The U.S. economy grew by 3.5 percent from July to September, the Commerce Department reports. But, contradictorily, unemployment continued to rise, to a 26-year high of 9.8 percent.
Since the recession began in 2007, the U.S. has lost 7.2 million jobs. Unemployment has risen more than 2 percentage points since President Obama took office in January. Economists project the jobless rate will exceed 10 percent by early 2010. And those are national figures — things are a lot worse here in Nevada.
As John Boehner, the top Republican in the House of Representatives, puts it: “Any positive signs for our economy are welcome, but a jobless recovery is not what the American people were promised.”
Even President Obama was wise enough to acknowledge “The benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well.”
It’s fairly clear why jobs are not rebounding. Investors are unlikely to start new businesses — nor existing businesses, hanging on by their fingernails, to increase staffing — till consumer spending rebounds enough to justify those investments.
But the unemployed are limited in what they can spend, and consumers in general are still sitting on their wallets, understandably uncertainty about the economic future.
What’s the source of much of that uncertainty? Ironically, the city that beats its chest and claims to be engaging in heroic measures to “save the economy” — Washington.
Health insurance “reform” was supposed to trim costs, making medicine more affordable. But does the “reform” include measures to reduce doctors’ insurance costs by limiting extortion by the trial lawyers — including, say, “loser pays”? No.
Does it include overruling state coverage mandates (which restrict interstate commerce), thus allowing consumers to buy any of a wide variety of less-expensive insurance plans across state lines? Just the opposite — the Democratic plan would mandate a huge wish-list of expensive, politically correct coverages.
Does it include free-market incentives — you know, “more greedy profit” — for treatment innovations? Of course not.
The sectors of the medical profession where there’s “no waiting,” superior customer service and effective price competition are precisely those sectors largely untouched by the “insurance” institution (the quotation marks are because as known today it’s really more in the nature of “pre-paid medical care” than risk-pooling, creating an incentive to give the pre-paid customer the cheapest bum’s rush possible.) Those sectors include, for instance, cash-only plastic surgery and veterinary care. If we’re looking for “reform,” why not adopt those models?
Instead, everyone knows the costs and bureaucratic inertia (if not outright paralysis) of the new socialized scheme will balloon — just as Medicare and Medicaid did, before it.
Meantime, the scheme to “cap and tax” emissions of carbon dioxide — a non-toxic gas necessary to plant life on earth — supposedly to fight a chimerical “man-made global warming” which fewer and fewer people believe to be a real crisis, waits in the wings, threatening to impose huge new costs on anyone who drives a car or uses electricity.
Talk about uncertainty.
Even the “good news” of GDP growth is at least partly attributable to one-time government gimmicks. The federal government spent money it doesn’t have — money it will have to eventually raise through new taxes — to subsidize first-time home buyers and “cash for clunkers.” But the government aid “is only temporary,” notes AP economics writer Jeannine Aversa. “Consumer spending, which normally drives recoveries, is likely to weaken without it. If shoppers retrench in the face of rising joblessness and tight credit, the fragile recovery could tip back into recession.”
A real economic recovery requires that both wages and prices be allowed to drop to true market levels, with investment encouraged by allowing investors to earn higher rates of interest in return for increased risk. Yet there has been no relaxation of federal laws that prop up the costs of hiring each new employee, while the Federal Reserve, “to foster the recovery, is expected to keep a key bank lending rate at record low near zero when it meets next week and probably will hold it there into next year.”
Why would any sane, non-governmernt-subsidized investor plow in money at a “near zero” rate of return, especially in risky times?
Meantime, nearly half a percentage point of the GDP growth in the third quarter — 0.48 percentage points — came from a 7.9 percent rise in federal spending. But should government spending really be counted as economic growth, since government only gets its money by grabbing it from the private sector, thus holding down growth, there?
A spot check by The Associated Press of the 30,000 jobs claimed to have been “created” by the stimulus determined 5,000 of the 30,000 — one in six — were bogus, some jobs being counted more than four times. One Florida day care center handed out raises all around and then claimed 129 “jobs saved.”
We should not lose sight of the fact that claims of government “job creation” are usually bogus on their face, since all government can do is TRANSFER funds which might otherwise have been used by taxpaying businesses to create their own, more stable jobs elsewhere.
Besides, if the “stimulus” cost $787 billion and is now seen as “running out of steam” in terms of future job creation, am I wrong, or would even 30,000 jobs have ended up costing $26 million per job?
Surely the private sector could have done a little better than that.