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2010 October 05 Tuesday
Obama One Third The Way Toward Employment Goal

U Chicago economist Casey Mulligan explains European government policies have been responsible for a much lower rate of employment in Europe. Part of this shows up in higher European unemployment rates. But fewer people in Europe even try to find jobs.

Employment has been consistently lower in Western Europe, with an average employment rate gap of 10 percentage points over the years 1980-2007. Our recent sharp drop still leaves two-thirds of the European-American employment gap that was there a few years ago.

So far Obama has managed to close only one third of the gap that the US has with Europe in terms of employment. He's got to keep the unemployment rate high in order to drive more people out of the labor force and onto welfare (masquerading as extended unemployment benefits) to make the US more like the European welfare states. Can he do it?

Some might argue that lowering the US employment rate is not a long term Obama goal. But it is an obvious predictable outcome of the policies he prefers. So he either does not mind this effect or he wants it. Either way he's effectively aiming for it.

The resulting lower labor market participation rate lowers tax revenues which makes his social programs less affordable. But he wants to solve that problem with higher taxes which will further lower the employment rate to make it closer to Europe. This will lower output and living standards. Seems unavoidable.

Mulligan does not expect the US employment rate to return to as high as it used to be. The government is growing and its policies work against employment.

Our future is likely to have a permanently larger role for government, and that means employment rates may never be as high as they once were. We might enjoy some of the European lifestyle, or recover the jobs lost during this recession, but not both.

I think the United States has peaked in many ways. Tragic. But there it is. We've got too many things working against us now. Hard to make way against such strong head winds.

Share |      By Randall Parker at 2010 October 05 09:23 PM  Economics Labor


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Black Death said at October 6, 2010 8:38 AM:

Here's some more good news for those of us who feel tha the USA is in a period of steep decline:

66% of adults do not feel confident that life for their children’s generation will be better than it has been for them.
65% think America is in a state of decline.
OK, so you get the picture that America’s forecast is cloudy with a chance of collapse.

Here are five societal trends that will further exacerbate the pessimism of two-thirds of American adults who believe our nation’s future is bleak:

National poverty is higher now than in all 51 years of record keeping.
There is an increasing number of high school drop-outs.
The American workforce is steadily becoming less educated.
Four of out of every ten births in America are to unmarried women.
Only 53% of Americans pay federal income taxes.

Each of these five trends taken separately could be viewed as a serious problem but not necessarily a signal of national decline.

However, when these problems are considered collectively with their cause and effect and interrelationships, it becomes apparent why we are facing a society-transforming tsunami that our nation as a free market democracy is nearly powerless to stop — no matter how many millions of dollars our government throws at these problems.

These trends are listed in no particular order, for they are all equally distressing.

1. America is getting poorer. One in five children and one in seven residents of America are living in poverty.

Here are the cold hard facts according to a September 2010 Census Bureau report:

43.6 million people in America are living in poverty.
That translates into 14.3% of the total population (up from 13.2 % in 2008).
Of that 43.6 million living in poverty, 20.7% are children (up from 19% in 2008).

http://pajamasmedia.com/blog/five-societal-trends-that-signal-our-nations-decline/

Mercer said at October 6, 2010 10:22 AM:

"He's got to keep the unemployment rate high in order to drive more people out of the labor force and onto welfare (masquerading as extended unemployment benefits) to make the US more like the European welfare states. Can he do it"

This is absurd. He wants to be re-elected and high unemployment makes that harder.


'Some might argue that lowering the US employment rate is not a long term Obama goal. But it is an obvious predictable outcome of the policies he prefers."

What policy makes that predictable? His biggest policy change is with healthcare. Obamacare will make it easier for small employers to get coverage or tell their employees to get coverage on their own. It also includes features to try to restrain the growth of medical costs.

Mulligan writes about Europe as if every country there is similar. There is a vast difference between the economic situation of Germany and Greece for example. Businessweek's current issue highlights the many strong points of the economy of Germany. One thing all the European countries probably have in common is that they spend much less on health care per capita then the US with health outcomes that are equal to the US. Anyone who is not wealthy or employed in healthcare should be in favor of moving our health care system closer to a European model.

Mulligan has a graph of employment for the entire population. He does not say whether the age distribution of the population is different between the US and Europe. He also does not factor that many countries do not want married women to work.

Sycamore said at October 9, 2010 5:55 PM:

Mercer, I suspect you are ignoring human biodiversity in the USA. Europe is whiter and hence on a national average level people there are more responsible in preventing say type II diabetes. Also, Africans and Hispanics are a lot fatter than Whites, probably not entirely by their own fault but rather partly by virtue of less extensive adaptation to modern diets. Needless to say this is a monumentally huge contributor to poor heath outcomes.

In fact, this form of argument by those who want European policies is the rule. "Alas, American children are 39th in science" - oops, American whites are 7th compared to whites in other countries (numbers made up, but do approximate numbers I've seen), but America is much less white than any European country especially continental ones. Blah blah.

It's the same talk with respect to every single variable. Blacks or mexicans have a pretty darn fair shake here in America but possess a different average nature leading to worse outcomes one most variables of note. Forgive me then if I'm not overawed by your attempt at evidence (which may be well intended; offense is not meant).

The sad thing is that this line of talk licenses our credulous elites to push through wild-eyed experimental education ideas, and other programs, which actually make matter worse. And no one can resist because the counter-arguments are supposedly 100% equivalent to supporting immediate genocide. It's no thing, whether or not a higher and yet higher precentage of young blacks is made totally unpresentable and unemployable by ever more retard-utopian, hyper-feminized notions of education. It must be that horrible American racism, which we know has been growing exponentially over the last 60 years, culminating in the inauguration of a KKK member as president in January 2009 amidst a nationwide rash of racial pogroms and shameless government-mandated hiring preferences for white protestants.

(Furthermore, Americans simply have more money; as income rises, food spending declines as a percent of a person's budget and health spending tends to increase as a percentage or same.)


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