Commentary Magazine


Topic: economy

The Canadian Way of Saving

Everyone complains that the U.S. savings rate is too low. To be sure, the way it is calculated is very flawed. It’s basically income minus outgo. But that doesn’t take into account such things as the growth of capital assets such as stocks, bonds, and real estate. Nor does it count as savings the portion of a monthly mortgage payment that is building equity rather than paying interest. Toward the end of a mortgage, most of the payment is building equity. As Forbes reported last month, American household wealth is a whopping $81.5 trillion.

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Everyone complains that the U.S. savings rate is too low. To be sure, the way it is calculated is very flawed. It’s basically income minus outgo. But that doesn’t take into account such things as the growth of capital assets such as stocks, bonds, and real estate. Nor does it count as savings the portion of a monthly mortgage payment that is building equity rather than paying interest. Toward the end of a mortgage, most of the payment is building equity. As Forbes reported last month, American household wealth is a whopping $81.5 trillion.

But if the federal government would like to see a big increase in conventional savings, it should adopt a Canadian idea that has been a huge success there. The Cato Institute reports on a savings account in Canada known as a TFSA (for Tax Free Savings Account). Canadians can put up to $5,500 a year into these accounts, out of after-tax income. And, if they put in less one year, they can put in more next year. Say in 2014 you put in only $2,000. Then next year you could put in $9,000 ($3,500 plus $5,500). The account earns tax-free interest and can be tapped at any time, with no taxes due on withdrawal.

Only available since 2009, as of June 2014, there were 13.1 million TFSAs in existence, with deposits amounting to $131.5 billion. There are about 27.7 million adult Canadians, so that means that fully 47 percent of them have a TFSA account. The United States has a population ten times that of Canada. So, presumably, if we were to adopt a similar program, in five years 130 million Americans could have $1.3 trillion on deposit.

One reason for their popularity is their liquidity and flexibility. There are no complicated rules about penalties for withdrawals or paying taxes on the interest, as there are with the various IRA’s and 401(k)s.

This is a very good idea. But, alas, Washington these days is where good ideas go to die.

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America’s Anxious Mood and What it Means for Republicans

Every political and presidential election takes place within a context and environment. And while it’s impossible to know what things will look like two Novembers from now, the overall mood of the nation then is bound to have some similarities to the mood of the nation now.

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Every political and presidential election takes place within a context and environment. And while it’s impossible to know what things will look like two Novembers from now, the overall mood of the nation then is bound to have some similarities to the mood of the nation now.

So what is the mood at this moment? The predominant feeling of Americans, according to polling data, is deeply unsettled and anxious, the product in large part of the multiplying failures of the Obama administration.

Think of the list from just the last year, from the disastrous rollout of healthcare.gov to the VA scandal, the flood of immigrants (many of them children) crossing the southern border, the Russian invasion of Crimea and its destabilization of Ukraine, Islamist advances in Libya, the colossal misjudgment about ISIS and the half-hearted air campaign the president is waging against it, and now the string of mistakes by the CDC in dealing with the Ebola virus.

Beyond this is the sluggishness of the economy, which has lasted the entire Obama presidency. Despite some encouraging recent jobs reports, overall the situation remains quite problematic: a drop in median household income even after the recession officially ended, the unusually low workforce participation rate (the lowest in 36 years), the broader failures of the Affordable Care Act, the rise in income inequality (nearing its highest levels of the last 100 years) and poverty (the poverty rate has stood at 15 percent for three consecutive years, the first time that has happened since the mid-1960s), the record number of people on food stamps and the fact that this year China overtook the United States as the world’s largest economy, the first time America has been in second place since 1872. It’s little wonder, then, that only around a quarter of Americans believe the country is on the right track.

In addition to all this, there are longer-term trends, such as middle-class Americans working longer hours than they did since 1979 while median net worth is lower, adjusted for inflation, than it was in 1989. Trust in government is at all-time lows. Disdain for the political class (especially Congress and the media) is sky-high. Americans are less trusting of our public institutions and of one another. More and more of us are living in “ideological silos”. Two-thirds of Americans think it is harder to reach the American Dream today than it was for their parents, and three quarters believe it will be harder for their children and grandchildren to succeed. Americans are pessimistic, feeling unusually vulnerable and polarized. (Political polarization is “the defining feature of early 21st century American politics,” according to the Pew Research Center.)

Given all of this, and assuming that in two years the political environment and psychological state of Americans is roughly what it is now, it’s interesting to contemplate some of the qualities they may be looking for in a GOP nominee.

My guess: A conservative who radiates competence, steadiness, and reassurance; who is perceived as principled, reform-minded, and reality-based; and who’s comfortably associated with a middle-class governing agenda. “Our main task is not to see that people of great wealth add to it but that those without much money have a greater chance to earn some,” is how former Indiana Governor Mitch Daniels put it in 2011, and his critique still holds. This can be done while also focusing needed attention on those living in the shadows of society.

In the aftermath of the Obama era, Americans will be a good deal more skeptical of empty, extravagant rhetoric. The public can also do without political figures comparing themselves to Michael Jordan, LeBron James, and Jesus (all of whom Obama or his closest aides have compared Mr. Obama to). A modesty about what government can accomplish would be most welcomed; so would distrust of those who cling to ideology even when facts argue the contrary.

Voters are likely to trust individuals who have demonstrated a mastery of governing and can identify with, and have something to say about, the challenges facing many Americans. (One example is soaring higher education costs, a subject very few Republicans talk about and even fewer Republicans have solutions for.) The Republican Party’s standard-bearer certainly needs to be perceived as modern, future-oriented, and understanding the ways the world is changing.

A GOP nominee will also have to speak more to people’s aspirations than to their fears. A campaign that could be symbolized by an angry, clenched fist won’t work. Demonstrating touches of grace and winsomeness probably will. And because Republicans are on a long-term losing streak at the presidential level, including having lost the popular vote in five of the last six elections, they’ll need to find someone who is able to do more than rally the faithful. They’ll have to win over a significant number of people who are not now voting Republican but are persuadable. Which means Republicans might want to look to someone characterized by intellectual depth and calm purpose rather than stridency. In a recent speech, Tony Blair said, “In the end parties can please themselves or please the people.” He contrasted those who have the character of a governing party with those who seem like the shriekers at the gates outside. That’s a distinction worth bearing in mind.

To be sure, no single individual will embody all these qualities, and someone may well come along who personifies other characteristics in a way that is highly appealing. In addition, of course, politics is never static. But my guess is that given the mood and attitudes of Americans right now, some combination of the traits I’ve sketched out will be needed if Republicans hope to win.

While I fully expect Republicans to do quite well in the mid-term elections 15 days from now, it’s worth recalling that Republicans did historically well in 2010 (adding 63 seats in the House and six seats in the Senate) yet lost the presidency and House and Senate seats in 2012. And like it or not, we’re in a period when the Republican Party’s image has reached a historic low; when a majority of Americans said last year that the GOP is out of touch (62 percent), not open to change (56 percent), and too extreme (52 percent); and when, at the presidential level at least, the GOP faces an uphill climb.

President Obama’s cascading failures will make things easier for Republicans in 2016, but it still won’t be easy.

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What’s Wrong with the American Economy?

Growth in the American economy since the year 2000 has averaged 1.7 percent per annum. That’s about half of what it averaged in the Reagan, Bush I, and Clinton years. Unemployment, especially in the broader measures, remains stubbornly high five years after the recession of 2007-2009 ended. What’s going on?

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Growth in the American economy since the year 2000 has averaged 1.7 percent per annum. That’s about half of what it averaged in the Reagan, Bush I, and Clinton years. Unemployment, especially in the broader measures, remains stubbornly high five years after the recession of 2007-2009 ended. What’s going on?

According to Peter Morici, an economics professor at the University of Maryland (and the bow-tied star of TV commercials for Kyocera office equipment) the problems lie in five key areas. 1) Poorly enforced trade agreements that allow China to manipulate its currency and export more goods to the United States, costing U.S. jobs. 2) Counterproductive energy policies that reduce domestic production, and therefore jobs, and cause more oil to be imported. 3) Burdensome regulations and taxation, such as restrictive licensing requirements and the highest corporate tax in the developed world. 4) Crony capitalism that reduces competition in the private sector in exchange for political contributions. 5) Disincentives to work, such as ever-expanding entitlements.

The good news is that, unlike the economic problems faced by many countries, all of these problems are amenable to reform. The bad news is that reforming the status quo, which always has determined defenders, requires strong presidential leadership and a Congress capable of acting in the national interest, not just in its members’ interests.

Right now, of course, we have neither. Even Democrats are beginning to notice that the Obama presidency is notably lacking in leadership. And Congress is more dysfunctional than it has been in a very long time. The latter problem can be at least partially ameliorated in a month. The former will have to wait until 2017.

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The Jobs Report

This month’s jobs report is a distinct improvement over last month’s mediocre results. The economy created 248,000 jobs, somewhat above the recent average of about 228,000. Unemployment fell two-tenths of a percent to 5.9 percent, the lowest since July 2008, as the financial crisis was rapidly building. Previous months’ estimates were raised as well. The August estimate had originally been 148,000 jobs. That was raised to 180,000.

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This month’s jobs report is a distinct improvement over last month’s mediocre results. The economy created 248,000 jobs, somewhat above the recent average of about 228,000. Unemployment fell two-tenths of a percent to 5.9 percent, the lowest since July 2008, as the financial crisis was rapidly building. Previous months’ estimates were raised as well. The August estimate had originally been 148,000 jobs. That was raised to 180,000.

There are still 9.3 million unemployed. That is down 329,000 from the previous month. But notice that that number is well above the 248,000 new jobs created. So the unemployment rate is going down, at least in part, because of people dropping out of the work force, not because they found work. The labor force participation rate fell .1 percent to 62.7 percent. Before the recession, it was at about 66 percent. There are 7.1 million working part-time when they would prefer to be in full-time jobs.

Yesterday President Obama was at Northwestern University touting his administration’s economic performance. George Will, on last night’s Special Report with Bret Baier, was less than impressed:

The president went to the state of Illinois to brag about the economy. Illinois has 300,000 fewer jobs than it had in 2008. For the last four years in the state of Illinois, the number of new food stamp recipients has increased twice as fast as the number of new job recipients. He was speaking in Illinois on a college campus. He did not mention that 40 percent of recent college graduates are either unemployed or underemployed — that is, in jobs that don’t require college degrees — and one in three recent college graduates is living at home with their parents.

No wonder that 58 percent of the country thinks that we’re still in recession when the recession, technically, ended over five years ago, in June 2009.

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The Jobs Report

Job growth stumbled in August. While economists had been expecting 225,000 new jobs, there were only 142,000, the first time the jobs number was below 200,000 since January, in the middle of a terrible winter. The unemployment rate dropped a notch to 6.1 percent, but so did the participation rate, to 62.8 percent, tying its lowest rate since the 1970s. In August 2013, the unemployment rate was 7.2 percent and the participation rate was 63.2 percent. In other words, much of the improvement in the unemployment rate comes not from more jobs but from fewer workers.

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Job growth stumbled in August. While economists had been expecting 225,000 new jobs, there were only 142,000, the first time the jobs number was below 200,000 since January, in the middle of a terrible winter. The unemployment rate dropped a notch to 6.1 percent, but so did the participation rate, to 62.8 percent, tying its lowest rate since the 1970s. In August 2013, the unemployment rate was 7.2 percent and the participation rate was 63.2 percent. In other words, much of the improvement in the unemployment rate comes not from more jobs but from fewer workers.

Those unemployed for more than 27 weeks dipped by 192,000, but is still very high at 2,963,000, 31.2 percent of all unemployed. Those working part time when they would prefer full time dropped by 234,000 to 7,277,000. If the under-employed are added to the unemployed, the broader unemployment rate is 12 percent, down from 12.2 percent last month.

So the Obama recovery continues at its dawdling pace, like a reluctant child on his way to school, still showing no signs whatsoever of Alan Greenspan’s dreaded “irrational exuberance.”

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The Jobs Report

The July jobs report came in this morning a little below expectations. That’s a good thing for Wall Street. It tumbled 318 points yesterday because of the rebound in GDP to 4 percent for the second quarter reported on Wednesday. The stock market has been doing so well lately (it has more than doubled since its recession low in March 2009) because the Federal Reserve has been keeping interest rates near zero to bolster the economy. With bonds paying so little, equities have been the only game in town. But with a stronger economy, the Fed will begin to raise rates and money would begin shifting out of stocks and into other investments. So right now, good news is bad news on Wall Street.

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The July jobs report came in this morning a little below expectations. That’s a good thing for Wall Street. It tumbled 318 points yesterday because of the rebound in GDP to 4 percent for the second quarter reported on Wednesday. The stock market has been doing so well lately (it has more than doubled since its recession low in March 2009) because the Federal Reserve has been keeping interest rates near zero to bolster the economy. With bonds paying so little, equities have been the only game in town. But with a stronger economy, the Fed will begin to raise rates and money would begin shifting out of stocks and into other investments. So right now, good news is bad news on Wall Street.

The economy added 209,000 jobs last month, down from June’s 298,000 (revised upwards in the latest report). Unemployment ticked up to 6.2 percent from 6.1 last month. Job growth has been above 200,000 a month for the last six months, the first time that has happened since 1997. The participation rate went up, but only a single notch, from 62.8 percent to 62.9.

But black unemployment rose from 10.7 percent to 11.4, while black youth unemployment went from 33.4 percent to 34.9. Both these numbers tend to be volatile, but they are still dismal. The number of people working part time for lack of full-time jobs was unchanged at 7.5 million; 3.2 million people have been unemployed for six months or longer, almost one-third of all unemployed.

In all, another so-so jobs report, typical of the Obama recovery.

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The Jobs Report

The employment picture brightened somewhat in June, with 288,000 new jobs (up from a revised 224,000 in May) and a decline in the unemployment rate to 6.1 percent from 6.3. That’s the lowest unemployment rate since August 2008, on the eve of the financial crisis. We have now had job growth above 200,000 for the last five months, the first time that has happened since the very prosperous years of the late 1990s. The number of long-term unemployed (over 27 weeks) declined by 293,000. Unemployment among African-Americans fell from 11.5 percent to 10.7.

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The employment picture brightened somewhat in June, with 288,000 new jobs (up from a revised 224,000 in May) and a decline in the unemployment rate to 6.1 percent from 6.3. That’s the lowest unemployment rate since August 2008, on the eve of the financial crisis. We have now had job growth above 200,000 for the last five months, the first time that has happened since the very prosperous years of the late 1990s. The number of long-term unemployed (over 27 weeks) declined by 293,000. Unemployment among African-Americans fell from 11.5 percent to 10.7.

But the picture was not all bright. The number of involuntary part-time workers increased by 275,000. Teenage unemployment increased to 21 percent. Among black teenagers it was a horrendous 33.4 percent, up from 31.1 percent in May. One in three black teenagers in the labor force are unemployed. The participation rate stayed steady at 62.8 percent for the third month in a row. But that is down from a year ago, when it was 64 percent and way down from before the recession. So much of the drop in unemployment came from people dropping out of the labor force, not finding jobs.

And many of the new jobs were at the low end of the pay scale. While retail jobs increased by 40,000 and leisure and hospitality 39,000, higher-paying jobs in manufacturing (16,000) and construction (6,000) were far fewer.

So while the news is good, it is not unalloyed good. We’ll know we are finally in a full-fledged recovery when the participation rate begins to climb steadily as discouraged workers see more opportunity and begin looking for jobs. That might send the unemployment rate up at first, but that, paradoxically, would actually be good news.

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Obama’s Climate Laughs No Substitute for Sound Economics

President Obama had a good time mocking congressional Republicans yesterday for being skeptics about climate change. But even he seems to know that selling his radical proposals that will cause serious economic pain will not be as easy a sell as jokes about Flat Earth Republicans.

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President Obama had a good time mocking congressional Republicans yesterday for being skeptics about climate change. But even he seems to know that selling his radical proposals that will cause serious economic pain will not be as easy a sell as jokes about Flat Earth Republicans.

As Politico noted, Obama’s speech to the League of Conservation Voters was notable mainly for the president’s comedy routine aimed at depicting those who haven’t bought into every aspect of the radical environmentalist agenda as extremists with a screw loose. The reason for this strategy is easy to understand.

If Obama’s talking about regulations, he’s losing. If he’s talking about carbon caps for power plants or energy emissions for air conditioners, no one cares. But if he’s talking about crazy Republicans who don’t make any sense—and by the way, are putting children at risk, he charges—well, that’s an argument he can wrap his arms around.

Given the stranglehold that the global warming crowd has on the mainstream media and, even more importantly, in popular culture, the president’s confidence that a majority of Americans may agree with him on climate issues is well founded. But the gap between a general belief that the earth may be warming and a suspicion that human activity may be causing it and support for some of the administration’s prescriptions to address these issues is considerable.

As even the president acknowledged in his speech, his attempt to get rid of coal-fired power plants and force car manufacturers to alter their plans will have economic consequences. But the disconnect here isn’t merely a matter of marketing and better communication, as the White House seems to think.

As I noted back in March, polls have consistently shown that while the American people may believe the climate is changing, they don’t consider this to be a priority when it comes to government action. Liberals tend to think the reason for this is that the public is not yet sufficiently alarmed by the prospect of global warming. But instead of attempting to make a reasonable case for changes that will send electricity and gas prices skyrocketing and the refusal to undertake projects, like the Keystone XL Pipeline, that would increase America’s available resources, they engage in scare tactics that, generally, backfire.

That’s because what the public wants is not so much mockery of skeptics or hysterical and wildly exaggerated predictions of a warming apocalypse but a measured analysis of the cost/benefit ratio of climate legislation. And that is exactly what is lacking in the president’s comedy routine. Even if the courts have given the president the power to enact far-reaching changes without benefit of congressional approval, that doesn’t translate into widespread approval for carbon regulations that will damage the economy and cause genuine economic hardship. Nor will that problem be solved be reports filled with alarmist predictions funded by wealthy activists like Tom Steyer and Michael Bloomberg that liberals cite to justify the suffering that will be imposed on the public. Though most Americans may think the climate is changing, they don’t think the apocalypse is at hand and aren’t interested in lowering their standard of living merely to gratify extremist ideology.

Merely branding his opponents as crazy won’t resolve this problem. Nor will the usual amorphous rhetoric about the power of green jobs that never seem to materialize and new technologies that will leapfrog over current difficulties that may take decades before they can take the place of fossil fuels, if, in fact, they ever do. In the meantime, they are left facing the prospect of Obama’s proposals creating economic havoc. As some Democrats in energy-producing states are learning, Obama may be getting laughs from coastal elites but his backing for environmentalist extremism may cost his party some Senate seats to the same Republicans he’s been mocking. While he may be thinking in terms of his 2008 boast about turning back the oceans, that seems a poor exchange for unpopular policies even if most Americans don’t agree with the skeptics.

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First Quarter GDP Is Down 2.9 Percent

The Commerce Department announced this morning that American GDP in the first quarter of 2014 declined a stunning 2.9 percent. That’s the first decline in GDP since the first quarter of 2011 and the biggest decline since the first quarter of 2009, while the economy was still in the throes of the Great Recession.

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The Commerce Department announced this morning that American GDP in the first quarter of 2014 declined a stunning 2.9 percent. That’s the first decline in GDP since the first quarter of 2011 and the biggest decline since the first quarter of 2009, while the economy was still in the throes of the Great Recession.

When the Commerce Department first announced first quarter GDP, in April, it measured it at being up .1 percent. In May it revised the figure to down 1 percent, and now it’s down 2.9 percent. Early GDP figures are often substantially revised, but this beat the estimate of economists surveyed by the Wall Street Journal, which was a 2 percent decline.

To be sure, the awful winter much of the country suffered had caused shoppers to stay home and many construction projects to be halted. But manufacturers drew down inventory and exports were down by a substantial 8.9 percent as other economies, especially in Europe, remain subpar.

The economy is expected to rebound in the second quarter, which ends on Monday, and no one is expecting a further decline in GDP. (Two consecutive quarters of declining GDP is the standard definition of a recession, by the way.) But even if the second quarter lives up to expectations of 3.6 percent growth, the growth for the first half of 2014 will be well below the 2 percent average since the economy began to expand in June 2009. American GDP growth over the long term has been a little over 3 percent.

So the American economy in the Obama recovery continues to sputter and wheeze.

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The Jobs Report

The economy added 217,000 jobs in May while the unemployment rate remained unchanged at 6.3 percent. The jobs number is a bit above the monthly average over the last six months, enough growth to keep the economic situation from getting worse but not enough to produce what anyone would call boom times.

The number of people employed in the United States reached 138.5 million, a new record, finally surpassing the previous record set in January 2008 before the financial crisis. But the population since then has increased by five percent. So the labor participation rate, at 62.8 percent (unchanged from last month) is well below the rate in January 2008, when it was 66.2 percent.

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The economy added 217,000 jobs in May while the unemployment rate remained unchanged at 6.3 percent. The jobs number is a bit above the monthly average over the last six months, enough growth to keep the economic situation from getting worse but not enough to produce what anyone would call boom times.

The number of people employed in the United States reached 138.5 million, a new record, finally surpassing the previous record set in January 2008 before the financial crisis. But the population since then has increased by five percent. So the labor participation rate, at 62.8 percent (unchanged from last month) is well below the rate in January 2008, when it was 66.2 percent.

There are still 7.3 million workers working part-time because they cannot find full-time employment or have had their hours cut back. There are 697,000 “discouraged” workers, little changed from a year ago. Overall teenage unemployment remains a dismal 19.2 percent while for black teenagers it’s an appalling 31.1 percent. That’s down from 36.8 percent last month, but this number tends to be volatile.

All in all this is about an average jobs report for the Obama era. Nothing to write home about but not calamitous either.

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Solving the GOP’s Middle Class Problem

Yesterday the YGNetwork released a new book, Room To Grow: Conservative Reforms for Limited Government and a Thriving Middle Class. It includes essays by some of the top thinkers and policy experts in the conservative world, offering reforms in the areas of health care, K-12 and higher education, energy, taxes, job creation, the social safety net, regulations and finances, and the family. Yuval Levin articulated a conservative governing vision while Ramesh Ponnuru wrote a chapter on recovering the wisdom of the Constitution.  

(The New York Times story on the release of the book can be found here, a related event held at the American Enterprise Institute can be viewed here, and the book itself and chapter summaries can be found here.) 

For my part, I contributed an opening chapter to Room To Grow, the purpose of which is to define the middle class and summarize the attitudes of those who comprise it. Here’s what I found. 

When speaking of the middle class, there’s both a technical and a practical definition. The technical definition is households with annual incomes ranging from roughly $39,400 to $118,200. The practical definition is the broad base of Americans. Fully 85 percent of Americans consider themselves as part of an expanded definition of middle class (lower, upper, and simply middle class). It’s people who don’t consider themselves rich or poor and who can imagine their fortunes going either way. 

Any successful political movement and party need to be seen as addressing their concerns.

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Yesterday the YGNetwork released a new book, Room To Grow: Conservative Reforms for Limited Government and a Thriving Middle Class. It includes essays by some of the top thinkers and policy experts in the conservative world, offering reforms in the areas of health care, K-12 and higher education, energy, taxes, job creation, the social safety net, regulations and finances, and the family. Yuval Levin articulated a conservative governing vision while Ramesh Ponnuru wrote a chapter on recovering the wisdom of the Constitution.  

(The New York Times story on the release of the book can be found here, a related event held at the American Enterprise Institute can be viewed here, and the book itself and chapter summaries can be found here.) 

For my part, I contributed an opening chapter to Room To Grow, the purpose of which is to define the middle class and summarize the attitudes of those who comprise it. Here’s what I found. 

When speaking of the middle class, there’s both a technical and a practical definition. The technical definition is households with annual incomes ranging from roughly $39,400 to $118,200. The practical definition is the broad base of Americans. Fully 85 percent of Americans consider themselves as part of an expanded definition of middle class (lower, upper, and simply middle class). It’s people who don’t consider themselves rich or poor and who can imagine their fortunes going either way. 

Any successful political movement and party need to be seen as addressing their concerns.

As for what I discovered in my analysis of the middle class, let me start with their mood, which is anxious, insecure, and uneasy. National Journal‘s Ronald Brownstein, in analyzing the data from an April 2013 Heartland Monitor Poll, said, “The overall message is of pervasive, entrenched vulnerability–a sense that many financial milestones once assumed as cornerstones of middle-class life are now beyond reach for all but the rich.” 

These concerns are largely justified. Since the turn of the century, middle class Americans have been working harder yet losing ground. Wages are stagnant. (The typical household is making roughly the same as the typical household made a quarter of a century ago.) Meanwhile, the cost of living–especially health-care and higher education costs–has gone way up. For example, health-care spending per person, adjusted for inflation, has roughly doubled since 1988, to about $8,500. The average student debt in 2011 was $23,300. (For middle class families, the cost of one year of tuition equals about half of household income.)   

The middle class is also increasingly pessimistic, with two-thirds of Americans thinking it’s harder to reach the American Dream today than it was for their parents and three-quarters believing it will be harder for their children and grandchildren to succeed.

The middle class holds the political class largely responsible for the problems they face. Sixty-two percent place “a lot” of blame on Congress, followed by banks/financial institutions and corporations. 

If Congress in general is held in low esteem, the situation facing the GOP is particularly problematic. Middle class Americans are more likely to say that Democrats rather than the Republicans favor their interests. Polls indicate 62 percent of those in the middle class say the Republican Party favors the rich while 16 percent say the Democratic Party favors the rich; 37 percent of those in the middle class say the Democratic Party favors the middle class while only 26 percent say the GOP does. When asked which groups are helping the middle class, 17 percent had a positive response to Republican elected officials; 46 percent were negative. (For Democrats, the numbers were 28 percent positive v. 40 percent negative.) 

The challenge of the GOP, then, is to explain how a conservative vision of government can speak to today’s public concerns; and to explain how such a vision should translate into concrete policy reforms in important areas of our national life. 

“Policy is problem solving,” I wrote in the introduction:

It answers to principles and ideals, to a vision of the human good and the nature of society, to priorities and preferences; but at the end of the day it must also answer to real needs and concerns. And public policy today is clearly failing to address the problems that most trouble the American people.

Room To Grow suggests some ways forward, with special emphasis on what can be done to assist and empower those who are, and those who want to be, in the middle class.

Reactionary liberalism is intellectually exhausted and politically vulnerable. There is therefore an opening for conservatism to offer a different way of thinking about government, to move from administering large systems of service provision to empowering people to address the problems they confront on their own terms; to provide people with the resources and skills they need to address the challenges they face rather than to try to manage their decisions from on high. The task of the right isn’t simply to offer new policies, as vital as they are, but to explain the approach, the organizing principle, behind them. It is, as my Ethics and Public Policy Center colleague Yuval Levin puts it, replacing a failing liberal welfare state with a lean and responsive 21st century government worthy of a free, diverse and innovative society. It’s time we get on with it.

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The Jobs Report

If the Commerce Department’s first-quarter GDP report that came out on Wednesday was bad news for the administration, the Bureau of Labor Statistics’ jobs report this morning is good news.

The economy added 288,000 new jobs last month and the February and March figures were upped from previous estimates to 222,000 and 203,000 respectively. The 288,000 figure represents the largest number of jobs added in a month since January 2012, and the second biggest since recovery began in June 2009. The statistics for most subgroups moved in the right direction as well. Black unemployment, for instance, fell from 12.4 percent to 11.6 percent.

But the big news is that the unemployment rate fell a whopping four-tenths of a percent to 6.3 percent, the lowest since September 2008, just before the financial crisis struck with full force. Economists had been expecting a drop to 6.6 percent. However, part of that drop can be attributed to a sharp drop in the total labor force, which shrank by 806,000. The labor force participation rate also fell by 0.4 percent to a dismal 62.8 percent. It was 66 percent in September 2008. If it were still at 66 percent the unemployment rate would be far higher than it is.

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If the Commerce Department’s first-quarter GDP report that came out on Wednesday was bad news for the administration, the Bureau of Labor Statistics’ jobs report this morning is good news.

The economy added 288,000 new jobs last month and the February and March figures were upped from previous estimates to 222,000 and 203,000 respectively. The 288,000 figure represents the largest number of jobs added in a month since January 2012, and the second biggest since recovery began in June 2009. The statistics for most subgroups moved in the right direction as well. Black unemployment, for instance, fell from 12.4 percent to 11.6 percent.

But the big news is that the unemployment rate fell a whopping four-tenths of a percent to 6.3 percent, the lowest since September 2008, just before the financial crisis struck with full force. Economists had been expecting a drop to 6.6 percent. However, part of that drop can be attributed to a sharp drop in the total labor force, which shrank by 806,000. The labor force participation rate also fell by 0.4 percent to a dismal 62.8 percent. It was 66 percent in September 2008. If it were still at 66 percent the unemployment rate would be far higher than it is.

If the trend of the last three months continues, one would expect more people to enter the labor force and that could push the unemployment rate back up for a while.

All in all, the Obama White House is happy this morning. Well, at least about the employment statistics if nothing else.

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The Growth Figures

New gross domestic product figures for the first quarter of 2014 were released this morning by the Commerce Department and they are dismal, a mere 0.1 percent growth. This was way below what economists had been expecting (the Wall Street Journal’s survey of economists had predicted a less-than-stellar 1.1 percent) and even more below the pace of the last half of 2013, which was 3.4 percent.

To be sure, it was a brutal winter in much of the country this year, but these figures are seasonally adjusted, to reflect normal winter slowdown in such industries as construction. Had it not been for considerably above normal spending on energy to heat homes, which caused consumer spending to rise by 3 percent (it rose 3.3 percent in the last quarter of 2013), the figures would have been worse.

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New gross domestic product figures for the first quarter of 2014 were released this morning by the Commerce Department and they are dismal, a mere 0.1 percent growth. This was way below what economists had been expecting (the Wall Street Journal’s survey of economists had predicted a less-than-stellar 1.1 percent) and even more below the pace of the last half of 2013, which was 3.4 percent.

To be sure, it was a brutal winter in much of the country this year, but these figures are seasonally adjusted, to reflect normal winter slowdown in such industries as construction. Had it not been for considerably above normal spending on energy to heat homes, which caused consumer spending to rise by 3 percent (it rose 3.3 percent in the last quarter of 2013), the figures would have been worse.

Business investment in such things as equipment and buildings fell 2.1 percent from the last quarter. Exports fell a startling 7.6 percent, the largest drop since the recession officially ended in June 2009 and reflecting lackluster economic growth abroad. Imports fell much less, only 1.4 percent.

To be sure, economists expect GDP growth to pick up next quarter, in part because the spending that was delayed this winter by the awful weather will be made up this spring and summer. But this continues a worrying pattern of not only lackluster growth overall, but very erratic growth, as can be seen in this chart from the Bureau of Economic Analysis. This is not at all typical of a recovery from a deep recession, which usually shows strong and steady growth.

Democrats had better pray that this is a blip in the statistics. Two more quarters like this and November will be an ugly political month for them.

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The Jobs Report

The monthly jobs report is modestly good news for the economy. While the unemployment rate stayed at 6.7 percent, the economy created 192,000 new jobs and the job totals for January and February were upped by a combined 37,000. There was other good news too. Teenage unemployment declined from 21.4 percent to 20.9. But the unemployment rate for black teenagers (which tends to be volatile) rose from 32.4 to 36.1. That might reflect more black teenagers coming into the job market, looking for employment. The participation rate ticked up from 63 to 63.2 percent. But it’s still down from a year ago, when it was at 63.3.

The economy needs at least 250,000 new jobs a month to achieve a steady decline in the unemployment rate and we have had only three months with job creation that robust since the end of 2011. So the recovery remains sluggish.

The administration will undoubtedly be touting the fact that the economy now has more private-sector jobs (116.09 million) than at the former peak in January 2008, when there were 115.98 million private-sector jobs. But don’t look for the administration to take note that since January 2008, governments have shed a total of 535,000 jobs, so the national job total is still well below the pre-recession peak. It won’t make the point either that the civilian labor force is 2 million people larger than it was six years ago, and that the participation rate was then 66.2 percent as opposed to today’s 63.2 percent.

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The monthly jobs report is modestly good news for the economy. While the unemployment rate stayed at 6.7 percent, the economy created 192,000 new jobs and the job totals for January and February were upped by a combined 37,000. There was other good news too. Teenage unemployment declined from 21.4 percent to 20.9. But the unemployment rate for black teenagers (which tends to be volatile) rose from 32.4 to 36.1. That might reflect more black teenagers coming into the job market, looking for employment. The participation rate ticked up from 63 to 63.2 percent. But it’s still down from a year ago, when it was at 63.3.

The economy needs at least 250,000 new jobs a month to achieve a steady decline in the unemployment rate and we have had only three months with job creation that robust since the end of 2011. So the recovery remains sluggish.

The administration will undoubtedly be touting the fact that the economy now has more private-sector jobs (116.09 million) than at the former peak in January 2008, when there were 115.98 million private-sector jobs. But don’t look for the administration to take note that since January 2008, governments have shed a total of 535,000 jobs, so the national job total is still well below the pre-recession peak. It won’t make the point either that the civilian labor force is 2 million people larger than it was six years ago, and that the participation rate was then 66.2 percent as opposed to today’s 63.2 percent.

All in all, the new jobs report displays an economy that is growing but hardly soaring. It’s not yet morning in America, to coin a phrase, but there is, perhaps, a hint of pink in the east.

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Unskilled Labor and the Minimum Wage

Like single-payer medical care, the minimum wage has one great advantage as a political idea: It can be explained on the back of a post card.  If employers are forced to pay a living wage then no one will live in poverty. For low-information voters (and the vast majority of political reporters) that’s all there is to it. Q.E.D.

No wonder liberal politicians have been advocating the minimum wage since the New Deal era. It’s been winning them favorable headlines and elections for eighty years.

But, again like single-payer, because it is a good political idea doesn’t mean that it’s a good economic one. It isn’t. A mandated minimum wage is utterly the wrong way to approach the problem of some people being unable to earn a decent living. Here’s why.

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Like single-payer medical care, the minimum wage has one great advantage as a political idea: It can be explained on the back of a post card.  If employers are forced to pay a living wage then no one will live in poverty. For low-information voters (and the vast majority of political reporters) that’s all there is to it. Q.E.D.

No wonder liberal politicians have been advocating the minimum wage since the New Deal era. It’s been winning them favorable headlines and elections for eighty years.

But, again like single-payer, because it is a good political idea doesn’t mean that it’s a good economic one. It isn’t. A mandated minimum wage is utterly the wrong way to approach the problem of some people being unable to earn a decent living. Here’s why.

When we talk about the “U.S. economy” we are talking about the sum of all transactions that take place in the United States in a given time frame.  A transaction is nothing neither more nor less than, “an exchange of commodities between two parties that is to the benefit of both parties.” Each side of a transaction must value what it receives more than what it gives away or the transaction won’t take place. No one would willingly spend ten dollars to buy a five-dollar bill.

But a mandated minimum wage sometimes requires employers to do exactly that. No employer will willingly pay an employee X dollars an hour unless he is reasonably sure he will get more than X dollars worth of work from him. And workers just entering the marketplace are usually unskilled and therefore their labor isn’t worth much, especially as unskilled jobs are more and more being automated. In the 1940’s former Congressman Herman Badillo worked his way through high school and college by working as a pin-spotter in a bowling alley, as a dishwasher, and as an elevator boy. All three jobs are now extinct.

So a mandated minimum wage set at a level above what unskilled labor is worth has several pernicious economic effects.

First, it costs jobs. If we understand anything about economics, we understand that if you raise the price of a commodity there will be less demand for that commodity. That’s just as true of labor as it is of beef, cement, or automobiles. Teenage unemployment is currently at 20.7 percent (black teenage unemployment is at a horrendous 38 percent). Raising the minimum wage will increase that unemployment or the law of supply and demand is false. A job at a subpar wage is a lot better than no job at all. That’s especially true as very few full-time employees stay at the minimum wage they started at. Once they acquire some skills and become more valuable to the employer, they start getting raises. Raising the minimum wage just keeps them from getting on that all-important first rung of the ladder.

Second, it helps the wrong people. The typical minimum-wage earner is not a head of household or primary breadwinner. He’s a teenager flipping hamburgers or bagging groceries after school. Thirty-nine percent—well over a third—of minimum wage earners live in families with incomes at least three times the poverty level. The average family income of minimum wage earners is $48,000 a year.

Third, the people who need the help—heads of households—would be far better helped by the earned income tax credit, which is predicated on family income, not individual wages, with no economic disruption. In other words the EITC is a medicine with far fewer undesirable side effects than the minimum wage. One reason that politicians don’t like it is that it shows up on the federal books, adding to the deficit, which the minimum wage doesn’t.

Fourth, the reason the minimum wage is so strongly backed by labor unions (the prime lobbying force at work here) is that while few of their members earn the minimum wage, many of them contractually earn multiples of it. So raising the minimum wage for those earning $7.25 an hour bagging groceries also raises the wages of those earning, say, $29 an hour (plus benefits) as a skilled worker. In other words, raising the minimum wage tends to raise the price of labor across the wage-earning spectrum, reducing the demand for labor across that entire spectrum.

Fifth, raising the minimum wage will only accelerate the trend to robotics and automation replacing unskilled labor. Five years ago, the grocery store I often go to had fourteen checkout lines, all manned by clerks. Today it has fourteen checkout lines, six of them manned by computers. Jack up the minimum wage by 39 percent, as Obama wants to do, and do you think in a few years there might be only one line that’s manned by a minimum wage worker instead of a computer? I do.

The minimum wage is a classic example of a really lousy idea that, unexamined, sounds noble. It’s not, it’s economic poison.

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The Oil and Gas Boom Booms On

The domestic oil and gas boom is rolling on, with no end of positive effects for the American economy. At the official end of the recession, in June 2009, we pumped 158.266 million barrels of oil that month. In November 2013, we pumped 233.051 million barrels, a 47.2 percent increase. This has led directly to much less imported oil, a much improved balance of trade, and a less influential OPEC.

But as Investor’s Business Daily points out, the economic benefits of the energy boom spread far beyond the oil industry into the economy as a whole. Jobs in the oil and gas fields are up about 40 percent since the end of the recession, and the ten states that are seeing substantially rising hydrocarbon production all have had job growth above the national average. And as IBD explains, “These jobs, moreover, are ‘sticky’ — anchored in the local economy and ranging from information services to training, health care, housing, education and related manufacturing.” North Dakota, battening on the rich oil resources of the Bakken Shield, has the lowest unemployment rate in the country.

And low-cost energy is attracting foreign investment. “The boom has also attracted a similar scale of new foreign direct investment,” IBD reports. “Because of low-cost energy abundance, 100 factories are set to come on line by 2017. When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.”

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The domestic oil and gas boom is rolling on, with no end of positive effects for the American economy. At the official end of the recession, in June 2009, we pumped 158.266 million barrels of oil that month. In November 2013, we pumped 233.051 million barrels, a 47.2 percent increase. This has led directly to much less imported oil, a much improved balance of trade, and a less influential OPEC.

But as Investor’s Business Daily points out, the economic benefits of the energy boom spread far beyond the oil industry into the economy as a whole. Jobs in the oil and gas fields are up about 40 percent since the end of the recession, and the ten states that are seeing substantially rising hydrocarbon production all have had job growth above the national average. And as IBD explains, “These jobs, moreover, are ‘sticky’ — anchored in the local economy and ranging from information services to training, health care, housing, education and related manufacturing.” North Dakota, battening on the rich oil resources of the Bakken Shield, has the lowest unemployment rate in the country.

And low-cost energy is attracting foreign investment. “The boom has also attracted a similar scale of new foreign direct investment,” IBD reports. “Because of low-cost energy abundance, 100 factories are set to come on line by 2017. When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.”

The Obama administration, naturally, is taking entirely undeserved credit for this, for its policies have slowed the oil and gas boom to the extent possible. Other Democrats, with the president’s blessing, have also been impeding oil and gas drilling. While Pennsylvania has been exploiting the vast gas reserves of the Marcellus shale, Governor Andrew Cuomo in neighboring New York has decided to let deeply depressed upstate go on being deeply depressed rather than drill into the Marcellus shale and, Cuomo proclaims, risk ground water contamination. This is, of course, nonsense. Fracking began in 1947 and hundreds of thousands of wells have been drilled in the last 67 years using the technique. There has not been a single case of documented ground water contamination from any of those wells.

Domestically, President Obama has, at best, slow walked the best and most obvious means of increasing American economic prosperity and employment. Internationally, he has worked to limit his country’s influence and prestige. I can think of no other example in all human history of a head of state whose policies were designed to weaken the country he headed.

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Obama’s Priorities v. Those of the American People

President Obama has recently said that the trend of growing inequality is “certainly my highest priority.” He might be interested to know that it’s not the highest priority for the people he was voted to represent.

Not even close.

A new Gallup poll found the 10 most important issues facing the American people to be, in order, (1) unemployment/jobs; (2) economy in general; (3) government; (4) health care; (5) federal budget deficit/federal debt; (6) immigration/illegal aliens; (7) ethical/moral decline; (8) education; (9) lack of money; and (10) poverty/hunger/homelessness. Even among Democrats, income inequality doesn’t rate. Neither, by the way, does raising the minimum wage, climate change, and gun control–three other issues Mr. Obama has made central to his second-term agenda.

So why is the president talking about issues that the public has so little concern about?

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President Obama has recently said that the trend of growing inequality is “certainly my highest priority.” He might be interested to know that it’s not the highest priority for the people he was voted to represent.

Not even close.

A new Gallup poll found the 10 most important issues facing the American people to be, in order, (1) unemployment/jobs; (2) economy in general; (3) government; (4) health care; (5) federal budget deficit/federal debt; (6) immigration/illegal aliens; (7) ethical/moral decline; (8) education; (9) lack of money; and (10) poverty/hunger/homelessness. Even among Democrats, income inequality doesn’t rate. Neither, by the way, does raising the minimum wage, climate change, and gun control–three other issues Mr. Obama has made central to his second-term agenda.

So why is the president talking about issues that the public has so little concern about?

Part of the explanation, I suspect, is that Mr. Obama really believes in his (progressive) agenda and feels more liberated in his second term to pursue it. But I also imagine that the president has very little to say that’s helpful to him or his party about unemployment and jobs, the economy in general, health care, and the debt. So Mr. Obama is turning to other issues, hoping to shift the American people’s focus from what they care about to what he cares about.

This effort is turning out to be a bust. The public is tuning the president out and turning him off. His words are like white noise, and he increasingly looks to be a lame duck–one day impotent, the next day irrelevant, drifting along in a world of his own. 

Mr. Obama seems to think that as a second-term president, he can talk about what he darn well pleases. Maybe. We’ll see what the voters think about that in November, when they get their chance to render their judgment on his second term. 

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An Old Idea, Still as Dumb as Ever

The New York Times has an op-ed this morning whose very title gives away its bias, “A New Way to Rein in Fat Cats.” “Fat cats,” of course, is a highly pejorative term designating people who have large incomes. In this case it refers not to people who inherited lots of money and spend their lives yacht racing and polo playing, not to Hollywood stars pulling down $20 million a picture, but specifically to corporate executives.

The author of this op-ed, Douglas K. Smith, wants to limit the compensation of the executives of corporations who do business with the federal government to 20 times the pay of its lowest-paid workers. If President Obama’s executive order requiring a minimum wage of $10.10 is issued, then the highest paid worker in a company paying someone the minimum wage would, assuming a forty-hour work week, earn $420,160. But CEO’s are not paid wages, they are paid a salary and they work far more than 40 hours a week. Like the president, they get 3 a.m. phone calls. They have to testify before Congress. They travel a lot. They make tough decisions that can cost or earn billions. It takes years of on-the-job training to be ready for the top job in a huge corporation. (If you’d like an example of what happens when an unqualified person tries to run a large organization, I refer you to 1600 Pennsylvania Avenue.)

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The New York Times has an op-ed this morning whose very title gives away its bias, “A New Way to Rein in Fat Cats.” “Fat cats,” of course, is a highly pejorative term designating people who have large incomes. In this case it refers not to people who inherited lots of money and spend their lives yacht racing and polo playing, not to Hollywood stars pulling down $20 million a picture, but specifically to corporate executives.

The author of this op-ed, Douglas K. Smith, wants to limit the compensation of the executives of corporations who do business with the federal government to 20 times the pay of its lowest-paid workers. If President Obama’s executive order requiring a minimum wage of $10.10 is issued, then the highest paid worker in a company paying someone the minimum wage would, assuming a forty-hour work week, earn $420,160. But CEO’s are not paid wages, they are paid a salary and they work far more than 40 hours a week. Like the president, they get 3 a.m. phone calls. They have to testify before Congress. They travel a lot. They make tough decisions that can cost or earn billions. It takes years of on-the-job training to be ready for the top job in a huge corporation. (If you’d like an example of what happens when an unqualified person tries to run a large organization, I refer you to 1600 Pennsylvania Avenue.)

So corporate CEOs may be overpaid, they may underachieve, but no one off the editorial pages of the Times can argue that they don’t work hard. Running a multi-billion-dollar organization is a very time-consuming, demanding, high-stress task that very, very few people have the skills and talents to handle.

So corporate CEOs are highly paid because market forces dictate that they be so. If someone has rare skills and talents that are in high demand, they will earn lots of money. For instance, there are only a handful of people in the country who can throw a baseball 60 feet 6 inches through a strike zone at 95 miles per hour. But Cliff Lee of the Philadelphia Phillies can. That’s why he was paid about $7,500 per pitch last season to do so.

So Mr. Smith’s bright idea is nothing more than a price-fixing scheme to stick it to a group that’s perennially unpopular on the left. I doubt he advocates that Cliff Lee be paid no more than 20 times what the janitors at Citizens Bank Park are paid. I equally doubt that President Obama’s Hollywood friends, who bankroll him so generously at $50,000-a-plate dinners, would be willing to settle for a lousy $400,000 a year in income. Private jets are expensive. So are $50,000-a-plate dinners.

Besides, this nonsense has been tried before. In 1993, Congress and President Clinton limited the deductibility of corporate executive salaries to $1 million. What happened? Nothing. Corporations quickly found ways around the salary cap in order to get the executive talent they felt they needed.

So the government can dictate price controls. The editorial board of the New York Times can write glowing editorials about “fairness.” And market forces will work their inevitable way regardless.

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The Jobs Report

Job creation slowed markedly in December, with only a dismal 74,000 jobs created last month, the worst monthly report in three years. Economists, notorious for their clouded crystal balls, had been predicting 200,000 new jobs, above the 2013 average of 182,000 per month.

They also predicted that the unemployment rate would remain steady at 7 percent. It didn’t, it fell a full three-tenths of a percent to 6.7. But that was only because the labor participation rate fell to 62.8 percent, down two-tenths. As has been happening all through the so-called recovery, improvement in the unemployment rate has been largely the result of a shrinking labor force, not a growing jobs market. The labor participation rate is the now lowest since the days of Jimmy Carter.

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Job creation slowed markedly in December, with only a dismal 74,000 jobs created last month, the worst monthly report in three years. Economists, notorious for their clouded crystal balls, had been predicting 200,000 new jobs, above the 2013 average of 182,000 per month.

They also predicted that the unemployment rate would remain steady at 7 percent. It didn’t, it fell a full three-tenths of a percent to 6.7. But that was only because the labor participation rate fell to 62.8 percent, down two-tenths. As has been happening all through the so-called recovery, improvement in the unemployment rate has been largely the result of a shrinking labor force, not a growing jobs market. The labor participation rate is the now lowest since the days of Jimmy Carter.

Unemployment in hard-hit sectors showed little if any improvement. Teenage unemployment is at 20.3 percent (raising the minimum wage would make that worse, probably much worse, as teenagers make up a very large percentage of minimum-wage workers). Black unemployment was at 11.9 percent. People unemployed for more than 27 weeks stood at 3.9 million, 37.7 percent of total unemployment, up from 37.4 percent last month.

The question is how much longer President Obama can avoid major political damage from these numbers. The “recovery” began in June 2009, according to economists. According to millions of unemployed, under-employed, and dropouts from the labor force, it has yet to begin.

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The Jobs Report

The Bureau of Labor Statistics unemployment report for November came out at 8:30 this morning. The unemployment rate fell to 7 percent in November, its lowest rate since November 2008, as the country was plunging into the deep recession. Partly, however, that reflected the recall of federal workers who had been furloughed in the shutdown of October. The economy added 203,000 jobs last month, above the average of 180,000 per month for 2013 (but which, in turn, was below 2012’s average of 183,000).

Still, while the number of those unemployed less than five weeks declined by 300,000, those unemployed for more than 27 weeks remained essentially flat at 4.1 million. The labor force participation rate, which has been in decline throughout the recession and anemic recovery, rose from 62.8 percent to 63.0.

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The Bureau of Labor Statistics unemployment report for November came out at 8:30 this morning. The unemployment rate fell to 7 percent in November, its lowest rate since November 2008, as the country was plunging into the deep recession. Partly, however, that reflected the recall of federal workers who had been furloughed in the shutdown of October. The economy added 203,000 jobs last month, above the average of 180,000 per month for 2013 (but which, in turn, was below 2012’s average of 183,000).

Still, while the number of those unemployed less than five weeks declined by 300,000, those unemployed for more than 27 weeks remained essentially flat at 4.1 million. The labor force participation rate, which has been in decline throughout the recession and anemic recovery, rose from 62.8 percent to 63.0.

These numbers might be good enough for the Federal Reserve to consider scaling back on its bond and mortgage purchases at the monthly meeting of its Open Market Committee later this month. That would account for the Dow being down about 70 points, as Wall Street likes the low interest rates that the Fed’s purchases have produced.

Meanwhile, the government on Thursday revised upwards its estimate of third-quarter GDP growth to 3.6 percent, the best showing since the first quarter of 2012. But much of that growth came by means of inventory growth rather than increased sales. So most economists expected fourth-quarter growth to be much more modest. The New York Times reports that Barclay’s has cut back its estimate of fourth-quarter growth to a mere 1.5 percent annual rate.

Overall, the news is moderately good. There is still no boom in sight, but at least things are moving in the right direction, if modestly.

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