their constituents, elected officials in Washington and state capitals have an obligation to fight this federal takeover of state authority. They should act soon. The EPA is scheduled to release its final regulation in August, initiating a one-year period before states will be forced to comply.

As this deadline approaches, our elected officials should determine how best to confront – and resist – the EPA’s latest power grab. They should remember that the jobs, economic well-being, health, and very lives of millions of minority and blue-collar families hang in the balance.

 

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.CFACT.org) and coauthor of Cracking Big Green: Saving the world from the Save-the-Earth money machine. Dr. Roger Bezdek is an internationally recognized energy analyst and president of Management Information Services, Inc., in Washington, DC (www.MISI-net.com).

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

BREAKING: New Jobs Report Just Out – Here’s The Ugly Truth Obama Doesn’t Want You To See

If you were to read only the first paragraph of the Associated Press report on the government’s brand new jobs report, you’d be led to believe that President Obama’s economic policies are working beautifully. But then the AP quickly changes its happy tune about the June jobs numbers for the nation and — in a stunning about-face that contradicts its own initial assessment of the country’s job health — reveals the dark side of the just-issued Labor Department report.

Here’s the AP’s opening “hip-hip-hooray, Obama” paragraph as carried on the left-leaning (and Obama loving) Huffington Post:

“U.S. employers added a solid 223,000 jobs in June, and the unemployment rate fell to 5.3 percent, a seven-year low. The numbers reflect a job market moving close to full health and raise expectations that the Federal Reserve will start raising interest rates as early as September.”

Did you catch that part about the “job market moving close to full health?” If that’s the rosy scenario we’re now celebrating, how can the Associated Press — only a few words removed from that happy dance — say the following about the drop in the unemployment rate?

The rate fell mostly because many people out of work gave up on their job searches and were no longer counted as unemployed.

Other details in the report were less encouraging: The percentage of Americans working or looking for work fell to a 38-year low. Average hourly pay was flat. And employers added 60,000 fewer jobs in April and May than the government had previously estimated.

So, at the same time that the AP trumpets “a job market moving close to full health,” the news service acknowledges that more and more and more Americans have dropped out of the labor force. It’s as though the AP had that first celebratory paragraph ready to roll before the truly bad news found in the devilish details of the government’s report was released.

Does the old expression “whistling past the graveyard” come to mind?

Coverage of the Thursday jobs report by The Hill goes into greater detail about the dark underbelly of the statistics that the president and his liberal supporters certainly won’t be pointing out any time soon.

“The number of people in the labor force fell by 432,000, a reason for the lower jobless rate, while 56,000 fewer people were employed, sending the participation rate down to 62.6 percent, the lowest level since 1977.”

And as long as we’re unpacking the Labor Department’s numbers to disclose the facts about America’s jobs picture rather than the feelings the left would embrace, here’s the truth about the kind of jobs the private sector created in June. As you can see, they’re not high-skilled, high-paying positions — except possibly for the health care sector — as much as low-skilled, low-paying service jobs. Again, via The Hill:

Jobs growth was centered in the service sector — retailers added 33,000 jobs, the healthcare sector tacked on 40,000 while leisure and hospitality jobs increased by 22,000.

Manufacturing only added 4,000 while construction employment was unchanged in June.

This post originally appeared on Western Journalism – Equipping You With The Truth

Popular TV Star’s Response To Lib Who’s Tired Of His Talk About ‘Work Ethic’ Is AWESOME

On his Facebook page Sunday, television star Mike Rowe rebuked the notion that he is peddling “right-wing propaganda” when discussing his approach to helping people who are unable to find work in the United States.

The host of CNN’s Somebody’s Gotta Do It shared a question from ‘Craig P’ which read:

Your constant harping on “work ethic” is growing tiresome. Just because someone’s poor doesn’t mean they’re lazy. The unemployed want to work! And many of those who can’t find work today, didn’t have the benefit of growing up with parents like yours.

How can you expect someone with no role model to qualify for one of your scholarships or sign your silly ‘Sweat Pledge?’ Rather than accusing people of not having a work-ethic, why not drop the right-wing propaganda and help them develop one?

The SWEAT Pledge, which stands for Skill and Work Ethic Aren’t Taboo, adheres to 12 principles regarding work. Craig P. was concerned primarily with how Rowe allocates funds from the mikeroweWORKS Foundation, which “promotes hard work and supports the skilled trades in a variety of areas” and “award[s] scholarships to men and women who have demonstrated an interest in and an aptitude for mastering a specific trade.”

Rowe responded:

Everyday on the news, liberal pundits and politicians portray the wealthy as greedy, while conservative pundits and politicians portray the poor as lazy. Democrats have become so good at denouncing greed, Republicans now defend it. And Republicans are so good at condemning laziness, Democrats are now denying it even exists. It’s a never ending dance that gets more contorted by the day…

I started mikeroweWORKS to talk about these issues, and shine a light on a few million good jobs that no one seems excited about. But mostly, I wanted to remind people that real opportunity still exists for those individuals who are willing to work hard, learn a skill, and make a persuasive case for themselves. Sadly, you see my efforts as “right wing propaganda.” But why? Are our differences really political? Or is it something deeper? Something philosophical?

You wrote that, “people want to work.” In my travels, I’ve met a lot of hard-working individuals, and I’ve been singing their praises for the last 12 years. But I’ve seen nothing that would lead me to agree with your generalization. From what I’ve seen of the species, and what I know of myself, most people – given the choice – would prefer NOT to work. In fact, on Dirty Jobs, I saw Help Wanted signs in every state, even at the height of the recession. Is it possible you see the existence of so many unfilled jobs as a challenge to your basic understanding of what makes people tick?

Rowe concluded that his goals are “modest” and would remain so. “I don’t focus on groups. I focus on individuals who are eager to do whatever it takes to get started,” he said. “People willing to retool, retrain, and relocate. That doesn’t mean I have no empathy for those less motivated. It just means I’m more inclined to subsidize the cost of training for those who are. That shouldn’t be a partisan position, but if it is, I guess I’ll just have to live with it.”

h/t: The Right Scoop

What do you think of Mike Rowe’s response? Share your thoughts in the comments section below.

This post originally appeared on Western Journalism – Equipping You With The Truth