Paul Krugman: Jobs Report Optimism May Prove 'Self-Defeating'

The New York Times:

In a better world -- specifically, a world with a better policy elite -- a good jobs report would be cause for unalloyed celebration. In the world we actually inhabit, however, every silver lining comes with a cloud. Friday's report was, in fact, much better than expected, and has made many people, myself included, more optimistic. But there’s a real danger that this optimism will be self-defeating, because it will encourage and empower the purge-and-liquidate crowd.

Read the whole story: The New York Times

Comments

[gerald4]

12:38 PM on 02/07/2012

Civilized nations have always taxed the productive population to pay for bureaucrats that supplied National Security, Crime Prevention, Police, Fire Protection, Education, and other similar items that assist, support and protect and prevent interruption of the agricultural and the industrial production bases that supplied the things (food shelter clothing) that the entire population needed to maintain life. Maybe this should be a part of the definition of civilization.

Complex civilized Industrial and Agricultural Bases can more efficiently produce the things necessary for life when the producers do not have to worry about foreign invasion, crime, protection rackets, corruption, sabotage, etc., disrupting the production.

A portion of the income earned by this producing base has almost always been forcibly taken or CONFISCATED by taxation to pay for services to prevent these occurrences that would otherwise interrupt and reduce the efficiency of the production of the things that the citizens need to sustain life.

There are economic limits to the amount of wealth created by the wealth producers that produce the things (food, shelter, and clothing) necessary for support of human life that can be CONFISCATED from the producers of the things necessary to sustain life and then spent on non wealth producing tax supported bureaucratic government services, government contracts, wealth distribution and other government expenses.

[Mister Neutron]

07:25 AM on 02/07/2012

There's some bad misinformation in the comments here about the unemployment rate. Some posters suggest that factors like the number workers who have become discouraged and stopped looking for work have offset reductions in the unemployment rate. This is demonstrably false. If you look at the U6 unemployment rate which includes these workers, the rate is the lowest it has been since February '09. In fact, no matter which of the unemployment rate measurements you use to compare (U1-U6), we're at lows not seen since early '09. Anyone suggesting that unemployment isn't improving is probably regurgitating nonsense they heard on talk radio.

FYI: "The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts "marginally attached workers and those working part-time for economic reasons." Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. And the "marginally attached workers" include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over"

http://portalseven.com/employment/unemployment_rate.jsp

http://en.wikipedia.org/wiki/Unemployment#United_States_Bureau_of_Labor_Statistics

[Damilton]

08:12 AM on 02/07/2012

I'm not totally with your thread. If workers have stopped looking for work, they would not be included in unemployment figures, so instead of "ofsetting" reduction, they would enhance reductions? i.e. it would look as if the unemployment figures have fallen, when in fact they have just dropped out?

[Mister Neutron]

08:34 AM on 02/07/2012

Damilton: "If workers have stopped looking for work, they would not be included in unemployment figures"

These people *are* included in the U6 unemployment rate if they have stopped looking but *still want to work*.

Some people are arguing that the U3 unemployment isn't an accurate method for measuring unemployment because it excludes these people. The U6 rate does include these people and it is also at lows not seen since early ’09 so the argument is invalid.

[joefoss]

08:01 PM on 02/06/2012

Along with the "good news is bad news" effect of improving job numbers on economic recovery policies, is the continuing influence of the "circular firing squad" Republican presidential primaries on the Obama team's re-election strategy.
=Ever attuned to the swings of political polling numbers, as they walk the tightrope between keeping the 1% happy and the 99% befuddled, the "folks" at the White House now have even less inclination to consider aggressive moves to rescue either the unemployed or the about-to-be-foreclosed (who are often, of course, the same people).
=Romney's "approval" numbers are down, no doubt due to the constant hammering he is taking
as the Republican frontrunner from his radical-right competitors, and the president's are up. This is certainly no time--I would expect Axelrod, et al., to be counseling President Obama--to be taking any chances on doing something that might upset Wall Street. Thus, the current policy
inertia: no plans to end the "Bush tax cuts for the wealthy" and using some of the increased federal revenue for infrastructure-building/job-creating projects, and the co-opting of the 50 state AG's "mortgage fraud investigation" by the White House, even as HAMP remains the handmaiden of the banks instead of helping homeowners.
=It's almost enough to make you root for, at least temporarily, higher unemployment figures
that might, in this election year, force the Obama administration to, finally, "do the right thing."

[castlerider]

05:22 PM on 02/06/2012

Exactly right, Mr Krugman. Spot on as always.

[ClarcKing]

05:10 PM on 02/06/2012

The American people will not forget this "talking while fighting" Abandonment Policy, this "you're on your own" offensive against the population. The screams to get rid of the Fed will get louder and louder. It should have been done 4 years ago at least. Political leadership knew of the outcome and now all we can falsely hope for, is that our coming crash does not resemble the Soviet Union's collapse, where millions were needlessly left to die. A genocidal policy exists; it is expressed in the continued expansion of hunger, homelessness, unemployment, contraction of employment, the constant expansion of Perpetual War, drawing in China and Russia, about to go thermonuclear; the final assault on humanity.

The Republican / Democrat political platform is so corrupt as to defy rational government operation; to protect the population. The stabilization of the United States is the only imperative, the only power on earth that can save humanity. The Wall St. cabal, the recipient of $29 trillion dollars, that terrorizes and corrupts the Congress, must be indicted, prosecuted to reestablish justice, sanity and the stabilization of the United States.

Statecraft demands the termination of the bankrupt, hyperinflationary, monetary financial system: Reenact the Glass-Steagall standard in US banking. Put the Fed into bankruptcy protection, recover the bailout trillions. Create the US National Bank that funds the 50 states, then fund the necessary economy platforms that enhance the population's physical economy, our standard of living. Stop Perpetual War. No other options exist.

[BRAINS4USA]

09:23 AM on 02/07/2012

Really. Can you return to earth before you post? And when you do - please check some little things like "facts"? Ok? Better luck next time.

[ClarcKing]

09:42 AM on 02/07/2012

BRAINS4USA? Really? it is not possible that anyone could misunderstand my post. However you have and you have no clue as to the actual national crisis.

[jcaunter]

04:56 PM on 02/06/2012

If these fake jobs reports actually do encourage the purge and liquidate crowd, so much the better. Society isn't going to reorganize until the peasants can't take it anymore.

[gerald4]

02:46 PM on 02/06/2012

The US Dollar electronic credits (and also the freshly printed paper US Treasury Bonds) have absolutely NO VALUE, except that the US government is allowing these Dollar Valued items (that US citizens paid to foreigners to make the consumer products that US citizens consumed) to be redeemed to purchase title to (corporations that own) privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned NATIONAL WEALTH and other assets located in the USA (that were created by previous US generations prior to de-industrialization) instead of redeeming these freshly printed paper US Treasury Bonds with gold from Ft. Knox.

When the USA has no more privately owned wealth and assets (title to US real estate and US businesses) available for foreigners in industrial countries to purchase in exchange for the foreigners freshly printed paper US Treasury Bonds and US Dollar electronic credits that we gave the foreigners to make consumer products for US citizens, those foreigners will then not accept any more of our freshly printed US dollars and US Treasury bonds to pay for the consumer products that we continue to import and consume.

The Federal government will then not have funding to pay for our US government expenses (bureaucratic payrolls, military payrolls, government contracts, wars, welfare, unemployment, infrastructure expansion, highways, bridges, etc.) and/or to pay for any more imported consumer products.

[gerald4]

02:55 PM on 02/06/2012

The US Government will then probably just start printing US dollars to pay for their government expenses as many African nations have done.

When this happens, the purchasing power of the US dollar will approach the value of toilet paper.

Each Nation desires to have sufficient financial resources to pay for the common infrastructure that they all enjoy, to take care of those that cannot take care of themselves, and various other government expenses that consumes existing NATIONAL WEALTH and does not create any new NATIONAL WEALTH.

[BRAINS4USA]

09:29 AM on 02/07/2012

Embarrassing...

[gerald4]

03:33 PM on 02/06/2012

In 1971 the USA was running out of Gold at Ft. Knox, and so President Nixon told foreigners in the industrial nations that they could exchange their US dollars for title to privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned wealth and assets located in the USA (that were created by previous US generations prior to de-industrialization) instead of Gold from Ft. Knox.


At 72, I thought that it would take decades to destroy the US economy, but President Obama, President Bush, and the last few Congresses are accelerating the process.

I have two children, and I do not think they will appreciate it when US Citizens hand them the bill for our non-productive lifestyles.

[BRAINS4USA]

09:29 AM on 02/07/2012

And still embarrassing yourself...

[victorianism]

11:23 AM on 02/07/2012

One half-a-year Iran war will finish all of this decades-long process.

[Neets101]

02:34 PM on 02/06/2012

FTA:

"And the inflation hawks at the Fed and elsewhere seem undeterred either by the way the predicted explosion of inflation keeps not happening,"

We all know about the new method for measurement of inflation.
Go grocery shopping sometime and tell me there is no inflation.

-------------------------------------------------------------------
http://dailybail.com/home/chart-the-real-inflation-rate-is-11-according-to-cpi-calcula.html

"Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter.

Since 1980, the Bureau of Labor Statistics has changed the way it calculates the CPI in order to account for the substitution of products, improvements in quality (i.e. iPad 2 costing the same as original iPad) and other things. Backing out more methods implemented in 1990 by the BLS still puts inflation at a 5.5 percent rate and getting worse, according to the calculations by the newsletter’s web site, Shadowstats.com."

[gerald4]

02:29 PM on 02/06/2012

FREE TRADE AGREEMENTS only hurt the US manufacturing workers.

Foreign manufacturers of the imported products and their foreign employees benefited by having jobs.

The US Consumer also benefited by having less expensive foreign made products available.

The US congressmen, senators, congressional aids, and administration officials also benefitted from gifts and campaign contributions provided by the professional US lobbyests to influence the congressional votes to create and administer the Free Trade Agreement laws.

[BRAINS4USA]

09:29 AM on 02/07/2012

No Gerald, this is not true at all.
Would be nice to see a post of you that either makes sense or could possible be remotely true...

[rdk70816]

02:09 PM on 02/06/2012

What countries are doing well financially now?

[gerald4]

02:53 PM on 02/06/2012

The industrialized nations!

[rdk70816]

03:00 PM on 02/06/2012

Theoretically, that should include the USA.

[BRAINS4USA]

09:30 AM on 02/07/2012

No Gerald they are not actually - even China is having troubles. Germany however is doing extremely well, as are The Netherlands

[gerald4]

01:08 PM on 02/06/2012

Why would or should any individual, business, partnership, corporation or other business entity ever do anything (like hiring another employee) that did not profit that business entity?

If the US labor, US electrical costs and US environmental compliance costs cannot be economically justified, then profit is not possible. Does any worker work without compensation?

Some workers believe that businesses should hire people and create jobs to be good citizens without a profit.

Will any laborer or other worker work without compensation or pay?

All business expenses like foreign labor, foreign rent, foreign electricity are deductable the same as US labor, rent, electricity and many other similar items are deductable.

All labor expenses, including foreign and domestic payroll costs are deductable.

All international and domestic product transportation costs are also deductable, or included into the subcontract price.

Hiring US citizens in the USA cannot usually be economically justified when compared to foreign operations.

[BRAINS4USA]

09:31 AM on 02/07/2012

Embarrassing yourself again...

[norkas]

12:09 PM on 02/06/2012

I believe workers should not be abused but unions often are a deterrent for any company thinking about entering into the manufacturing sector in America.

We all know about the abuses of the union and at times they have caused the downfall of many businesses.

If you want manufacturing back in America there must be a very strong change in how the union behaves otherwise there will be very limited manufacturing in America.

[frankieshoes1]

12:18 PM on 02/06/2012

Abuses by the unions? Can you be specific as to how they have caused the downfall of companies??

[getsit]

12:24 PM on 02/06/2012

He can't because he's clueless. More garbage from the right.

[norkas]

12:44 PM on 02/06/2012

Sorry frankie i did not respond to you sooner.

Unions negoaited deals that could not be sustained by business or municipalities.

In NYC we know of a business that was told they will unite the workers and go union . After looking at the deal the owner closed his business and120 people were out of work. This same thing has happened often to small business.

Negoations for pensions that NO one could afford such as many firfighters in NYC recieving over $70,000 a year that will in time bankrupt NYC or cause total havoc if this had to be negoaited.

GM union package prior to he meltdown was off the charts and it helped cause GM to tank along with poor management as well.

I do not mean to break the unions because I would not build a safe building without them but the insane demands that are made and if not agreed to they swill strike and try to destroy a business if need to.

[norkas]

12:45 PM on 02/06/2012

I am not from the right

[gerald4]

11:42 AM on 02/06/2012

With the total destruction of US jobs caused by the FREE TRADE AGREEMENTS that were created by the US government, almost everybody's job is going to be outsourced, and the remaining doctors, auto repairmen, construction workers, and other jobs that cannot be outsourced will not have any paying customers that have any money to buy their services.

How could any of the big or small US manufacturing businesses ever even think about creating and/or keeping any jobs in the USA if they are hamstrung with many times more expensive labor costs, electrical energy costs that is required to be generated in compliance with the EPA, health care payroll tax costs, unemployment payroll tax costs, social security and medical care payroll tax costs, environmental compliance manufacturing costs, fringe (holiday and vacation) benefit payroll costs, OSHA compliance payroll costs, union labor work rules, anti-business laws, and general anti-business attitudes that make manufacturing products in the USA many many times more costly than manufacturing the same product in almost any other foreign country?

FREE TRADE AGREEMENTS economically require that US businesses use foreign manufacturing costs if foreign costs are less expensive than US costs.

[tacevad]

01:31 PM on 02/06/2012

a level playing field doesn't mean Americans should drop their standard of living, the other way is for outsourced jobs off shored to include a payment to the government (we the people effected) equal to the advantage a company receives in reduced costs by outsourcing to begin with. Instead we have been paying companies to move out of the company...that insanity MUST stop!

[BRAINS4USA]

09:32 AM on 02/07/2012

Not true Gerald. Car industry still going great as an example. Better post something about electronics - I hope you are better at that...

[Ngonyama]

11:27 AM on 02/06/2012

Points well taken, mr Krugman. As usual. But it would have been a little fairer (and more up to date) if you had mentioned the half a trillion the ECB injected into the banking system recently rather than (just) the interest hike of some time ago.

Mr. Draghi worked a little miracle with that stimulus, no matter what the German bankers had to say about it (Inflation, inflation, inflation of course)

[Tom Hendricks]

11:24 AM on 02/06/2012

What would help is taking this good news and adding to it with a National Hiring Day.

There's only one jobs program that doesn't need government involvement at all.
There's only one jobs program that makes every corporation in the US part of the solution
There's only one jobs program that costs nothing.
There's only one jobs program that works in one day.

National Hiring Day - This is a day that corporations are encouraged to hire new employees. Corporations are called on to put patriotism first and help their country in
hard times. Those corporations that cannot hire, are asked to stop firing for that month.
http://wp.me/p5S9X-nv

Republicans should love this because it's outside the government and voluntary. Democrats should love this because it helps those needing jobs. Independents should love it because it helps all with little sacrifice from any one corporation, group, or person. Corporations should love this because with just a hire or two they become part of a collective country wide jump start of the economy.

There has never been a time In American History where hiring people would hurt corporations less, and help the country more.

[tacevad]

01:35 PM on 02/06/2012

there has to be incentive to hire, at the moment profits are more important than people in American Corporations.

[gerald4]

03:45 PM on 02/06/2012

Profits have been more important than people since the begining of recorded history.

American workers are free to get another job working for another business.

American workers are free to (work hard and) start their own business.

American workers are free to talk to some other US business and then offer to work for less money than that business is currently paying it's current employees.

[Tom Hendricks]

07:23 PM on 02/06/2012

National Hiring Day would challenge the greediest of corporations while supporting the best. It would put the spotlight on which companies are willing to give back to their country with a hire or two, and which are not. I think some are into rigid greed that has backfired to the point where their customers can't even afford to buy their product anymore. But most are reasonable enough to invest in a few jobs to get the economy going again and get new customers in the process.

National Hiring Day idea gets two reactions from people - the one says all corporations will turn their back on the country and put greed ahead of patriotism. The other says corporations are there to make money, most are just getting by, and patriotism through jobs creation is not a part of that responsibility.

I think most corporations are somewhere in between - they see that supporting the country during tough times like this is not a burden but an opportunity, an opportunity to not only help those out of a job, but get the economy going and help themselves to new customers with those new jobs.

[GJCO-JMH]

03:49 PM on 02/06/2012

Hiring should always be voluntary... but businesses don't hire just for the heck of it, and definitely not with any expectation that the economy will magically turn around in a day. No business works that way and neither does the economy.

How about first asking businesses WHY they aren't hiring, and you'll find that what you're missing are the costs and commitment-risk beyond each employee's salary... especially for the vast majority of businesses which run on slim profit margins and are the backbone of the whole economy.

As long as the government continues tax-greedy spending policies, private businesses are not about to go out on a limb and encumber themselves with any added expenses.

[Tom Hendricks]

07:20 PM on 02/06/2012

This is a lot of fuss over one job. Do you think Apple would go under if they helped the country with 2 jobs?

Dan Froomkin: Even as the nation continues to confront massive unemployment, the nation's biggest companies have been hoarding cash. Banks have been able to borrow the money essentially for free from the Federal Reserve, so why not? In fact, according to the Federal Reserve (Table L.109, line 28), banks are sitting on $1.6 trillion in reserves -- about 80 times the $20 billion they held in 2007.
Meanwhile, non-financial companies are keeping their profits liquid, rather than plowing them back into investments, to the tune of about $2 trillion."

National Hiring Day is voluntary, and any corporation can turn their back on the country while they, at the same time, are lobbying it, asking for lower taxes, sending jobs overseas etc. But it won't wash with me. Consumers may turn their back on these companies too.

CEO's retiring with 50 million, how about 49 million and hiring folks with the rest? Still asking too much of the millionaires? The truth is that it's good business. Corporations can't grow if their customers can't grow. Greed is bad business.