In hospital dramas, a patient is brought in with mysterious and horrific symptoms, and the medical staff race against time to save the patient’s life. To up the drama, the patient improves under treatment, then inexplicably relapses, developing new life threatening symptoms, and the doctors realize they were wrong about their diagnosis and the treatment. They run a battery of tests all through the night, then have some sudden insight, and try an experimental treatment.
It makes for riveting television. But what if the patient never gets better, no matter how many experimental treatments and expensive drugs are used? What if the goal of the doctors isn’t to actually let the patient get better, but to make the family think that they are doing something, so that the family will continue to let the doctors try experimental solutions? What if the doctors were politicians and the patient was the US economy?
So, the preliminary jobs numbers for October came out at the beginning of this month and were immediately touted as a sign that the economy is improving (seven years later). Taken on its own, 271,000 jobs created is a strong showing, not as strong as April (330), November (423), and December (329) of 2014, but it is fairly strong. However, between 15,000,000 and 20,000,000 Americans of working age are still sidelined by the economy, and, according to the Bureau of Labor, there are another 5.7 million Americans working part time, who want full time employment. That is as many as 25.7 million Americans who are unemployed or underemployed in the United States. 271,000 jobs isn’t even a drop in the bucket at that point.
Further, there’s good reason to believe that many of the October jobs included tens of thousands of jobs that were NOT created in August and September, as only 290,000 jobs were created over the span of those two months combined. And while the job numbers have remained fairly stable through 2013 and 2014, the economy continues to have troubling symptoms. The third quarter GDP growth rate was revised downward from only 1.6% to 1.5%, half of the GDP necessary to create enough jobs to accommodate population growth, as was born out by the very modest job numbers in August and September. And it was only 0.6% in the first quarter of 2015.
The official U-6 number is currently at 10% to 11%, a number bad enough that even Democratic presidential candidate Bernie Sanders has made a campaign issue of the 1 out of 10 American workers sidelined in our economy. So, yes, the 271,000 jobs created was a good number, but it’s not good enough to make serious headway on the 25 million Americans who are unemployed or underemployed in the United States. It’s a number that’s largely a result of hiring that didn’t happen in the third quarter, and it’s likely to be revised downward in the coming weeks.
And on top of everything else, the federal core loans rate remains at 0.10%-0.25%, where it has been since the bleakest days of 2008 in the middle of the Great Recession. The Bush Tax Cuts are still largely intact. And the Federal Reserve is still relying on quantitative easing, because the economy still isn’t responding to the low federal core loans rate. If the economy is doing so well, why are all of these “stimulative” policies still in place? More concerning still is why no one is talking about this in the mainstream media? We still have high unemployment, sporadic GDP growth, and a punitive regulatory environment, despite a full scale barrage of stimulus programs and increasing venture capital investment.
If we are to believe everything the Keynesians and socialists are to tell us about how the economy is supposed to work, then the economy should absolutely be on fire. With a federal core loans rate at less than 1%, a healthy economy would have run away inflation. With the quantitative easing policy, the economy should look like the Weimar Republic. After everything that’s been done to stimulate the economy, the economy is perpetually “recovering“. It’s time to stop accepting excuses as to why the economy hasn’t reached “expansion“.
“The buck stops here.”
-Harry S. Truman-
Excuses won’t improve the economy but frankly neither will political rhetoric. Like a medical drama, the disease isn’t what’s killing the patient, it’s the treatment. The patient simply can’t heal, because the treatment has the patient in constant state of trauma. The “cure” is to stop the “treatment“.
Let’s not mince words, however. Once the plugs are pulled and the needles come out, the economy is going to crash. The economy isn’t a living thing, however. Like a phoenix, the economy will be reborn from the ashes, and flourish anew. That’s how economies have worked since the dawn of human civilization. We have to stop letting politicians pretend they know what they are doing. The real challenge is that there may not be a politician brave enough to make these things happen.
Here’s the cure:
- Stop taking money out of the primary source of demand in an economy: the consumer. Consumer demand drives the economy. Every dollar you take away from the consumer is a dollar that is no longer available to buy something that drives the engine of the economy. Fairly taxing 250,000,000 Americans isn’t just inefficient, it’s impossible. Don’t tax individuals. (The Liberty Tax)
- Reduce the cost of hiring people, especially at the bottom rungs of the job market. More people working means more people buying. And more people buying means more people needed to produce, which means more hiring. Reducing the cost of labor also makes American workers competitive with foreign workers on an even playing field. Remember, the value of the dollar is arbitrary by definition, because the value of the dollar is determined by the market. Since the value of a dollar is arbitrary, the price of all goods and services adjust with the value of the dollar, not despite it. Reduce the minimum wage to $1.00 an hour. (The Currency Wage Policy)
- Eliminate regulation that is needlessly restrictive. Yes, we need laws that keep the environment clean, but we don’t need laws that redefine science. CO2 is not a pollutant. Any regulation that doesn’t directly deal with the health and safety of workers or consumers needs to be repealed. There are over a hundred federal agencies, when there should be no more than ten. The federal government’s job is to regulate commerce not to run it, and anyone that doesn’t understand the difference should not be in office.
- Stop federal dollars flowing into any part of the economy that isn’t attached to actual productive purchases. The federal government is not a hedge fund or venture capital firm. The government’s track record is terrible, picking losers over winners every time, such as the billions lost in the GM bailout alone. No more subsidies. No more corporate welfare.
- Cut government spending by at least half. It’s past time to look for a way to humanely sunset welfare programs, Social Security, and Medicare. We must find a way to maintain these programs for those currently on the programs, but cut them all off. For those who don’t meet the cut off, compensation for their contributions have to be made. The transition to better market or state level solutions is a priority. This will require action from the States and belief in the power of the market to solve problems and efficiently utilize resources.
Get government out of the economy, because, the secret is that economies do not need governments. It’s governments that need economies.
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