The Daily Parker

Politics, Weather, Photography, and the Dog

Data-supported conclusions about jobs

Via Krugman, economist Lawrence Mishel shows that businesses aren't concerned about uncertainty:

An examination of current economic trends, and especially what employers are doing in terms of hiring and investment, debunks this story about regulatory uncertainty as the cause of our dismal job growth. An examination of what employers and their economists are saying again and again in private surveys (cited later in this paper) makes it clear that what businesses actually identify as their challenges does not fit this story either. In other words, what the heavily politicized trade associations in Washington (like the [U.S.] Chamber [of Commerce]) are saying does not correspond to the real challenges facing both large and small businesses, even as they themselves perceive them.

Actually, it’s not really “uncertainty” about these potential rules and regulations that is the complaint: the regulatory process is moving along, and the rules are becoming final and therefore certain. But the House Republicans and various business groups are actually trying to delay the rules, prolonging the sense of uncertainty. The bottom line is an old conservative story: that regulation will raise costs and make future business opportunities to sell goods and services insufficiently profitable. The new twist is that these fears are suppressing current investments and hiring, and are thus a major cause of our unemployment problem.

Except it isn't true:

Instead of uncertainty about regulations, there is strong evidence that the absence of job creation reflects the continued unwinding of the financial collapse and the corresponding lack of demand. Firm investments and hiring are lower because they have ample capacity to produce the goods and services they are selling to a shrunken market, while firms are deleveraging at the same time.

Or, as Krugman says, "the willingness of so many people to completely abandon any intellectual principles here, so that they can play for Team Republican" has contributed to policies that actually hurt employment.

Comments are closed