The Government, The Economy, & Their Predictions
July 31, 2009
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Posted by Michael S. Langston
A mere 10 days ago, we were told by our President, that his recovery act has diverted a disaster (here):
Good evening. Before I take your questions, I want to talk for a few minutes about the progress we’re making on health insurance reform and where it fits into our broader economic strategy.
Six months ago, I took office amid the worst recession in half a century. We were losing an average of 700,000 jobs per month and our financial system was on the verge of collapse.
As a result of the action we took in those first weeks, we have been able to pull our economy back from the brink. We took steps to stabilize our financial institutions and our housing market. And we….
…passed a Recovery Act that has already saved jobs and created new ones; delivered billions in tax relief to families and small businesses; and extended unemployment insurance and health insurance to those who have been laid off.
Of course, we still have a long way to go. And the Recovery Act will continue to save and create more jobs over the next two years – just like it was designed to do. I realize this is little comfort to those Americans who are currently out of work, and I’ll be honest with you – new hiring is always one of the last things to bounce back after a recession.
As I wrote previously, I’m not sure what a “saved” job is or how one goes about calculating a figure, but we do know the unemployment rate is 2% higher than predicted. Additionally, when one is contemplating whether this or any other President is truthful, we should ask if any of their other projections were correct in the first place.
From Bloomberg:
July 31 (Bloomberg) — The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.
& for comparison, something we also know. When Senator Kerry, then Senator Obama, and many other people, liberals and independents all, were dismayed by President Bush’s tax cuts during a recession and a war:
The revisions showed that the 2001 recession was less severe than originally estimated, reflecting a smaller decline in business investment. The economy actually grew 0.1 percent from the fourth quarter of 2000 to the third quarter of 2001, erasing the 0.2 percent drop previously reported.
Of course Bush started us down our current road with the first stimulus bill, because something just had to be done… which I guess presupposes that allowing 300 million people to work to bring back the economy is “nothing”…
Either way – lastly, and most importantly, we know that this has been tried before. It took several decades to move beyond the blindness people had due to FDR’s almost cult-like status to revise the books written at the time, but the New Deal did in fact lead to a longer Great Depression that was necessary (here):
The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a “new” New Deal to address the current crisis. But the facts do not support the perception that FDR’s policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.
The goal of the New Deal was to get Americans back to work. But the New Deal didn’t restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32…
No worries though – I’m sure the government is telling the complete truth about how much health care will cost, what it will do to the current system (good & bad), and all the rest of it. We just have to believe!
…Some other articles on this as well here @ Reason.com, article on economist research @ UCLA here, & detailed research paper here @ Cato.org.
Categories: Critical Thinking, Economics, free market, History
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Tags: Auto Industry Bailout, Economic Predictions, Economics, History, Housing Crisis, Obama Administration, Stimulus, Unemployment
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