Friday, August 6, 2004

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Jobs and the election

I was trying to think of a way to phrase my post about the latest job figures.

Ted Barlow and Megan McArdle beat me to it, though.

Even Irwin Stelzer, in a Weekly Standard article that highlights the good news about the economy over the past month, concedes the following:

the most widely watched and reported figures--jobs, oil prices, and stock prices--are grist for the Kerry mill. The jobs market is not as strong as Bush would like it to be, oil and gas prices are higher than he would wish, and stock prices are stuck somewhere between level and falling.

Those are the numbers that voters see repeatedly reported on television screens, and, in the case of gas prices, feel in their pockets every time they fill their tanks. Business Week estimates that consumers are spending an average of an extra $10 billion per month for gas and other energy products. Also, the effects of the Bush tax refunds have worn off, and a good day for stock prices is one on which they don't fall. All of this is apt to tame the animal spirits of both consumers and businessmen. That is not a recipe for reelecting an incumbent who took responsibility for the now-slowing recovery when it was steaming ahead.

Back in the fall at a Right Wing News symposium, I was asked, "What does the Dean Kerry have to do to beat Bush?" I answered: "It's less what Dean Kerry has to do than what happens in Iraq and the economy. The worse those situations are, the less Dean Kerry has to do."

Keep that line in mind for the next three months [That would be easier if you hadn't assumed it was going to be Dean--ed. Hey, I was just responding to the question!! Besides, all the cool blogs thought Dean was going to win then!]

posted by Dan on 08.06.04 at 07:43 PM


As I noted over at Angrybear, both the household survey and the payroll survey are saying employment growth over the past 6 months has been 1.1 million (compared to a 1.0 million increase in labor supply). But then Snow and Chao try their best to confuse the numbers (IMHO). Incidentally, the employment to population ratio, which Brad DeLong has emphasized for a while (quite rightly) finally got off its bottom of 62.2% and now is reported at 62.5%. If Chao and Snow stop acting like dizzy Bush cheerleaders, maybe they'd see this statistic and start crowing aobut it.

posted by: pgl on 08.06.04 at 07:43 PM [permalink]

My impression of the "household suvey" is that it only measures whether the people in the household are employed in any capacity whatsoever.

That could mean a household is "employed" if someone who, say, used to be a brand manager for a hi-tech now has a job at McDonald's. Or if that person's spouse/partner, who used to not have a job (because a second income wasn't necessary) is now a part-time office clerk.

In raw statistics, that's two jobs in one household - which looks nice, statistically, but no one could honestly say they're even as well off as they were, much less better off than they were.

Wouldn't a survey of per capita earned income be a more honest indicator of how good the economy is?

posted by: CaseyL on 08.06.04 at 07:43 PM [permalink]

"My impression of the "household suvey" is that it only measures whether the people in the household are employed in any capacity whatsoever."


An unsuccessful real estate agent, who hasn't sold a house all year, and thus hasn't earned a dollar, would be counted as employed. (But wouldn't show up on the establishment survey, because they aren't employees of the real estate agency.)

posted by: Jon H on 08.06.04 at 07:43 PM [permalink]

Then, to paraphrase an old saying, the "household survey" ain't worth a bucket of warm...uh, spit :)

posted by: CaseyL on 08.06.04 at 07:43 PM [permalink]

In terms of what is happening right now in the IT consulting job market, this summer is shaping up to be the worst of those since 2001. I use as a measure, the number of weeks that I have been unemployed between consulting jobs, and I had not gone beyone 9 weeks. This summer, I have gone 10 weeks, so far. I expect it to go longer, given the slowdown in hiring since May.

If I were really cynical, I would put it to the perception that it is very likely that John Kerry and the Democrats will win, and no one wants to make financial commitments, based on that perception.

posted by: Jim Bender on 08.06.04 at 07:43 PM [permalink]

Why not?

posted by: CaseyL on 08.06.04 at 07:43 PM [permalink]

It's not so much the job information. Even when the modifiers "only" and "disappointing" are added, jobs were added and unemployment dropped, and frankly, aren't that bad in historical terms. However, stock prices hit their lowest level in 2004 today and have dropped five of the past six weeks. That news gets reported every day.

posted by: Norman Pfyster on 08.06.04 at 07:43 PM [permalink]

"unemployment dropped"

Only because people have dropped out of the workforce.

If Bush can get everyone to drop out of the workforce, not looking for work, by November, he can reach zero unemployment.

posted by: Jon H on 08.06.04 at 07:43 PM [permalink]

"It's not so much the job information. Even when the modifiers "only" and "disappointing" are added, jobs were added and unemployment dropped, and frankly, aren't that bad in historical terms. "

Er...which historical terms are you referring to? I mean, which point in US history are the current job figures better than? The 19th Century? The Great Depression?

And, again: losing a job that paid $55K per year, with full benefits, and replacing it with 2 jobs that pay minimum wage, no benefits, is NOT an improvement.

posted by: CaseyL on 08.06.04 at 07:43 PM [permalink]

"Wouldn't a survey of per capita earned income be a more honest indicator of how good the economy is?"

I think that would be better for Bush. GDP numbers and productivity have the best performing economic indicators during the Bush administration. Wouldn't that suggest that per capita income is doing much than employment?

posted by: Xavier on 08.06.04 at 07:43 PM [permalink]

No, actually, it wouldn't. What it will show is that more money is being made, but also flowing in larger quantities into fewer pockets. "Increased productivity," after all, means "higher business revenues with lower overhead (i.e., salaries)."

posted by: CaseyL on 08.06.04 at 07:43 PM [permalink]

America has turned the corner! TURNED THE CORNER! Failed policy, after failed p olicy, after failed policy. Dan, with a policy process you yourself have termed broken, why is this failure any surprise? Whatever happened to the party of personal responsibility? Why are the poor the only ones judged on their record? Just to keep track of all the goodd news, break even is around 140k jobs a month. This was WELL below that. Also, the past couple months growht was downsized TOO. To my surprise, this was actually mentioned in the Standard article.

posted by: Jor on 08.06.04 at 07:43 PM [permalink]

This is a bit off topic, but two little-noted events involving swing states occurred this past week that are worth noting. The first is that a Democratic mayor of the 2nd largest city in Minnesota switched party ranks and publicly endorsed Bush for re-election. The 2nd is the recent amendment in Missouri to ban same-sex marriages that was overwhelmingly endorsed by voters (71% I believe). Now I'm not stating my position on this issue as that's irrelevant, but this could easily be seen as a ringing endorsement of Bush's social conservatism. Of course, how the economy plays out there is another issue. But these are two huge events that have taken place in hugely important swing states in Bush's favor. Don't practice saying "President Kerry" just yet.

posted by: Danny on 08.06.04 at 07:43 PM [permalink]

In the dark, dim, dusty past someone theorized that business benefits from Democrats because they do better at controlling the excesses which occur when Republicans let business go to excess to maximize profits. I'm not sure this fits in here, but I thought I'd mention it.

posted by: chuck rightmire on 08.06.04 at 07:43 PM [permalink]

As Dan noted, Megan McArdle has a post on this topic over at Asymmetrical Information. The post is typically interesting and has good comments. As is often the case, some of the best comments are left by the people running the site. Toward the end of her second comment Megan (Jane Galt) states:

I think any honest analyst looking at the economy will admit that any problems it currently has are not the fault of the Bush administration, and that anything John Kerry promises to do to fix it will have little-to-no effect, just as will anything George Bush claims to have done or be planning to do. I do not expect to see many honest analysts wandering around the scene this election.
This statement sums up my thoughts about Bush/Kerry and the economy so well that I think it is worth repeating. The rest of the comment from which it is extracted is also worth reading. Discussions that assume the President is the driving force behind the present economy make no sense whatever to me and they are driving me nuts ... and yes I would be saying the same thing if the economy were going swimmingly.

On a related note, uncertainty has a negative effect on hiring. This uncertainty can be uncertainty in the business climate, which explains why new hiring occurs late in economic recoveries, or uncertainy in the political climate, for example upcoming elections, or uncertainty caused by any number of other factors, such as terrorism. The reason for this effect is related to the difficulty of reversing hiring and firing decisions. Much of the modern theory of making irreversible (or difficult to reverse) business decisions uses the idea of real options. A clearly written book on this subject is Investment Under Uncertainty, by Avinash K. Dixit and Robert S. Pindyck (Princeton University Press, Princeton, NJ, 1994) I suspect that most readers of Daniel Drezner who have the pre-requisite mathematics background (elementary differential equations) would enjoy this book.

posted by: Average Joe on 08.06.04 at 07:43 PM [permalink]

Only because people have dropped out of the workforce.

From table A:

Civilian labor force.....| 146,661| 146,998| 146,974| 147,279| 147,856

July isn't a month where the workforce shrinks; that's usually September when teens/college students go back to school.

posted by: h0mi on 08.06.04 at 07:43 PM [permalink]

President Bush is in serious danger of losing the election. This will be a disaster for this nation. John Kerry will do little to fight terrorism. May God help us.

posted by: David Thomson on 08.06.04 at 07:43 PM [permalink]

DT, yes, it will be hard for Kerry to underperform bush on the WoT. One false war -- Iraq, and another failing war Afghanistan (according to those commie, America-first hating British). Hard to beat a record like that. And OBL still on the loose.

Dan, You harp on some phrase spouted by one of Kerry's dozens of advisors, but somehow the Bush administrations official job growth projections (from just afew months ago), that were clearly pie-in-the-sky kind of stuff get a complete pass. Here's the graph Delong made a couple weeks ago, and with updated numbers, its just gonna look even worse,

Personally, I think you're worries about Kerry's protectionism are way overblown -- imo, its really the only marketable way to deliver an effectivem essage onthe fact that Bush is fubar'ng the economy. And even if he does bank protectionist (although I doubt it'll be worse than bush now) -- having a process for creatin policy that you dont agree with, will be better than pie-in-the-sky crap we have now, where you might idealogically agree with.

posted by: Jor on 08.06.04 at 07:43 PM [permalink]

More info on the broken policy process from Delong, he excerts O'Neil, Such, sad, sad, sad reading. I'll concede the president doesn;'t have much sway over the economy, but its pretty clear his "stimulus packages", really weren't stimulus at all, and thats because theyr eally weren't designed asshort-term stimulus. I really odn't understandd how there is a question anymore -- a guy who led us to a false war, and whose broken policy process sent us down the largest number of jobs lost since Hoover. A guy who sat still for 7 minutes while the country was under attack. Where is hte decision? IS this a joke? There's definitely some Drezner is hiding. The only thing I can think of is he's in love with one of the Bush daughters after their recent vogue spread.

posted by: Jor on 08.06.04 at 07:43 PM [permalink]

Whoops, the other Delong Link

posted by: Jor on 08.06.04 at 07:43 PM [permalink]

At the other end of the comment-worthiness scale from Megan McArdle, Jor wrote,

Where is hte decision? IS this a joke? There's definitely some Drezner is hiding. The only thing I can think of is he's in love with one of the Bush daughters after their recent vogue spread
where all of the spelling and grammar mistakes are in the original quote. The rest of the comment is of a similar quality, as are all of Jor's comments on this post. I have seen worse comments in other places, but Jor's stand out because they are at Daniel Drezner, which usually attracts a reasonable quality of commenter.

I also have noticed that the comments on posts involving the upcoming Presidential election, and especially comments on posts involving George W. Bush, tend to be be of much lower quality other comments at Daniel Drezner. In some cases, such as Jor's, the comments become completely deranged. Sad and, to me, puzzling.

posted by: Average Joe on 08.06.04 at 07:43 PM [permalink]

Couple of things to keep in mind here:

1) it was the economists that were predicting +200k jobs, and they were making these predictions based on the underlying strength of the economy.

2) we gained jobs, not lose them.

3) the economy is in good shape. The tax cuts, low interest rates, and the weak dollar all worked wonderfully to facilitate capital formation in a collapsing stock market, make exports cheaper, and maintain consumer spending rates during a recessionary period.

With that in mind, it's worthing looking at the details (construction is flat, manufacturing is up, retail and information are down, etc), rather than obsessing over the *relative* number.

posted by: Ursus on 08.06.04 at 07:43 PM [permalink]

Sorry to tell you this, but real per capita income is up 0.5% since Bush took office. I'm
afraid that is another worse 3 years since the depression stat.

I do not blame Bush for the recesion, but his policy have contributed significantly to the point that this is the weakest economic recovery in history -- going back to almost the civil war.
Interestingly, historically every recovery has been strong except two -- the Bush I recovery and the Bush II recovery. In the first 10 quarters of these two recoveries real GDP rose 7.2% as compared to an average of 13.7% in the previous 7 post WW II recoveries. What was different about these two recoveries to all other recoveries? About the only thing I can think of is supply side or voodoo economics. Anybody got another suggestion?

Kerry is playing a very smart game-- he does not have to beat Bush. He just has to let Bush beat himself and he is doing a very good job of that.

It must be tough to be a Bush defender when you do not have any achievements to brag about so all you can do is bad mouth your opponent.

posted by: spencer on 08.06.04 at 07:43 PM [permalink]

I have a question for Average Joe, who says,

"Discussions that assume the President is the driving force behind the present economy make no sense whatever to me and they are driving me nuts ... and yes I would be saying the same thing if the economy were going swimmingly."

Did you in fact say the same thing when the economy appeared to be doing better and when President Bush and others in his administration took credit for it? If so, where did you demonstrate such intellectual honesty? Please give the links. Thanks.

posted by: Jeff L. on 08.06.04 at 07:43 PM [permalink]

Why did the economy boom in the 90's? Largely because of the creation of a new business sphere: the Internet. The Internet itself wasn't created in the 90's, of course: the original science/military net it grew from was developed throughout the preceding decade or so. But Congress (due in no small part to Al Gore's leadership on the issue) opened the 'Net to civilian development in the late 80's. It was like the arrival of a whole new ecological niche, and new industries spawned to fill it.

If you want vigorous economic growth, you need new industries. A President can't create new industries; however, a President can *impede* their creation. He can impede their creation either by executive fiat, or by not funding the basic research from which they grow. And this is exactly what Bush has done.

The biggest potential new industries are in alternate energy and stem cell/genetic medical technologies. Both require huge amounts of money in basic research grants -- which they can't have, thanks to Bush's borrow-and-spend policies, which starve the public sector, including university research. Both require free and vigorous research and development -- which they can't have, because Bush is too beholden to established players in the energy business and has also given religious fundamentalists absolute veto power over US health policies.

That plays well with his corporate cronies and his religious base. But we can't have real, lift-all-boats economic growth without
new industries, and we can't have new industries if we're going to forbid the development of their underlying technologies.

*That's* where a President makes a real difference.

Bush doesn't know science, isn't interested in knowing *about* science, and has backed himself into an ideological corner that requires him to avoid people who do know science.

Kerry doesn't have that baggage. Kerry doesn't wear those ideological/theological blinders. A President Kerry won't have a magic wand that creates 10 million jobs from thin air. A President Kerry will, however, have the intelligence and open-mindedness to support the creation of new industries, in energy and medicine, which will in turn create millions of new jobs.

posted by: CaseyL on 08.06.04 at 07:43 PM [permalink]

Jeff L., I do not have my own blog so providing links is difficult if not impossible. I have stated my position regarding the President and the current economy in a comment on a blog and in remarks to friends. My position has remained the same for at least the past year. Here is the blog comment, from Asymmetrical Information:

The modern belief that the president affects the vitality of the economy reminds me of the ancient and medieval belief that the king affected the fertility of the land. I think two beliefs share a similar psychology. Notice that Congress, which must pass all budget legislation, does not share the same responsibility in many peoples minds. I can think of similar examples of people and institutions that affect a modern dynamic economy, yet do not share the same responsibility as the president in these peoples minds. It reminds me of blaming the king for a famine or hoping that the new king will lead to good harvests.

Posted by Average Joe at March 12, 2004 05:37 PM
This comment can be found in the archives of Asymmetrical Information here. I can not link to the comment directly, but if you follow the link and note the time and date stamp, then finding the comment will be easy. It is, unfortunately, the only remark of mine that is both relevant and publically available.

I resent having my honesty questioned. I especially resent your shifting the burden of proof to my establishing my honesty. Nothing in the simple statements that I made in my earlier comments warrants such skepticism. In contrast, your aggressive debating tactics do call into question your integrity. Perhaps you could now demonstrate your fair-mindedness by providing links where you either take my position, as stated in the comments above, or where you praise George W. Bush's stewardship of the economy.

posted by: Average Joe on 08.06.04 at 07:43 PM [permalink]

Sorry to comment again so soon, but I wish to note that the comment from Asymmetrical Information that I quoted in my last comment here is extremely relevant to this post. And I also note that I have given Jeff L. an excellent opportunity to demonstrate that he is not a partisan hack. I wait with bated breath.

posted by: Average Joe on 08.06.04 at 07:43 PM [permalink]

Agree with comments by JonH and CaseyL, said it for me.

posted by: Alex on 08.06.04 at 07:43 PM [permalink]

More precisely, how the war and the economy appear to be doing will be the deciding factor for George Bush. The economy is doing well -- not uninterruptedly well, but improving slowly and solidly by most measures -- and the war in Iraq continues to go amazingly well. (Who says so? 99% of everyone visiting outside the Green Zone, including many who are clearly unsympathetic to Republicans). George Bush deserves only minor credit on both counts, and would deserve only minor blame if they were not going well. But if we as a populace are going to unreasonable assign too much blame and credit to the president, we should at least get it right whether blame or credit is due.

In both instances however, the public perception is that things are not going well, or just muddling along. There is ample commentary in the blogosphere why this might be so.

posted by: Assistant Village Idiot on 08.06.04 at 07:43 PM [permalink]

AJ, welcome to the internet! Bad grammar and spelling mistakes from rapid
fire posts are synonymous with internet street-cred, c.f. usenet or
slashdot. You obviously have been here long enough though (or perhaps it
was from highschool debate club) to learn that ad-homs are a tried and
true method when you have nothing left to argue with. Congrats, on that

Perhaps the wingnuts would like to explain to us why criticizing Bush's stimulus package as being a gigantic failure -- because it was actually a tax cut for the rich -- rather than a real stimulus package, is not relevant? Or why Bush's pie-in-the-sky economic predictions, that no one with a brain believes any more, are good for the country? The president can't do much for the economy, but the little he can do, Bush has royalled fubar'd. See my prior posts linking to Delong for the details. And BTW, Drezner himself has said the Bush policy process is significantly fubar'd -- however, it appears, he just can't pass the hurdle of linking that failed process to our current state of affairs.

posted by: Jor on 08.06.04 at 07:43 PM [permalink]

CaseyL: Alternative energy is not a big money-making opportunity. I don't know of any alternative energy advocates trying to sell it that way. The Internet was a big boost to the economy because it allowed for greater efficiency and created a number of new services. Alternative energy wouldn't really add anything new to the economy (we already have energy) and it's unlikely we will be producing energy at lower cost through alternative sources anytime soon. The only legitimate benefit from alternative energy is environmental. It would not be economically beneficial. And the federal government is already dropping plenty of money into alternative energy. You might want more, but you can't honestly claim that Republicans are stifling alternative energy development.

The Republican position of stem cell research is embarrassing, but I think you're overstating its potential economic impact. There are some interesting potential benefits from stem cells, but I don't see how stem cells could create a new industry on a scale anything like the Internet.

You're also forgetting genetically modified organisms and nanotechnology. The Republican position is clearly superior on those issues, and I think they have greater economic potential than alternative energy and stem cell research. On those issues, the left is really anti-science. They aren't just threatening to withhold federal funds. They want broad regulations to impede even private research.

posted by: Xavier on 08.06.04 at 07:43 PM [permalink]

Didn't read carefully the Weekly Standard discussion about WalMart sales until I saw DeLong rip into it. Dan - two places NOT to get reliable economic information: National Review Online and the Weekly Standard.

posted by: pgl on 08.06.04 at 07:43 PM [permalink]

Average Joe "I do not have my own blog so providing links is difficult if not impossible."
I hope your research regarding the the president's potential influence on the economy is more indepth than your research regarding links. You don't need a blog to link. (no space between


posted by: r.t. on 08.06.04 at 07:43 PM [permalink]

Hah! I should talk huh. I was giving AvJoe the whole line for making a link, and it made a link.

posted by: r.t. on 08.06.04 at 07:43 PM [permalink]

caseyl, you've let your bigotry override reality.

In the 2003 SotU, Bush announced a $1.2 billion research fund for fuel cell technology, and has since supplemented that with additional money. You can keep believing your fantasy that he's not doing anything to drive R&D but you'll still be falling back on prejudice when faced with reality.

As for your fantasy about stem cell research, the ban is limited to a prohibition against federal money being used on fetus cells (except for those cells which were harvested during the one-year exception period in 2000, when clinton lifted the existing ban). Perhaps if you had acrtually read the FAQ at the NIH site, you would also be aware that this ban does not apply to state or federal budgets. If you are aware of a specific research project that (1) requires federal money and cannot use any other source of funding, and (2) requires the use of new cells collected from fetuses and cannot use any of the existing lines or adult cells, then its not much of a venture is it?

posted by: Ursus on 08.06.04 at 07:43 PM [permalink]

Ursus, if you new anything about biomedical funding in the US, especially at the very basic science level, which stem cell research is, you'd know that hte majority fo the money is Federal and allocated by the NIH. Bush's decision is basicaclly cutting of the majority of US researchers.

posted by: Jor on 08.06.04 at 07:43 PM [permalink]

There is no ban on animal embryonic stem cell research however.

I believe it was Dean Esmay who pointed out a dearth in information about such animal experimentation where essentially people wanted to experiment on "humans" or human-like creatures without any tangible proof that the experimentation was actually beneficial.

posted by: h0mi on 08.06.04 at 07:43 PM [permalink]

r.t., when I said "I do not have my own blog so providing links is difficult if not impossible" I was refering to the difficulty in finding archived statements by me on the topic of the post on the internet. If I had my own blog then finding such statements would be much easier, as these statements would be archived in my blog. Fortunately, I could find a single statement that I made that is both relevant to the issue at hand and is archived as a comment. Finding that statement took half of an hour and, frankly, I was lucky to find it.

If you look closely the comment of mine that you remark upon, then you will see that I included a link in it. I know how to link to other sites on the internet.

posted by: Average Joe on 08.06.04 at 07:43 PM [permalink]

Average Joe, it sounds like you could benefit from a text editor that, when you finished, would automatically save your work to disk and to your clipboard. Then you could paste it into whatever blog you wanted. I guess you'd also want to index your posts with keywords so you could find them easier, but maybe a global search would be enough.

If you're spending significant time writing, wouldn't it be worth it to keep track? This is your life being spent on other people's blogs, and the writing might have some sort of residual value.

posted by: J Thomas on 08.06.04 at 07:43 PM [permalink]

Average Joe,
Thanks for the link. I'm not sure it gets at what I was asking -- I suppose what I was looking for was a similar sentiment directed at those who celebrate the Bush administration's economic stewardship. Does your cited post? I certainly acknowledge that for at least the last year you have sincerely held the position you enunciate, at least in response to those who complain about Bush's policies.

On a substantive note, while I do not think the President is the driving force behind the economy, I certainly think that the President affects the vitality of the economy. Is it really your position that he does not, or is your position the less strong one that he is not the driving force behind the economy? Or is your point, as your cited post seems to indicate, that the president does affect the economy, but he is not the only one? I certainly agree with the latter point. But that does not make people's belief that the president affects the economy any kind of magical thinking, as you seem to suggest. Also, one of your examples is telling: Congress of course does have budgetary authority, but surely we can agree that under modern conditions in general the president has taken over a considerably larger share of that authority than, say, originally intended by the framers of the Constitution. And moreover, when the president's part controls both houses of Congress, and when legislators are well-disciplined in subordination to the President, both of which have been the case for much of the Bush administration, surely we can agree that that too enhances the president's budgetary authority and causal power.

As I believe the president does affect the economy, and as I believe the President's actions have adversely affected the economy, I can't cite any instance (either with links or without) where I have either taken your position or where I have praised Bush's stewardship of the economy. But I don't see how that has anything to do with my fair-mindedness. Fair-mindedness does not, as best as I can judge, necessitate taking both sides on an issue. Nor does it rule out partisanship. As for being a hack, well, I'm not in a position to judge.

posted by: Jeff L. on 08.06.04 at 07:43 PM [permalink]

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