Is the recession over yet? – II

“What is the use of living, if it be not to strive for noble causes and to make this muddled world a better place for those who will live in it after we are gone?” — Winston Churchill

Statisticians say the recession ended mid-2009, four and a half years ago. But what do you think? Does it feel like the recession ended or does it feel like we are still in a recession? In a recent poll, 74% said we are still in a recession.

It’s no wonder most people feel that the recession never ended. Employment is miserable. GDP growth is pathetic. Median family income is down for four straight years. Almost 50 million Americans live below the federal poverty line. A record 47 million people are on food stamps. One pundit declared that “More people in the United States are poor, unemployed, underemployed, looking for work, disgusted and quit looking for work, on food stamps, and on disability than anytime in our history.”

If those words look familiar it is because I first wrote them three months ago. In that column, the focus was on the worst employment picture in more than 30 years. Three recent pieces of economic news make this a good time to look more broadly at the economy.

1) On April 22, the New York Times reported that the U.S. no longer has the highest Median Family Income in the world. Canada is now #1.
2) April 30, the headline news was that in the first quarter of 2014, the U.S. economy grew at an almost non-existent rate of 0.1%.
3) That same day other headlines stated that China would soon pass the U.S. as the world’s largest economy.

Our economy stinks and we will have more such headlines if we don’t fix it. So, how do we fix it? The first step is to replace all the politicians who don’t even realize there is a problem, who do the same wrong things year after year expecting different results.

For decades, probably for more than a century, the U.S. has had the richest middle class in the world. Not just the richest middle class, but also the richest lower class, the richest upper class, and even the richest poor people. Those in the bottom 10% were much better off than the bottom 10% in any other country.

U.S. median family income is now down for five years in a row. In Canada, median family income is up for four of the last five years. Is it pure coincidence that Canada has been governed by Conservatives in recent years, the U.S. by Progressives?

The Index of Economic Freedom is an annual scoring of some 180 nations by ten measures of economic freedom. As the Index states, “The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination.”

The U.S. was rated economically “free” in 2006. Since then, its freedom score has dropped 6 points, it has fallen out of the top 10 to now #12 and is ranked only “mostly free”. The U.S. has lost economic freedom for seven years in a row, particularly in the areas of property rights, and freedom from corruption.

Conversely, Canada has increased its freedom score by more than 10 points over the last 20 years. It is currently ranked #6, and is rated “free”.

Hmm, is there a pattern here? The U.S. loses economic freedom seven years in a row and median family income goes down for five years in a row. Canada increases its economic freedom and median family income goes up four of the last five years. It now has the world’s highest median family income.

GDP growth in this so-called “recovery” has been pathetic. For four years it has been around 1.5% to 2%. That is the slowest by far of all the recoveries in 65 years. The Federal Reserve Bank of Minneapolis has a nice interactive chart of all postwar recoveries. The current recovery amounts to merely an 11.1% increase in GDP over the almost five years since the recovery began. Many of the previous recoveries had double or almost triple that growth. This recovery is barely half the average of the ten previous recoveries.

Imagine if we had had as much as average growth in the last five years. Investor’s Business Daily estimates that we would now have $1.3 trillion higher income. That is about $10,000 higher per household. That is the cost of bad economic policies.

Apologists for the Obama “recovery” say that the recession was especially severe. Historically, the more severe the recession, the stronger the recovery. It should have been easy to produce better than average numbers. They now say that financial recessions take longer to recover. But that’s not what they said back in 2009 and into 2010. Back then they forecast a strong recovery. It was only after their economic plans failed that they started spouting the “financial recession” excuse.

The Democrat Party would be wise to heed the words of one of its Presidential candidates from some 20 years ago, the late Senator Paul Tsongas, who said, “You cannot redistribute wealth that you never created. You cannot be pro-jobs and anti-business at the same time. You cannot love employment and hate employers.”

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Is the recession over yet?

“Be thankful we’re not getting all the government we’re paying for.” — Will Rogers

Statisticians say the recession ended mid-2009, four and a half years ago. But what do you think? Does it feel like the recession ended or does it feel like we are still in a recession? In a recent poll, 74% said we are still in a recession.

It’s no wonder most people feel that the recession never ended. Employment is miserable. GDP growth is pathetic. Median family income is down for four straight years. Almost 50 million Americans live below the federal poverty line. A record 47 million people are on food stamps. One pundit declared that “More people in the United States are poor, unemployed, underemployed, looking for work, disgusted and quit looking for work, on food stamps, and on disability than anytime in our history.”

But the December jobs report says that unemployment dropped from 7.0% down to 6.7%. Doesn’t that show that the economy is improving? Well, no. Almost all of the reaction, other than from hopelessly partisan hacks, says that the report is bad news. E.g. CNN described it as “weakest job growth in years”, USAToday referred to it as “unexpectedly weak jobs report”. Many reported that there were “only” or “just” 74,000 new jobs, the worst in almost a year. (UPDATE: The January Jobs Report is better but “is another disappointing jobs report”. “Job growth remains weak,” “disappoints again”.)

Not so well known is that jobs have to increase by about 150,000 every month just to keep up with the increase in population. Since 2009, when the recession supposedly ended, the civilian population age 16 and above has grown from 236 million to 246 million. Meanwhile, the number who were employed grew from 140 million to 144 million. In other words, of the 10 million who entered the working age population, only 4 million found a job.

Compare the current “recovery” with two others. From 1983 to 1987, population grew by almost 9 million; jobs by almost 12 million. From 1993 to 1997, population grew by a bit over 8 million, jobs a bit over 9 million. Those were strong recoveries – employment grew even faster than population. In the eleven recoveries since they started collecting statistics in 1948, the current recovery is by far the weakest and slowest.

US News magazine has a fascinating chart from the Federal Reserve of St. Louis. It shows both the unemployment rate and the EMployment rate from 1948 through 2013. They show the data for employment and unemployment separately because the two are calculated differently. But for more than 60 years, covering 10 recessions, employment and unemployment are mirror images of each other. When employment goes up, unemployment goes down and vice versa.

This time is different. For the first time in the history of these employment statistics, employment is NOT moving up. By the government calculations, unemployment has improved but employment as a percentage of the population has held steady for four years at a level much worse than we have seen for 30 years.

employment to population

But how can unemployment go down without employment going up? If you stop being unemployed doesn’t that mean you are employed? Well, no. Many people are not counted as either employed or unemployed; they are counted as “Not in labor force”. If you have been unemployed for so long that you give up looking, then you stop being counted as unemployed, and are instead counted as no longer in the labor force.

A record high 92 million people are counted as no longer in the labor force, an increase of 10 million in just 4 years. Some people will say that it is because baby boomers are retiring. That’s a nice theory but the numbers say otherwise. Those aged 55 and above have actually seen their employment numbers grow by 6 million people. It is the younger workers from 16-54 who have lost jobs – 8 million jobs.

In the four years of the current “recovery” the number of Millennials working full-time has decreased every year. The number living at home with their parents has grown every year. This is a human tragedy.

On top of all the ongoing poor employment numbers, the non-partisan Congressional Budget Office (CBO) recently estimated that ObamaCare will cost 2.3 million jobs by 2021. Apologists quickly countered that it would not be because people lost their jobs; rather it would be because people decided not to work. “When Americans quit looking for work because they conclude not working beats working, America faces a significant problem” says a white paper from Express Employment Professionals.

Some say that were are in a “New normal”. Many of us – I hope most of us – do not believe in a “fate that will fall on us no matter what we do.” For most of its existence, the United States has been the freest, most prosperous nation on earth. It is long established that freedom and prosperity go hand in hand; more freedom produces greater prosperity.

Sadly, the U.S. has moved away from freedom to a more and more intrusive government. The Index of Economic Freedom reported just last month that “The U.S. is the only country to have recorded a loss of economic freedom each of the past seven years.” Hmm, could that explain the awful employment?

Great article by Rand Paul

One of Rand Paul’s strengths is that he connects well with his audiences. This article is addressed to college students but has a good message for all of us.

The federal government now attempts to micromanage American life at practically every level.

The government tells you what kind of lightbulbs you can buy, what kind of toilet can be in your home, how much water can come out of your showerhead. Privacy is seemingly an antiquated notion, with government snoops able to access third-party records, such as phone records, e-mails, financial records, and pretty much any other personal information they want, without a judge’s warrant.
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America has drifted away from the constitutional principles of limited government, separation of powers, and individual liberty.
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We need to do a better job of communicating why big government is the problem—why it is bad for the economy, freedom, and a restrained, yet strong, foreign policy.
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conservative solutions are tangible too. We’re not just saying no to more government. Our proposals will lead the way to more prosperity, more stable families, political decisions made at the local level, a dollar that holds up in a global marketplace, an education system that puts students and parents first, a vibrant culture supported by religious institutions, and opportunities for young people like you to grow and lead America into a renewed age of freedom.
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Our political opponents and the media like to portray conservatives as unconcerned about the poor, senior citizens, and minorities. Nothing could be further from the truth. But we need to do a better job of communicating the promise of conservatism, not simply the failures of liberalism. We advocate not for special privileges for “the rich” but rather for a flourishing economy that lifts everyone up, creating millions of jobs and lessening the burden of taxes and government regulation.

We need to shout to anyone who will listen, “More freedom and less government means more jobs, more wealth, and a better life for everyone.” Despite the trillions of taxpayer dollars spent on bailouts and “stimulus” plans over the past several years, the economy hasn’t fully recovered from the Great Recession.

One in six Americans lives in poverty, more than at any other time in the past several decades. This is unacceptable.
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Decentralization of power is the best policy. Government is more efficient, more just, and more personal when it is smaller and more local. By decentralizing government, we strengthen communities, allowing people to depend on and care for one another, rather than on some distant, incompetent bureaucracy masquerading as defender of the common good. This is a message we need to do a better job communicating.

Read the whole thing.

Is the American School System Damaging Our Kids?

A psychology professor suggests the conventional school system is “failing our children and our society”.
It’s no wonder that many of the world’s greatest entrepreneurs and innovators either left school early (like Thomas Edison) or said they hated school and learned despite it, not because of it (like Albert Einstein).
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Most students—whether A students, C students, or failing ones—have lost their zest for learning by the time they’ve reached middle school or high school. … when the children were in school … they were often bored, anxious, or both. Other researchers have shown that, with each successive grade, students develop increasingly negative attitudes toward the subjects taught, especially math and science.
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Research has shown that people of all ages learn best when they are self-motivated, pursuing answers to questions that reflect their personal interests and achieving goals that they’ve set for themselves. Under such conditions, learning is usually joyful.
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This amazing drive and capacity to learn does not turn itself off when children reach five or six. But we turn it off with our coercive system of schooling. The biggest, most enduring lesson of our system is that learning is work, to be avoided when possible.

Less freedom, worse economy

The U.S. has dropped even lower in the Index of Economic Freedom, published annually by the Heritage Foundation and the Wall Street Journal. “The U.S. is the only country to have recorded a loss of economic freedom each of the past seven years.” Since 2006, the U.S. has lost six points, has dropped out of the top 10, and has slipped from “Free” to “Mostly Free”.

It should surprise nobody that our economy is in bad shape. Economic freedom correlates closely with prosperity, lifespan, and happiness. We have terrible unemployment, millions have given up even looking for a job, median family income drops year after year.
Lots more interesting info at the link.
 

Government knows best

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” — Thomas Sowell

Are you smart enough to make your own decisions or do you need the government to make decisions for you? Our governments – federal, state, and local – more and more think that you are not smart enough so they make decisions for you.

Imagine that you have lived in your house for 20 years. For you and your husband that house is perfect; you love it just the way it is. Then tragedy strikes and it burns down. Fortunately, you have insurance and you quickly decide to rebuild it precisely as before.

Then the government says “Nope, we won’t let you rebuild it as it was. Your ceilings were too low; you must raise the ceilings and roof.” No matter that you lived with those ceilings for umpteen years and they were just fine for you, government knows best and you’ll have to make the ceilings higher.

Later, the government tells you that you must install more outside faucets. Personally, I have never lived in a house that had more than two faucets outside. Most had just one. Now government says “We won’t let you live in your own house unless you have three outside faucets. Oh, and while you are at it make sure you have outside electrical outlets on three sides.”

You grumble and curse but you do what government decides is good for you, and finally your house is finished and ready for you to move in. “Not yet!” says the government, “Your water heater is 30 gallons; you should have at least a 40 gallon tank.” But you reply, “30 is plenty for us. That’s all we ever had.” Doesn’t matter, the inspector says. Someday you might sell the house and the next family might want a larger heater. Well, they can install a larger water heater, you reply. Finally you give in and replace the perfectly good water heater with a slightly larger one just to get the government off your back.

The above happened to a friend of mine. She is still seething that she and her husband do not have the right to choose what is right for themselves, that the government makes those choices for them.

Many government agencies treat citizens as if they are children incapable of making good decisions themselves. The Department of Energy (DOE) justified recent regulations on the basis that consumers needed to be protected from their own “irrational” choices. The DOE determined that 79% of the benefit of the new regulations was “correcting irrational consumer behavior” while only 3% of the benefits was reducing CO2 emissions.

Federal agents raided an Amish farm at 5 a.m. for the crime of selling raw milk to people who wanted to buy raw milk. I have never tried raw milk, but many say that it tastes better and is much healthier. If adults decide to drink it, should their decisions be blocked by armed federal regulators?

A Pennsylvania city spent $2 million renovating its ballpark. The teams were about to play, fans were about to enter the stadium when a government inspector refused to allow it to open because the “mirrors in the men’s room were a quarter-inch too low.” A speech in Congress complaining about such micro-regulating received a very rare standing ovation.

A magician was told that he needed a federal “animal exhibitor’s” license to display his one bunny rabbit. Later he was ordered to write a disaster plan to save the rabbit from “Fire. Flood. Tornado. Air conditioning going out. Ice storm. Power failures”, etc.

Some towns have regulations about how tall your grass can be. In Georgia, a “Code Compliance Officer” entered a woman’s house, located her bedroom, and woke her up to give her a ticket for her front lawn being too long. Lest you think that is urban legend, it is a true story and it indicates how full of self-importance some of these regulators are.

Around the country, kids selling lemonade or girl scout cookies on their own land suddenly find police officers telling them to cease and desist because they are violating some regulation. One enterprising teenager saved up his money to buy a hot dog stand. He and his parents thought they had followed all the regulations, obtained all necessary permits, but he was shut down for operating too close to a restaurant. It had nothing at all to do with safety, and everything to do with restaurant owners not wanting competition.

In some states only a licensed funeral director could sell a casket. It had nothing to do with safety – the casket sellers were not handling any bodies. The funeral directors wanted a monopoly so they could keep their prices high.

Should you have the right to choose an interior designer, floral arranger, or hair-braider or should government make that decision for you?

How about a compromise? Let the government issue all the licenses and regulations it thinks are good for you. But let them be advisory, not mandatory. If you trust only a licensed floral arranger then so be it. But if you choose to hire an unlicensed interior decorator or floral arranger let the government not interfere.

LTE: Free people in a free society

Re “On insurance, easiest choice may not be best” (Monitor Forum, Dec. 12):

Lisa Kaplan Howe informs us that people “were allowed to keep” old insurance policies. But this turns on its head the relationship between a people and their government.

Free people in a free society aren’t allowed to keep things – it is their inherent right to keep what they think is best for themselves. The question should not be what the government allows people to do; it should be what the people allow their government to do.

Should a woman have the right to choose what insurance is right for her, or should government make that choice for her? Obamacare interferes with a woman’s right to choose her insurance; now many women have lost their choice of doctors.

Howe warns us that we “may be paying more than you need to.” Does she not know that the new Obamacare policies have much higher premiums and higher deductibles? She tells us that “assisters won’t keep any of your personal information.” Is she unaware that the assisters (navigators) have not had background checks and that some of them could be felons? Has she not heard of all the security flaws in the website that make it easy for hackers to obtain private information? Obamacare has proven to be a disaster. The solution is more freedom of choice. Let people decide what is best for themselves, not what the government will “allow” them to have.

(Published in Concord Monitor, Dec. 19. I like that the Monitor added emphasis as seen above.)