Scary Chart Of The Day

Updated through Friday’s unemployment report:

There’s not much more to say, is there?

H/T: Calculated Risk

FILED UNDER: Economics and Business, Quick Takes
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. john personna says:

    Sure, there is a lot to say. We should revisit the logic put out by House Republicans in 2010. Specifically:

    House Majority Leader John Boehner is pushing President Barack Obama to cut federal spending to create private sector jobs.

    “I gave the president a statement by more than 100 economists urging both parties to cut spending now to boost private sector job creation. The need is clear,” the Ohio Republican said Thursday, according to The Hill website.

    Among other things, the economists’ statement said, “Efforts to spark private-sector job creation through government ‘stimulus’ spending have been unsuccessful. As economists deeply concerned about our nation’s future, we urge a change in direction.

    To support real economic growth and provide the spark needed to support creation of private-sector jobs, immediate action is needed to rein in federal spending.”

    Or would it feel better to contest WWII all over again, and forget this ever happened?

  2. john personna says:

    Reminder: As I said in these pages, you can be for austerity, but be aware than when you are for it, you are also for slow (decades long) recovery.

  3. Ben Wolf says:

    I’d love to hear an explanation of how spending cuts create jobs. And I don’t mean a hypothetical argument, I mean one with empirical evidence to support it.

  4. Jay Tea says:

    Well, Ben, we’re about to get boned out of half a billion dollars over Solyndra. Had we not put up those loan guarantees, then those investors would likely have found another, more successful (you’d be hard pressed to find a less successful) venture for their money. So that stimulus money just cost us a whole bunch of jobs. How’s that for an off-the-cuff example?

    J.

  5. john personna says:

    @Jay Tea:

    Dude. Seriously. Someone shared a rule with me once, and it has been a standby. It is “when one number is 3 orders of magnitude smaller than another, it simply doesn’t matter.” If you’ve got $100,000 in savings, and you drop $100 in the street, it simply doesn’t matter.

    Or, when you’ve got a yearly budget of $3.729 trillion, a single item has to be $3.729 billion or higher, to even matter.

  6. JKB says:

    I see your scary chart and raise you with a scary video. It’s good to see Constitutional officers with that deer in headlights look when questioned about the success of one state in creating jobs over all the others. She gives a fine answer for a freshman trying to squirm out from under the question. You know, before they learn critical thinking or to actually be familiar with the material.

    But let’s break it down. Texas is creating jobs. Secretary Solis says it could be because they have different pay scales, i.e., pay more aligned with productivity. She says they are a right-to-work state, i.e., not saddled with debilitating union extortion. She says they have a strong oil and gas industry, i.e., extraction of resources creates jobs. Oh, and apparently they have education problems but still create jobs and employ their citizens.

  7. john personna says:

    @Jay Tea:

    BTW, that “3 orders of magnitude” rule would really help the Teas understand why their budget fixes don’t work. NPR, Solyndra, all the little crap they want to cut, simply doesn’t matter to the big picture.

    You need to find items in the trillions. (And just about the only single items that big are the wars.)

  8. Just nutha ig'rant cracker says:

    @Ben Wolf: I took an econ class a few years ago. During the course of the class, where Say’s Law (breifly [and probably over-simply] labor has the same supply demand curves as any other product or commodity) was presented, I asked if anyone had ever seen Say’s Law in effect. That is, had there ever been any situations where decrease in the rate labor was paid had spurred increases in hiring. My professor’s answer was “not that I’m aware of.”

  9. john personna says:

    @JKB:

    As some have noted, it’s a question of focus with Texas. Some numbers, like poverty rate, put them at the other end of the scale. They have the 8th highest poverty rate among the states. The higher tax states, like Oregon and California, are down at 19th and 20th in poverty.

    So how do you feel about the trade-off?

    I was really shocked to be drinking beer with some Orange County Republicans and hear them say that “in the good old days you made it, or you didn’t.” That either before or after they talked about buying guns “because it will all end soon.”

  10. Just nutha ig'rant cracker says:

    @john personna: In fairness to Jay and his relatives (the Teas) out there, you can make some progress in balancing the budget cutting out the NPRs and Solyndras out there–provided there are 10 billion of them.

    All they need is 9,999,999,998 more and they’ll be economics heroes. In fact, we can probably make significant progress with only 5,999,999,998.

    BTW, are there 10 billion line items in the budget?

  11. JKB says:

    @john personna:

    A wise American once wrote: A penny saved is a penny earned.”
    If you add that to: A million dollars here, a million dollars there, pretty soon you are talking about real money, you get the idea.

    Now, granted, most Tea party supporters aren’t steeped in government math and accounting. They can’t afford to because in their businesses and lives, if they did accounting like the government, the government would throw them in jail.

    It is true that we will have to tackle the big budget items but with small cuts that add up. When you are broke, cutting out the daily or even weekly stops at Starbucks even at only $5 a hit, and you can save some real money. Cutting the big stuff is hard and painful, but trimming the small expenses that run up the credit card is easy if you have self-discipline and a mature understanding that not indulging today can lead to great rewards in the future.

  12. Rick M says:

    @Ben Wolf: If you agree that economic growth is a key driver to job growth, then the following video may be of interest. Starting at around 4:00 the video cites over 20 studies suggestng a negative relationship between government spending and economic growth. http://youtu.be/4pdmNynEwYA

    *Of course, if the goal is employment without regard to real growth, production or living standards, governments can force 100% employment such as in the Soviet Union.

  13. john personna says:

    @JKB:

    Now, granted, most Tea party supporters aren’t steeped in government math and accounting. They can’t afford to because in their businesses and lives, if they did accounting like the government, the government would throw them in jail.

    That’s what’s really bizarre. These ARE skills necessary to business and personal financial success.

    You can’t name one or two < $1B items, and call that a balanced budget, any more than you can drop premium TV channels to fix a household budget.

  14. Jay Tea says:

    @john personna: “A journey of a thousand miles begins with a single step.” How many orders of magnitude is that?

    Seems to me Ben was asking for a “single example” of where stimulus spending cost jobs. He didn’t specify any numbers. You seem to be saying that if I can’t come up with enough examples to meet whatever threshold you choose, if I can’t come up with a magic solution to make the whole problem go away, then I shouldn’t bother trying.

    Guess what? Identify enough idiocies like the Solyndra mess, and eventually things will get better. We’ll identify the people or mindsets that keep pushing them, and get rid of them.

    To use a medical model, sometimes identifying and treating enough symptoms will help diagnose the disease. Sometimes the disease is incurable, but you can control enough of the symptoms to keep it in check.

    Besides, the current method of “we just haven’t spent enough to get out of debt, we just need to spend more, even though it’s never worked yet!” ain’t working out so well.

    J.

  15. JKB says:

    @john personna:

    So your are saying we can create jobs or have fewer people below the poverty line?

    I’m afraid I don’t understand that logic. My experience has been that without a job, the old poverty line looms large, with a job it recedes. So creating jobs is one of the best ways to get people above the line.

  16. john personna says:

    @Jay Tea:

    “A journey of a thousand miles begins with a single step.” How many orders of magnitude is that?

    As someone who has hiked 1000 miles this year, let me tell you that it takes more than just talking about starting.

    But even if you do start, no that isn’t enough. Grinding out the miles isn’t always easy.

  17. john personna says:

    @JKB:

    So your are saying we can create jobs or have fewer people below the poverty line?

    You are playing dumb, but I’ll be patient. Texas attracts employers and workers with low costs, in energy, housing, and taxes. Those are a plus for people with jobs, but the flip side of the low taxes part is low services. Lower services means more poverty.

    Now, to the extent that you want to export the “Texas miracle” we all have to think about that trade off, and actually if it is exportable at all. Because if the jobs were drawn from California rather than created out of thin air, then net jobs, when California is more Texas-like, will be the same.

  18. john personna says:

    @Jay Tea:

    To use a medical model, sometimes identifying and treating enough symptoms will help diagnose the disease. Sometimes the disease is incurable, but you can control enough of the symptoms to keep it in check.

    Heh. I bet you really didn’t want to tell us that your “plan” was to treat symptoms, and do window-dressing.

  19. JKB says:

    @john personna:

    Lower services means more poverty.

    So you are saying the more Welfare spending, the fewer people who qualify for welfare?

    Have you considered that there may be more people below the arbitrary poverty line in Texas because it is easier to live on less in Texas? And with jobs being available it is more likely those now poor will be able to raise their income and leave the government reservation?

    Here is a video to help you understand.

    Well, perhaps there are some jobs in Texas that would have been in California had California not run off those who create jobs. For the guy wanting a job, all we can say is, “Thank God, for Texas” because those jobs were leaving California either by walking or feet first.

  20. john personna says:

    @JKB:

    I’m pretty sure with your two points, you just demolished the Texas miracle.

    If poor people move to Texas from other states to live cheap, and workers move from other states to chase transferred jobs, the net-net is zero.

  21. JKB says:

    @john personna:

    Perhaps, perhaps but if they are just transferred jobs, then Thank God for Texas as otherwise those jobs would have no place to go but China or oblivion.

    But to return to what started this thread, new jobs, old jobs, transferred jobs? The one thing we know is that Obama’s Secretary of Labor has given not thought to those jobs, has sought no information on how to build on that success elsewhere, even laughs when asked about Texas creating jobs. Not only that, she goes on at length about all the work she has to do to clamp down on this job creating.

    So I ask, if Obama’s highest priority is creating jobs, shouldn’t his Cabinet be on board with real solutions by now nearly 3 years in?

    Here is Solis speaking about jobs, today, on Labor day. Move over Alicia Silverstone, Clueless has a new poster girl.

  22. @JKB:

    A wise American once wrote: A penny saved is a penny earned.”
    If you add that to: A million dollars here, a million dollars there, pretty soon you are talking about real money, you get the idea.

    All true, after a fashion. But I can find a penny everyday for the month and still not be able to buy a cup of coffee (heck, depending on the coffee I want it could take the good part of a year to get there at that rate).

    The scale of the savings matters, which is JP’s point.

  23. @john personna:

    If poor people move to Texas from other states to live cheap, and workers move from other states to chase transferred jobs, the net-net is zero.

    Indeed and therein lies the problem with touting Texas as a miracle: if, as would appear to be case, most of the jobs created were from internal transfers within the US and not truly new jobs, the usefulness of the Texas model as a national one disappears.

  24. john personna says:

    @JKB:

    Perhaps, perhaps but if they are just transferred jobs, then Thank God for Texas as otherwise those jobs would have no place to go but China or oblivion.

    Wouldn’t the jobs that can got to China, go to China, and the ones that cannot go to China, but can go to Texas, go there?

    Texas may have $100K/yr software jobs, but it doesn’t have $2/hr assembly jobs.

    But to return to what started this thread, new jobs, old jobs, transferred jobs? The one thing we know is that Obama’s Secretary of Labor has given not thought to those jobs, has sought no information on how to build on that success elsewhere, even laughs when asked about Texas creating jobs. Not only that, she goes on at length about all the work she has to do to clamp down on this job creating.

    So I ask, if Obama’s highest priority is creating jobs, shouldn’t his Cabinet be on board with real solutions by now nearly 3 years in?

    What the heck, we are back to The Party of the Market asking for the President to create jobs?

    Read my first item up top again. The argument The Party of the Market gave us was that we only needed to cut spending and the market would create those jobs.

    This is the chart I use. It shows that total federal, state, and local spending declined from 2009 to 2010. It still shows a pop back up to a higher 2011 and slightly lower 2012, but I think those are projections. I don’t think anyone (federal, state, or local) has actually expanded.

    Now, if you want Obama to create jobs, are you going to let him spend any more money to do it? Or should it be all magic?

  25. JKB says:

    @john personna:

    What the heck, we are back to The Party of the Market asking for the President to create jobs?

    No need to spend money to create jobs that are unsustainable without ongoing tax support. But if Obama wants to create jobs he can suspend the implementation of new regulations, conduct a review of current regulations with the goal of bounding enterprises for bad behavior but leaving the field clear for citizens to innovate and build businesses. One very beneficial change would be to do away with the productive work sapping paperwork and reporting that serves no purpose other than giving bureaucrats something to bother people about.

    He could work to repeal Obamacare since that has businesses waiting for the shoe to drop. As that is very unlikely, he could accelerate the imposition of the rules so that business could at least make the adaptation. Although, that would mean we’d know what was in the bill and how deeply it was going to “change” us before the election.

    He could use his office to encourage states to do the same for their regulations.

    He could by executive order direct the DOJ to use intent for regulatory violation prosecutions while working with those without intent to improve their compliance.

    He could ask Congress to repeal Sarbane-Oxley and other new laws that have imposed costly risks upon businesses.

    So Obama doesn’t need money to create jobs, he needs the will to reshape the regulatory environment to control the bad actors while not micromanaging the creators.

  26. JKB says:

    @Steven L. Taylor:

    The scale of the savings matters, which is JP’s point.

    But JP’s assertion has been that we can have all the less than a billion dollar expenses we want since the are so small. You balance your budget by cutting everywhere not just going for the big cut. Small savings add up especially if they are recurring. And we definitely need to get out of the habit that we can afford just about anything as long as it costs less than a billion.

    @Steven L. Taylor:
    But that is “if” and as shown in the video of Solis, she has not even given the Texas job increase a cursory examination. But she has looked into how to throw the regulator’s wrench in the machine. A bit of a balanced approach might be better. You know, go after the bad actors while supporting the hard working job creators.

  27. Al says:

    Keep in mind that “Post World War II” reads to me as “I’m ignoring the Great Depression to make this chart look worse than it is.” That’s not to say that the current recession isn’t bad because it clearly is but I quickly find myself loosing patience with the lack of context in these kinds of charts.

  28. john personna says:

    @JKB:

    But JP’s assertion has been that we can have all the less than a billion dollar expenses we want since the are so small.

    Obviously that was not my assertion. It depends on the item being singular and non-recurring.

    This $500M is single in non-recurring. The $5B in ethanol subsidies are yearly, and recurring.

    Which should have our focus?

    (All you really offered me to make the $500M part of a set was a promise, that you could go out and find a bunch of unrelated things. But you haven’t. You haven’t given the list. That matters.)