Government As A Corporation? Nope.

I’ve heard this meme over the past three decades, and the emptiness of it never diminishes.

Paul Krugman apparently agrees:

America Isn’t a Corporation

If business and the free market really could meet all of our needs, government wouldn’t exist.

It is because government steps in to moderate the excesses of the market and set the rules and create a level playing field that capitalism can thrive.

Unfortunately, the idea that government should be run like a government is part of the conventional wisdom — of people who don’t think too hard about it.

Krugman remarks:

But there’s a deeper problem in the whole notion that what this nation needs is a successful businessman as president: America is not, in fact, a corporation. Making good economic policy isn’t at all like maximizing corporate profits. And businessmen — even great businessmen — do not, in general, have any special insights into what it takes to achieve economic recovery.

Why isn’t a national economy like a corporation? For one thing, there’s no simple bottom line. For another, the economy is vastly more complex than even the largest private company.

In fact, running government as a business has some terrible consequences:

Consider what happens when a business engages in ruthless cost-cutting. From the point of view of the firm’s owners (though not its workers), the more costs that are cut, the better. Any dollars taken off the cost side of the balance sheet are added to the bottom line.

But the story is very different when a government slashes spending in the face of a depressed economy. Look at Greece, Spain, and Ireland, all of which have adopted harsh austerity policies. In each case, unemployment soared, because cuts in government spending mainly hit domestic producers. And, in each case, the reduction in budget deficits was much less than expected, because tax receipts fell as output and employment collapsed.

Currently, it is Willard Mitt “Gordon Gekko” Romney who is claiming that his extensive portfolio of firing people makes him uniquely qualified for the presidency.

Poppycock.

He’s even tried to compare his actions at the now-infamous Bain with Obama’s bailout of the automobile industry.

Like many observers, I was somewhat startled by his latest defense of his record at Bain — namely, that he did the same thing the Obama administration did when it bailed out the auto industry, laying off workers in the process. One might think that Mr. Romney would rather not talk about a highly successful policy that just about everyone in the Republican Party, including him, denounced at the time.

But what really struck me was how Mr. Romney characterized President Obama’s actions: “He did it to try to save the business.” No, he didn’t; he did it to save the industry, and thereby to save jobs that would otherwise have been lost, deepening America’s slump. Does Mr. Romney understand the distinction?

In an era when huge private corporations have led to the largest economic calamity in our lifetime, you would think politicians would be leery of drawing comparisons.

The major problem with this mindset is that it misses the real issue:

We’re in the mess we’re in BECAUSE government got too cosy with business and let corporations remove regulations and determine government policies.

It failed.

And if we are to learn from the example of Europe, cutting spending and jobs to save “the bottom line” is a self-inflicted wound to our economy and the stability of the nation.

-Chris

Related articles

• What Mitt Romney Learned From Killing Jobs (usnews.com)
• Ron Paul supports Romney on ‘vulture’ layoffs. Shame! (thehill.com)
• LAYOFFS WATCH: RBS Plans To Eliminate 3,500 Jobs Globally (businessinsider.com)

Lies About Jobs

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I am not the biggest fan of Barack Obama.

My leanings are more progressive, and his seem to be deeply rooted in the corporate boardroom.

That said, you have to give the man his due when it comes to the stimulus and job creation.

I am convinced by arguments by Paul Krugman and other Keynesians that the stimulus was much too small to have optimal effect, but the small package Obama was able to push through did create jobs.

This is, of course, the reality being mocked by the current meme being rolled out by the pack of jackals running for the presidential nomination on the Republican side.

Both Mitt Romney and Gingrich have calculated the number of jobs lost in the American economy from the date of President Obama’s inauguration and repeating that Obama’s policies have resulted in 1.9  million lost jobs.

In GOP-land, this proves that the stimulus was a complete failure.

Paul Krugman brings the inconvenient facts:

Start with the Obama record. It’s true that 1.9 million fewer Americans have jobs now than when Mr. Obama took office. But the president inherited an economy in free fall, and can’t be held responsible for job losses during his first few months, before any of his own policies had time to take effect. So how much of that Obama job loss took place in, say, the first half of 2009?

The answer is: more than all of it. The economy lost 3.1 million jobs between January 2009 and June 2009 and has since gained 1.2 million jobs. That’s not enough, but it’s nothing like Mr. Romney’s portrait of job destruction.

The Economist points out that even if you used the Romney-Gingrich metric, if the economy continues to grow at the current pace (and the jobs report was actually better than expected at the time of this response) the argument will be weak by the time election day rolls around:

A lot can happen over the next year, but for the moment the current recovery looks likely to continue. On Friday, the Bureau of Labour Statistics will report the latest employment data, for the month of December. The consensus forecast is for a gain of 170,000 private-sector jobs and a loss of 20,000 public-sector jobs, for a net gain of 150,000. (In the year to November, the economy added an average of 133,000 net jobs and 157,000 private-sector jobs per month, so this would represent a slight acceleration.) If we extrapolate those changes out through the election, then Mr Obama’s opponent will only be able to claim net job losses during the Obama presidency of just 55,000. What’s more, the net figure will entail government job losses of 833,000 combined with net private-sector job creation of 788,000. Given steady improvement in state and local finances, continued loss of 20,000 government jobs per month seems too high, so there is a decent chance that the Republican nominee will be unable to claim any net job loss during the Obama presidency at the time voters go to the polls.

This is what is on offer from the modern right-wing — solutions to problems that don’t exist and a willful ignorance of real problems and what can fix them.

Unfortunately, the person likely to receive the GOP nod is a serial liar who has spent a career destroying jobs for profit.

Krugman again:

The point is that Mr. Romney’s claims about being a job creator would be nonsense even if he were being honest about the numbers, which he isn’t.

At this point, some readers may ask whether it isn’t equally wrong to say that Mr. Romney destroyed jobs. Yes, it is. The real complaint about Mr. Romney and his colleagues isn’t that they destroyed jobs, but that they destroyed good jobs.

When the dust settled after the companies that Bain restructured were downsized — or, as happened all too often, went bankrupt — total U.S. employment was probably about the same as it would have been in any case. But the jobs that were lost paid more and had better benefits than the jobs that replaced them. Mr. Romney and those like him didn’t destroy jobs, but they did enrich themselves while helping to destroy the American middle class.

And that reality is, of course, what all the blather and misdirection about job-creating businessmen and job-destroying Democrats is meant to obscure.

We are living in scary times, where it is obvious that the real lessons of the utter and absolute failure of trickle-down economics that are plain to most literate people will never be recognized by a sizeable portion of the American populace.

So you get candidates like Romney, Paul, Gingrich, and Santorum who willfully lie and distort readily-available facts on a level and scale so blatant and egregious that it beggars the imagination.

And on the other side, we have Obama.

Sigh.

-Chris

Related articles

• A message with a shelf life (economist.com)
• ‘Job Killer’: President Obama Guilty, or Innocent? (abcnews.go.com)
• GOP candidates give Obama little credit for improving jobs numbers (thehill.com)