It is clear, from any economic sense, that compensation paid in the private sector is more beneficial to society than that paid in the public sector. This is because amounts in the former is controlled by people risking their own money making sure it is maximizing output for a given input. (It also works for charities funded by people parting with their own hard earned money).
Federal state and local governments and government funded not-for-profits are less good for society, and they normally pay too much for what they receive in services. So how stupid must one be that we want to incentivize- by forgiving student loans – those who would take more from and contribute less to society??
One of the most important takeaways from this COVID affair is the clear evidence of how critically important free markets are. While the free market is developing workarounds for providing necessities and developing relevant new products, the government can’t get out of its own way in terms of what it is trying to do and is finding that an overabundance of regulations has hampered its responsiveness.
There have finally been some recent changes, such as allowing telemedicine across state lines, modifications of certificates of need, and loosening of licensing requirements; perhaps the CDC, FDA, and other agencies will realize they don’t need as much regulation in the first place and such barriers actually inhibit health and economic well-being. Temporary, but more importantly, permanent reductions in regulations would be a step in the right direction. Because what is missing right now is the robustness of the private sector – but we can see its potential.
We are witnessing the incredible ingenuity of the American people as they are finding new ways to respond to this crisis. People are out there trying to figure out how to meet toilet paper demands, create new testing mechanisms, make and provide medical equipment, ventilators, masks, and vaccines. Nearly all of this is being done without the government. It’s the 325 million people out there trying to figure out what they can do to make things better and providing for a new and different need. Services are being changed to provide a product without prolonged human interaction. Door-to-door deliveries are being established. Companies are learning how to find their own ways to adapt.
All of this, it must be noted, has virtually nothing to do with the government. Whether it’s Amazon, pharmacies, FedEx, or restaurants, people know their own industries. They’re changing for their customers and for their company. This is, quite simply, real people knowing best what they need to do instead of some faceless government bureaucrat or rule telling them what to do because someone thinks he knows better about industry operations than the movers and shakers do.
The COVID crisis is a great opportunity for growth and deregulation. This will be the strength of our economic recovery. This is the free market at its best.
The Washington Post recently published a ridiculous article about deficit spending and entitlements from a group of former chairs of the White House Council of Economic Advisers. Unsurprisingly, these economists scoff at the idea that entitlements are a cause for alarm, and predictably attack the Jobs and Tax bill that passed last year by President Trump. Of course, it’s to be expected, as the author-contributors were hand-picked from either only the Clinton or Obama administrations. Let’s take a closer look at some of their assertions:
“It is dishonest to single out entitlements for blame. The federal budget was in surplus from 1998 through 2001, (read: Pro-Clinton), “but large tax cuts and unfunded wars have been huge contributors to our current deficit problem” (read: anti-Bush). “The primary reason the deficit in coming years will now be higher than had been expected is the reduction in tax revenue from last year’s tax cuts, not an increase in spending” (read: anti-Trump). “This year, revenue is expected to fall below 17 percent of gross domestic product — the lowest it has been in the past 50 years with the exception of the aftermath of the past two recessions” (read: anti-Trump).
What’s noticeably absent? Any mention of Obama. Where were these so-called economists when Obama went spending crazy? When the deficit doubled in the eight years of Obama’s administration? Deficit spending is an undisputed crisis and a large driver of that is, in fact, entitlements — a problem that has continued to be punted each year; in fact the latest SSA report, released June 5, plainly states that Medicare’s Trust Fund is set to run out in 8 years, and Social Security’s in 16. The Social Security program’s costs will exceed its income this year for the first time since 1982, forcing the program to dip into its nearly $3 trillion trust fund to cover benefits. But these numbers and projections are nothing new, so it is right for the Hoover Institute to continue to insist on reform in the face of years of inaction.
At a time when these very authors note that “the U.S. unemployment rate is down to 4.1 percent, and economic growth could well increase in 2018. Consumer and business confidence is high,” to then hold up Clinton as the pinnacle of economic excellence, spear Bush and Trump as reckless, and to completely ignore the profligate spending of Obama is disingenuous. The bias of the Washington Post shines through with this one.
The Wall Street Journal has done a nice roundup of the October Jobs Report released a few days ago. U.S. employers hired at strong rate in October, reflecting a sharp bounce back from September, when payroll growth slowed in the wake of hurricanes striking the southern U.S. Meanwhile, the unemployment rate fell to a new low for this expansion. Here are some of the key figures from Friday’s Labor Department report.
UNEMPLOYMENT RATE
4.1%
The jobless rate last month edged down to 4.1%, the lowest reading since December 2000. That low rate, however, reflects that fewer Americans were working or seeking work during the month. The labor-force participation rate slipped to 62.7% from 63.1% in September. The prior month’s reading was the highest in years—and the participation rate slipped in October back to a level recorded this spring.
JOBS
261,000
U.S. employers added 261,000 jobs to payrolls in September—the best pace of monthly pace of hiring in more than a year. Employment rose sharply in food services and drinking places, mostly offsetting a decline in September that largely reflected the impact of hurricanes Irma and Harvey, the Labor Department said. Hiring last month also improved in business services, manufacturing and health care.
WAGES
-1 Cent
Average hourly earnings slipped by a penny to $26.53 in October. It was disappointing showing for wages, which had appeared to break out the prior month. From a year earlier, hourly pay rose a lackluster 2.4% in October. Many economists are waiting to see wages rise at a faster pace given the historically low unemployment rate.
UPWARD REVISIONS
90,000
Payroll growth was significantly stronger than previously estimated in recent months. Upward revisions showed 90,000 more jobs were added to payrolls in August and September than previously reported. September hiring was revised to a gain of 18,000 from an initial estimate of down 33,000. That keeps intact the longest stretch of consistent job creation on Labor Department record.
UNDEREMPLOYMENT
7.9%
A broad measure of unemployment and underemployment known as the U-6, which includes people stuck in part-time jobs and others, was 7.9% in October. That was the lowest monthly reading since 2006.The rate has been declining this year in concert with the narrower unemployment rate, known to government statisticians as the U-3.
Nonfarm payrolls increased 156,000 for the month and the unemployment rate ticked up to 5 percent, the Bureau of Labor Statistics reported Friday. Economists surveyed by Reuters had expected 176,000 new jobs and the jobless rate to hold at 4.9 percent. The total was a decline from the upwardly revised 167,000 jobs in August (compared with the original number of 151,000).
A broad measure of unemployment and underemployment was 9.7% last month, holding steady from August and July but down from 10% a year earlier. The gauge known as the U-6 includes unemployed Americans, workers who are stuck in part-time jobs because they can’t find full-time work, and people who are marginally attached to the labor force.
The report is as expected: mediocre for Americans after more than eight years.
