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Who's Minding the Store?

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The US economy added 207,000 jobs in July, based on data from the establishment survey.  That is, the government surveys different businesses to estimate total payroll employment and found the number of jobs climbed by 207,000 in July.

This is the 27th consecutive month of job growth.  Boy, that Bush is finally getting the hang of running the economy.  What a hot streak!

Actually, President Bush is not minding the store.  He is not at the helm of the economy.  Neither is Alan Greenspan.

Job growth continues because the economic climate remains relatively stable for decision-making by entrepreneurs.  There has been little change in the legislative environment or tax policy.  There is nothing like a relatively unambitious government to spur economic activity.  The current crop of politicians spends too much, but that is par for the course and has failed to interrupt the steady growth in the economy.

As a side note, the Economic Policy Institute has a new study [2] that finds that NAFTA has resulted in 1 million lost jobs since 1993.  There isn’t a phrase to describe the intellectual dishonesty of this assessment.  When you overstate something, it’s sometimes a result of double-counting.  This is half-counting–looking only at jobs that have been lost to displaced production and ignoring jobs created because of expanded opportunities [3] due to producing goods more efficiently.

But even though this number is flawed, it’s still remarkably unremarkable.  NAFTA has been in effect for just over eleven and a half years.  According to the absurdly assessment of the EPI, NAFTA has destroyed about 87,000 jobs a year.  The US economy added more than twice that number in a single month and even that increase of 207,000 is a net number—an increase above and beyond job losses.

About 8 million jobs are lost and created every quarter in the US.  When the economy is growing as it is now, the number created exceeds the number destroyed.  The effects of NAFTA, even under the most pessimistic and gloomy analysis of the EPI are a rounding error overwhelmed by productivity change, choices made by individuals to retire or quit and new businesses starting as some fail.  We live in a very dynamic economy.

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