Reason TV: So where are the jobs?

posted at 1:33 pm on October 29, 2010 by Ed Morrissey

That’s the question at the forefront of the midterm elections, of course, and Democrats have no answers. Reason TV has an explanation for why the private sector has not begun to create jobs on a meaningful scale while generational highs in unemployment persist: uncertainty.  Ted Balaker takes a look at the depressing effect (in more than one sense) of an administration and Congress running amuck with regulatory expansion.  Businesses cannot possibly plan for the future, and instead have decided to hunker down with their capital — and that’s very reminiscent of the last catastrophic economic period in American history.

Today many Americans credit FDR with rescuing our nation from the Great Depression, but there’s plenty wrong with that view, says Lee Ohanian, a UCLA economics professor who specializes in economic crisis. “What’s wrong with that view is that private-sector job growth did not come back under Roosevelt,” says Ohanian, who notes that Americans often forget how long the Great Depression lasted. Unemployment stood at 17 percent in 1939, a decade after the infamous stock market crash, and, although times were much worse back then, Ohanian sees troubling parallels between the Great Depression and the Great Recession. In both instances our nation emerged from a severe downturn with strong productivity growth and the banking system largely restored. “So the key puzzle for both today and the 1930s is why aren’t private-sector jobs being created at a much more rapid rate?”

Uncertainty may have something to do with it. “Uncertainty is an enemy of job creation,” says Ohanian, “Because in a world with a lot of uncertainty there’s a tendency to ‘wait and see.’” Our nation’s job creators wait and see what Washington’s next experiment will be.

CEO Joanne Garneau has spent a year waiting for the Federal Trade Commission to announce a new regulation that will determine whether her company hires more employees or even stays in business. It’s just one regulation, a tiny one by Washington standards. How will businesses end up being affected by ObamaCare or the 2,300-page financial overhaul? What if taxes go up? Today, like the 1930s, uncertainty reigns.

According to research conducted by Ohanian and fellow UCLA economist Harold L. Cole, FDR’s anti-market policies actually prolonged the Great Depression by seven years. And what about Obama’s policies? When the unemployment rate finally does improve will he receive credit for rescuing America from the Great Recession or blame for prolonging the crisis?

The problem in this case is twofold.  First, rather than incentivizing capital investment in the broad market by lowering tax rates, the Obama administration has signaled just the opposite by keeping the tax hikes due at the end of the year on the table ever since taking office.  If capital investment will carry added risk and income will carry higher penalties, the smart option is to shelter capital until a more attractive environment arrives.  At the same time, the uncertainty in regulatory expansion means that businesses can’t even conduct a rational cost-benefit analysis on expansion, which essentially puts off those decisions entirely.

The jobs will not return until regulatory uncertainty vanishes and the tax regime is changed to encourage investment.  It doesn’t get any more clear than that.


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Speak of the devil: Do any of you Hoosiers remember this visit to Podunkville, IN? It was one of those shovel-ready projects for an area with 19% unemployment, projecting 1500 new jobs by ’11.

Today? The property is setting empty, with “For Sale or Lease” signs posted.

hoosiermama on October 29, 2010 at 1:38 PM

Math is hard, but economics…you have to be like a freakin’ genius to understand that stuff!

AubieJon on October 29, 2010 at 1:38 PM

Well, we just have to trust the guy who has never had a job, to create jobs.

I guess that’s the “Hope” part.

NoDonkey on October 29, 2010 at 1:41 PM

Germany’s economy had the same crisis ours did in ’08, but they’re thriving now. Their secret? They moved to the right.

itsnotaboutme on October 29, 2010 at 1:41 PM

It’s Jimmy Carter all over again……it’s 1978 folks.

Jobs/Economy/Crisis with Iran………..deja vu!!

PappyD61 on October 29, 2010 at 1:46 PM

itsnotaboutme on October 29, 2010 at 1:41 PM

Germany’s unemployment rate is now at 7.9%.

I remember when that was unthinkable here.

Now it’s enviable.

Barack Obama and his Democrats have changed America, you gotta admit.

NoDonkey on October 29, 2010 at 1:48 PM

Reason TV: So where are the jobs?

They were in the car that first went in the ditch and then went over the cliff.

rukiddingme on October 29, 2010 at 1:49 PM

Don’t get me started on those guys over at Reason. They were way in the tank for Obama in 2008.

VidOmnia on October 29, 2010 at 1:50 PM

India’s GDP grew 8.8% in the last quarter….India isn’t a super power. The United States of America is a super power….but you wouldn’t know it by the way our “Current” Elected Public Servants behave.

Dr Evil on October 29, 2010 at 1:50 PM

The reasons that there are no jobs being created is boils down to one simple fact: People who run a business are held accountable for their decisions on a daily basis. Politicians are only held accountable every 4-6 years

Mord on October 29, 2010 at 1:51 PM

Think of all the post election layoffs were about to see. From printers to campaign managers and out of work incumbents, the stats are about to surge upward.

meci on October 29, 2010 at 1:53 PM

hoosiermama on October 29, 2010 at 1:38 PM

I remember this United Auto Workers Local Costs 650 Jobs in Indiana.

Dr Evil on October 29, 2010 at 1:53 PM

Where are the ‘jobs? They are all being given to Democrats by the MSM.

Oh, wait, you meant actual jobs with paychecks…

Kataklysmic on October 29, 2010 at 1:53 PM

I wonder if the United Auto Workers Union donated to the DNC…oh my.

Dr Evil on October 29, 2010 at 1:56 PM

On the other hand Comcast Corp splits donations about evenly between Democrat and Republican party. When does Comcast take over NBCU and by extension MSNBC?

Dr Evil on October 29, 2010 at 1:59 PM

Never mind Comcast wanted Net neutrality.

Dr Evil on October 29, 2010 at 2:01 PM

Great work by Professor Ohanian. I bet he’s shunned in the faculty lounge though.

PattyJ on October 29, 2010 at 2:02 PM

A people who do not learn from history are doomed to repeat it. We knew Roosevelt was a big socialist and what he did, yet we elected another big socialist in Obama. All we can do is pray that God will alter the course we should be on, 10 years of high unemployment, and show us a miracle!

The Expert Knows

HAExpert on October 29, 2010 at 2:03 PM

Reason TV: So where are the jobs?

in the back of bus under the bus.

davisbr on October 29, 2010 at 2:06 PM

Time Warner the parent company of HBO who host Real Time With Bill Maher…who is still employed gives heavily to the Democrat Party. CNN is a partner of Time Warner move along folks, No Liberal bias to see here LOL!

Dr Evil on October 29, 2010 at 2:09 PM

SHOVEL READY…………………………….

ONE MILLION JOBS……………….

12 TRILLION IN STIMULUS BUCKS……………

HOPEY/CHANGEY………THE SOCIALIST MAN WITH
A PROGRESSIVE PLAN…………..

IT APPEARS………………

IT HAS BECOME A CATOSTROPHIC FAILURE…..

IN LESS THAN TWO YEARS…………

SO,ARE YA GONNA VOTE IN STUPID AGAIN…….

THE LYING LEFTY LIBERALS THAT IS………………….

canopfor on October 29, 2010 at 2:09 PM

My fear about these midterms…the Republicans take both the House and Senate, thereby stopping this train wreck of an Admin, giving enough of a measure of confidence to business to begin hiring and expanding again. Then Ojesus takes the credit and gets re-elcted in 2012.

That’s why I don’t think winning the Senate is good in the long run. (but then there’s that matter of SCOTUS judges…)

ornery_independent on October 29, 2010 at 2:09 PM

How many ‘new’ laws have been written that include the phrase “The Secretary of ______ shall decide” or “The Secretary shall promulgate regulations that…..”

Nothing like certainty in an uncertain world. But then that would require that Congress READ legislation BEFORE passing it.

GarandFan on October 29, 2010 at 2:12 PM

I am an economist by education and training.
Obama has created jobs. Actually they are in India and he does owe them a visit. Some one tell him they don’t pay taxes here.

seven on October 29, 2010 at 2:19 PM

Businesses cannot possibly plan for the future, and instead have decided to hunker down with their capital

If you had McCain in the White House and less so-called “uncertainty”, there would still be high unemployment. Economic crises and near financial system collapses don’t end quickly or nicely.

Once consumers start buying again, then companies will start hiring and expanding. Until the economic outlook is more clear, businesses simply will not change course.

bayam on October 29, 2010 at 2:23 PM

Ohanian sees troubling parallels between the Great Depression and the Great Recession.

A few of us here at HA have been saying this all along.

17% in 1939 using the algortithm of the day would be 5% less using today’s.

Today’s “official” but fake number is 17.5%

Today’s actual number is 22% using the “lets count all the actually unemployed people” algorithm at Shadowstats.com

Obama and the clown posse keep poisoning the enviroment and employers are either moving or closing up shop.

None are going to hire new permanent employees. I’m seeing the number of 1 to 2 year contract assignments increasing.

dogsoldier on October 29, 2010 at 2:23 PM

Germany’s economy had the same crisis ours did in ’08, but they’re thriving now. Their secret? They moved to the right.

itsnotaboutme on October 29, 2010 at 1:41 PM

Germany remains a very socialistic country with government-run medicine and extensive social benefits. So I don’t agree that we should move in Germany’s direction.

bayam on October 29, 2010 at 2:25 PM

bayam on October 29, 2010 at 2:23 PM

No sir, you are incorrect. There would be no ObamunistCare and probably no Auto bailout. The NON-stimulus also might not exist.

These things that ODumbAss, Piglosi and Dingy did have poisoned the private sector until they are REPEALED or UNDONE.

dogsoldier on October 29, 2010 at 2:26 PM

Germany remains a very socialistic country with government-run medicine and extensive social benefits. So I don’t agree that we should move in Germany’s direction.

bayam on October 29, 2010 at 2:25 PM

Where have you been the past 2 years?

Chuck Schick on October 29, 2010 at 2:35 PM

Meanwhile, businesses will still do business. The poor business climate has accelerated the movement of production to China.

I am finding more and more products with new country of origin stamps. I checked out Halloween candy last might. Last year most of the novelties like plastic figurines filled with candy contained American candy in Chinese containers. This year the novelties, plastic and candy are product of China. Except for Nestle, Mars and Hershey which used the ‘distributed by’ label to avoid being pinned down on manufacture, most of the bagged candy I checked was made in Mexico or China.

This week the last ‘Made in USA’ drinking straw I could buy locally was replaced by Chinese made straws. No more straws for me until I find a replacement. Chinese straws leave a chemical taste in the mouth which is only because they leave chemicals in the mouth

The current instability is killing off small manufacturers of niche products. It is hard to rebuild if the patented machinery is scrapped or sold overseas

Does anyone still know how to make spring operated wooden clothespin? I would like to buy some along with some American made rope.

All these tiny operations added up to a lot of jobs. The current administration does not have any understanding how much these small operations contributed to jobs, and they do not understand how heavy handed regulations and taxes kill off the little guys first, leaving the big fish. When one big fish moves to China, they can wipe out half a State

entagor on October 29, 2010 at 2:37 PM

No sir, you are incorrect. There would be no ObamunistCare and probably no Auto bailout. The NON-stimulus also might not exist.

You’ve made good arguments here before and I respect your opinion but would point out that the stimulus wasn’t a exactly looked down up by Greenspan or Bernanke, both bright economists and Republican appointees. But on Bloomberg TV, Greenspan does criticize additional stimulus:

http://www.washingtonpost.com/wp-dyn/content/video/2010/10/08/VI2010100801913.html

While the CBO numbers aren’t a hard science, both the CBO and Wall Street estimates peg jobs saved / created by the recession in the 2 – 3 million range, with 1.5% to 3.5% added to the GDP. Under that scenario the economy might have contracted last quarter, which would likely have meant even higher unemployment. It’s hard to imagine what this economy will look like when the stimulus effect ends. Given the new Republican majority in Congress, chances are we’ll find out.

bayam on October 29, 2010 at 2:40 PM

The current instability is killing off small manufacturers of niche products. It is hard to rebuild if the patented machinery is scrapped or sold overseas

Does anyone still know how to make spring operated wooden clothespin? I would like to buy some along with some American made rope.

Earlier this week, the Fed approved construction of what will become the largest solar plant in the US. Is it American owned? Of course not- it’s being financed and constructed by the Germans. Instead of draining trillions of dollars of American wealth to the Middle East every year for energy, this country can look forward to essentially paying Germany for our energy.

Not only have we lost much of our manufacturing base, we’re losing out when it comes to the growth industries of the future. It’s pathetic.

bayam on October 29, 2010 at 2:47 PM

bayam on October 29, 2010 at 2:40 PM

I have a low opinion of greenspand and bernanke. They are not bright. Greenspan was adequate and functional for a time, Bernanke, not so much. The CBO’s output is reflective of the values they were given as input. Have you ever seen the acronym GIGO? (Garbage In, garbage Out) Anyone believing the stimulus actually created ANY private sector jobs has rocks in their heads.

They are simply disconnected from reality. Some short term local public sector layoffs were held in abeyance for a while, and some annoying and unnecessary roadwork got done, but thats about it.

Claims of 2-3 million jobs are just outright lies. The GDP numbers are not real either. They are all political values manipulated for the convenience of the administration.

dogsoldier on October 29, 2010 at 2:53 PM

Once consumers start buying again, then companies will start hiring and expanding. Until the economic outlook is more clear, businesses simply will not change course.

bayam on October 29, 2010 at 2:23 PM

Clearly there should be a democrat mandate to forcibly make citizens buy things.

You really know your economics.

Inanemergencydial on October 29, 2010 at 3:01 PM

Anyone believing the stimulus actually created ANY private sector jobs has rocks in their heads.

I don’t know if anyone is claiming that the stimulus created permanent jobs. The goal of deficit spending after a near economic crisis is to keep the economy from falling off the edge of a cliff. But you’re right, the expectation that it would lead to some kind of V-shaped economy was never even close to realistic.

probably no Auto bailout.

Unlike TARP, the auto bailout was Obama’s decision although Bush did throw the auto companies a lifeline. I think that both Presidents will be given a lot of credit for this policy. The USA simply would have dropped from the ranks of serious manufacturing powers without an auto industry. Even Ford supported the bailout because if GM and Chrysler failed, the entire auto supply chain would have collapsed taking down Ford as part of a sinking ship.

Yes, auto jobs from foreign automakers would have remained, but an incredible amount of American expertise, infrastructure and, obviously, capital ownership would have been lost. Thailand and Vietnam have foreign auto plants- simply building cars doesn’t give a nation any status or real wealth.

Once GM goes public again in 2011, the government’s role will come to an end, taxpayers will recover billions of dollars, and the total bill for taxpayers will be very small given the total economic benefit to the country. Today’s GM is a completely different company with rock solid financials and a great future ahead of it.

bayam on October 29, 2010 at 3:07 PM

bayam on October 29, 2010 at 3:07 PM

I looked at this. The auto industry would not have failed. GM and Chrysler did fail. They will fail again and again until someone allows them to die. The short version of that is the math just doesn’t work for them. We can’t keep them afloat and should not have tried.

We have to allow failure. I’ll explain why in a moment.

Ford is doing fine.

Thomas Edison said, “I haven’t failed, I’ve found 10,000 ways that don’t work,” referring to the invention of the light bulb.

I don’t suggest the failure of GM or Chrysler casually. The government has absolutely no business interfering in the private sector in that manner. If company x is poorly managed and goes out of business, that’s that.

No company is too big to fail. People working at those places need to see the writing on the wall and take appropriate steps to look after THEMSELVES.

dogsoldier on October 29, 2010 at 3:25 PM

I almost forgot, we have at present by my estimation between 30 and 35 million people out of work. Some percentage that is growing are those that are now homeless.

We stopped hearing about foreclosures, did you all notice the crickets? Banks have a huge surplus of eroding inventory.

Obama and company put us over the edge of the cliff. People are just now seeing the ground far below looming up at them, like the coyote holding the anvil in a road runner cartoon.

With each passing day, more and more Americans join the 99ers (or the 111ers as the case may be)

Folks with no money buy no Turkey and stuffing. They probably won’t be buying Christmas or Chanuka (sp?) gifts either.

dogsoldier on October 29, 2010 at 3:33 PM

Well, in all fairness to Emperor Obeyme, FDR had something to lift our nation out of the Great Depresion that The Emperor does not yet have:
World War.

oldleprechaun on October 29, 2010 at 3:42 PM

Chanuka (sp?) gifts

Chanukah (Hanukkah)! Get thee to a Hebrew class!

Oh, and if your shopping for Chanukah (Hanukkah) gifts, I can always use power tools, thank you. Chanukah (Hanukkah) commences at sundown on December 1st.

oldleprechaun on October 29, 2010 at 3:47 PM

I looked at this. The auto industry would not have failed.

At the time, Ford said that without GM and Chrysler building cars, all their suppliers would have gone bankrupt, forcing Ford into bankruptcy as well. Yes, you’d still have Tesla and a few small players, but the US auto industry would be dead.

GM and Chrysler did fail. They will fail again and again until someone allows them to die. The short version of that is the math just doesn’t work for them. We can’t keep them afloat and should not have tried.

We have to allow failure. I’ll explain why in a moment.

Look into it again- GM has performed, to everyone’s surprise, a monumental turnaround and is today a very successful and strong auto company. China and other fast-growing markets are bringing in billions in profits. Predictions are for a public company stock offering that values the company at $8 to $12 billion. GM failing is definitely out of the question at this point. A huge win for the US manufacturing base.

I’m not sure about Chrysler- have’t followed the smaller auto co. It’s hard to see how their small Fiat line-up will succeed until gas prices return to the $4 to $5 range. (Reader bias- I don’t like Fiat cars.)

bayam on October 29, 2010 at 3:48 PM

FDR also catered to the unions, trying to force up wages, which kept even more unemployed.

J_Crater on October 29, 2010 at 4:05 PM

The greedy UAW is still picking at the carcass: The UAW: The Curse that Just Keeps on Giving

The sooner GM and Chrysler (and Ford) go through a real bankruptcy process and the corrupt UAW is vanquished, the better off our country will be.

Say no to any UAW product. Say no to any unionized retail outlet. Say no to any unionized shippers. Say no to any unionized business!

Vote for 50-state Right-to-Work.

slickwillie2001 on October 29, 2010 at 5:08 PM