Saturday, September 5, 2009

The Jobless Recovery

The NY Times this morning has a lengthy article that suggests that the employment picture is not likely to improve, even if the economy shows signs of recovery. Typical of the NY Times, they suggest a variety of policy measures, none of which would add a single employee to private employer rolls. The people that write these articles must have majored in religious mysticism, certainly not economics.

Businesses decide whether or not to hire employees. That is the crux of the issue. What is largely irrelevant is: 1) the savings rate; 2) whether or not there is another $ 800 billion redistribution of wealth (the mis-named "stimulus package"). If businesses don't hire then unemployment is not going to get better. Is anyone at the NY Times listening? Is anyone in the Obama Administration listening?

Imagine that you had an orange tree and wanted to sell oranges? Would you encourage laws that required folks to wear space suits while eating oranges? Would you encourage laws that impose a tax on people that consume oranges? Would policies like that encourage people to buy your oranges? Would you encourage a law that would take money from doctors and give it to lawyers? Would that help your orange sales? What about considering a law that would make it more fun to eat oranges or perhaps a tax break for eating oranges? How would that affect your orange sales?

The NY Times and Obama Administration (these are flip sides of the same coin) seem to not understand who does the hiring in the economy. Their approach is to penalize anyone who would consider hiring anyone. Then, they are surprised that no hiring takes place and argue that another redistribution bill should do the trick. Even though the last two redistribution bills did nothing but add to the national debt.

You have to give them one thing -- they are consistent and persistent. Look for joblessness to remain a severe problem -- a problem the Obama Adminstration has no intention of tackling and the NY Times has no possiblity of understanding.