Job creation by the numbers.

[telemann.livejournal.com]

I have to admit, I was surprised by this macro too.

Comments

[angelcerv25.livejournal.com]

Half this community's going "who's that?"

LOL

[new-wave-witch.livejournal.com]

Everybody knows Mr Rogers!

[moonshaz.livejournal.com]

I love this man (http://www.cartercenter.org/news/experts/jimmy_carter.html).

[telemann.livejournal.com]

Yeah, he is all kinds of awesomeness.

[musicpsych.livejournal.com]

Devil's advocate:

Is it really 1:1 for job creation though? Could Carter have benefited from programs passed by his predecessors, while Reagan and Bush's job creation rates were hurt by programs passed by their predecessors?

Also, it's easier to sustain gains over 4 years than over 8, the latter of which is more likely to include more of the natural rise and fall of an economic cycle.

[telemann.livejournal.com]

Is it really 1:1 for job creation though.

Seems so.

Could Carter have benefited from programs passed by his predecessors

Seems unlikely, given that Ford was a fiscal conservative who wanted to reign in Federal spending by using austerity, and was opposed to stimulus spending to get the economy to grow.

Your questions are also interesting, because Carter's economic policies were so heavily criticized during the 1980 election, most notably by the Reagan campaign; and certainly the country at the time blamed Carter for the inflation issue, which dated back to the Johnson administration, and certainly Reagan wasn't asking your questions. Bush never blamed Ronald Reagan for his economic troubles that I recall; and was also a one term president like Carter, so all things being equal, your point about a one term president having it easier than a two term seems to be a draw, at least for President Bush Sr.

The University of Nebraska economics dept has a great article that will likely answer a lot of your questions: "Fiscal Policy, Monetary Policy, and the Carter Presidency (http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=10&cad=rja&uact=8&ved=0CHsQFjAJ&url=http%3A%2F%2Fdigitalcommons.unl.edu%2Fcgi%2Fviewcontent.cgi%3Farticle%3D1033%26context%3Deconfacpub&ei=23zyU9uMCrC-sQT6uYGYDw&usg=AFQjCNH6Z7alTF0ydVTUK8Wo-p9wBHs5rQ&sig2=w5vhYgIRjavcuc-ZtYk4hA&bvm=bv.73231344,d.cWc) written by Annie Mari May.

[fizzyland.livejournal.com]

And wasn't it really the hostage situation that doomed Carter?

[telemann.livejournal.com]

Yeah I think so. The polling was pretty close until the debate aired. Regan was making some serious fuck-ups regarding race (he had a campaign speech in Missouri not far from where some civil rights workers were murdered, and Reagan made a speech supporting "states' rights").

Carter mentioned in an interview that John Anderson's ( a liberal Republican who ran as an independent) candidacy cost him the election. Key states were Arkansas (Carter lost by 5,000 to Regan, but Anderson received 10,000 votes), Delaware was similar, in New York, Reagan won by 165,459 but Anderson won nearly 500,000 votes. That after a two year primary fight with Teddy Kennedy had left Carter pretty bruised.

If you look at the close states ( where Reagan only won by 1 but under 10 percent), and add Carter's win of 49 votes: the final electoral victory would have been 278, Carter wins by a whisker. To be fair, Carter was close in 3 states that he won by thin margins, again due to Anderson's run. Then the issue of "stay home voters" who were pissed a more liberal candidate wasn't the final nominee. Hey if conservatives can suggest that Obama won in 2008, and 2012 because Conservative Republicans were pissed at the final nominee, well, that can go both ways!

[goumindong.livejournal.com]

The race thing wasn't a fuck up. That was dead intentional. Without it Reagan probably would have lost because the racists would not have thought he was one of them.

[goumindong.livejournal.com]

Here is the difference in non-farm payroll (annual post term) from 1975 to 1995 (so + 1-3 years on either side) (such that the average of that graph would be "average annual job growth")



Carter had to deal with the oil embargo (which ended when Reagan was elected and that arguably accounts for pretty much all of his job drop numbers.

The economy unarguably got worse with Reagan's tax changes, and it wasn't until Volcker saved his ass with the Fed that the economy improved. Remember that when Reagan took over in 1980 things were supposed to get better (oil embargo ending should have had immediate and massive stimulative effects which should have increased job growth even higher to correct for failure to grow during Carter's term.) but they did not.

HW Bush gets unlucky. He has Greenspan's recession AND he has the end of the savings and loan crisis. Both things that, more or less, Reagan dumped on him. Its hard to say whether or not his policies would have been better. Off the cuff it seems to me like the really terrible people that Reagan had in his administration on economic issues had less pull in his administration.

But it was those same people that W brought back to the table. And we all know how that turned out.

Reagan was an absolutely terrible President. It is fitting that he is so idolized by the current republicans

[hardblue.livejournal.com]

This is one of the big Red and Blue divides, right? Their story is that the economy was tanking after decades of New Deal liberalism, and that it was the wonder of the big Reagan tax cuts, along with deregulation and cutting wasteful spending on the poor, that turned the economy around and made for an economic miracle bringing America back from the brink. No?

[oslo.livejournal.com]

If only there were some way to accurately assess the situation without resorting to this kind of abdication of intellectual responsibility.

[hardblue.livejournal.com]

I'm just hoping to get an interesting response from Goumindong. If he is of a mind, he can make something of it. I imagine that one can make a fairly solid academic case against the Red State picture, and that the case has probably been made a number of times, but that it does not change their creation story.

[goumindong.livejournal.com]

It is, certainly. But there is basically no evidence to support the Republican story. While the stagflation of the late 70's had not happened before it was not something which inconsistent with the theory and cannot be construed to be a failure of Keynesian economics and new deal liberalism.

There were some technical points to make about the efficacy(and construction) of the various models but its an academic quibble and not something that has an effect on the overall theoretic construction. Kind of like how Darwinian Evolution has changed due to new evidence, but the overall idea of "natural and sexual selection" hasn't changed.

The minutiae can actually be summed up pretty succinctly. In Keynesian economic structure there are generally three big abstracted forces. Demand, Supply, and Money; each representing a complete market. Demand is the market for goods and services, Supply is the market for labor, and Money is the market for bonds/savings.

In an abstract sense we have a short term equilibrium (I.E. the current state of the economy) which is defined by the equilibrium point of the Money and Demand market and we have a long term equilibrium (I.E. the ideal state of the economy) defined by the equilibrium point of the Supply and Demand markets. The economy tends to push towards the ideal state of the economy.

Aside: From these we get the primary difference between Demand side and Supply side economics. Keynesians attempt to push the economy towards the idea, and supply siders want to push the idea. The problem with supply side policies is mainly that they don't actually increase supply, not that the idea of increasing supply is bad. The explanation for this is another post through.

OK so back to the structure. In a general static sense there can be three states of the economy. The demand/money equilibrium can be higher than the demand/supply equilibrium (we will call this over supply). The demand/money equilibrium can be lower than the demand/supply equilibrium(we will call this under supply). Or the demand/money equilibrium can be in equilibrium with the demand/supply equilibrium (which basically never happens)

But this would only be a snapshot in time of the current situation. Supply and Demand both tend to increase over time (and it tends to increase in ways we cannot predict for reasons which will go in that other post if it happens). And the difference in the speed at which they increase determines the general state of the economy. So we can think of four dynamic states. We can be in oversupply with supply/demand eq increasing faster than the demand/money eq. We can be in undersupply with supply/demand eq incrreasing faster than the demand/money eq. And we can be in over/under supply with supply increasing slower than demand.

The Keynesian structure at the time however was strictly static due to the state of mathematical advances at the time. The dynamic aspects of the situation had to be inferred from an understanding of the structure rather than an explicit model. While much of modern economics is about trying to model those dynamic aspects, the simple extrapolation from the Keynesian model is still a very good structure (this is also one of the reasons why Krugman is so good at predictions and many other economists are so bad)

Post too long....

[goumindong.livejournal.com]

Continued...

So the 1970's hit and something strange happens. We have an oil embargo which actually materially effects the supply/demand equilibrium. It does so in a negative way. Where as previously supply/demand has always been increasing with demand/money trying to catch up. In the latter structure we have what is called a normal Phillips curve. Inflation goes up as unemployment goes down. But the phillips curve isn't actually a curve. Its only a curve for one dynamic state of the economy. Its actually a function. The stagflation broke the models that were being used because the models that were being used weren't able to look inbetween different states (those methods hadn't been developed yet, not sure if they even have yet)

So conservatives had this attack that said that the phillips curve had broken down and so keynesianism/liberalism was bunk which played well to people who didn't understand the full situation. But it only really broke the mathematical limits of the numerical models. It did not break the theoretical structure(as anyone who has read the General Theory rather than cribbing from Hicks should know, as Keynes spends roughly the entire book talking about dynamics)

What actually happened was Paul Volcker (http://en.wikipedia.org/wiki/Paul_Volcker), a Carter appointment(though Carters prior appointment wasn't good), saved the nation from Reagan. He was so good that Reagan was basically forced to reappoint him in 1983 despite some very public fights over money policy.

[peristaltor.livejournal.com]

So conservatives had this attack that said that the phillips curve had broken down and so keynesianism/liberalism was bunk which played well to people who didn't understand the full situation. But it only really broke the mathematical limits of the numerical models.

Interesting. I'll have to look into this in more detail.

It did not break the theoretical structure(as anyone who has read the General Theory rather than cribbing from Hicks should know, as Keynes spends roughly the entire book talking about dynamics)

Quick question: were the people employing the numbers—modeling the economy with the numerical models—"cribbing Hicks"?

[goumindong.livejournal.com]

Kind of. Hicks wrote the most popular interpretation of Keynes. And he wrote it in a way that easily model-able. The vast majority of post war, pre lucas, practical and theoretical macroeconomics followed from Hicks. Without Hicks it would be more or less impossible to do numerical analysis and study of macroeconomics in the Keynesian structure. The other way would be to develop a new dynamics from whole cloth. Not something that is particularly easy*

That isn't a bad thing, I am guessing that most of the people doing that work in the 50's and 60s understood that that they were working with an abstraction. You a

At that point the people who were doing the work were either

A) People in the fight

or

B) Taught by people in the fight.

And by "in the fight" i mean the fight for the Keynesian macroeconomic worldview over the classical worldview. Which Keynes won. Hard.

*dynamics is hard because the only good solutions we have are local solutions(To solve a dynamic system you linearize the system around its equilibriums). You also need path functions for demand/supply. Which would mean that you either need microfoundations (which are another subject entirely) and/or you have to prognosticate. As a rule economists love to do that, but not in actual economic models. After getting off of a long fight to NOT use microfoundations because they produced wrong results when viewed in the static models no one was eager to get right back into it to try to see if they could get Dynamics looking like Keynes showed they should.

Additionally the math of dynamics was not as advanced as it is now. One of the things I have been studying is exhaustible resources. (which are a simple dynamic system compared to macro) and the solutions from the 30's to 50's are really ugly simply because some of the shortcuts had not been figured out.

[hardblue.livejournal.com]

That's pretty rich, dude. I wasn't expecting a treatment of the Keynesian model, but I can understand why. I actually try to read Krugman's discussions on the contention over the validity/value of the model, and his frustrations for being on the minority side of that debate, as I also see other economists and pundits talk of Krugman as if he were a sort of 'early earth creationist'. But it's kind of opaque to me. Maybe some others, such as Rowsdowerism, can get into it with you.

It might amuse you to know, I took a couple of economics courses, and so I tried to follow you here, as I do Krugman, and I was immediately thrown with the idea that Supply was labor. I always took it that supply-side economics was about giving more money to the producers, as in those Reagan tax cuts, that too much wealth was being directed to the workers and the poor, which was only deadening the economy, as well as driving that inflation in the 70s. We supposedly needed to put more money back in the hands of the producers and job creators, so that they could get back into inventing and making stuff.

As to the Republican story I was talking about, I was thinking more of the fundamental notion of the size of government: that no society can thrive when you have so much wealth and power in the hands of the government, as had been shifting there since the New Deal - it's stultifying and corrupting. Although I don't buy the story, I can see its seductive appeal, especially for Americans. My main thrust at their story is that Republicans, for all their rhetoric, do not seem genuinely interested in shrinking government as much as in redirecting it, such as into the War on Drugs and the military and perhaps corporate welfare.

[goumindong.livejournal.com]

supply is the labor market. So its the equilibrium between labor and capital.

So a bit of a divergence here to talk about something called a "corner solution" since if i can just call it that it makes a lot more sense. Suppose we have a hypothetical buyer who is deciding how much of two goods to buy. Call them X, and Y. He will do so based on his preferences for each one such that the ratio of the marginal utilities for each will be equal to the ratio of the prices. In simpler terms, if you change the price of good X he will buy it marginally more until he gets more benefit from buying good Y. But this assumes that the solution doesn't have the consumer buying zero of good X or Y. If its the case that the consumers prefers X to Y so much that at the current prices he never buys good Y then changing the price of X or why may not have an effect on how much he buys.

And the same thing happens with a seller of goods.

The reason supply side doesn't work is two fold. One is that labor suppliers (I.E. laborers) are pretty much in a corner solution. They always want to work and they always want to work for 8 hours a day, 40 hours a week. Raising wages doesn't really get them to work more. You cannot incent them to work harder/more whatever.

The other is that capital is more or less saturated. That is, you can't add more factories to take advantage of people who would be working that aren't. Those factories have been built already and are working to the capacity that demand allows.

You might think of it like a 4x game like Civ 5. At the start of the game you increase your hammers in three ways. You can build buildings which give more hammers, you can build improvements which give more hammers, or you transfer people to more productive enterprises. But at some point in the middle of the game your population is large enough that you're using every piece of improved land you have. Building improvements doesn't do anything anymore, there is no one to use them. Transferring people to more productive enterprises doesn't do anything anymore, they're already as productive as they can be. Building buildings is dependent on your research state. Which while we know what increases it in Civ 5, we don't have a clue what increases it in the real world*.

So the GOP has two main "supply side policies". One is lowering taxes which is supposed to cause people to invest in infrastructure which makes more people more productive and so leads to hiring. But infrastructure is more or saturated, one Janitor doesn't need two mops and one building doesn't need two janitors and one car plant doesn't need two buildings (and so on and so forth).

The second is lower wages (by reducing worker protections) which is supposed to cause businesses to hire more because labor is now (effectively**) cheaper except that everyone who is going to work is working already so no one joins the workforce. Note that this also fundamentally misunderstands the current labor/capital power dynamic. If we wanted to increase the amount of workers willing to work you would have to raise wages(which lowering taxes should do IF the people who had their taxes lowered still received the same services from the government and we were talking about actual laborers because we fucking know the GOP isn't going to cut their taxes)

*Well, ok that isn't true we do. Its just that no one wants to pay for massive state sponsored research projects anymore because the people voting for this stuff think that lowering taxes is magic. Yes I am explicitly saying that Civ 5 has a better grasp of economic concepts than Republican lawmakers.

**Exactly what constitutes a labor cost is another subject.

[telemann.livejournal.com]

Yeah, I forgot to mention the GDP to public debt was the lowest for any modern President during Carter's term.

[joshthevegan.livejournal.com]

I never understood why liberals felt the need to be embarrassed by Jimmy Carter. That guy is the fucking greatest.

[peristaltor.livejournal.com]

The press were not kind to the man when he was President. I lived through the bullshit. Hell, I bought it and voted Reagan (when I could).

The press tend to gravitate toward people who promise sunshine and roses, even in winter.

And had GHW and his spook cronies not committed treason (http://www.consortiumnews.com/archive/xfile1.html), Carter might very well have won 1980. It was a close election (made less close by the press on election night, but that's another story).

[jom-art.livejournal.com]

he's definitely most misunderstood one, then.

[the-rukh.livejournal.com]

The US political landscape is a history of the decent being run over by the ones willing to do things people shouldn't be willing to do. The fact is Carter just didn't play dirty, and in politics, fighting with one hand behind your back doesn't make you heroic because your reputation is the very thing you're fighting for.

[hindustar.livejournal.com]

He is and always will be my favorite president. I love him with the irrational brain of a 6 year old. I remember the other kids teasing me and telling me he killed a rabbit, it broke my little 6 year old heart. lol. The more I read about him, the more I feel vindicated.

[enders-shadow.livejournal.com]

How can we make him run for president 2016? Even if just to have him at some debates.....

[hindustar.livejournal.com]

I would love to have him run, but I don't think anything would motivate him to do it again. =(

[peristaltor.livejournal.com]

Few who have had the shit dumped on them long for those calm days in the cesspool.