Friday, September 7, 2012

August Jobs Report Disappoints

This morning brought another disappointing jobs report from the Department of Labor.  According to the Bureau of Labor Statistics, the economy added a mere 96,000 jobs in August.  By contrast, in August of 1984, during the Reagan Recovery, the economy added 241,000 new jobs.  (Go to this website and insert the appropriate dates to locate this figure.)   As previously explained on this blog, the labor force was much smaller during the Reagan Recovery.    Thus, in order to replicate the rate of job growth the country experienced in August, 1984, the economy should have created over 300,000 new jobs in August, 2012.  In short, the Obama "recovery" is still sputtering, and the Reagan-Obama jobs gap is still growing.  To be precise, for the months of April, 2012 through August, 2012, the Reagan-Obama jobs gap stands at 1.7 million.  (See here for a calculation of the April through July gap).

The President and his allies often speak of the need to share the fruits of prosperity.  Many Americans likely wonder "what prosperity?"

Monday, September 3, 2012

Chevy Volt Sighting!

Some hunt Sasquatch, others search for the Loch Ness Monster, while still others seek proof of alien visitations.  This blogger hunts the elusive Chevy Volt.  The hunt finally bore fruit late last month, when this blogger captured a single photo of a Volt (see above), at an undisclosed location in the Mid-Atlantic.  (I hesitate to provide more detail, so as not to violate the privacy of the owner.  For all I know this was the only Volt in the city in question.)

As previously explained on this blog, President Obama invoked the hope that General Motors would make greener automobiles such as the Volt as one argument for his ill-advised bail out of General Motors, which has now cost the American taxpayer about $25 Billion.  It would be hard to argue that the taxpayer has gotten its money's worth.  The Volt costs a "mere" $39,145, more than a spiffy BMW 3-Series Coupe.  It's thus no surprise that General Motors has suspended production of the Volt or that some dealerships are selling fewer than 1 (one) Volt per month, despite the generous tax subsidies that Volt purchasers, who enjoy average household incomes of $170,000, receive.  Nor is it any surprise that the sales of the Ford Fusion swamp those of the Volt. 

As previously explained on this blog, the national government is ill-equipped to pick among competing uses for scarce capital, a function that free societies properly reserve to the market, so long as background rules, including taxes on inefficient externalities,  ensure that market prices reflect the actual costs and benefits of economic activity.  Moreover, once the government takes on the task of picking winners and loser, citizens will naturally invest scarce capital, time and energy in trying to convince the government to allocate capital to them instead of other citizens.    As Luigi Zingales put it more recently, describing the views of Congressman Paul Ryan (with which Zingales apparently agrees):  "Ryan opposes these subsidies, not only because they waste taxpayers’ money, but (more importantly) because they create perverse incentives: they encourage businesses to lobby Washington for preferential treatment rather than to compete in the global marketplace."   After all, the government will never have access to nearly enough capital to satisfy all the various demands for bailouts, subsidies and what-have-you.  For instance, the same year that the national government bailed out General Motors, 400,000 other businesses failed as well, apparently without receiving any bailouts.  The GM/Volt boondoggle is "exhibit A" in the case against empowering the national government to pick winners and losers.

One suspects that, within a few years, the Chevy Volt will be as rare as Sasquatch.