February Jobs Report Stronger Than Expected
February's jobs report came in stronger than analysts expected, but wage growth remains stubbornly stagnant.
Heading into today’s release of February’s Jobs Report, there was some anticipation that a month of cold, snowy weather in the MidWest and along the East Coast would cause the numbers to fall away from the strong trend we had seen throughout 2014, and which we continued to see in January. While the consensus forecast put job gains at roughly 235,000 for the month, some analysts were predicting a number much lower than that. As it turned out, February’s weather didn’t slow the jobs market much at all, although wage growth remains stubbornly stagnant:
Total nonfarm payroll employment increased by 295,000 in February, and the unemployment rate edged down to 5.5 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing. Employment in mining was down over the month.
Both the unemployment rate (5.5 percent) and the number of unemployed persons (8.7 million) edged down in February. Over the year, the unemployment rate and the number of unemployed persons were down by 1.2 percentage points and 1.7 million, respectively. (See table A-1.)
Among the major worker groups, the unemployment rate for teenagers decreased by 1.7 percentage points to 17.1 percent in February. The jobless rates for adult men (5.2 percent), adult women (4.9 percent), whites (4.7 percent), blacks (10.4 percent), Asians (4.0 percent), and Hispanics (6.6 percent) showed little or no change. (See tables A-1, A-2, and A-3.)
(…)
Total nonfarm payroll employment rose by 295,000 in February, compared with an average monthly gain of 266,000 over the prior 12 months. Job gains occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing. Employment in mining declined over the month. (See table B-1.)
In February, food services and drinking places added 59,000 jobs. The industry had added an average of 35,000 jobs per month over the prior 12 months. Employment in professional and business services increased by 51,000 in February
and has risen by 660,000 over the year. In February, employment continued to trend up in management and technical consulting services (+7,000), computer systems design and related services (+5,000), and architectural and engineering services (+5,000).
Construction added 29,000 jobs in February. Employment in specialty trade contractors rose by 27,000, mostly in the residential component. Over the past 12 months, construction has added 321,000 jobs.
In February, employment in health care rose by 24,000, with gains in ambulatory care services (+20,000) and hospitals (+9,000). Health care had added an average of 29,000 jobs per month over the prior 12 months.
Transportation and warehousing added 19,000 jobs in February, with most of the gain occurring in couriers and messengers (+12,000). Employment in transportation and warehousing grew by an average of 14,000 per month over the prior 12 months.
Employment in retail trade continued to trend up in February (+32,000) and has grown by 319,000 over the year.
Manufacturing employment continued to trend up in February (+8,000). Within the industry, petroleum and coal products lost 6,000 jobs, largely due to a strike.
Employment in mining decreased by 9,000 in February, with most of the decline in support activities for mining (-7,000).
Employment in other major industries, including wholesale trade, information, financial activities, and government, showed little change over the month.
As The New York Times notes, February actually ended up being an improvement over January:
The Labor Department reported on Friday that employers added 295,000 workers to their payrolls in February and that unemployment fell to 5.5 percent.
The report was a big improvement from January’s, when employment rose to a newly revised 239,000 jobs and the unemployment rate was 5.7 percent.
Economists were generally positive about the state of the nation’s recovery from the recession, despite its relatively sluggish pace.
“While there are a lot of risks out there, it feels less risky than in the past 25 to 30 years,” Mark Zandi, chief economist for Moody’s Analytics, said before Friday’s release. “It feels really, really good out there.”
Analysts’ expectations had called for about 230,000 new jobs and for a slight decline in the unemployment rate, which ticked up slightly to 5.7 percent in January.
One consistently dark patch in the recovery has been the sluggish growth of wages. In February, wages rose 0.1 percent, according to the Labor Department. Average hourly wages for private-sector workers have been rising slowly, at around 2 percent, for the last few years.
Slow wage growth has helped prevent the economy from returning to its potential, making many Americans feel as if the recovery has left them behind.
“Everyone knows of someone who has been laid off or has a friend or relative who has been laid off,” said Gary Chaison, professor of industrial relations at Clark University. “We hear we’re on the road to recovery, but people aren’t convinced of that.”
Still, many economists have a sunnier outlook, expecting wages to finally start to increase at a faster pace this year as the job market tightens.
“We’re facing a turning point, and we’re going to see more pressure on wages,” said Tara Sinclair, chief economist at the job search site Indeed.com.
On the good side, it’s worth noting that the both the top line unemployment rate and the broader measure of unemployment known as U-6 are at their lowest points in seven years. Considering how long it has taken the jobs market to recover from the 2007-2008 recession, this is undeniably good news especially with respect to the U-6 number, which remains above 10% but was once as a high as 15% and has taken quite some time to improve. If nothing else, this is an indication that we’ve finally reached the point where improvements in the top-line rate are coming because of greater job opportunities and not because large numbers of people have simply given up looking for a job entirely. The Labor Force Participation rate remains stubbornly low, of course, but it’s still unclear how much of that is due to people who have given up looking for work and how much is due to people who have taken early retirement. In any case, though, February generally continues a trend that started a year ago that shows no sign of ending at any point in the near future absent the intervention of some kind of external force that causes a shock to the national or global economy.
The one caveat in this month’s report, as it has been for some time now, is regarding wages:
In February, the average workweek for all employees on private nonfarm payrolls was 34.6 hours for the fifth month in a row. The manufacturing workweek was unchanged at 41.0 hours in February, and factory overtime edged down by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours. (See tables B-2 and B-7.)
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $24.78. Over the year, average hourly earnings have risen by 2.0 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $20.80. (See tables B-3 and B-8.)
To a large degree, of course, the reason that wage growth has been sluggish is due to the fact that the market for jobs remains one in which their are still more job seekers than there are jobs. As long as that remains the case, employers won’t feel pressured to push wages up. While there are some signs that this may be starting to happen, such as the recent announcement by WalMart that it was raising wages across the board for nearly all of its non-salaried workforce, we’re still at a point where this is very much an employers market and that’s likely to continue to be the case for some time to come.
With the announcement that the U-3 rate is now at 5.5%, one does have to wonder just how long such a strong jobs market can continue before cooling off. It used to be the case in the past at least that an unemployment rate between 5.0% and 5.5% was considered “full employment,” for example. While we did manage to get a year or two where the rate dipped below 5% during early 2000’s we learned pretty quickly that those numbers weren’t sustainable. Additionally, the Federal Reserve has made clear that if the jobs market to continues to improve at its present pace then they would begin to consider raising interest rates in order to forestall the possibility of inflation, which of course hasn’t been a real concern in the American economy in 34 years. Under the Fed’s current parameters, we should reach that point sometime by June or July. At that point, if interest rates do rise even slightly, it’s likely to have an impact throughout the economy.
This economic news is very depressing for Republicans, but I suspect that they will claim credit for it anyway. Wage growth? The middle class has not been a proportionate beneficiary of economic growth for a long time now.
I blame Obamacare. That’s why job growth is so. . . Wait, you’re saying we added jobs? We added jobs at an impressive rate even as Obamacare was being implemented?
Once and for all: Republicans are economic imbeciles. Ignore everything they have to say about the economy. No, really: ignore them entirely. They are always wrong.
Clearly, four straight years of devastating austerity are finally wrecking havoc on the … oh, wait.
You keep saying this, but unemployment is back at historic norms now. So why hasn’t wage growth caught up? Why is this time different from every other recovery, where we’d have 3 to 4 percent wage growth at this point in the recovery?
Oh wait, I know why. Because productivity has skyrocketed, almost exponentially. So we’re doing a lot more work with the same amount of workers, and companies are just pocketing the profits instead of reinvesting it in paying their employees a decent wage.
So the middle class just keeps getting squeezed, and more squeezed, and more squeezed, and debt keeps on accumulating.
Yeah, this is gonna end well.
@Hal_10000:
Well, thankfully we did not, as many European countries did, adopt and implement policies of real austerity and spending reductions. Many of those nations have not yet recovered from the recession and their own austerity policies.
@Hal_10000:
Four straight years of devastating austerity is why this recovery has taken so long.
You’re smart enough to know that…which means you’re just trying…in vain…to score points for your team. But your team is behind the devastating austerity. So they are responsible for the slow recovery. Kinda hard to justify that to anyone but the regular dupes.
@al-Ameda:
See;
@Hal_10000:
@Ben:
Wage growth flattened with the implementation of the Republican war on the Middle Class which began with Reagan.
http://economistsview.typepad.com/.a/6a00d83451b33869e20168ea930e8e970c-800wi
I await the revisions that will tamper down on this number. 🙂
Seriously, you don’t think they’ll revise upward do you?
@Tillman: Actually, something like 47 of last 48 months had upwards revisions.
@humanoid.panda: Obviously the one absent was the beginning of a trend.
@Tillman: Sorry couldn’t catch your sarcasm 🙂
The economy is not strong and it is not creating jobs.
http://cnsnews.com/news/article/ali-meyer/628-labor-force-participation-has-hovered-near-37-year-low-11-months
Labor for participation is at historic lows. If the current labor force participation were the same as it was in January 2009 the unemployment rate would be 11.4%. The BHO Commerce Dept (specifically the BLS) arrives at the phony numbers by knocking people off the labor force rolls. The REAL (u-6) number is 14.6%.
There are FEWER, not more, people working today than at the beginning of BHO”s reign of error.
Stock market is high? Sure, zero percent interest rates will do that. IT’s phony. Just as the dot com boom could not be sustained because the P-E- ratios did not justify the market cap that they had. The bubble popped.
Similarly, equities today are overvalued because they are fueled by zero percent interest rates. IT will pop – it’s a question of when, not if. People are parking their money in equities rather than in banks. It’s all smoke and mirrors – just like everything else with this corrupt regime.
I know, I know, the Fed is independent and the White House can not influence it. Sure, wink-wink.
@James P:
Thanks! Based on the record you people have on economics, I should now be able, if I assume everything you’ve said is nonsense, to be able to get rich beyond my wildest dreams.
Go sell it in Kansas.
@Hal_10000:
The austerity moves pushed by Republicans (rejection of the JOBS Act, the sequester, the government shutdowns) did retard the recovery, until after the 2014 elections. Austerity did work well-for Republicans. Note that the last austerity move by Republicans -the government shutdown-was 18 months ago. Essentially,they ran out of ways to sabotage the recovery. Unfortunately, what they did worked well enough to prevent the economy from taking off till December 2014.
The lesson for liberals-never again lose focus on the economy until AFTER the recovery is on its way. Had Obama and the Democrats passed a second round of stimulus in December 2009…
About the labor force participation rate. Here in Marin County our unemployment rate is around 3.4%. Full employment. But I guarantee you there are people sitting at home supposedly part of the underemployed who have worked in the past and could be taking jobs right now, today, but aren’t. So who’s fault is that?
Yeah, they’re lousy jobs at Starbucks and In-N-Out. But if you’re not a complete moron and you want to work and have some ambition, you can start pouring lattes in year one and by year ten have your own Starbucks. I did a lot of restaurant work. It was rare that I wasn’t offered a bump to management within six months.
@James P:
Time to repost for the benefit of the newby my favorite article showing how Krugman and the liberals have beeen right, right, right over the past 7 years and how conservative economists of all stripes have been wrong, wrong, wrong:
(It could just as well have been DeLong the Invincible, Stiglitz the Invincible, or Thoma the Invincible, BTW). Bottomline, conservative economists didn’t predict the disaster of 2008, had no answer on how to fix it, and repeatedly made wrong predictions after. No one with any interest in solving economic problems should spend a minute reading those losers, unless as examples of what not to do.
This article is on point:
Guess which one?
@James P:
It’s 11.6%, asshole.
http://www.bls.gov/news.release/empsit.t15.htm
Seriously, what kind of a moron you have to be to think that the government is faking the data on u-3 unemployment, and yet somehow to fails to do it on wider measures of unemployment. Where do you think the figures for labor particpation and u-6 you are citing are coming from: the resistance? Benevolent aliens? Reagan’s ghost?
@michael reynolds:
And that’s the issue: as long as wages remain stagnant, these people won’t return to the job market, but the fact there are so many people who could potentially compete for jobs makes workers less likely to demand raises. There really is no solution to this quandary besides govermnent action.
@James P:
The strength of the economy is a matter of opinion, but there is no question that jobs are being created. To argue otherwise is silly. (You can argue that more/better jobs are needed or the job creation is poor, but you can’t argue the economy isn’t creating jobs at all.)
Given the demographic changes, the labor force participation rate was expected to decrease after 2009, regardless of the strength of the economy.
No the U-6 unemployment rate is 11%. Even if the U-6 rate is is the “REAL” unemployment rate, it has decreased from 17% in 2009. Kind of seems like an improvement.
Of course this isn’t true, and hasn’t been true for a while. Anyway, even when it was true, all it meant was that there was a recession at the beginning of 2009.
LOL, no refutation needed.
Um, the GOP and Rand Paul are the cranks pushing to politicize the Fed.
@C. Clavin:
The recovery has taken so long because the real estate bubble left us with trillions in private debt to get out from under. It was always going to take five years or more to get out from under it, “stimulus” not withstanding. And given that every Keynesian has been predicting that austerity would plunge us right back into a recession, I’m disinclined to favor their point of view.
Note that other “austere” economies are recovering as well. UK has positive growth, so much that Krugman said they’d “abandoned austerity” for the same budget he earlier described as austere. Ireland has one of the fastest growing economies in Europe to the point where their debt is small enough to end austerity. Spain growing as well. Meanwhile, Abenomics isn’t working in Japan. I don’t expect that to change any Kenyesian minds any more than the last eight decades have.
@michael reynolds: You didn’t dispute one single thing that I stated. I find that very telling.
In January there were hundreds of thousands of people whose 99 weeks of unemployment expired. Thankfully, the GOP Congress did not renew their unemployment. When they stopped receiving these welfare checks (and that’s PRECISELY what they are) they are no longer counted as unemployed. Knock these people off the rolls of the unemployed and voila the U-3 unemployment rate drops.
Trust me on this, don’t try to debate me on economics.
@humanoid.panda: Calling me an asshole does not mean that the economy is doing well. Calling me an asshole does not put people to work. Calling me an asshole only means that you are losing the argument. Liberals are typical in this way – when a conservative makes a point they don’t like, they inevitably turn to name calling.
Obama says the unemployment rate is 5.3. You yourself conceded that it is significantly higher — I guess that makes you a racist, right?
The fact is that FEWER people are working today than in January of 2009 and no amount of name calling will change that fundamental fact.
@Hal_10000:
I’m not sure I’d be talking up austerity in Europe as a positive thing, it’s generally recognized to have been a complete failure.
@Hal_10000:
You mean Keynesians like Reagan and Bush43?
Austerity cut jobs and growth relative to what they would have been otherwise. We could have been at this point in the recovery in, say, 2011 or 2012. Other economies who pursued more austerity are recovering more slowly. There is a pretty direct link…as direct as squishy things like economics get. Direct enough that it’s very hard to argue with. Unless you are trying to score points for your team.
What confuses me is that the God your team worships was a devout Keynesian.
@Hal_10000:
As for Ireland…
Their jobless rate is 9.6%…ahead of much of the EU…but nothing to be bragging about.
Ireland’s debt-to-GDP ratio remains one of the highest in the EU at 115%. Is that Keynesian enough for you?
@C. Clavin: Sadly, you’re right. Both bushes were Keynesians. We need to look toward von Mises and von Hayek for answers – not the discredited philosophy of JM Keynes.
http://www.macrotrends.net/1377/u6-unemployment-rate
@James P:
According to macrotrends, the U-6 unemployment rate is 11%.
@David M:
This is the same Stiglitz who predicted that austerity would cause a double-dip or triple-dip recession. Now he’s backing off and saying that inaccurate prediction doesn’t mean anything. That it was still bad compared to some imaginary universe where countries can borrow money without end.
Being wrong never seems to be a problem for economists.
@David M: I posted this so one could easily extrapolate that if the labor force were the same size today as it was in Jan 2009 that the unemployment would not be 5.3% of whatever bogus number the Obama BLS is claiming.
There are FEWER people working today than there were in Jan 2009 and BHO’s record on the economy is one of complete and abject FAILURE.
I believe this is purposeful (Cloward-Piven). His goal is to make more people dependent on government and if you judge him by this metric (as he judges himself) then he is succeeding.
@C. Clavin:
True. The recovery is still a long way away. Tends to happen when your country winds up in an asset bubble several times their size.
And Japan has debt of 200+% of GDP. Why isn’t that Keynesian enough?
@James P:
There were approximately 133 million people working in 2009 and 141 million working now.
Guys, you’re wasting your time talking and sharing facts with this group. When the supposed Republican intelligentsia on this site (Doug and James) refuse to accept that their economic theories are bankrupt ideas that have been disproven time and time again, what hope do you have of convincing the know nothings and the hucksters. The modern Republican party no longer serves a purpose other than to be the id for its members to act out their cruelty towards their fellow americans.
I wasn’t aware anyone didn’t realize austerity is a stupid idea, especially after it’s recent failure in Europe.
@Loviatar: Fostering dependency on government (which your party seeks to do) is cruel.
I don’t measure compassion by the number of people who are trapped in a cycle of dependency of sucking on the government teat and slopping at the government trough. I measure compassion by the number of people who no longer need your liberal “compassion”.
@James P:
You’re just ranting now, making up numbers, accusing the BLS and the Fed of lying because the data does not show what you want it to show.
I could go out right now and have five jobs by the end of the day. If you live in the Bay Area and are unemployed it’s probably because you want to be unemployed.
Do your stats account for the aging of the population? Do they account for people who thanks to Obamacare no longer have to hold onto a job just for the insurance? Do they account for people who became self-employed without forming a corp? Do they account for the fact that there are fewer dependent children relative to the population and parents can drop jobs they had just to cover child care? (0-17 was 24.2% of population when Mr. Bush’s recession began, now 23.1.)
Again, simple question since you are an economics expert able to dispute Nobel prize winners in economics: Are there people right now in areas of full employment like Marin County, that are counted in UE6 but could get jobs if they chose to do so? Obviously yes, so follow-up question: why? And second follow-up question, isn’t refusing an available job a sign of a pretty strong economy? I mean, if I really needed to, I’d drop some fries at In-N-Out.
In other words, given an aging population, given fewer kids, given the security of Obamacare, given the meteoric rise of the market and thus people’s portfolios, isn’t it likely that a straight comparison of 2008 numbers and 2015 numbers is going to overstate the number of discouraged workers?
TL;DR: Your 2008 cohort was younger, had more kids, had portfolios that were in the toilet and needed a job to get medical coverage. This cohort is older, has fewer kids, has secure access to medical insurance and may have seen its portfolio double o triple.
@James P:
Sadly, no. Hall is making plenty of points liberals disagree with, and yet no one is calling him an asshole. That’s mostly because he is not lying, flinging conspiracy theories, and refuting himself, like you do.
Obama is a politician, and as politicians journalists have been doing since times immemorial, he is using U-3, and not U-6 as the figure he uses in his public pronouncements. When Reagan declared “morning in America”, around 1984, u-6 was about 13%, and u-3 was about 5%/ . Which number you think he used?
http://nextbigfuture.com/2012/02/broader-unemployment-rates-going-back.html
Now, if by “Obama says that unemployment is 5.3%”, you mean that the Obama administration is selling lies to the public by manipulating data, then yes, you are a lying asshole. Both rates have been measured for decades, using more or less same methods, and still are. As I said above, you can pretend that the U-3 figure is released by the regime, and the u-6 by the resistance, but that won’t make it so.
Total non-farm employment, February 2009:
133274 thousand people.
Total non-farm employment, February 2015
141126 thousand people.
Source
Now, if you were talking about people employed as percentage of work-force, than yes, that percentage is still lower than it was before the recession. Apparently, even flinging poo at walls requires some skils you are sorely missing.
@James P:
Let us know when the billionaires stop needing to suckle at the government’s teat.
@michael reynolds: [“Again, simple question since you are an economics expert able to dispute Nobel prize winners in economics”]
Yes
@michael reynolds: Completely agree with you on this point. I hate corporate welfare. I opposed TARP and the bailouts as strongly as anybody. I excoriated my own president (GWB) for abandoning free market capitalism.
Don’t expect me to defend billionaire welfare queens.
@James P:
Dunning-Kruger effect. Look it up.
(Unless you meant “my mind is so closed to evidence that there is no point in debating me on economics”, in which case, my apologies.)
@michael reynolds: Unlike James P, I am not a Noble Prize winner, but from what I understand ,people think that structural factors , like aging and better stocked portfolios, account for about half of the decline in labor participation rate. The other half is recession related.
@humanoid.panda:
That sounds about right. I have no doubt there are lingering effects of Mr. Bush’s Not-Quite-Depression, these things do tend to linger unless you, say, get into World War 2 and provide a massive stimulus.
Longer term and more troubling, I think technology is taking a larger toll than people acknowledge. To me that’s the trend to watch, because that can be absolutely revolutionary.
@humanoid.panda: I never said I was a Nobel winner — please don’t put words in my mouth.
I was asked if I was in a position to dispute them and I answered in the affirmative. Reading comprehension isn’t your thing, is it?
@James P: Sarcasm. Look it up.
@James P:
People whose unemployment benefits have expired are still counted as unemployed so long as they are looking for work. There are no requirements as to the diligence of the job search. Tell the survey taker that every so often you spend a few minutes looking at Craigslist to see if there’s anything interesting, and you’re counted as being in the labor force.
@James P:
Based on what. Your alleged PhD? I certainly hope you aren’t going to try to sell the notion (assuming it even exists …) that said degree concerned economics, given the flawed and reactionary nature of your thinking in regard to that subject (which has so eloquently been demonstrated by my peers to be garbage).
Around here, you get judged on the quality of your arguments, not the magnitude of your ego. You’re getting decimated on the former, but the latter won’t allow you to accept that fact.
Dunning-Kruger indeed 😀
@James P:
Enthrall me with your economic acumen here – what would have been the probable outcome had TARP and the other bailouts not been implemented?
And be specific …
TARP was absolutely necessary, and I think people who sit around criticizing decisions made in the midst of a crisis are people who’ve never had a crisis. Requiring politicians to be perfect, to make flawless decisions is destructive. People – even presidents – need room to act, especially during a crisis, and that action will almost inevitably be flawed. The zero defects mentality is stifling, and it is dishonest. That applies to Mr. Bush as well as Mr. Obama.
We avoided a potential depression. Could it have been done better? No doubt. But everything in life could have been done better, absolutely everything. You have to pretty far up in that academic ivory tower, or else lost in the fever swamp of partisanship, not to be happy that the bullet flying toward our collective heads, missed. I’ll take a dirty win any day of the week.
The u-3 v. u-6 debate is so tiresome. If you want to talk u-6, fine. But if so, then you still have to address a) historical comparisons of u-6, and b) the u-6 trends.
KrugTron is right once again:
Indeed.
James P. , Hal and Doug comes at economics from the Austrian, libertarian POV. Here is Noah Smith on just how delusional “Austrian ” economics has been:
RTWT. The plain fact is that conservative economists-including the Austrian variety-were just simply dead wrong about the last 7 years. I can still remember when Doug was predicting sustained high unemployment because of “structural factors” and when Hal kept on insisting, against all evidence to the contrary, that austerity was in fact good for the economy.
I believe in Krugman and company not because they are always right: rather I believe because the conservative economists have been so consistently wrong. It’s why I believe in science over creation science: the scientists are usually right and the creation scientists are usually wrong. I do admire economic conservatives and creation scientists for one thing though: the stubbornness of their faith. But you can’t base policy on faith alone.
@stonetools:
I don’t know anything about Doug’s economics, and James P has all the makings of an Austrian (Agressive ignorance, self-importance, and burning attachment to Hayek and Mises), but Hal is not an Austrian, as far as I can tell. Keep in mind: all Austrians are anti-Keynesians, but not all anti-Keynesians are Austrians.
@HarvardLaw92: [“Around here, you get judged on the quality of your arguments, not the magnitude of your ego. “]
OK, sparky. I believe it was you who said I’m a lawyer, don’t ever argue with a lawyer about vocabulary, you’ll lose. You’re the one with the ego.
My degree is from a school with is better than yours — at least in terms of acceptance rate. My alma mater has a lower acceptance rate than yours and is ranked higher than Harvard seven of the past eight years on the THES global survey,.
How do I know econ? My dissertation was Jesus Huerta de Soto (google him) whilst he was on sabbatical.
_________
To answer your question, the global economy would have crashed had TARP not been passed. For a period of two years we would have had a worldwide depression.
It would have been terrible but we would be better off today for having gone through it. Recessions are both necessary and a positive if you take a long term approach. Recessions do the same thing for the economy as kidneys do for our bodies. They filter out waste and inefficiencies.
Many companies would have gone under (and many jobs would have been lost) but new companies would have replaced the old ones and we would have been on a much stronger footing.
It’s the same thing as pruning a bush. You need to get rid of old dead inefficiencies to make room for fresh new buds. The same holds true for economics. Yes, there would have been a world wide recession (probably even a depression) had we not passed TARP and we would have been better off in the long term as a result.
I’m sure von Mises, von Hayek, Rothbard, and de Soto would all agree with me.
@stonetools: [“James P. , Hal and Doug comes at economics from the Austrian, libertarian POV. Here is Noah Smith on just how delusional “Austrian ” economics has been:”]
1) Absolutely!
2) Austrianism has only been tried in one country (Chile in the 1970s) and it was largely successful.
@humanoid.panda: @humanoid.panda: [“JamesP……burning attachment to Hayek and Mises), but Hal is not an Austrian, as far as I can tell. Keep in mind: all Austrians are anti-Keynesians, but not all anti-Keynesians are Austrians. ‘]
I can’t speak for Hal, but you pretty much hit the nail on the head as it applies to me.
@James P:
Which has nothing to do with the quality of your arguments. Frankly, if you aren’t signing my checks, I don’t care about your CV – or what you say that your CV is. You seem to feel the need to keep trotting out your resume. Your arguments don’t back up the assertion. Move on.
And you base this two year calculation on what, exactly? The last depression?
On second thought, don’t bother answering. We’re doing our best to get you to leave. I shouldn’t be encouraging you.
And I won’t be responding. Feel free to talk to yourself if you like.
@James P: You have no shred of idea of what you are talking about. What was tried in Chile was Friedmanism, not Austrian economics, and any Austrian who knows what they are talking about would have kicked you out of the club for saying something so ridicilous.
Referring to
One of the rare occasions when you and I are likely to find ourselves in agreement. Couldn’t resist 😀
@humanoid.panda: I said Austrian-lite was tried in Chile – it was not pure Austrian. If Austrianism was tried in Chile it would be better off today than they other wise are.
I am well aware of the differences between Freidman and the Austrians. I know plenty about Austrianism — I wrote several papers about it (two were published) and they were graded by none other than Jesus Huerta de Soto. I think he is more of an authority on Austrianism than you are.
Von Mises sadly passed away around the time Gen. Pinochet liberated Chile from the communists (yes Allende was a communist – yes he won an election, so did Hitler).
Von Hayek was not involved in CHile. IF the CHileans consulted him instead of Freidman they would be better off because you are correct in your assertion that Freidman was not a pure-Austrian.
@James P:
Hitler was not elected. He lost his bid for the presidency and was later appointed to be Chancellor.
Allende was the constitutionally elected president of Chile, and yes he was a communist. Defending Pinochet’s brutal coup is to defend the murder of thousands and the arbitrary detainment of thousands of others.
@HarvardLaw92: Did you have to apply as a foreign exchange student (like your hero Obama) t get into Harvard? IF Harvard wants to maintain its reputation, it really needs to cut down on that.
You don’t seem to have a particularly strong grasp of what you are talking about. You are out of your depth when you discuss economics.
W@Steven L. Taylor: Why did President Hindenburg appoint Hitler as Chancellor? Because he liked his moustache? HE appointed him for the same reason Queen Elizabeth appointed David Cameron — because his party won the most seats in the election – a free and fair election.
Cameron’s party had a plurality – he had to form a coalition with Nick Clegg. Queen Elizabeth appointed him PM even though he personally only won his own constituency. Are you claiming that Cameron’s government is undemocratic or otherwise illegitimate?
That’s how a parliamentary democracy work. Hitler was a wicked evil vile piece of filth who murdered six million human beings. HE also gained power because his party legitimately won an election. Winning an election does not mean you are not evil.
Hitler won an election (his party did) – he was evil.
Allende won an election – he was a communist and I am glad that Gen. Pinochet liberated the country from the communists. CHile would have been a lackey satellite state of the USSR, just like CUba.
Which country is better off Chile or Cuba? Are you intellectually honest enough to admit why Chile is better off?
Pinochet was hardly a Jeffersonian democrat. HE was not elected. However, Chile was better off for his intervening in 1973 than they would have had Allende remained in power.
Hitler won in 1933 and Germany never had another election (until after WW2). Allende won and CHile would not have had another election — just like Cuba hasn’t had an election.
Either way (with Pinochet or Allende in La Moneda) CHile was not going to be having elections in the future. The question was would they better off as a capitalist nation or as a Soviet satellite? Most Chileans know that Pinochet on balance did more good than harm.
@James P: There is an importance difference, especially when comparing Hitler and Allende, as to precisely how they came to power and the role that elections played. Further, it matters to general health of the two polities at the time of the elections. Chile had a functioning democracy, Weimar Germany was another matter and was nearing collapse.
Hitler was not a member of Reichstag when he was selected to the Chancellorship (but yes, the Nazi’s had a chunk of seats). I am not questioning whether Nazis won any votes or if Hitler was named Chancellor. I am disputing the stupid simplicity of “Hitler was elected” and see what happened. (The comparison to Cameron is incorrect for these and other reasons).
The comparison to Allende is absurd in any event.
To defend Pinochet is to defend mass political murder, plain and simple. And yes, some Chileans do still see Pinochet as a hero. “Most” however, is not an accurate description.
Allende had not made any moves to forestall the 1974 elections–that is rank speculation.
You are defending a regime that killed at least 3000 people and shut down political life for all practical purposes from 1973-1989.
@Steven L. Taylor: I’m not defending mass murder. Pinochet did not have clean hands. I am only saying that life under Pinochet was preferable to life under Castro (which is what Chile would have become had Allende remained in power).
Cuba was and is not free. In 1973-1990 CHile was not free. However, I don’t think you can dispute than Chile was far more economically prosperous than Cuba during this time.
Would you rather be unfree and poor or unfree and (relatively) prosperous. I would surely choose the latter.
The difference between Castro and the Nazis is one of scope. The Nazis killed far far far more people. That does not exonerate Castro. Castro is also a murderer. I agree with you that it is not fair to compare Allende to Hitler but it is entirely fair to compare him to Castro or Hugo Chavez.
I am not defending all of the actions of the Pinochet regime. My argument is far more limited in scope. I merely saying that Pinochet was preferable to the alternative ————life as a Soviet client state a la Cuba.
If I were a Chilean in 1973 I would have supported Pinochet and with 42 years hindsight I still maintain that while he was hardly ideal he was preferable to the alternative. If were were both Chileans in 1973 we would have been on different sides. If Pinochet won you would have likely wound up in jail. IF Allende won I likely would have wound up in jail.
Neither of the two men were small d democrats.
@James P: You are creating a false choice based on speculation to justify your defense of political murder.
@Steven L. Taylor: Do you at least concede that Chile was and is far more economically prosperous (by any metric you choose to use) than Cuba?
@James P: Yes, but then again it likely would have been without Pinochet as it was a more developed economy in 1973 than was Cuba in 1973.
@James P:
I overlooked this. Please provide evidence from the three years Allende was in the office of mass political arrests.
If you keep feeding trolls, they never leave.
@HarvardLaw92: I know. I know. Sometimes I can’t help myself.
Indeed…he did have something in common with Pinochet…
@James P:
Liar.