Get Real about Jobs

by Chidem Kurdas

Today President Obama is holding a jobs summit, with the professed goal of soliciting ideas to encourage businesses to hire. Short-term tax credits for employers are among the measures mentioned.

Yesterday here on ThinkMarkets Mario Rizzo pointed to the distorting impact of such proposals and cited Gary Becker’s argument that cutting income taxes is a better way to stimulate employment.  There is another type of distortion – related to the highly informative back and forth by Jerry O’Driscoll and Roger Koppl on Mario’s post – that should be spelled out. Even as the economy recovers, government-created uncertainty is going to discourage hiring.

What Ended The Great Recession?

by Mario Rizzo  

Some business forecasters with a not-too-bad record are predicting that the recession will be over by the end of the year.  (NBER dates the beginning to December 2007.)  

Of course, the recovery in terms of real output from the Great Depression began in the 3Q of 1933 and that did not preclude high unemployment rates and a further recession in 1937. Here. Let that pass for the moment. 

If recovery begins, the discussion about why will also begin. Let’s confine ourselves to evaluating policies designed by the government to produce recovery.

Regime Uncertainty During The Great Depression

by Mario Rizzo

 

The destabilizing “regime uncertainty” that has been analyzed by the economist Robert Higgs was already seen after the first few years of FDR’s administration by one of its most influential members, Raymond Moley.

 

He had been an economic advisor to Governor Alfred E. Smith of New York. He was a conservative Democrat who quit the administration in mid-1936 because he thought it was moving too far to the left.  

 

What Roosevelt and others saw as an “experimental” or “pragmatic” turn was, in reality, a confusing and destabilizing mix of ill thought-out policies and rhetoric.