Posts tagged with: recession

“When People Give Up Looking for Work, What Do They Do?” A Wall Street Journal story looks at the “millions of working-age men” sidelined by the economic slump, and warns that “the longer they’re out of work, the more their skills deteriorate and the harder it is to land the next job.”

“Those who can’t find work often turn to safety net programs, such as food stamps, unemployment benefits and disability — programs that have ballooned since the recession began,” the article continues. “Once people start receiving disability benefits, they rarely leave the program.”

The take home: take any ethical job. Consider self-employing yourself, offering to do work others find unpleasant. Some potential employers in your preferred career may look down on you for having done grubby work, but others will admire your willingness to roll up your sleeves and get your hands dirty while you’re waiting for a job in your chosen field.

The Bible condemns willful idleness and enjoins us to labor so that we can have the means to help those truly in need. If after pursuing any ethical job available, you’re still underemployed, cut your living expenses to the bone, minimize your use of the government dole, and use your idle week days to volunteer long hours doing something beneficial for society, including time on your knees in intercessory prayer.

The Christian community talks so much about pursuing your vocational passion and calling that we often neglect that gritty reality that sometimes God uses circumstances to call us into work that doesn’t use all of our talents, but instead exercises our fortitude, selflessness, and humility.

I remember when I was 22. (more…)

A new study by Grand Valley State University professors Leslie Muller and Paul Isely suggests that the Affordable Care Act has already cost West Michigan 1000 jobs. Muller summarized the results in a Wood TV story:

“Firms are actually holding off on hiring or their reducing their hiring that they were thinking they were going to be doing because of the ACA,” said Muller.

The 1,000 jobs lost does not include the number of workers in West Michigan that have lost hours to ensure that they are kept as part-time employees. Nearly one-third of companies said they have cut employees’ hours.

“We’re talking about a thousand jobs in West Michigan that would have been here absent the ACA,” Muller said.

The study found lower-skilled jobs tend to be suffering the most.


Brian Burrough has a mostly enjoyable New York Times review of a book that’s mostly positive about my native state’s mostly small-government formula for economic growth. Some excerpts:

Ms. Grieder, a onetime correspondent for The Economist who now works at Texas Monthly, and a Texan herself, has written a smart little book that … explains why the Texas economy is thriving. It’s called “Big, Hot, Cheap and Right: What America Can Learn from the Strange Genius of Texas”….

What might be copied, Ms. Grieder indicates, is the so-called Texas model — that is, a weak state government with few taxes and fewer regulations and services. It would be far harder to replicate the state’s civic DNA, which features traits that can be traced to its decade, beginning in 1836, as a stand-alone nation (independent, suspicious of Washington), the late-1800s cowboy era (self-reliant, fraternal) and the 20th-century introduction of oil and entrepreneurialism (pro-business, skeptical of government)….

Outside writers have been regularly caricaturing the state since the novelist Edna Ferber introduced America to postwar Texas with “Giant” in 1952. The canon ranges from “The Super-Americans,” by John Bainbridge (1961), to “As Texas Goes … : How the Lone Star State Hijacked the American Agenda,” by Gail Collins, a New York Times columnist (2012). Ms. Grieder’s is the rare book that takes stock of the Texas model without ridiculing many of its traditions and politicians.

My one concern is that the book’s author seems enamored of Gov. Rick Perry’s crony capitalist strategy of using subsidies to attract companies to the Lone Star State, a habit that is anything but small government and likely to come back to bite. On the whole, though, the book and the book review appear to give far more props to low taxes and limited government than I thought possible for a work endorsed in the pages of The New York Times. Maybe there’s hope for those city slickers after all.

Blog author: jcarter
Thursday, September 6, 2012

Stanford economists Russ Roberts and John Taylor offer a helpful discussion potential GDP, recessions, and recoveries. Their comparison of previous recession/recovery cycles to the most recent one helps to illuminate just how unusual (read: terrible) our current recovery has been.

(Via: Cafe Hayek)

Economic historian Brian Domitrovic has an interesting post up at his Forbes blog, Past & Present, on the proximate causes of the 2008 meltdown. According to Domitrovic, uncoordinated, even “weird” fiscal and budgetary policy in the early 2000s kept investors on the sidelines, and then flooded the system with easy money. The chickens came home to roost in 2008 (and they’re still perched in the coop).

In 2000, as the stock market was treading water in the context of the mammoth surplus and the electoral contest over fiscal policy, it was indicating that investors wanted to see what would ensue. What came was poorly-crafted tax policy and movement to gobble up the surplus on the spending side.

[After the crash of 2001-2003 and brief recession] the Federal Reserve stepped in to try to pick up the slack since fiscal policy had gotten weird. It was then, 2001-2003, that the Fed plumbed new lows in the federal funds rate

Finally, in 2003, Bush announced that the marginal rate of the income tax would be taken down immediately and somewhat substantially, to 35%. The Fed pivoted to raise rates, giving us an approximation of the Reagan-Volcker policy mix of the 1980s of real tax cuts and tight-ish money.

But for several years, too much money had been in the system, and it proceeded to migrate to monetary policy hedges, above all oil and land, the latter especially desirable because housing debt was fulsomely guaranteed.

Not only were these policies imprudent from a cold hard economic point of view, they weren’t capable of producing the human benefits they were supposed to. The false compassion of Bush-era conservatism is tied up with both the over-spending of the 2000s and the imprudent loans encouraged by an ultra-low interest rate environment and the “Ownership Society” of the 2004 campaign.

Government compassion does nothing to empower the poor—rather than pulling them out of poverty, it encourages reliance and assails their dignity. No matter how nice everyone’s being, nothing changes. And while some of the instincts behind the Ownership Society were right, the idea that it would be good for people to own houses they couldn’t properly afford was destructive. It severed the natural connection between labor and its results.

Domitrovic goes on:

The primary question we must ask about the 2000s is not what caused the crisis as the decade came to a close, but why was growth so subpar the whole time? Ultimately financial crises reflect the declining potential of the real economy to deliver…

And of course the economy will not grow and wealth will not be created under policies which undermine the dignity of Man’s labor. By reducing economics to fiscal calculus, academics and policy makers throw out half their toolbox: if the fiscal and budgetary warnings weren’t enough from 2000 to 2008, there were also human and moral warnings. Domitrovic (who, to be clear, is not one of those who has thrown out half his toolbox) concludes:

By rights, today we should not be mired in economic malaise; rather, we should be enjoying a fourth decade of prosperity on the heels of the roaring 1980s, 1990s, and 2000s.

By rights indeed, but our economists have cast off right, and reduced their science to a materialist one.

Blog author: kschmiesing
Wednesday, December 22, 2010

If you continue to wonder why the U.S. economy, long after it has shown signs of life and has started to recover from the Great Recession in fits and starts, refuses to take off, here’s a pretty good answer: “Our entrepreneurs have lost faith in the federal government,” says Michael Franc.

He’s not the only one saying it, but he says it well. Uncertainty is the bane of commerce; thus it’s no mystery why businesses have stashed a record amount of cash aside rather than pouring it into new initiatives and new jobs. Franc writes:

This layered uncertainty looms as a Sword of Damocles over every business, every investor, and every head of household in America. It has suffocated the risk-taking, entrepreneurial spirit that has made America the exceptional nation in human history. For entrepreneurship hinges on intelligent risk-taking, not closing your eyes and plunging headfirst off the foggy cliff of government intervention and manipulation.

I have close friends here in Michigan who are out of work–talented, principled, hard-working people who are either unemployed or seriously underemployed. My heart breaks for them and for everyone eager to work who has been blindsided by the current recession. Unfortunately, government policies to help sometimes make the situation worse. A recent Detroit News story offers fresh evidence, evidence suggesting that Michigan’s bloated nanny state is creating perverse incentives in the labor market, incentives that are both economically and morally degrading:

In a state with the nation’s highest jobless rate, landscaping companies are finding some job applicants are rejecting work offers so they can continue collecting unemployment benefits.

Members of the Michigan Nursery and Landscape Association “have told me that they have a lot of people applying but that when they actually talk to them, it turns out that they’re on unemployment and not looking for work,” said Amy Frankmann, the group’s executive director. “It is starting to make things difficult.”

Chris Pompeo, vice president of operations for Landscape America in Warren, said he has had about a dozen offers declined. One applicant, who had eight weeks to go until his state unemployment benefits ran out, asked for a deferred start date.

“It’s like, you’ve got to be kidding me,” Pompeo said. “It’s frustrating. It’s honestly something I’ve never seen before. They say, ‘Oh, OK,’ like I surprised them by offering them a job.”

Some job applicants are asking to be paid in cash so they can collect unemployment illegally, said Gayle Younglove, vice president at Outdoor Experts Inc. in Romulus.

State benefits last for up to 26 weeks.

The unemployed can then apply for extended federal benefits that increase the total time on the public dole up to a maximum of 99 weeks.

The federal jobless benefits extension “is the most generous safety net we’ve ever offered nationally,” said David Littmann, senior economist of the Mackinac Center for Public Policy, a free-market-oriented research group in Midland. The extra protection reduces the incentive to find work, he said.

The solution isn’t to walk away from charity. The solution is to return the lion’s share of charity work to families, churches and local communities. This is charity with a human face, charity that can make important distinctions informed by local knowledge, charity that promotes human flourishing rather than dependency and dysfunction. It’s a change that will require governments to stop crowding into the sphere of private charity, and for families, churches and community organizations to prayerfully crowd back into charitable work they may have turned over to the government in decades past.

No system of charity is perfect, private or otherwise. And government-directed help has its place, such as in the case of some natural disasters. However, the evidence continues to mount that long-term, state directed charity leads to moral and economic disaster. It’s time to change.