Krugman Complains
Sourpuss Paul Krugman was apparently stunned into silence by the March jobs report; it took him a week or two to come up with a negative angle. Here is the best he can do:
At last, a favorable surprise on jobs: estimated payroll employment rose 308,000 in March, above almost everyone's expectations. You can't blame the administration for trying to play up the good news....For perspective, it helps to remember what solid job growth looks like. During Bill Clinton's eight years in office, the economy added 236,000 jobs per month. But that's just an average: a graph of monthly changes looks like an electrocardiogram. There were 23 months with 300,000 or more new jobs; in March 2000, the economy added 493,000 jobs. This tells us not to make too much of one month's data; payroll numbers are, as economists say, noisy. It also tells us that by past standards, March 2004 was nothing special.
Of course, we can hope that the March numbers are just the beginning of a torrent of good news. But the straws in the wind aren't wildly encouraging. Weekly first claims for unemployment insurance are down — but they're still above the 2000 average, and job growth in 2000 barely kept up with population. Average weekly hours, sometimes a clue to future hiring, fell in March — in fact, they fell so much that total hours worked declined even as the work force increased.
Which brings us to politics. [Ed.--It usually doesn't take Krugman this long to get to politics.]
Leaving the details for another day, it's pretty clear what John Kerry's economic philosophy will be. He's surrounding himself with advisers closely tied to Bill Clinton, and even more closely tied to Robert Rubin, the legendary former Treasury secretary. In office, we can surmise, Mr. Kerry would follow a Rubinesque strategy of bringing long-term budget deficits under control through a mixture of tax increases for upper-income families and spending restraint. No doubt he would move slowly on deficit reduction as long as the economy remained weak, but his advisers would tell him, as Mr. Rubin told Mr. Clinton, that responsible long-run budget policies are good in the short run, too, because they help keep interest rates low.
In short, this year's election will be a contest between a candidate who advocates a return to economic policies that were associated with eight years of very solid job growth, and one who advocates continuation of policies that have, after three years, yielded exactly one good monthly jobs report. If the election is driven by economics at all — which seems doubtful right now, with the debacle in Iraq accelerating — it will reflect the job situation on the ground, which remains grim.
It is, of course, laughable to pretend that Krugman "hope[s] that the March numbers are just the beginning of a torrent of good news." Krugman fervently hopes that they are a one-month anomaly and that he will soon be able to return to his usual doom and gloom commentary. In fact, if the jobs numbers and other economic data continue to be strong for the next seven months, Krugman will be thoroughly discredited and may have no choice but to resign his column and go back to teaching.
What happens over the next few months is, of course, the key. The March jobs numbers were great; if every month were as good, John Kerry's pledge to "create" ten million jobs during his four-year term--as if any President could do such a thing--would fall nearly five million jobs short of reality.
In the meantime, two points should be made. First, Krugman's claim that the "job situation on the ground" is "grim" is ridiculous. The current unemployment rate is 5.7%. This is not grim by any historical standard; the average unemployment rate during the Clinton years was 5.2%.
Which brings us to the second point. Advocates of President Clinton's economic policies have always been hard-pressed to explain what exactly it was that Clinton contributed to the boom of the 1990's--which turned out to be, in the end, as much a bubble as a boom. Even the most rabid liberals can't argue that tax increases per se cause economic growth. So the theory has always been that Clinton and his advisers (especially Rubin) pursued policies that resulted in low interest rates, and the low interest rates in turn fueled the 90's boom. That's what Krugman says in today's column.
The problem with this theory is that post-Clinton, interest rates have fallen even lower. Over the past two years, we have seen interest rates at historic lows. If Clinton's policies created jobs by pushing down interest rates, then Bush's policies have done the same thing even more effectively. And if low interest rates aren't the reason why we should want to return to Clintonesque economic policies, then Krugman, after three years, hasn't been able to think of another one.
