WSJ: The Media Fall for Phony 'Jobs' Claims

Discussion in 'Economics' started by Tom B, Jun 9, 2009.

  1. Tom B

    Tom B

    The Media Fall for Phony 'Jobs' Claims
    The Obama Numbers Are Pure Fiction.


    Tony Fratto is envious.

    Mr. Fratto was a colleague of mine in the Bush administration, and as a senior member of the White House communications shop, he knows just how difficult it can be to deal with a press corps skeptical about presidential economic claims. It now appears, however, that Mr. Fratto's problem was that he simply lacked the magic words -- jobs "saved or created."

    "Saved or created" has become the signature phrase for Barack Obama as he describes what his stimulus is doing for American jobs. His latest invocation came yesterday, when the president declared that the stimulus had already saved or created at least 150,000 American jobs -- and announced he was ramping up some of the stimulus spending so he could "save or create" an additional 600,000 jobs this summer. These numbers come in the context of an earlier Obama promise that his recovery plan will "save or create three to four million jobs over the next two years."
    [MAIN STREET] Associated Press

    The president should 'save or create' more jobs in Cleveland.

    Mr. Fratto sees a double standard at play. "We would never have used a formula like 'save or create,'" he tells me. "To begin with, the number is pure fiction -- the administration has no way to measure how many jobs are actually being 'saved.' And if we had tried to use something this flimsy, the press would never have let us get away with it."

    Of course, the inability to measure Mr. Obama's jobs formula is part of its attraction. Never mind that no one -- not the Labor Department, not the Treasury, not the Bureau of Labor Statistics -- actually measures "jobs saved." As the New York Times delicately reports, Mr. Obama's jobs claims are "based on macroeconomic estimates, not an actual counting of jobs." Nice work if you can get away with it.

    And get away with it he has. However dubious it may be as an economic measure, as a political formula "save or create" allows the president to invoke numbers that convey an illusion of precision. Harvard economist and former Bush economic adviser Greg Mankiw calls it a "non-measurable metric." And on his blog, he acknowledges the political attraction.

    "The expression 'create or save,' which has been used regularly by the President and his economic team, is an act of political genius," writes Mr. Mankiw. "You can measure how many jobs are created between two points in time. But there is no way to measure how many jobs are saved. Even if things get much, much worse, the President can say that there would have been 4 million fewer jobs without the stimulus."

    Mr. Obama's comments yesterday are a perfect illustration of just such a claim. In the months since Congress approved the stimulus, our economy has lost nearly 1.6 million jobs and unemployment has hit 9.4%. Invoke the magic words, however, and -- presto! -- you have the president claiming he has "saved or created" 150,000 jobs. It all makes for a much nicer spin, and helps you forget this is the same team that only a few months ago promised us that passing the stimulus would prevent unemployment from rising over 8%.

    It's not only former Bush staffers such as Messrs. Fratto and Mankiw who have noted the political convenience here. During a March hearing of the Senate Finance Committee, Chairman Max Baucus challenged Treasury Secretary Timothy Geithner on the formula.

    "You created a situation where you cannot be wrong," said the Montana Democrat. "If the economy loses two million jobs over the next few years, you can say yes, but it would've lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs. You've given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct."

    Now, something's wrong when the president invokes a formula that makes it impossible for him to be wrong and it goes largely unchallenged. It's true that almost any government spending will create some jobs and save others. But as Milton Friedman once pointed out, that doesn't tell you much: The government, after all, can create jobs by hiring people to dig holes and fill them in.

    If the "saved or created" formula looks brilliant, it's only because Mr. Obama and his team are not being called on their claims. And don't expect much to change. So long as the news continues to repeat the administration's line that the stimulus has already "saved or created" 150,000 jobs over a time period when the U.S. economy suffered an overall job loss 10 times that number, the White House would be insane to give up a formula that allows them to spin job losses into jobs saved.

    "You would think that any self-respecting White House press corps would show some of the same skepticism toward President Obama's jobs claims that they did toward President Bush's tax cuts," says Mr. Fratto. "But I'm still waiting."
  2. pspr


    The administration is setting itself up for a big collapse. Their economists must be idiots to tell Obama that unemployment would peak under 9%. They should know that even if the economy came screaming back unemployment would continue to climb for months as businesses adjusted.

    Think about it:
    1. When business slows a business reluctantly cuts workers.
    2. When business begins to return you make do with the workers you have adding hours and work load.
    3. Only when business becomes too strong for the reduced work force to handle you consider adding workers.

    That is why the Unemployment Rate is such a lagging indicator. Business only adds workers when it absolutely must which is much later in the recovery.
  3. maxpi


    I like the WSJ. They don't really engage in Journalistic Malpractice like the Liberal rags...
  4. Arnie


    And making employers provide more and more is just going to make them even slower to hire. So far we have the Kennedy Health bill that will make employer provided health care mandatory and then we have an idiot democrat (is that redundant?) congressman that wants the employer to provide paid vacations for all employees. Just wait, we will see paid maternity time off, probably for both mom and dad. So naturally, employers won't be in rush to hire.

    "...But he is changing the paper. Mr. Murdoch believes that the country is yearning for a national conservative daily, so that is where he is taking The Wall Street Journal. He is also an old-fashioned news hound, so he’s pushing for straighter, snappier, less analytical stories. As the owner — and as a man with a very clear vision of what he wants — he has every right to impose those changes.

    But to me — and I’m speaking now not as a someone who works for a competitor but as someone who has always adored reading The Wall Street Journal — the paper he is producing is less distinctive, less interesting and less important to its core business readership. The Journal of yore always assumed that its readers knew the basic facts of a big story, so it worked hard to find new, fresh angles that required smart reporting and original thinking. The old Journal could barely bring itself to publish a quarterly earnings story without putting it in context for the reader. Most painful for me are the memories I have of the rollicking Wall Street Journal narrative that was such a staple — a behind-the-scenes story about some shenanigans inside a company that only The Journal would ferret out and tell. Nobody else in journalism wrote those stories on a regular basis, and now that The Journal has largely stopped writing them I fear they are going to disappear, like an ancient dialect that dies out.

    I’ll never stop subscribing to The Journal, just like I’ll never stop subscribing to The New Yorker. But it used to be that on days when I was too busy to read it, I feared I was missing something. This week, I realized, I don’t feel that way anymore."
  6. Arnie



    You missed a quote........

    Back when Mr. Murdoch was battling the Bancroft family for control of Dow Jones, I was the guy predicting that he wouldn’t wreck the paper if he got his hands on it. In fact, many of the accusations have turned out to be wrong, as I suspected they would be. He is not politicizing the paper, nor is he using it to drive some other agenda that he might have.
  7. Times change. It is now almost a year since that article was written. And Murdoch will be Murdoch. Besides, did you not read the second sentence of the portion of the article I quoted?

    "...Mr. Murdoch believes that the country is yearning for a national conservative daily, so that is where he is taking The Wall Street Journal."

    What was the WSJ before Murdoch decided to take it "conservative?" A liberal rag?
  8. fhl


    quote a nytimes blog, and think you've found a masterpiece.

  9. Tom B

    Tom B

    You are quoting a "liberal rag" (your words). You cannot discuss the merits of the article, so you attack the paper.
    #10     Jun 9, 2009