Smart people saying smart things

Mark Thoma: “The Growing Unemployed: A Case of Benign Neglect

The high unemployment rate ought to be a national emergency. There are millions of people in need of jobs. The lost income as a result of the recession totals hundreds of billions of dollars annually, and the longer the problem persists, the more permanent the damage becomes. Why doesn’t the unemployment problem get more attention? Why have other worries such as inflation and debt reduction dominated the conversation instead? … The increased concentration of political power at the top of the income distribution provides much of the explanation.

Consider the Federal Reserve. Again and again we hear Federal Reserve officials say that an outbreak of inflation could undermine the Fed’s hard-earned credibility and threaten its independence from Congress. But why is the Fed only worried about inflation? Why aren’t officials at the Fed just as worried about Congress reducing the Fed’s independence because of high and persistent unemployment?

Similar questions can be asked about fiscal policy. Why is most of the discussion in Congress focused on the national debt rather than the unemployed? Is it because the wealthy fear that they will be the ones asked to pay for monetary and fiscal policies that mostly benefit others, and since they have the most political power their interests – keeping inflation low, cutting spending, and lowering tax burdens – dominate policy discussions?

Christina D. Romer: “It’s Time for the Fed to Lead the Fight

The Fed’s dual mandate doesn’t say it should care about unemployment only so long as inflation is at or below the target. It’s supposed to care about both equally.

… The academic literature shows that monetary policy can be very effective at reducing unemployment in situations like ours. In the recovery from the Great Depression, for example, aggressive expansion of the money supply played a large role in lowering the real cost of borrowing and in spurring growth.

After the Fed has pushed interest rates down to zero, its main remaining tool is communications. It can affect expectations of future growth and inflation, which can have powerful effects on consumer spending and business investment today. But to have a big impact, the monetary actions need to be bold — and pursued with gusto.

Duncan Black: “Evil

More people with microphones and appropriate audiences need to start using moral language to describe Ben Bernanke’s actions. He’s not stupid, so there’s only one other option, really. We know that the costs of relatively low (as in, sub-8 percent) inflation are trivial. We also know that a willing Fed has precisely zero problem killing inflation if it so desires. There is no need for “credibility” on this issue unless you have a government that’s spent years running the printing presses to pay its bills. Bernanke sleeps well at night so he can get up every day and ensure that millions experience severe economic hardship.

Noni Mausa: “Let’s Play ‘You Be the Sucker!’

Business and banks have heaps of money – and aren’t hiring, spending their money, or loaning it out. Meanwhile, a few million working-age Americans have no money and no work, and many are young, strong, highly trained and capable. Business is complaining that they can’t get suitable employees for some sectors. But they aren’t training them, and in sectors where wages are low, they aren’t raising wages. Houses stand empty, while thousands are homeless or living in cramped conditions with family or friends. They are all playing “Don’t Make Me The Sucker.” It’s like a game of musical chairs where no-one gets off their chairs except the terminally benign or naïve. You can crank up the music all you want, but nobody’s moving.

And in this game, they’re all correct. If any of them moves without all the others moving, they get to be The Sucker.

… So obviously what we need, right here, right now, is a nation of fools. Can anything get all the players off their chairs in back into Mr. Fezziwig’s dance? Nobody trusts anybody, and rightly. The smaller players can’t do it, and the giant ones hardly need to. But something needs to be done.

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  • Invisible Neutrino

    According to the latest data from the alternate measure, unemployment has not meaningfully decreased in 3 years.


    The inflation alternate measure shows that even after adjusting for the official statistics, Helicopter Ben has no cause to be worried about inflationary pressures.

  • aunursa

    The high unemployment rate ought to be a national emergency. There are millions of people in need of jobs.

    Don’t worry.  President Obama heard the cries of the American people, and he has promised to make it a top priority

    Obama has an ambitious second-term agenda, which, at least in broad ways, his campaign is beginning to highlight. The President has said that the most important policy he could address in his second term is climate change, one of the few issues that he thinks could fundamentally improve the world decades from now. He also is concerned with containing nuclear proliferation.

    Well … sometime soon I’m sure that the president plans to focus on the jobs issue.

  • Alex B

    Because this isn’t a thing apparently:

  • Charity Brighton

     The President is responsible is for everything, but he should concentrate on nothing. If he tries to bypass the legislature, he’s a tyrant; if he tries to work with them, he’s a pushover; and if they fail to comply with his requests, he’s a terrible leader.

  • Geds

     Well … sometime soon I’m sure that the president plans to focus on the jobs issue.

    Oooh, and our alternatives, the Republicans, are just positively OOZING with ideas for job creation.  I mean, think of all the jobs that will come from making gay marriage even more redundantly not allowed across most of the country and reinstating DADT and giving even more tax cuts to the rich, who, as we all know, are just WAITING for that magical low tax rate to finally step up and give all the unemployed people jobs.

    Oh, and firing government workers is a good way of creating jobs, too.  Can’t forget how many jobs we could create by eliminating a whole bunch of jobs.

  • Invisible Neutrino

    Kind of like how some Republican governors have refused to accept ARRA funds?

  • Tonio

     The Democrats aren’t doing enough to reduce social and economic privilege, but what the Republicans advocate would actually increase those things. Attacking “economic privilege” doesn’t mean taking away the millions from the 1 percent. Instead, it means ending the ways that the system is gained in their favor. It means public financing of campaigns and single-payer health care so that money doesn’t determine the outcome of elections or the quality of an individual’s care.

  • Kubricks_Rube

    “Well … sometime soon I’m sure that the president plans to focus on the jobs issue.”

    You know, aside from the fact Obama released a major jobs plan in the fall which Congress quickly killed ( ) that paragraph in the New Yorker, when read in context, quite clearly refers to major policy goals outside of the regular responsibilities of the executive, like jobs and the economy and foreign policy. To suggest that unemployment is not a top priority for this administration- even if merely out of self-preservation- is just absurd.

  • Invisible Neutrino

    Also, I seem to remember all the Unemployment insurance extensions Congress wouldn’t reauthorize until the Republicans decided to stop throwing their toys out of their collective pram, because the Senators vowed to block passage with a filibuster until they got their frakkin’ tax cut extension.

    For Example:

  • Charity Brighton


    To suggest that unemployment is not a top priority for this
    administration- even if merely out of self-preservation- is just absurd.

    And that’s really the most irritating thing about this talking point. No president wants the economy to be in the toilet. Even the most soulless sociopath ever to occupy that office would want the numbers to be better than they are now, if only for the purpose of winning future elections. You can argue that Obama’s policies are ineffective or even stupid if you want, but it’s absolutely ridiculous to suggest that he doesn’t mind if the economy is bad or the unemployment rate is high.

    Seriously, can anyone name a single reason why Obama — or any president — would prefer a bad economy during an election year?

  • Lliira

    Oh, the president is an absolute monarch now, who can make whatever he wants happen no matter how obstructionist the legislative body is? 

  • jclor

    That the President outright refuses to push the big, red “Create Jobs” button on the corner of his desk is a slap in the face of the American people.

  • P J Evans

     That the president didn’t call in, in the first two months he was in office,  the people who said before the inauguration that they intended to do everything they could to block everything he wanted to do, was a bad sign. He had the opportunity then to be the bad-ass that was needed, and not using it meant that the two-year-old mentality became entrenched. So we’ve had gridlock for the last three years, and I don’t see much chance of that changing, short of throwing most of the Republicans (and several alleged Democrats) out of Congress.

  • JonathanPelikan

    Are you aware of the context of that paragraph? Ah, of course you are. Seems like the rest of the community is, so I guess my question here is: Who are you lying for? Fred knows you’re lying, I know you’re lying, others know you’re lying, and you definitely know you’re lying. (This sort of ‘rip it out of context and present it as hard fact’ definitely comes under the ‘lying’ umbrella.)

    I know this was just in service of the required slam at the Kenyan negrist for simultaneously wanting to stick his Keynsian hands into the sacred free market and also being a wimpy weakling who won’t stand up and do what’s necessary ever, but come on.

    P.S. I also wonder if the mention of climate change made you think about how the two major sides stack up on that particular issue, and especially how your side looks compared to the other on it.

    “That fucking ‘President’, trying to address the cooking Earth before humanity manages to completely eradicate its chances on living on its own world, long term. I say we Drill Baby Drill instead!”

  • Albanaeon

     Yep.  Addressing global warming would never create jobs.  Not a single person would be needed for inspections or installations or even fricken paperwork.

    And we’ll go ahead and ignore that global warming is expected to shave 5% or so from the world’s economy at least, which is what happened in the Great Recession.  So addressing global warming and preventing that won’t save or create jobs either.

    Glad you’re here for these insights…

  • P J Evans

     And also no one is needed to build or even develop the stuff that will be needed. It all just appears from out of nowhere, by magic.

    I’ve heard those arguments before. They sound like the same ones used about seatbelts in cars in the early 1960s, and airbags later, about the scrubbers that remove particulates from exhaust stacks, about secondary and tertiary water treatment plants, about wind and solar power generation….

  • Cradicus

    Well played. No one stirs the pot better than aunursa!

  • Chris Algoo

    No one stirs the pot like Gaston!

    Erm… sorry.

    On topic, Obama’s up against a party who’s determined to ruin America as much as it can, in an effort to ruin him. If he negotiates, he’s weak. If he’s aggressive, he’s forcing policy down our throats. I think we’d probably be better off with Hillary as the VP – we wouldn’t have any hilarious Biden gaffes, but she’s a fighter, and brave (She told the world that gay rights are a thing and they’d better get used to it. Awesome.) Those are both things that the Democrats should seriously consider adopting.

  • hapax


    we wouldn’t have any hilarious Biden gaffes

    I love Joe Biden.  Every one of his “hilarious gaffes” that I can think of was a case of simply refusing to play along and mouth the lies that everyone else pretends to believe.

  • Charity Brighton

     I think there will come a day when someone will say, “Same-sex couples should have equal rights,” and everyone else will roll their eyes and say, “Well, duh, Neil deGrasse Tyson, tell us something we don’t know!”

  • Invisible Neutrino

    And the Repubs got the name “Party of No” for a reason.

    It’s easy to act like a recalcitrant little kid who loves to contradict his or her mom for pure shits and giggles. It’s a lot harder to be serious about things and admit that hey, dogma isn’t working.

    You know what some frustrated parents have done when their kid just won’t seem to quit acting up?

    That’s right. Frustrated parents end up whapping their kids on the ass because they’re at the end of their absolute fucking rope and they can’t, at that moment, strategize any better way out. The Republicans should all have gotten a collective swat on the ass for being obstructionistic a-holes, but failing that they should have been put in ‘time-out’.

  • LL

    I was thinking about criticism of Obama from self-described liberals/Democrats just last night. It’s not that he’s above criticism, nobody is, but many (actually, it’s probably most) of the people who voted for him in 2008 didn’t bother voting anymore after that. So they elected him president and then left him twisting in the wind with a majority Republican Congress in 2010 (to refresh memories, Republicans gained 63 seats to win back control of the U.S. House of Representatives and gained 6 seats in the U.S. Senate, and Republicans replaced Democratic governors in 11 states). How the hell is he supposed to get much done when Congress is full of people who would rather see him fail even if it results in pain for the rest of us?

    Democrats have to vote more often than once every 4 years to keep and use any influence they might have. Obama can’t do it by himself. He’s the president, not Gandalf the wizard. 

    Seriously, sometimes it appears that the average Democratic voter is just as stupid as the Republican ones, just in a different way. But way more lazy. Say what you want about the Republicans, but they know how to play the game and understand how effing important turnout is in every election. 

  • P J Evans

     They didn’t give him their unlimited support because he demonstrated before the inauguration that half his promises were, um, inoperative, and he’s spent most of the time since then taking the loaves he promised and turning them into quarter-loaves. And then telling us that he couldn’t do any better. Bull.

    I don’t think any politician should get unlimited, unthinking support. Politicians who can’t even follow through on their most basic promises deserve even less.

  • Albanaeon

    His failure to even try to push progressive policies was a pretty glaring failure on his part.  I think even a series of failures would have played better than his decision to start in the “middle” and compromise from there.  For one, it played on the traditional “Dems are weak” and “no one want liberal policies,” since we didn’t get a strong stand on principles and our “socialist” president retreated so fast from liberal (read centrist) positions it cut the ground out from under progressives.  So we got a bunch of center-right approaches, that are denounced by Repubs as Socialism and filibustered.  So he’s a liar to liberals/Progressives, shark chum to right wingers, and wishy-washy to Independents.  And to the people he wants to have vote for him, not very appealing.

    So here we are with Obama basically campaigning on how bad Romney is.  Which is not exactly the most inspiring of campaigns for his supporters and lots and lots of cynicism.


  • P J Evans

    Romney does more damage to his own campaign than to anyone else’s, One good thing this year.
    I’d rather vote for Cthulhu than either one of the presumed nominees, though.

  • LoneWolf343

     I would like to try a president who just sleeps through his administration.

  • erikagillian

     >I would like to try a president who just sleeps through his administration.

    That would be Ronald Reagan.  I wish he’d slept through his governorship of California too.

  • Invisible Neutrino

    Example: Obama essentially admitting that his anti-NAFTA promises have been mostly cosmetic.

    Chapter 11 (“investor-state relations”) is the way in which corporations can, even if the case they try to make is ultimately dismissed, effectively force governments in the USA, Canada, or Mexico to try and appease business interests even to the extent of ignoring long-standing governmental protections designed to enhance local employment, or to render a service traditionally not done by the business sector, or what-have-you.

    In the case of the dispute so linked, UPS wanted the Canadian government to cough up $200 million as the price for not allowing completely competitive mail service with Canada Post. A panel of exactly three people was involved in all phases of this contentious dispute, and it was decided 2 to 1 in favor of Canada.

    Think about that, people – one person effectively held the balance of power over whether or not the Canadian government shall have to spend large sums as part of a protection shakedown racket.

  • Charity Brighton

    Democrats have to vote more often than once every 4 years to keep and
    use any influence they might have. Obama can’t do it by himself. He’s
    the president, not Gandalf the wizard.

    That’s actually a serious problem that we have in the United States,
    even outside of the context of Obama and criticism from the left. We
    actually have pretty decent turnout for presidential elections and
    Congressional elections that take place at the same time as the
    presidential election.

    Apart from that, though, the turnout goes down the toilet. While
    presidential election turnout is usually between 50 – 60% (give or
    take), mid-term elections peak about 30% participation. And
    gubernatorial elections are even more horrific, often having less than
    10% of voter participation.

    If you take that into account, it’s only natural that special
    interests wield so much influence; they’re the reliable voters, who will
    come to the polls often and regularly.

    That’s not an excuse for Obama’s failures of leadership though; part
    of the reason turnout fell in the midterm elections was because
    Democrats were dispirited by his apparent unresponsiveness to liberal
    priorities. But I do think it’s important for us to remember that
    all elections are important. Not just the president,
    or Congress, or even the governor of your state. Even elections for
    school boards, attorneys general, and sheriffs are important.

  • hapax


    Even elections for
    school boards, attorneys general, and sheriffs are important.

    *Especially* these.  School board elections are where “abstinence only” or creationist crackpots get installed.  Attorney general and sheriff elections are where those with agendas about “voter fraud” and “illegal aliens” get their bigotry institutionalized.

    And the turnout is so small that one vote really can make a difference.

  • Brandi

      I would like to try a president who just sleeps through his administration.

    Wasn’t that basically Reagan’s entire second term?

  • Chris Hadrick

    “Again and again we hear Federal Reserve officials say that an outbreak of inflation could undermine the Fed’s hard-earned credibility and threaten its independence from Congress”
    ??  The Federal Reserve has MASSIVELY inflated the money supply in the past couple of years. interest rates have been at rock bottom.  Anyone remember QE and QE2?

    you know what’s great for the economy? low gas prices. you know what will ruin that? qe3


  • AnonymousSam

    Hyperinflation, with our stagnant income levels? That’s going to be fantastic. Nothing like paying $14.95 for a loaf of bread when you make $7.15 an hour. Before taxes.

  • Charity Brighton

    *Especially* these.  School board elections are where “abstinence
    only” or creationist crackpots get installed.  Attorney general and
    sheriff elections are where those with agendas about “voter fraud” and
    “illegal aliens” get their bigotry institutionalized.

    Yeah. The New Hampshire state legislature has essentially been conquered by the “birthers” (people who believe that President Obama is not a natural-born U.S. citizen), to the point where state election officials have been physically threatened for allowing Obama’s name on the ballot. Not by random whackos, by the way; by state legislators themselves!

    Not just that, these elections are where future federal candidates are groomed (how many recent presidents have never served in a state or local office?) who did not serve in either a state legislature? have a much more direct impact on our everyday lives. School boards are an obvious one, but even many federally-funded welfare programs that many low-income people depend on are run by state and local authorities, mostly under their own rules; if they’re mismanaged on the state and local level and the needy are frozen out, well… it doesn’t really matter who you voted for in November…

  • Chris Hadrick

    sam- there are way too many dollars out there. It will not end well.

  • hapax


    there are way too many dollars out there. It will not end well.

    Radical commie notion — how ’bout instead of piling them up beneath the padded leather chairs of bank execs and corporate CEOs, we spread a few of ’em around to the folks that don’t have jobs (and haven’t had them for several years) or health care or use them to build roads and upgrade the electrical grid or, heckopete, even just fund some poets and painters and skydiving giraffe-riding ballet artists?

    I mean, I’ll take your word for it that it STILL won’t “end well”, but in the meantime some folks might get groceries and lifesaving operations and we’ll have roads and electricity and poems and paintings and giraffe ballet in the sky, and I think we can all find something on that list that we think would be awesome.

  • Charity


    I mean, I’ll take your word for it that it STILL won’t “end well”,

    Don’t. This guy treats a website about Ludwig von Mises as if it’s a grimoire and a book of prophecies. If he told me that Ron Paul was a Congressman representing the 14th district of Texas, I’d check it out myself just in case.

  • Invisible Neutrino

    Also, the velocity of money has probably drastically slowed down; people
    aren’t spending money like they used to, or they’re effectively saving
    by trying to pay down old debt. In short, all the QE money Bernanke’s
    been shoving into the banking system has basically frozen up because
    very little of it is actually going into the purchases of consumer

    MV = PQ

    All the hyperinflation alarmists tend to forget that V (how fast the money moves around) matter as much as how much you push into circulation.

  • Chris Hadrick

    hapax-  like a mail stimulus?   sending people a check? Thats one solution but it would be difficult to do that via the money creating process.  They would probably just borrow more from China. 

    You can get money from borrowing ,taxation, or inflating the monney supply, I can’t think of too many ways the latter could be used for the type of operation you’re proposing.

    neutrino- so what will more do? and what happens when these companies start spending that money?  and why has the V slowed down?

    Charity- you’re a grimoire and a book of prophecies.

  • Beroli


    Charity- you’re a grimoire and a book of prophecies.

    Your generically plugging those into an “I know you are but what am I?” flame has me wondering if you actually know what those words mean.

  • JonathanPelikan

    I got a stupid little chuckle out of it, but then again, I’m the sort who revels in Youtube comedy, internet memes, etc, so my humor instinct probably broke somewhere along the line.

  • Invisible Neutrino
  • P J Evans

     The safe assumption is that hse doesn’t know what they mean, and has no intention of finding out.

  • Chris Hadrick

    they want to us to pay more at the pump to pay and for our basic neccesities to cost more because they don’t have the guts to tax the rich, basically. or the ability to make cuts in their 4 trillion dollar world empire budget. So ripping off the plebes is the easiest thing to do politically.

  • Sgt. Pepper’s Bleeding Heart

    Hi there.

    You have cheap “gas” prices. Very cheap. You are happy to externalise the cost of your cheap energy usage thereby massively screwing over people in less powerful countries* who don’t enjoy the energy guzzling lifestyle that you do. Bitching about the price you pay for energy is insulting. Get over yourself.


    *Remember them? You’ve previously wrung your hands about all the countries your country invades, so I assume you give a shit about other people–or is your concern solely the drain on your taxes attributable to supporting the most expensive military in the world?

  • Invisible Neutrino

    Be fair, please. The price of gas for Anericans has about doubled since pre-2000 levels*, and for Canadians, has tripled. For oil companies, they’re making out like bandits, but for the average working person, it’s legitimately a nasty hit to the wallet that just keeps going and going and going and going.

    Energy in the USA is only relatively cheap by international standards**. By their own standards it’s an expense that is still managing to hurt working peoples’ pocketbooks.


    * Anecdotally in Washington state you could expect to pay around $1.60 US a gallon in that era, Now, it’s hovering at the $2.50 – $3.00 US a gallon mark.

    In Vancouver, where I live, you could expect routinely to pay around 60 cents a liter. Now, it’s pushing $1.40 a liter.

    This stuff adds up. Back then? You could literally fill a Honda Civic’s tank for about $20. Now? Well, that’s like a $50 expense. Add that up over the course of a year….

    ** That said, I’ve often seen it written that if the cost in taxes of military expenditures to send troops to the Middle East (even in the 1990s the US maintained military bases in the M.E.) were backed in at the pump the true price of gas in the USA would be closer to $6 a gallon.

  • P J Evans

     It’s about US$4.00 a gallon in southern California. (The lowest price I’ve seen, lately, is about US4.25, but it has been dropping slowly from a high of around $4.50.)

  • Chris Hadrick

    energy guzzling lifestyle? I drive for a living.  and gas may be cheap relative to Europe but it’s expensive relative to other places and expensive relative to how it is generally budgeted at the individual level here in relation to other things. We are paying boom era prices  during a bust.

    tell the family that has to cut out basic neccesities because everything is going up in price while he makes the same that he’s bitching. 

    and yes the military is the issue that gets under my skin the most. Why should people have to forego any part of their salary to support a world empire none of them benfit from?

    inflating the money supply even more (see chart on previous page) is the most cowardly move possible here.

  • P J Evans

    I drive for a living

    You’ve also claimed you’re a veterinarian. Why should we believe anything you say? (Particularly since you don’t know what you’re talking about.)

  • Beroli


    You’ve also claimed you’re a veterinarian.

    Mobile Veterinary Services!

  • Invisible Neutrino

    I wouldn’t let him treat a frackin’ bacterium.

  • Chris Hadrick

    I am not a veterinarian though I love my cat biggie

  • PJ Evans

     Then nothing you say here can be trusted.

  • Invisible Neutrino

    Just because that trick works on Reddit* to get you karma doesn’t mean people will suddenly be nice to you here, mmkay?


    * You kind of remind me of some of the Nice Guys who go on that site. It’s a common trick to post a picture of your cat to elicit the “aww” factor.

  • Chris Hadrick

    more inflation isn’t the solution. trust me