Cybrpnk's Rantings

Conservatives are crowing about the fantastic economic news. Should they be? I think not. They predict the best economic growth in 20 years this year. But what does that really mean. They talk about all of the jobs that are being created, but just what are those jobs? The conservatives have been complaining that people are not recognizing how good the economy is, but perhaps the real truth is that people are trusting their personal experience ahead of statistics, as well they should.

Let's start with the growth number. This is supposedly the best indicator of the health of the economy, and many economists are predicting a healthy growth rate for this year. But the growth number can't be looked at in isolation. First off, it's easy to get higher growth when you are coming out of a downturn. The economy has shrunk, so each billion dollars of growth counts more. Secondly, they completely discount the fact that the fed has kept interest rates at a forty-year low for quite some time. This makes it much cheaper to finance growth, and encourages investors to take more risks. As we saw in the tech wreck, more risk is not necessarily the healthiest thing to build the economy on. Also lost in the numbers is the effect of the massive military spending Bush has pushed over the last eighteen months. If you take the effect of that money out of the economy, things are not so rosy.

But what about all those jobs that have been created? Well, first off a significant number of those jobs are in government, or directly tied to government spending. The job growth in private industry is still anemic. Secondly, the job growth numbers have not yet been above the people applying for unemployment in any month. That's right, even in the best months there were actually fewer jobs at the end of the month than at the beginning. Also, due to the absurd way the U.S. calculates unemployment, the new workers being added to the workforce every month are not counted. As people turn eighteen, or graduate from school, they are now looking for work. But they haven't had jobs, so they aren't considered unemployed. Economists estimate that there are as many as 300,000 such new people every month. Again, Bush's job gains are not even treading water. But unemployment is down, right? Wrong. As people exhaust their unemployment benefits, they cease to be considered unemployed. How's that for crazy? The actual percentage of adults working is significantly lower than it was when Bush took office. But we don't measure unemployment that way. The reason ordinary people don't think the economy is getting better is that for most of them it isn't.

There is one other critical wrinkle in the job creation figures. To hear the conservatives talk, you would think that all jobs are equivalent. Presumably none of them would be willing to trade in their big salaries for a job at McDonalds or Wal-Mart, but they seem to think that everyone else should be happy with such a tradeoff. It's hard to get exact numbers on this, but there is a widespread belief that the average new job being created is lower paying than the jobs that are being lost, and frequently comes with less generous benefits.

Ultimately what Wall Street means when it touts a healthy economy is that things are good for Wall Street. If you believe in the old cliche about a rising tide lifting all yachts, you'll be satisfied with that. If you suspect that maybe what's best for corporations is not best for America you are not going to be comforted by mere numbers. You will want real jobs, at decent wages, with comprehensive benefits. And on that front, Bush has completely failed to deliver.

Apparently Wall Street is unhappy with John Kerry's choice of running mate because they think John Edwards is anti-business. Well, maybe it's time we had people running this country who believed that what was good for America would ultimately be good for business. Maybe it's time to let Wall Street wait for things to get better, rather than them rolling in cash and telling everyone else to be patient.