Paul Krugman: Talk of 'Uncertainty' is Just a Myth to Blame the Bad Economy on Obama
As Digby noted, "Bush flack" Torie Clarke was on This Week touting the tired line about companies not hiring because of "uncertainty" over regulations and trade agreements, which Paul Krugman attempted to shoot down in this segment. I'm glad Krugman was there to respond to this nonsense, but I think using economist's terms like "excess capacity" isn't always particularly helpful when trying to get the average lay person like myself who's not an economist to understand the gist of his argument.
Companies are not hiring because there is not a demand for their products because we've got too many people out of work right now. Until we turn that around, those companies are not going to start hiring. And we're not doing anything to protect American jobs, but of course the free-traders like Clarke are never going to acknowledge that these horrid trade agreements we've had for decades have caused nothing but a race to the bottom on wages and the only jobs they have been creating are ones overseas and very few here at home. She was allowed a free pass on that here as well.
Sadly as Krugman rightfully pointed out here, there seems to be very little interest by our politicians to do anything meaningful to create jobs here at home. And just as sadly the only discussion allowed by our corporate media on job creation includes the tired talking points we heard out of Clarke here and not the words outsourcing, race to the bottom, fair trade, tariffs, wage and labor protections or equating patriotism to caring about employing American citizens. And until we break up these media monopolies with the same interests as these multi-nationals with a race to the bottom on wages, I don't expect we will.
Transcript via ABC News below the fold.
AMANPOUR: Great to see you all here. So, the jobs numbers, good, right?
KRUGMAN: Yes, it begins with a sigh, because, look, this is better than naught. Right? Better than no jobs. But unemployment is a funny number. Unemployment, you're only considered unemployed if you're actively looking for work. And so if you look, over the past year, the unemployment rates have come down a lot, significantly anyway. But that's basically almost all because fewer people are looking for work.
AMANPOUR: So where is it headed in terms of the people looking for work?
KRUGMAN: Well, it's still terrible. It's still a terrible job market. It's not deteriorating. But it's still a very -- there's still about five times as many people looking for jobs as there are job openings. And it's still -- the length, the average duration of unemployment hit a new record.
So we're in a situation where, you know, things are not getting worse, or at least not getting worse in all dimensions anymore.
AMANPOUR: So is that good news? It's not getting worse.
WILL: Well, it's not getting worse. Actually, the good news within the news is that there are 14,000 fewer people working for government in the United States as state and local governments shed jobs.
But a corollary of what Paul just said is that when the economy picks up and people become encouraged to go back into seeking jobs, you could have the economy rising and unemployment rising simultaneously.
We lost more jobs in this great recession than the last four recessions combined. Now we have had, for 28 months, essentially zero interest rates. The quantitative easing, the printing of money that began in November, under this the Fed -- the Federal Reserve Board has been buying 70 percent of the new issues of Treasury debt. That ends in June.
That probably distresses Paul.
KRUGMAN: Yes, I would just say that the aftermath of a terrible financial crisis, and this was the worst financial crisis since the 1930s, is always a prolonged period of weak growth. And the tragedy is that Washington has given up on the jobs picture.
It's not that -- it's not a failure of policy. I think the policies that we have undertaken made things less bad than they would have been. But here we are with still terrible unemployment rate, 37 weeks the average unemployed person is unemployed. And no interest in Washington about doing anything to create jobs.
AMANPOUR: So we were just speaking to Senators Sessions and Schumer. Did you hear anything from them that would lead to a slightly less grim outlook?
IGNATIUS: Only that you heard a reluctance on both sides to take the budget showdown off the edge of a cliff. I didn't hear much enthusiasm for a shutdown from Senator Sessions on the Republican side.
I think what's excited the White House about these numbers is not the unemployment number per se, because as Paul says, there are all sorts of complicated factors that go into that, but the job growth number. And it does look as if the economy is finally beginning to generate jobs in the numbers that over time, would bring the unemployment rate down and would get you back on a trajectory of more normal growth. We're not there yet. But I think people see, you know, a light at the end of the tunnel, you can say, they at least see the tunnel.
CLARKE: I think the good thing from the two senators is neither one of them tried to score huge political points one way or the other, which is kind of the norm, and I thought was very responsible and even-handed, which is good.
But here's the failure of policy, I think. What will really get the private sector humming and hiring a lot of people is if they have predictability and certainty about things like regulatory regimes and are some of these trade agreements going to go through that we really need? Because it is a global picture, not just a domestic one.
And I know there's a lot going on, but nobody seems to be focusing on that, not the administration, not Congress. And Paul is laughing.
KRUGMAN: Because that's not -- the reason businesses are not investing is they have tons and tons of excess capacity. There's a very clear relationship historically between the amount of unemployment and the amount of business investment. When unemployment is high, when capacity is low, investment is low. There's nothing -- all of this stuff about uncertainty is just a myth being made up to blame this on Obama.
CLARKE: No, it's not. Money is a coward. Money is a coward. It's not going to go unless it knows it can make money.
KRUGMAN: There's nothing in there. There's nothing in there. It's exactly what you expect.