Wednesday, September 30, 2009
Success No Matter What
Wednesday, September 30, 2009
This Friday, September's job-loss total will be announced. Whatever the numbers, administration officials surely will tell us that life is better -- because of them. "We brought the global economy back from the brink," President Obama said at the close of the G-20 meeting last week. "(B)ecause of the bold and coordinated action that we took, millions of jobs have been saved or created; the decline in output has been stopped; financial markets have come back to life." This has been the president's theme: His so-called stimulus package, bailouts for politically connected banks and industries, ludicrously wasteful programs like Cash for Clunkers, etc. have saved America from the greatest disaster since the Great Depression.
But this theme runs up against some rather unfortunate facts.
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In January, the administration's economic models warned that unemployment would hit 9 percent next year if its $787 billion "stimulus" wasn't passed. Passing it would keep the jobless rate under 8 percent before it begins to fall (http://tinyurl.com/nuuq5l).
Well, the packaged passed -- and unemployment in August rose to 9.7 percent.
OK, economic forecasters make mistakes. Fair enough. But neither the administration experts nor President Obama will acknowledge that their models and strategy are flawed. Instead, they spin the numbers and proclaim success, insisting that the plan is working even though unemployment is higher than they said it would be.
For example, Christina Romer, chief of the president's Council of Economic Advisers, preferred to emphasize that the 216,000 jobs lost in August were about half a million less than six months before. Never mind that the economic strategy hasn't restored any of those 700,000 jobs previously lost. They'd rather distract us by focusing on the slowing rate of loss rather than the losses themselves.
But, New York University economist Mario Rizzo writes, to take credit for this is to imply that "in the absence of fiscal stimulus, the rate of increase in unemployment never falls." That's ridiculous. Should Obama get credit anytime things aren't as bad as they might have been?
"The stimulus apologists are ignoring the original prediction based on a model. By that prediction, the stimulus is doing harm," Rizzo commented.
As Harvard economist Greg Mankiw writes, "In light of the shifting baseline, it is impossible to hold the administration accountable for whether its policies are achieving their intended effects."
"The administration, however, has not been particularly in admitting to this lack of accountability. Indeed, the act of releasing quarterly reports on how many jobs have been 'created or saved' gives the illusion of accountability without the reality."
This lack of accountability -- this claim of success no matter what happens -- should surprise no one. Many of us warned about it months ago. Remember, Obama didn't promise to create 3.5 million jobs. He promised to create or save that many. There is no way to test that. If you still have your job, does that mean Obama saved it? If an entrepreneur created a new job, in spite of Obama's destructive anti-business regulatory apparatus, does Obama still deserve the credit?
As I wrote in February: "Given time, the economy, unless totally crippled by government intervention, will regenerate itself. That's because an economy is not a machine that needs jumpstarting. It is people who have objectives they want to achieve. They will not sit on their hands forever waiting for government to 'fix' things. Instead, they work to overcome obstacles to get what they want. Some banks are struggling, but there are still people who want to lend money and people who want to borrow it. They will find each other without government help."
But I underestimated this administration. I expected it to say, in the face of continued rising unemployment, that the "stimulus" wasn't big enough. Instead, it claims success.
I suppose I should be relieved. Claiming success is far less destructive than another irresponsible "stimulus." I'm grateful for small favors.
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