February 2010: Those daunting unemployment numbers, when fact follows fiction, and other observations

A tip of the spring training baseball cap to the late, great New York newspaper columnist Jimmy Cannon for borrowing his signature phrase: nobody asked me, but…

THE FEBRUARY UNEMPLOYMENT NUMBERS SUGGEST THAT IT MAY BE MANY YEARS BEFORE THE GREAT RECESSION’S IMPACT WANES. While there were some positive signs in the Bureau of Labor Statistics figures, the number of unemployed remained at 14.9 million, an unemployment rate of 9.7 percent. An additional 8.8 million Americans were working part time, according to the BLS, because their hours had been cut back or because they were unable to find a full-time job. Then there were another 2.5 million or so described as “marginally attached to the labor force,” primarily discouraged workers.

These are big numbers, and they aren’t going to improve quickly. High rates of unemployment will present a daunting challenge in the years ahead with unknown consequences for the social fabric of the U.S.

To return to pre-Great Recession levels of unemployment will require significant job growth—the creation of seven or eight million jobs. Add to that the need for another one million jobs annually to meet the needs of young Americans entering the job market, and the extent of the challenge becomes clearer.

Rutgers economists Jim Hughes and Joseph Seneca estimated in September 2009 that it might take until 2017 before unemployment dropped to pre-recession levels. They optimistically projected the U.S. economy adding two million jobs a year for seven years. That sort of expansionary growth seems unlikely.

What will this mean for the already frayed safety net of unemployment insurance and food stamps? What will be the political impact in hard-hit states like Michigan, Florida, and California? What about the social costs? It is uncharted territory: since the Great Depression the U.S. has not experienced lengthy sustained high unemployment rates, unlike many European nations. Count on this, and not health care, as the key issue in the 2012 presidential election.

FACT FOLLOWING FICTION: READERS OF DANIEL SILVA‘S THRILLERS WOULD HAVE IMMEDIATELY RECOGNIZED THE MOSSAD MODUS OPERANDI in the recent assassination of a Hamas operative, Mahmoud al-Mabhouh, in Dubai.

In several of his best-sellers, Silva features Israeli assassin and art restorer Gabriel Allon; the details of his fictional missions match those of the al-Mabhouh killing: the careful planning, the staking out of the target, the team of agents (including females) equipped with fake passports, and the stone walling when the operation goes awry. Of course the Israeli government denies that the Dubai hit was a Mossad operation, just as it does Allon’s skullduggery in Silva’s imagined world.

“WHAT WOULD KEYNES DO?” IS A QUESTION ECONOMISTS HAVE ASKED ABOUT GOVERNMENT POLICY AND THE GREAT RECESSION. Carnegie Mellon’s Allan Meltzer pointed out in a Fortune magazine interview that John Maynard Keynes did not approve of large structural deficits and would have been aghast at the Obama stimulus plan:

The type of stimulus he advocated was very specific. He said it should be geared towards increasing private investment. He viewed private investment, as opposed to big government spending, as the source of durable job creation. He also said that the deficits should be self-liquidating, so that the increased economic activity caused by the stimulus inevitably generated a combination of extra tax revenues and lower unemployment payments. With higher revenues and lower outlays, the deficit would disappear.

GIVE CREDIT TO THE SLATE EDITOR WHO CRAFTED THIS HEADLINE: “I Should Have Read My Islamic Marriage Contract“: it’s certainly provocative enough. The author, Ayesha Nasir, explains the cultural reasons for the lack of “due diligence” by her and other Pakistani Muslim women when it comes time to sign a marriage contract.

The consequences under Islamic law can be serious: many women sign away their right to file for divorce and agree in advance to unfair financial settlements or child support if the marriage does end. Nasir doesn’t offer any solutions to the practice in her essay; will change for the better come only when civil law replaces Islamic law?

THE RICH DID INDEED GET RICHER IN THE PAST DECADE. I was struck by a recent brief item in the Sunday New York Times noting that the average amount earned by the top 400-highest-earning households in the U.S. in 2007 hit $345 million. And these mega-rich households paid an average tax rate of 16.6 percent, “the lowest since the I.R.S. began tracking the data in 1992.”

It’s true that the financial meltdown in the fall of 2008 has probably hit the Golden 400 hard, but the absolute level of income reported is staggering, as is the relatively minimal percentage of taxes paid. You don’t have to be a Leveller or a socialist to find the numbers disturbing, or to ask: when is enough, enough?

THE FIRST POST ON “NEITHER RED NOR BLUE” APPEARED IN FEBRUARY 2006. Much to the surprise of its author, NRNB has reached its fourth anniversary, avoiding the fate of most blogs (death by abandonment—only some 5.6% of the 133 million blogs Technorati has tracked since 2002 are still considered active.) For what it’s worth, we’ll persevere with NRNB in 2010.

THIS MONTH’S WORDS OF WISDOM COME FROM ENGLISH AUTHOR H.G. WELLS (1866-1946): “The uglier a man’s legs are, the better he plays golf. It’s almost a law.”

Copyright © 2010 Jefferson Flanders
All rights reserved

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