How Democrat policies cause unemployment to increase

Consider this article from the Washington Post. (H/T Belmont Club via ECM)

How Democrats prevent job creation

Most of the article talks about how Obama’s temporary hand-outs will not create any lasting jobs – they’ll simply go away as soon as the government stops taking money from the private sector to pay for these public works projects. But then the article talks about free trade and how free trade creates jobs. Is Obama in favor of free trade?


More promising is the president’s call for a renewed national emphasis on exports, which currently support about 10 million jobs in the United States. It’s a sound concept, especially at a time when the weak dollar improves this country’s global competitiveness. But the goal he set in his State of the Union address — doubling exports to $3 trillion per year over the next half-decade — is unreachable via the laudable but modest policies that he has been willing to embrace so far, such as greater trade promotion efforts and relaxed controls on national security-related export controls. Though he called for “strengthened” trade relations with South Korea, Panama and Colombia, he did not challenge Congress to approve pending free-trade agreements with those three countries. That would require defying labor unions and other interest groups in his party. But it would create hundreds of thousands of jobs.

Free trade creates jobs by allowing our businesses to buy cheaper materials from abroad, and to sell their products into foreign markets. Consumers also benefit by being able to buy cheaper foreign goods, which allows them to save, invest or buy other things.

The only people who suffer are labor unions, who are paid salaries and benefits far in excess of what their skills really warrant. For example, a unionized GM auto worker in Detroit may be paid $70/hour in salary and benefits, while a non-unionized Honda auto worker in Ohio may be paid $40/hour. Unfortunately, these unions play a big role in getting Democrats elected, sometimes by using violence, etc., to get their man elected.

How Democrats cause jobs to be shipped overseas

Here is the latest from the Heritage Foundation. (dated 01/12/10)


According to an Associated Press analysis reviewed by independent economists at five universities, the $20 billion spent nationwide on infrastructure so far “has had no effect on local unemployment rates.” And this was just the most recent embarrassing headline for the White House’s signature economic policy. Since the first reporting deadline in October, newspapers and other media outlets across the country have identified 94,341 fake jobs reported by the Obama administration as jobs “created or saved” by the stimulus. After the Government Accountability Office issued a report finding “significant reporting and processing problems that need to be addressed,” Obama administration spokesman Ed Pound offered this defense of the Obama administration’s jobs numbers: “Who knows, man, who really knows.”

Now Office of Management and Budget Director Peter Orszag issued a little-noticed memo last month ending the “saved or created” metric and instead directing agencies to count only jobs “funded” by stimulus dollars. But as Harvard University labor economist Lawrence Katz tells ProPublica, this is not really an improvement: “I just think it’s a silly exercise.” Instead Katz says a more accurate way to account for the effect of the stimulus is to look at the unemployment numbers put out by the Bureau of Labor Statistics.

That is a great idea. The latest BLS report issued last Friday found that the U.S. economy dropped 85,000 jobs in December, bringing the jobs lost total to 2.7 million since the stimulus was passed and 3.4 million since Obama became President. In contrast, the President’s White House Council of Economic Advisers had promised total employment of at least 138.6 million by 2010. Actual employment as of December was reported to be 130.9 million, leaving the Obama jobs deficit at 7.7 million.

The problem with infrastructure spending as stimulus, and really government spending as stimulus, is that Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another. Businesses are telling pollsters that among the biggest reasons they are not creating jobs is the prospect of new tax and regulatory burdens. A better solution to reduce unemployment is to simplify and reduce the barriers to business success.

The problem is that Obama is associated with special interests who are hostile to business, like unions, trial lawyers, and environmentalists, so he won’t do what needs to be done. Whenever Democrats tax, regulate, intimidate, and demonize business, they cause unemployment to increase. Fancy that. All this complaining by Democrats about “greedy corporations” and “global warming” cost you your job.

Obama promised that his policies would create jobs, but his policies failed. He predicted that his policies would work, but they did not work. He prescribed pixie dust to fix the economy, and it failed. He failed. And his only response to his failure is to blame his predecessor who embraced tax cuts and free trade, and presided over a 5.2% average unemployment rate over 8 years. George W. Bush didn’t attack businesses, and we all had jobs. Remember that?

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