FRONT PAGE CONTRIBUTOR
AP Headline: ‘Higher jobless rates could be the new normal’
The sound you hear is that of expectations being ratcheted downward.
To a capitalist, the words “It’s different this time” are a notorious red flag.
They’re usually uttered in the midst of a speculative boom, to explain why this boom is different from the last one that went disastrously bust.
In a market driven by capitalist rules (supply & demand, creative destruction), they’re nearly always wrong.
But in a centrally-planned system, where the government picks winners and losers, where dinosaur businesses are too big to fail, where investment in capital-wasting non-economic ventures (read: “green jobs”) is actually encouraged, where labor unions are exalted and private property trod upon, where the government is expected to be the engine that drives job growth, and where John Maynard Keynes has been restored from the economic dustbin of history to be beatified, economic stagnation and high unemployment are to be expected.
Just ask any fiscal conservative.
WASHINGTON — Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.
That could add up to a “new normal” of higher joblessness and lower standards of living for many Americans, some economists are suggesting.
The words “it’s different this time” are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can’t be counted on now. Here’s why:
# The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit’s automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.
Maybe organic growth could come from an unexpected area of the economy like it did in the ’90s, if government would just get out of the way.
# The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.
# Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.
And with impending tax increases and the possibility of mandated health care, businesses are justified in sitting on the sidelines until they see what the landscape is going to look like.
# Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can’t borrow like they once did.
What a shame. A stagnant economy and persistently high unemployment are the direct, predictable result of the President’s policies. Maybe instead of changing our expectations we should look into changing those policies. Or changing politicians.