Little-Acorn
Well-Known Member
When it takes a trained professional economist to point out the obvious to the American people, you have to wonder if our educational system isn't evey bit as bad as people say it is.
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http://townhall.com/columnists/thomassowell/2011/08/30/an_unusual_economy
An Unusual Economy?
by Thomas Sowell
8/30/2011
Many in the media are saying how unusual it is for our economy to be so sluggish for so long, after we have officially emerged from a recession. In a sense, they are right. But, in another sense, they are profoundly wrong.
The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand.
Some very sharp downturns in the American economy, such as in the early 1920s, were followed quickly by bouncing back to normal levels or beyond. The government did nothing -- and it worked.
In that sense, this is an unusual recovery in how long it is taking and in how slowly the economy is growing -- while the government is doing virtually everything imaginable.
Government intervention may look good to the media but its actual track record -- both today and in the 1930s -- is far worse than the track record of letting the economy recover on its own.
Americans today are alarmed that unemployment has stayed around 9 percent for so long. But such unemployment rates have been common for years in Western European welfare states that have followed policies similar to policies being followed currently by the Obama administration.
Those European welfare states have not only used the taxpayers' money to hand out "free" benefits to particular groups, they have mandated that employers do the same. Faced with higher labor costs, employers have hired less labor.
The vast uncertainties created by ObamaCare create a special problem. If employers knew that ObamaCare would add $1,000 to their costs of hiring an employee, then they could simply reduce the salaries they offer by $1,000 and start hiring.
But, since it will take years to create all the regulations required to carry out ObamaCare, employers today don't know whether the ObamaCare costs that will hit them down the road will be $500 per employee or $5,000 per employee. Even businesses that have record amounts of cash on hand are reluctant to gamble it by expanding their hiring under these conditions.
(Full text of the article can be found at the above URL)
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http://townhall.com/columnists/thomassowell/2011/08/30/an_unusual_economy
An Unusual Economy?
by Thomas Sowell
8/30/2011
Many in the media are saying how unusual it is for our economy to be so sluggish for so long, after we have officially emerged from a recession. In a sense, they are right. But, in another sense, they are profoundly wrong.
The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand.
Some very sharp downturns in the American economy, such as in the early 1920s, were followed quickly by bouncing back to normal levels or beyond. The government did nothing -- and it worked.
In that sense, this is an unusual recovery in how long it is taking and in how slowly the economy is growing -- while the government is doing virtually everything imaginable.
Government intervention may look good to the media but its actual track record -- both today and in the 1930s -- is far worse than the track record of letting the economy recover on its own.
Americans today are alarmed that unemployment has stayed around 9 percent for so long. But such unemployment rates have been common for years in Western European welfare states that have followed policies similar to policies being followed currently by the Obama administration.
Those European welfare states have not only used the taxpayers' money to hand out "free" benefits to particular groups, they have mandated that employers do the same. Faced with higher labor costs, employers have hired less labor.
The vast uncertainties created by ObamaCare create a special problem. If employers knew that ObamaCare would add $1,000 to their costs of hiring an employee, then they could simply reduce the salaries they offer by $1,000 and start hiring.
But, since it will take years to create all the regulations required to carry out ObamaCare, employers today don't know whether the ObamaCare costs that will hit them down the road will be $500 per employee or $5,000 per employee. Even businesses that have record amounts of cash on hand are reluctant to gamble it by expanding their hiring under these conditions.
(Full text of the article can be found at the above URL)
