From: ZEITLIN@SLACVM.SLAC.STANFORD.EDU (Cary Zeitlin)
Newsgroups: alt.politics.clinton,alt.politics.bush,alt.politics.elections
Subject: Re: The same old unemployement lies
Date: 15 Sep 92 19:21:11 GMT
 <BuHBtM.C1q@eis.calstate.edu> <1992Sep13.194438.25482@umbc3.umbc.edu>
 <1992Sep14.213527.13967@Princeton.EDU> <168639974.MEDELMA@cms.cc.wayne.edu>
Organization: Stanford Linear Accelerator Center

In Message-ID: <168639974.MEDELMA@cms.cc.wayne.edu>
MEDELMA@cms.cc.wayne.edu (Michael Edelman) writes:

>In article <1992Sep14.213527.13967@Princeton.EDU>
>niepornt@phoenix.Princeton.EDU (David Marc Nieporent) writes:

>>       While inflation was indeed bad in 1980, unemployment never went over
>>7% under carter. The current rate is 7.7%, and would be higher under the pre-
>>1984 accounting rules, which dropped the long term unemployed from the
>>calculation (The new numbers are more informative, and lower). In spite
>>of the runaway interest rates, there were more jobs created under Carter
>>then in either of Reagans terms, and the total number of jobs has *dropped*
>>since 1988, as has the median income (which dropped $1100 last year alone).

>Disingenious, to say the least. Prior to the Carter regime the newspapers
>wrote of the dreaded spectre of "double digit inflation" lurking just
>around the corner, and that helped Carter. But under Carter we actually
>saw peak rates during part of 1980 that topped 17%. Remember, Carter was
>president from 1976 to 1980, but his policies had their effect from about
>1977-78 through 1981-82. There is a lag.

Right. And Mr. Edelman dogmatically adopts the approach that one must add
1-2 years to account for this lag. This conveniently puts the blame for the
recession of the early 80's on Carter and the blame for the current recession
on Bush, thus exculpating his hero Reagan. The truth is, there is no magic
about the 1-2 year figure, and in any case, the economy is not infinitely
malleable by executive branch policy. So whenever you hear Mr. Edelman
or others of his ilk repeat their dogma, remember: 1) Many policies take
*much* more than 1-2 years before they come home to roost -- decades, in
some instances; and 2) Sometimes external factors, beyond the control of
the federal government, have a major impact on the U.S. economy.

>>Also, 1980 was a recession, and thus artifically worse than the rest of
>>Carter's term, just as 1982 was worse than the rest of Reagan's term,
>>and 1991-2 was worse than the beginning of Bush's term.

>What makes it "artificially worse"? The recession didn't just happen. It
>was Carter's policies that brought it about. If you're willing to give
>Bush responsibility for killing the Reagan boom, you ought to allow that
>Carter was just as influential. It took Bush two years to kill the boom,
>just as it took Carter two years to really start driving the economy into
>the toilet, and Reagan two years to reverse that trend.

Carter, if you recall, was trying to squeeze inflation out of the economy
with an extreme tight money policy, as advocated by Volcker at the Fed.
This indeed produced a recession. Why was Carter so worried about inflation?
Because inflation of that period was largely driven by events external to
the U.S.: Iran, under Khomeini, slashed oil production, which gave OPEC
an excuse to drastically raise prices. I am not defending Carter here;
I think his management of the economy was generally inept. But he was not
the fumbling idiot that some on the net make him out to be. He was relying
heavily on policies pushed by Volcker and other conservatives whose biggest
worry was (and is) inflation. He had retreated from his previously-stated
position that he was primarily worried about the "human tragedy" of
unemployment.

>You can't improve employment figures overnight, and it takes a while for
>capital markets to respond to money supply and fed policies.

Since you brought up employment figures, let's explode one of the myths
of the Reagan years: that he achieved high employment. In fact, it was the
policy of the Reagan administration to keep unemployment high (I can dig up
some references if people are interested). High unemployment keeps wages down,
which keeps inflation under control. Recall, inflation is what conservatives
worry most about. To make the strategy more palatable politically, it was very
helpful to stop counting the chronically unemployed. Reagan employed classic
expansion tools to spur growth -- a tax cut (for his rich friends, of course)
and deficit spending, with a big chunk going for defense. Thus Reagan could
claim growth (rather modest, compared to the boom times from about 1946-1966;
not at all the "unprecedented" success that Dutch and his apologists claim)
with only moderate inflation (lower than the 70's for the most part, but
creeping back up towards the end of his term), and acceptable (at least to
the voting public) unemployment statistics. The reality, which it has taken
some people quite a while to see, is that the policy of keeping unemployment
high has created a lot of misery, which has many destructive side-effects.

>
>>       Just so you know.
>>--
>Uh-huh.

Mr. Edelman thinks he knows it all. He reminds me of a wise saying I once
heard: "The less they know, the surer they are."

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Cary Zeitlin                            ZEITLIN@SLACVM.SLAC.Stanford.Edu

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