Jobs Errors

by Kate Piercy Last year, the White House told us the stimulus bill would cut unemployment, estimating it would be down to 7.5 percent today. As Dan Mitchell writes in today’s New York Post, “something obviously went wrong.” Today we’re at 9.5 percent unemployment. What happened? Part of the problem, according to Mitchell, was the faith in...

by Kate Piercy

Last year, the White House told us the stimulus bill would cut unemployment, estimating it would be down to 7.5 percent today.

As Dan Mitchell writes in today’s New York Post, “something obviously went wrong.” Today we’re at 9.5 percent unemployment. What happened?

Part of the problem, according to Mitchell, was the faith in Keynesian economics, or “the discredited notion that politicians can borrow money from the economy’s right pocket and increase prosperity by dumping money in the economy’s left pocket.”

The key issue rests in whether businesses have a reason to invest. If they start hiring and spending money, will they make money? Unfortunately, says Mitchell, Washington has been sending the opposite message:

The “stimulus” boosted federal spending, thus draining funds from private-capital markets and diverting resources from the productive sector of the economy. The main jobs that it “saved” were employees of state and local governments — shielding the public sector from pain even as it inflicted more agony on the private sector.

For more on this topic, check out the full article here.