M.D. Harmon: The post-Obama economic recovery

Obama Galesburg
President Barack Obama yet again pivots to the economy during speech at Knox College in Galesburg, Illinois

“I think every president in the intense media environment we have now, certainly every two-term president, gets to a point where the American people stop listening, stop leaning forward hungrily for information. I think this president got there earlier than most presidents. And I think he’s in that time now.”

Wall Street Journal columnist Peggy Noonan on ABC’s This Week Feb. 28

“In his economy speech President Obama said we’ve all been distracted by phony scandals. He prefers we be distracted by his phony recovery.”

— Jay Leno, the Tonight Show, week of July 21

When progressive politicians say they want to “create jobs,” the first question that they should be asked is, “What is a job?”

All too often, what they would say is, “A worker producing goods or services and drawing a paycheck for it.”

But that’s not what a job is — or, at least, it’s not by any means the full definition.

Bear with me a bit on this, because the lack of vital context is what lets those in public office (and, for that matter, academia and the mainstream media) get away with telling people that what they advocate will “create jobs.”

That’s how President Obama can stand up in front of the American people and say he wants to grow middle-class incomes while nearly everything he’s done in office has either had no effect on those incomes, or actually worked to depress them — and has also counteracted the very process that creates jobs in doing so.

That’s because, you see (and you probably already knew) that a job isn’t just a worker drawing a salary, it is an employer with sufficient resources to pay that worker a salary.

And that salary is a function of both the worker’s productivity (that is, his ability to create value for his employer and thus society) and the profit level of the enterprise in which the worker is employed.

That is, no value produced means no job will exist — and no surplus income available for both investment in the business and a reasonable rate of return on that investment also means no job will come to be. No profits, no job.

And not just in the private sector either. No profits means no tax revenues, which means no government jobs.

Simple economics? Certainly.

But why then do the people now in power in Washington, and their cheerleaders in the major media and Big Labor, keep on pushing policies — Obamacare coverage rules, prohibitions on resource production, minimum wage laws, environmental policies that raise the cost of power and make it less available, regulations that make starting and running a business harder and harder every year, tax rates and benefit mandates (either from government or union contracts), et cetera, et cetera, et nauseating cetera — that either make job creation harder or drive investment abroad?

And there’s another way in which politicians promising to “create jobs” can deceive us: They can tell us that either raising our taxes, or borrowing money, or running the U.S. Mint’s printing presses 24/7, or (as now) all three together, will “spur growth” by subtracting money from our pockets, savings accounts and investments to use it on projects favored by politicians and lobbyists, not real entrepreneurs.

That’s not even mentioning the growth in government employment itself, in which wages and benefits far outstrip on average the wages and benefits (and job security) available to private-sector workers of equivalent educational levels and job experience.

According to progressives, those all are “jobs.” But they ignore the jobs that could have been created by the private sector if government had restricted itself to the tasks appropriate to its sphere and let ordinary people spend more of their own incomes on their own priorities.

The CCN/Money website studied Congressional Budget Office figures and reports that government jobs have better pay and benefits for all educational ranks below the doctorate level:

“Federal and private-sector workers with bachelor’s degrees earned the same hourly wage on average. But those working for the federal government enjoyed average benefits that were worth 46 percent more.”

And, CNN said, “Federal workers with no more than a high school education are paid 21 percent more on average than their private-sector peers, and have average benefits worth 72 percent more. … In fiscal year 2011, the CBO estimates that the government paid 16 percent more in salary and benefits combined than it would have for a comparable workforce in the private sector.”

And what has Obama done to make things better for private workers?

He said in his speech to college students in Galesburg, Ill., that he would support “more jobs in growing industries; quality education; the ability to own a home, a secure retirement; and health care,” according to a Wall Street Journal story July 25.

It added (with my appended comments), “Sprinkled throughout the speech were familiar proposals, including calls for investments in infrastructure ($900 billion in ‘stimulus” wasn’t enough?); government job training programs that are more directly connected to business needs (we used to call those “schools”); expanded pre-kindergarten programs (his own administration’s data show they have no lasting effect) federal policies designed to reduce college cost (stop subsidizing ever-rising tuition levels) and (wait for it!) an increased minimum wage (sigh).

As a WSJ editorial pointed out that same day, “The recovery that began four years ago has been one of the weakest on record, averaging a little more than 2 percent (compared to an average of between 3 and 4 percent for previous recoveries). And it has not been gaining speed. Growth in the fourth quarter of 2012 was 0.4 percent. It rose to a still anemic 1.8 percent in the first quarter (of this year), but most economists are predicting even slower growth in the second quarter (for which figures have not yet been released).

While “stocks are doing great, and housing prices are rising,” the major middle-class impact would be in job growth, “which remains anemic.”

And incomes aren’t rising, either. Median annual household income, adjusted for inflation, is $51,500, “essentially unchanged from $51,671 a year earlier.” But real income, which normally falls during recessions and grows during recoveries, has fallen 5 percent since the recession ended in June 2009.

Obama’s “recovery” has produced about 2.5 million new jobs, while the recovery from the 1982 recession under President Ronald Reagan saw 12 million jobs created.

Or, as the WSJ editorial put it, “If only Mr. Obama understood that before a government can redistribute wealth, the private economy has to create it.”

But Obama decries “inequality” of incomes while doing nothing to lift those of the middle class — including backing Federal Reserve policies that pump up stock values while keeping returns on savings low, harming retirees and bank accounts and benefiting the investor class.

Finally, unemployment has remained above 7 percent for 54 months, the longest period since 1948, when records began to be kept, while the national debt has now topped $17 trillion, having grown 75 percent since Obama was elected.

How long can a leader wage this sort of deceptive class warfare and get away with it in the public’s eyes?

Maybe, as Peggy Noonan pointed out in the quote above, about 5 years? The president’s approval ratings are down to 45 percent (and down to an astounding 25 percent among independents), so people seem to be catching on.

As Tea Party leader Sal Russo noted in an Investor’s Business Daily column July 26, “Class warfare and empty rhetoric don’t create jobs.”

What will? “Washington must abandon Obama’s version of crony capitalism,” he says. “Providing special tax breaks to certain businesses while forcing others to take on a larger burden is not the American way. … A real agenda for growth would start with abandoning Obamacare. Even the president’s ally, Teamster Union boss James Hoffa, said that the legislation ‘would destroy the foundation of the 40-hour workweek that is the backbone of the American middle class.’ ”

Next, Russo says, we should “simplify the tax code” in a way that “lowers the tax burden” and “shuck over-burdening government regulations.”

And Peter Ferrara, who writes on economics and public policy for Forbes magazine, wrote on July 28 that things can get better — but maybe not until 2016.

In a column headlined, “There’s An Economic Boom Lurking Once President Obama’s 2nd Term Ends,” Ferrara wrote, “The truth is Obama disdains economic growth and the middle class, because both are progenitors of financial and political independence. What he treasures is the neediest of government dependency, which is the progenitor of a political machine, trading government handouts for votes.”

With food stamp recipients climbing to 47 million Americans and the real unemployment rate (including discouraged workers who’ve given up searching for jobs) above 15 percent, Obama may be getting exactly what he wants.

Ferrara lays out the path to prosperity: “The foundation for creating jobs and increasing real wages under capitalism is capital investment. That provides the money to establish new businesses and expanding existing ones, hiring more workers in the process. (And the) increased demand for labor bids up wages … (and) finances new tools and equipment for workers to work with, making them more productive. That increased productivity proves employers with the resources to pay the increased wages resulting from the increased demand for labor.”

But, weighed down with taxes and regulations, that “mighty economic engine” is “in chains, and on strike.”

Lifting the middle class, Ferrara says, “will have to wait … for the liberation of America, and the election of a president who knows something about economics, and how capitalism works.”

M.D. Harmon, a retired journalist and military officer, is a free-lance writer and speaker. He can be contacted at: mdharmoncol@yahoo.com


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