Uncertainty Paralysis

[Supply Sider]

The Bush cuts weren't scheduled to sunset until 2010. That provided 9 years of certainty on the first round of cuts and 7 years of certainty on the second round. That's plenty of time.

Since the issues here are employment and jobs, let's compare the Bush and Obama administration using the best employment measure: labor participation.



As you can see, following the Bush tax cuts, the labor participation rate actually stabilized and increased a bit. Since Obama's stimulus, the labor participation rate has been in free fall. At this point, any economic benefits derived from the Bush tax cuts is nullified by the fact they must be renewed each year. Oh, and did I mention that President Clinton is calling for their renewal?

[erdawiro]

I'm not sure what that has to do with uncertainty.

Labor force participation numbers only matter when more context is given, such as what the labor force participation is by age group. From 2005 to 2011, particpation among individuals aged 16-19 dropped nearly 10% and among those aged 20-24 it fell around 5%. For the other age groups particpation fell a couple of percent, in line with what you would expect in the wake of a massive recession.

Clinton is only calling for an extension of the tax cuts for everyone but the "wealthiest Americans". It is those cuts for the rich which Bartlett was referring to as having no stimulative effect .

Source: http://www.ftportfolios.com/Commenta...te-not-so-fast

[Supply Sider]

I'm not sure what that has to do with uncertainty.

From your boy Bartlett: "Republicans have a problem. People are increasingly concerned about unemployment, but Republicans have nothing to offer them."

Bartlett was the one who broached the jobs issue, hence my referencing of the labor participation.

Labor force participation numbers only matter when more context is given, such as what the labor force participation is by age group. From 2005 to 2011, particpation among individuals aged 16-19 dropped nearly 10% and among those aged 20-24 it fell around 5%. For the other age groups particpation fell a couple of percent, in line with what you would expect in the wake of a massive recession.

Precisely. And in the context of history, the labor participation rate under George W. Bush was still quite high. It simply didn't match the period between 1983 and 1999, which was unprecedented period of economic expansion. Obama's primary economic problem is that the labor participation rate continues to plummet -- a fact that your study seem to ignore. For every one job added to the labor force, three people are dropping out. And they aren't dropping out solely because a large segment population is reaching retirement age. Quite the opposite, actually.

Youth umemployment is reaching record highs and youth labor participation is reaching record lows. Consider these figures from Department of Labor Statistics last summer:

The labor force participation rate for all youth--the proportion of the population 16
to 24 years old working or looking for work--was 59.5 percent in July, the lowest July
rate on record. The July 2011 rate was down by 1.0 percentage point from July 2010 and
was 18.0 percentage points below the peak for that month in 1989 (77.5 percent).

In July 2011, 18.6 million 16- to 24-year-olds were employed, about the same as last
year. This summer's increase in youth employment--from April to July--was 1.7 million,
down slightly from last summer (1.8 million). The employment-population ratio for
youth--the proportion of the 16- to 24-year-old civilian noninstitutional population
that was employed--was 48.8 percent in July, a record low for the series, though only
marginally lower than in July 2010. (See table 2.)

Clinton is only calling for an extension of the tax cuts for everyone but the "wealthiest Americans". It is those cuts for the rich which Bartlett was referring to as having no stimulative effect .

Interesting. He never makes your addendum in this video.

http://www.huffingtonpost.com/2012/0...n_1572069.html

[erdawiro]

This thread is on uncertainty and its effect on economic growth. When I quoted Bartlett, I prefaced his words with "Bruce Bartlett on uncertainty". Even Bartlett makes it clear that the article is about uncertainty:

These constraints have led Republicans to embrace the idea that government regulation is the principal factor holding back employment. They assert that Barack Obama has unleashed a tidal wave of new regulations, which has created uncertainty among businesses and prevents them from investing and hiring.

No hard evidence is offered for this claim; it is simply asserted as self-evident and repeated endlessly throughout the conservative echo chamber.

Bartlett didn't broach the topic of unemployment, he broached the topic of uncertainty - he mentioned unemployment.

Regardless, we're talking about it now.

When the economy is starved for demand, especially on an individual and household level, you expect low employment in low-skill jobs. Two of the industries that contribute most to unemployment are food services and retail. In 2000 there were 670,000 unemployed retail workers and in 2010 there were 1.6M unemployed retail workers. Similarly, in 2000 there were 470,000 unemployed food services workers and in 2010 there were 1.1M. Those two sectors account for nearly 20% of all unemployment. Other sectors, like office assistants, that are often filled with young workers have similar unemployment figures but those jobs are less directly demand related. The point is, when people are spending less you expect younger demographics to feel greater impact. The 16-24 range includes a large number of people who either have not graduated high school, not graduated college, or have little experience. In other words, the least employable people in the job market. As long as consumer demand is low unemployment will remain high and labor force particpation will remain low, especially among the youngest worker groups.

But then that just meshes with the other data I posted - businesses are worried about poor sales. If demand increase, uncertainty decreases and we are all happier because of it.

Clinton clarified his statement today.