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All U. S. Job Growth since 2001 due to Government Spending

by TGeraghty Sat Feb 4th, 2006 at 07:38:00 AM EST

The wonders of flexible labor markets at work:

Promoted by Colman. What is the lesson for the rest of us? (Back from FP on 2-4)


Nathan Newman: All Bush Job Growth due to Government Spending

As this EPI study details, subtract out the government funded jobs, mostly due to the defense sector, and NO net jobs have been added under Bush's watch.  So that means tax cuts have accomplished ZILCH in encouraging private sector job creation.  It's all increased government spending.

Max Sawicky: It Has Come to This

. . . for job growth, this has been one stinky recovery.

It happens that the extent of actual job growth can be accounted for by growth in public sector jobs. And there's nothing wrong with that. However.

The upshot is that the triumph of Republican conservatarian economic policy consists of an expansion of government jobs financed by loans from the Communist Peoples Republic of China.

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... look I never even did economics 101. Pardon the ignorance.

But am I reading the figures right if:

  1. Actual Change in Jobs is SMALLER than the estimate of Jobs created in the public section?
  2. Does that imply that if it wasn't for the jobs in the public sector, there would be a decrease in the net jobs?

Slightly OT, but anyone in the US seen "Why We Fight" yet?
by Nomad on Tue Jan 31st, 2006 at 06:03:16 PM EST
  1. Yes, but the guy Colman quotewd is imprecise: the jobs on the graph aren't public sector jobs, they are private sector jobs created with government spending (i.e., more expanded bombs production and such). So if we included public sector job creation, the picture is even darker.

  2. Yes.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Feb 1st, 2006 at 05:09:07 AM EST
[ Parent ]
Hey, I didn't quote anyone.
by Colman (colman at eurotrib.com) on Wed Feb 1st, 2006 at 05:10:24 AM EST
[ Parent ]
Sorry, I meant TGeraghty...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Feb 1st, 2006 at 06:18:01 AM EST
[ Parent ]
So I was seeing it right. About time I start shedding my 101 ignorance.

As for the Colman mix-up, this was rather a succinct TGeraghty post and as we all know Colman excels in succinct-cy... ;)

by Nomad on Wed Feb 1st, 2006 at 06:46:50 AM EST
[ Parent ]
I'm working on succinct-cy, as my last two diaries should indicate.

It's one of my New Year's resolutions.

by TGeraghty on Wed Feb 1st, 2006 at 05:00:50 PM EST
[ Parent ]
Actually, I believe that, even counting the public-sector job creation, there has still been a net decrease in jobs, when taking growth in the labor market into consideration.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Jan 31st, 2006 at 11:40:53 PM EST
True, tough it grew from years ago. If you ckeck the Labor Department's household data series (which is supposed to be more precise on overall numbers) and payroll data series (which is supposed to be more precise on relative changes), and check it against census population estimates (monthly; Excel!), you'll find:

Percentage of the employed in the total resident population:

  • January 2001: 48.6% (household survey) resp. 46.7% (nonfarm, payroll survey)
  • December 2003: 47.4% (household survey) resp. 44.6% (nonfarm, payroll survey)
  • December 2005: 48.0% (household survey) resp. 45.2% (nonfarm, payroll survey)


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Feb 1st, 2006 at 06:16:36 AM EST
[ Parent ]
This is hardly a surprise to those following economic news. It is a well known fact that excesses of 1990's were not purged out of the system (via long recession) but debt problems remained unsolved due access to cheap credit.

The boom in private residential construction (and assiciated trades) have matched increase in percentage of population owning (actually having bought) their housing as well as rapid increase in residential construction costs.

The boom in governmental jobs can be associated with at first a DoD budget increases ("get well") and then 9/11 with associated wars that increase expenditure of defense articles.

The falling sectors include information (burning excesses of "Y2K" and telecom boom) and manufacturing (poorly performing fields include autos and forestry). The big deal here is that manufacturing losses are now biting also durable goods while job losses have been concentrated on non-durable goods in earlier recessions.

The Great American Job Creation Machine(c) has been badly sputtering throughout the 21st century mostly because of nature of shallow recession. Job growth is essentially tied to business investments and during this recession the business investments have been postponed due (excessive?) capacity buildup in 1990's. This is closely related to lack of expected (domestic) demand due weak wage growth and debt load.  That is why the job growth in sectors that serve general public has been so slow. On the other hand, the growth in sectors aimed towards serving well-to-do are doing just fine. This is made possible by very large concentration of wealth to people who form the latter part of comsumer. However, the number of jobs needed to serve one Will Wealthy is essentially smaller than what is needed to server hundred Al Averages.

The irony (and tragedy) of US is that the two-tiered economy allows you to have both boom (in high street) and bust (in main street) at the same time...

by Nikita on Wed Feb 1st, 2006 at 01:52:25 AM EST
A 25% increase in defence-related jobs and the entire job growth would be acounted for by the military-industrial complex.

The US is turning into a war economy as far as production is concerned while, at the same time, trying at all costs to prevent the war from impacting "the consumer". This is probably a reflection of where Americans were psychologically before 9/11. If 9/11 happened now, I don't think the government would feel the need to tell people to "go out and shop" but could be quite confident of being able to make people accept that the war is going to impact their consumption. When private debt is no longer able to maintain consumption, we might see a similar, spontaneous realignment.

As anecdotal evidence, a close friend of my girlfriend's claims to have no choice now but to become a recruiter for the military, even though they are less than enthusiastic about Bush' s war.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Wed Feb 1st, 2006 at 05:32:59 AM EST
This deserves an extended comment, but perhaps someone else can flesh it out.

I think it was Jerome? who produced a similar analysis for the UK (compared to France) which showed Gordon Brown has presided over a similar situation.

Perhaps Drew or someone can correct me, but to some degree this is sensible Keynsian type stuff at work? Smoothing the employment valley with government spending?

But at the same time, it's important in my view to emphasise that:

  1. Perhaps things could have been organised better? (e.g. are bombs really the most productive use of these government created jobs? Could the stimulus have been more effective if directed using different policy instruments?)

  2. All the voluminous hot air about what makes job creation happen (and why the US/UK approach is better than others) needs a seriously critical eye placed on it. This is evidence, it needs to be used to improve the models that people bandy about.
by Metatone (metatone [a|t] gmail (dot) com) on Wed Feb 1st, 2006 at 05:43:42 AM EST
But you cannot have Keynesian spending on "defence" and "government discretionary" while at the same time preaching tax cuts and a smaller government. The result is not only a budget debacle but a very real crisis in local provision of public services.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Feb 1st, 2006 at 05:50:04 AM EST
[ Parent ]
Well, I agree.

I was conflating the US and UK situations because of parallels in the statistics, however Brown has not been engaging in the same tax cutting as Bush. (Although the Blair rhetoric has been "anti-govt" that is more focused on privatisation than actual cuts it seems.)

by Metatone (metatone [a|t] gmail (dot) com) on Wed Feb 1st, 2006 at 05:55:25 AM EST
[ Parent ]
The Browm-Blair policies are, at the end of the day, more of the traditional tax-and-spend variety. Services are outsourced, and any reductions in aggregate state spending are offset by council taxes.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Feb 1st, 2006 at 06:06:15 AM EST
[ Parent ]
I think they prefer to refer to it as 'modernisation' rather than 'tax and spend' ;)
by Samir on Sat Feb 4th, 2006 at 10:40:17 AM EST
[ Parent ]
In a very crude way, yes, this is Keynesianism (I wouldn't call Bush's spending sensible), but you're quite right -- and I'm sure that, were he not, you know, dead, Keynes would be applauding somewhere -- that the spending could have been directed to more productive activities that would've helped to prepare America for the future -- funding for research and education, rebuilding infrastructure, whatever.

Brown is spending, as I understand the party line at the Financial Times, on much more useful activities, like public investment, police, and so on.  (Britain does, however, seem to have a problem with private investment, but I don't think Brown is the cause, nor do I think it's a long-term problem.)  The "brilliant minds" at The Wall Street Journal think it's a recipe for disaster, pointing to Germany and France, as they always insist on doing.  I think Brown will be fine, if he can get a boost from the private sector reasonably soon.  If he starts slashing spending, he may do much more harm than good in the short term, depending on how fast the BoE begins lowering interest rates.

FDR did, basically, the same thing as Bush during World War II, except that FDR raised taxes.  Hiring soldiers, nurses, manufacturing workers, etc., pushed the US well beyond full employment.  The unemployment rate fell, if I remember correctly, to about 1%.  The war provided an opportunity for Roosevelt to finally justify spending on the level that Keynes and his followers advocated.  But military spending is, in general, incredibly wasteful, even though I think it's sometimes necessary (as in the case of WWII).  I don't think spending on this level is necessary, obviously.  The entire Iraq war is an unnecessary use of lives and money.  But, getting back to the point with an example, the upkeep on nuclear (or "nukular," in Bushspeak) weapons, alone, is very expensive.

Migeru is right to point out the hypocrisy of promising tax cuts, spending increases, and smaller government.  Bush might as well tell the American people that he favors bigger, but smaller, government.  Take away the "small government" bullshit rhetoric, and Bush is essentially preaching a modern Republican form of Keynesianism, with some of the "tax cuts pay for themselves," Supply-Side talking points sprinkled in.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Feb 1st, 2006 at 12:11:39 PM EST
[ Parent ]
What is the source for this information?

Could you please provide a link

Thanks.


joe

by joe (stone*pony&1$@gmx.co.uk) on Wed Feb 1st, 2006 at 11:02:24 AM EST
The "this EP study" link in the first below-the-fold quote box.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Feb 1st, 2006 at 11:21:50 AM EST
[ Parent ]
Question: does anyone have the figures for direct public sector job growth in the US, not private sector jobs created by public spending, but actual government employees?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Feb 2nd, 2006 at 10:52:16 AM EST
Try this. You'll find four tables, two each for yearly and monthly data, the first of each pair for goods-producing and the second for services jobs, all government jobs are in the latter.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Feb 2nd, 2006 at 11:07:49 AM EST
[ Parent ]
If you are interested in a breakdown of those government jobs, it's at the bottom of this table.

(Both of these links are updated with the most current data.)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Feb 2nd, 2006 at 11:10:40 AM EST
[ Parent ]
Thanks DoDo, so that's like ~1 million more jobs in the public sector over the period we're talking about on top of the jobs we're talking about? That's impressive.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Feb 2nd, 2006 at 11:21:18 AM EST
[ Parent ]
Nearly 1 million more?? How is it ever possible that the US administration keeps the phrase "smaller government"?
by Nomad on Sat Feb 4th, 2006 at 08:13:18 AM EST
[ Parent ]
Yeah.

This is central to what asdf keeps arguing about, but many of us were busy to misunderstand (I only 'got it' weeks ago): the 'Anglo-Saxon' business propaganda is wrong not only on theory and characterising the structure and performance of the real economic system on this side of the pond, but the other side of the pond, too.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat Feb 4th, 2006 at 10:41:29 AM EST
[ Parent ]


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