There are other factors which argue that the household data is right in this case:

-- The extraordinary productivity numbers would be less extraordinary.

-- Proprietor's incomes are rising significantly

-- The trend of larger companies to shed payroll and allow the same functions to be performed by independent contractors who often keep the same employees.

-- The trend of professional women who become mothers to return to work as part-time contractors

-- The continued trend toward an information based economy and the development of the internet encourage working at home and working as an independent contractor.

Out here in the real world, we have all seen more and more of our friends and family become part of one or more of these trends. People are leaving big companies for small boutiques or self-employment in droves.

One wonders how this would affect conversations on going in other threads on this site, particularly among the statistical experts.

The economy is controlled by Amerca's enemies. The reason why the economy isn't growing is the high oil price. The oil prices are high, because OPEC decided to limit output of oil. Why? Because OPEC is filled with America's worst enemies. Arab tyrants and fundamentalist muslims from the Middle East to whom Bush has said either you stop opprressing your populations and thereby being a major contributor to terror or I wil deal with you. They saw Saddam's fate. Now OPEC is keeping the oil prices artificially high, to make sure the economy doesn't grow and the unemployment stays high. They hope this will make the voters angry and will cause Bush's defeat. I don't understand that some people, especially Democrats are falling for this ploy. If Bush loses, America's enemies will win. It's as simple as that.

Forbes Magazine, Feb. 25

"We have concluded that the data on so-called payrolls survey is surely the most accurate of the two and our suspicion is that at the end of the day there will be revisions to the household data," Greenspan said in response to a question from the House of Representatives Budget Committee.

The Fed chief said recent official estimates of immigration are likely "grossly overestimated", which in turn overestimates employment growth as measured by the household survey.

Still, he noted that the household survey does capture self-employment, which has "improved far more strongly" than the underlying payroll figure.

“U.S. employers added 21,000 workers in February, less than the lowest forecast, further evidence of a "jobless'' economic recovery that may affect President George W. Bush's reelection prospects. “

This is just liberal media spin. These scoundrels are doing everything possible to damage the current President. They were saying the exact opposite when President Clinton was running for reelection. The glass is half empty when a Republican is in the White House and half full if the occupant is a Democrat. I can cynically see it now:

“There is one person without a job in the United States. Will this threaten President Bush’s reelection hope?”

Larry Kudlow is fairly optimistic:

“So Friday’s number may well be better than expected. But if not, I’ll still take the “over” for next month’s number.”

http://www.nationalreview.com/kudlow/kudlow.asp

Is he Kudlow overly optimistic? We will find out soon enough.

We will hear about the political implications of these numbers ad nausem for the next month. The problem is that very few people vote on numbers. They vote on their situation. If the numbers do not reflect reality, their political impact will be nill. The other thing to remember is that, if it’s a long, long time from May to December, it's even longer from March to November.

I need to add, I just turned on the first spring training game. The world series will be over before the election.

Once again, Daniel Drezner shows himself to be a Republican apoligist. Go read Brad Delong or the Federal Reserve. Go look at unemployment claims. The idea that the household survey is more accurate is grasping at straws when the statistical information showing the household survey is distorted is there for anyone not trying to make the facts fit the story instead of the other way around.

I was pretty unimpressed by Elise Gould's piece. There was a lot of handwaving there to disguise the fact that all she did was repeat, "This one's more accurate because the conventional wisdom is that this one's more accurate." Granted that the sample size is higher for the payroll survey, the household survey's size is perfectly adequate.

The issue of "firm births" is totally handwaved away by Gould (as it generally is in these discussions): "In its estimates of employment, the BLS addresses the problem of firm births and deaths using past history and various estimation techniques to provide an adjustment factor to the current series." Well, gee, if "various estimation techniques" are used, it must be accurate. How could "various estimation techniques" be wrong?

I don't mean to take sides in this debate; I just think that someone needs to provide more proof than "People generally agree that one is more accurate."

The payroll survey, incidentally, doesn't just miss the self-employed, farmers, etc.; it also misses the employed-under-the-table.

I can't believe that anyone still takes the crackpot "NAIRU" theory seriously. The 1990s disproved this as "estimates" (guesses) of what "NAIRU" might be kept dropping and dropping. Furthermore, there was never any empirical reason to believe this "theory" in the first place. When had a *wage-driven* inflationary spiral actually taken place? The truth is that tight labor markets spur technological advance so that businesses can make more efficient use of scarce labor resources. Which is a *good* thing.

If we calculated unemployment the same way that the Europeans do, it would be in double digits. Median incomes would not continue to stagnate if the rate was really as low as 5.6%.

As for the claims that there was nothing that Bush could have done about it, what about creating public works projects - like repairing the nation's crumbling infrastructure, or providing broadband service to rural areas? This could have created millions of jobs, tightened the labor markets, and thus driven up wages across the board. But Bush lacked the vision - and his cronyist backers such as David Thomson like high unemployment because it keeps ordinary Americans down.

Amusing stuff.

Personally I keep an eye on job advertisements because that let's me clue in on what technologies it would be useful to know in order to maintain employability.

All things considered, there ain't all that much out there right now. Which makes me a little curious about the whole "employees -> contractors" schtick. If companies really are moving employees into contracting then wouldn't they try to take competing bids to gain a better contractor or lower the bid price? Wouldn't that result in *more* job advertisements?

So why are there so relatively few job advertisements out there?

questions, questions, questions.

Firebug:

You've made this point twice, so I have to ask: What's different about the way the Euros count unemployment?

“But Bush lacked the vision - and his cronyist backers such as David Thomson like high unemployment because it keeps ordinary Americans down.”

Huh? This is an example of economic illiteracy in its purest form. Wealth creation is not a zero sum game. The exact opposite is true. A lower unemployment rate is beneficial to everybody.

There is also another myth that has to be taken to task: a great economy means that nobody will be unemployed. Alas, not true. Many people will still lose their jobs even in the best of times. As matter of fact, they may be even more vulnerable when the economy is booming! A growing economy will more rapidly create---and destroy jobs. So what can we realistically do since job hopping will be the norm for the 21st Century? I suggest that the private insurance companies think of some sort of coverage to protect the individual worker.

While the general question of whether the household or establishment surveys are better will continue, it's not an argument that administration defenders will want to pursue too hard right now. The household survey showed employment down by 265,000 in February.

But Scheiber also goes on to write to balance the quote you include:

None of which should be interpreted as a vindication of the administration's economic agenda. Even though the Bush tax cuts have succeeded at stimulating the economy, they've done so at enormous (and largely unnecessary) long-term cost. The large deficits created by such K-Street goodies as a cut in the tax on dividend income and the (longer-term) lowering of top marginal income tax rates, will almost certainly drive up interest rates once the economy sees a few quarters of growth. That could choke off the expansion not long after it starts.

---------------

Let's face it, if the jobs numbers were high, Bush et al and all the GOP-friendly website would be touting the 'success' of his economic policy. But when the numbers are low, every excuse in the book comes out. So if he wants all the credit (whether he deserves it or not), he's gotta have the balls to take the blame (whether he deserves it or not).

The household survey dropped 265,000 last month, and if the labor force hadn't fallen by 392,000, the unemployment rate would have climbed to 5.8%. What's more if it wasn't for government hiring, there wouldn't have been any job growth at all. The change in *private* non-farm payrolls was zero.

Greenspan in his Q&A a couple weeks ago said that non-farm payroll data rather than household data is more reliable when it comes to evaluating the health of the labor markets.

Stephen Roach concurs...

http://www.morganstanley.com/GEFdata/digests/20040209-mon.html

---
Nor do I buy the commonly expressed view that the data are simply wrong — that the payrolls-based survey of business establishments simply misses the inherent dynamism of risk-taking entrepreneurs whose enthusiasm for hiring can only be captured in the so-called household survey. Yes, the household-based job count is up 1.4 million workers in the 12 months ending January 2004 — well in excess of the paltry gain of 6,000 as measured by the establishment survey. According to the US Bureau of Labor Statistics, a little more than 25% of that discrepancy can be traced to definitional differences between the two surveys — namely a household survey that includes the self-employed, unpaid family workers, and private household staff. But the remainder of the difference could well be a perceptual one — disaffected workers sampled in the household survey who have downgraded their aspirations and simply won’t admit to the tougher reality depicted by businesses in the establishment survey. Yet there is really no comparison in the sampling accuracy of these two surveys. According to the US Bureau of Labor Statistics, the “active sample” of some 400,000 establishments in the payroll data covers about one-third of the total universe of such workers; by contrast, the monthly sample of only 60,000 households covers only 0.06% of the universe of over 106 million households in the United States. There is no doubt in my mind as to which of these two surveys should be trusted.

Dear all,

David Thomson had the audacity to ask if I was a fool or a liar, and to ask me to back up my claims with facts. I did. Not only that, even IF you accept the household survey as accurate it's clear that the 5.6% unemployment rate is masking a worsening employment situation. When I presented this, by analyzing the internals all Bithead could do was whine about how no one had ever mentioned correcting for population growth. Duh.

This argument is bogus. It keeps on getting trotted out, time after time, to try to put out the picture that the economy isn't so bad. Well it is. And there have been consistent revisions to the data - downward revisions. As the Fed has pointed out, if the payroll survey had been the inaccurate meter the revisions would have gone the other way. As it is, we are overestimating job creation. Furthermore, this is perfectly consistent with corporate numbers. For instance, Intel said that this was a historically weak season for them and lowered expectations for their revenue. Now if top-line growth for Intel is hitting a historical low, can we really imagine that there are so many other jobs being created in the economy?

Of course people are going to work part-time or trying to get whatever temp work they can. They have to eat afterall. When unemployment benefits run out they can go to school, turn to taking care of family members, or scrounging up whatever kind of paying work they can.

Work that is without security, benefits, or usually much of a future. The drop of the labor force participation rate is indicating that there is a lack of employment opportunity. When people have too hard a time finding work, they have to change their lives. These are thinking individuals, not static drones. They will find a way to get whatever income they can, and put the best face on it that they can "Yes, I like being my own boss now...". And some will truly like it, but I think that in the aftermath of the go-go nineties when all these people were perfectly happy to have decent jobs and hope for stock options and bonuses, to imagine that there has been a huge cultural shift that makes temping and freelancing so much more effective ... that is ludricous from a purely sociological point of view.

These people are being driven by economic necessity, and not leading it!

David Thompson writes: "Larry Kudlow is fairly optimistic:

“So Friday’s number may well be better than expected. But if not, I’ll still take the “over” for next month’s number.”

http://www.nationalreview.com/kudlow/kudlow.asp

Is he Kudlow overly optimistic? We will find out soon enough."

Kudlow's own colleagues on CNBC's morning show were mocking his excessive optimism a week or so ago. Specifically, they (dismissively) referred to a comment of Kudlow's that every prisoner brought into Gitmo would be worth a 100 point rise in the DJIA.

"As for the claims that there was nothing that Bush could have done about it, what about creating public works projects - like repairing the nation's crumbling infrastructure, or providing broadband service to rural areas? This could have created millions of jobs, tightened the labor markets, and thus driven up wages across the board. But Bush lacked the vision - and his cronyist backers such as David Thomson like high unemployment because it keeps ordinary Americans down."

Maybe that's what Japan aught to do to revive their decade-long depression. Oh wait a minute, that IS what they have done for the last 10 years. My bad.

It's real simple: Government can't spend any money unless it takes it from productive citizens in the form of taxes, borrowing or inflating the currency by printing money which makes evey dollar worth less. Simply moving money around via the government doesn't create anything. Keynes' "multiplier effect" is a fiction. It never materialized.

Japan is a classical Keynsian depression, as was the US Great Depression. Actually the Great Depression was really 2 depressions: One turned a recession and market correction into a depression ('30-'33), the other smashed a shakey recovery to bits in an unprecedented double-dip depression ('37-'38). Both were created by Keynesian foolishness.

I didn't think we really had to revist the discredited "High Wages Theory".

DSpears: "It's real simple: Government can't spend any money unless it takes it from productive citizens"

.. or Paris Hilton...

DSpears: "in the form of taxes, borrowing or inflating the currency by printing money which makes evey dollar worth less. Simply moving money around via the government doesn't create anything."

It breaks up idle concentrations of wealth and helps get the economy moving again. And ensures that jobs are created *in America* rather than overseas. Currently we are headed towards a liquidity trap/deflationary spiral which is where Japan is stuck. A dose of inflation would be *good* because it would kick start us to get us out of there. Japan waited too long and they also did not break up the corrupt, cronyist 'keiretsu' arrangements. And our economy is becoming more and more corrupt by the day. There aren't a whole lot of Hank Reardens around these days, in case you haven't noticed. A ton of Orren Boyles, though.

Firebug writes: " Japan waited too long and they also did not break up the corrupt, cronyist 'keiretsu' arrangements. "

Also, they've been slow to get rid of 'zombie companies' kept alive only by loans from banks who don't want to write off the piles of earlier loans.

Yeah, Heritage, everyone who thinks the labor market is bad is just imagining it. Sheesh.

History is repeating itself; didn't Bush I try this?

Dr. Drezner, why don't you just go down to career services at the university and ask them what they think about the job market and or economic conditions. Those first-hand conditions should sum up things nicely. If you talk to people looking for work, they'll tell you its absolutely awful.

Well well well.

I suppose that when the fight devolves to reality vs theory, reality will generally win. Fact is that this economy is a hollow shell. It's largley been funded by tax cuts, tax refunds and home refinancing.

But just how many homes are left to refinance and how much lower can the interest rates go? Tax cuts are good, along with refunds, but unemployed people generally don't pay all that much in taxes so the refunds will consequently be low.

I figure the cash will start running out by Sept. Then we should see a significant downward turn in the economy with a steepening slide in the beginning of 2005 leading to a depression.

*shrug* that's what you get when jobs are being outsourced in such an accelerating rate.

"Is he Kudlow overly optimistic?"

The answer to this question, in any context, is yes. Kudlow is always overly optimistic about absolutely everything.

Appalled Moderate: European unemployment figures

I know a bit about the German system. Generally the definition of unemployment is broader than in the US, and includes for example people working less than 15 hours weekly who are looking for additional work. It also includes more people that by the US definition would fall in the marginally-attached category. However the surveying is not done by phone, but through your having to show up at the Dept. or Labor office and register as looking for a job.

The German DOL just recently "restructured" (i.e. completely screwed up) their websites, so I cannot find the definitions anymore.

The German unemployment rate is currently around 11%. That is quite a bit, and the administration considers switching over to the ILO definition, which is pretty close to the US definition, and expectations are that this would reduce the rate by 2%. Germany already publishes a "harmonized" EU standard rate, which is currently at 9.3%.

There are those in Germany who are pointing to the US rate as "proof" that the US is economically more successful, and argue that German benefits are too generous, allowing people to slack off without really looking for a job.

Contrast this to the US -- the official number is U-3, which is currently at 5.6%, but the U-6 rate, which includes the marginally-attached, which want to work, but for various reasons are not currently looking -- discouragement about prospects, family obligations, inability to secure childcare or transportation, etc., and is currently at around 10%, not too far from the German rate.

It is certainly plausible to assume that with longer and more generous benefits people are making more efforts to do the job searching required to not have their benefits cut. Once benefits run out, people with low job prospects may stop looking, as looking costs effort and money. In the US unextended benefits are up to 6 months, in Germany depending on age and insurance history up to several years with a reduction schedule. Then comes a much-reduced long-term unemployment benefit. This will keep more people in the "looking for a nonexistent hob" status that in the US would become discouraged (and officially unreported in the U-3 rate) in the US.

Of course the more generous benefits come at a price -- unemployment insurance costs much more than in the US -- approx. 6.5% of nominal gross income with a cap, paid 50/50 by employee and employer, and that's in addition to 20% social security tax and around 14% health insurance, subject to similar caps and sharing. (Actually I don't know how much in the US, as it does not appear on my paystub.) But then of course Germany does not invade other countries (these days at least) or keeps a large worldwide military presence, keeping expenditures down elsewhere.

But the arguments about the rate differences are largely besides the point -- the important question is how unemployed people are taken care of. They get longer and higher benefits in Germany, and they generally have health insurance as part of the benefits. (Welfare recipients also have health insurance BTW.) Of course this comes at a cost to the working population, which some people who are confident that they will never have to use the benefits find brutally oppressive, without realizing that it is partially those very benefits that keep their salaries and working conditions at an OK level, and their anxiety level in check.

DSpears: "Simply moving money around via the government doesn't create anything."

That's right, but _if_ the government "moves" the money into desirable and productive activities, like infrastructure maintenance, raising the living standard of the poor by providing them with some minimal shelter, food, and healthcare, then it would create something. If the money is given to poorly overseen contractors for shoddy work, the benefit is likely much lower.

Regarding moving around of money, how much value is created by the money flowing in circles in the daily stock market transactions and other financial speculations?

"That's right, but _if_ the government "moves" the money into desirable and productive activities"

You definitely need to study economics. Reading Ludwig Von Mises and Friedrich Hayek would be a great start. The government will almost always make horrible choices regarding investment issues. Even the most brilliant bureaucrats lack the knowledge required to run unfamiliar businesses. A wise person is barely able to handle their own affairs. Lawyers don’t possess the expertise of geologists and the shoe maker is probably an idiot when it comes to auto manufacturing. The overwhelming historical evidence virtually proves that great successes are usually the result of individuals risking their own effort and money.

I'd like to say it's amazing, this devotion to the idea that things are so bad with the economy. But of course the reason behind that devotion is rather easy to see; the Democrats don't have a hope in hell without the economy being bad. So no matter what the real numbers are, the Democrats (And yes, oldman, you've exposed yourself as such rather nicely, thank you)are going to continue this whining until doomsday.

AS has already been pointed out, by Niel Boortz:

"**The peak unemployment rate during the recession that began in Clinton's term was 6.4 percent. The current unemployment rate is 5.6 percent.

**In the last year more than 2,000,000 new jobs have been added in the United States.

**Between 1983 and 2003 outsourcing went from 6.5 million jobs to about 10 million jobs.

**Between 1983 and 2002 jobs in-sourcing -- jobs coming TO the United States -- went from 2.5 million to 6.5 million.

**If you subtract the jobs coming to the United States every year from the jobs going out every year you come up with a 'net' figure. The net outsourced jobs reached its peak in the early 1980's; a peak of about 4 million jobs. In other words, things were worse at the end of the Carter Administration then they are right now.

**During this same period ... from '83 to '03 a total of 38 million jobs have been created by private businesses in the United States. No other industrialized country in the world has matched this number. "

Rich Lowery continues:
Rich Lowry whose book you will note on the right column on this page, reports that:

"The numbers even like George Bush more than Bill Clinton. According to J. Edward Carter's calculation, during the first three years of the Bush administration compared with the first three years of the Clinton administration, the inflation rate is lower (1.9 percent versus 2.6 percent), the unemployment rate is lower (5.5 percent versus 6.2 percent), annual productivity growth is higher (4.1 percent versus .5 percent), and the increase in nonfarm real compensation per hour is higher (+0.8 percent versus -0.3 percent)."

I'd say if the Democrats plan to run on the economy, they're going to be in serious trouble.

CM make think it plausible that cutting benefits stops people from looking for work, but that isn't what studies I have seen in newspaper accounts show. Rather, they tend to show that longer and more generous unemployment benefits encourage people to stay unemployed.

And there are many ways to do that, while meeting the formal requirements of a job search. My sister, who worked in a personnel department of a large engineering firm, told me that they received, from time to time, terrible resumes. One was even written in crayon. Looking back, I am sure that some of those were from people who wanted to stay on unemployment a bit longer.

sigh.

Bithead. I'm a Conservative Republican. I've been one since I joined the USMC at age 17, and could vote.

I think this economy sucks. I think it's largely floated on a sea of home refinancing. I think that the money influx into the economy is necessarily limited. I think that money is going to start to run out about the end of the year.

Want to try that liberal argument again?

As for the numbers. Really now. Do you trust those numbers or the classified section in your local newspaper?

Ed;

You managed to get by my editing errors?
(sigh... anyhow...)

Frankly, I don't trust the local paper for much of anything... inclduing want ads as a gauge of employment. My reasons are personal expereince... and admittedly somewhat anicdotal in nature.

Years ago, after I had left the broadcast business, I worked at a local newspaper, and took ads for a living for around a year. Based on that experiences, I don't think the number of ads in a paper to be an accurate representation of anything at all.

That point aside, how do you explain the numeric disparity between the Clinton years and now?

*shrug* and what exactly do you mean by "That point aside, how do you explain the numeric disparity between the Clinton years and now?"?

Numeric disparity of what? Jobs?

Let's face a few salient facts here. Clinton, and America, enjoyed a huge boost from the tech bubble. A bubble that could not be predicted in any ways, shape or form. It happened, for idiotic reasons btw, purely by accident. And a result of that accident was an enormous input into the economy.

This effect could not be predicted, was not predicted and was not planned for.

Without this bubble how would the economy of the late 90's have looked? Similar to about ... now perhaps?

The simple fact, regardless of politics frankly, is that genuine recoveries are based on increased employment providing for an influx of consumer spending. This recovery is an eggshell and is based largely on home refinancing and other financial tricks. Once this 'fat' has been converted into equity and spent, what then? The reason why there aren't any jobs?

Because it's far more effcient and cost-effective to create new jobs overseas, where the costs are lower, than to create them in America. After all. Why bother creating a job in America when you'll probably have to outsource it later on anyways? Just go ahead and outsource it from the getgo and you'll pull in even more profits.

That's my argument.

Well, Ed, I was speaking of all the numbers presented.

Ed, it seems to me what you're mising here is that as a matter of history, every economic stimulous package in history (with the notable exception of World War II) has been rather frail at it's beginnings, with only one or two facts being used to "prime the pump". Bush's actions in this regard are no different than any other.

Insofar as jobs are concerned, our economy is now suffering from the American worker pricing themselves out of the market. That's not something that can be cured by legislation, unless we're going to outlaw the unions. (Which by the way, is why Kerry getting so cozy with the unions is such a scary sight... the idiot will simply make things worse)

As for the tech bubble being unpredictable, I submit to you the large growth that went on there is/was a result of investments during the Reagan years. I think you'll tend to agree that Clinton was the undeserving beneficiary of what Reagan/Bush41 set out.(You'll never hear the Democrats say this, of course. How ould it be to say publicly that the successes unde his watch were due to the man he defeated at the polls?)

The economic specifics are never predictable in terms of what will grow, but you know when that level of investment and pride happens, we're going to see growth for a long time.

Will that happen again? I suspect so, eventually, assuming the WOT is carried out with a degree of sucess. Nailing BinLaden, would me a massive symbolic step on that road, I think.

We were on our way to that goal when 9/11 occurred, I think. The effects of that attack have been cripling to our economy (and that of the world as a whole) in more ways than we yet understand. That attack was planned so, I beleive.

Hmmm.

1. Priming the pump.

The pump has been "primed" and running for almost two years now. Still the best that this economy can do is +21k jobs in Feb 2004? How many articles are out there where economists are "struggling" to understand why there aren't any jobs in an economy that is growing at the rapid pace of +4.1% per year.

They're overseas that's why.

2. Insofar as jobs are concerned, our economy is now suffering from the American worker pricing themselves out of the market.

Which entirely and utterly proves my point. That companies are simply not bothering to create jobs in America. As for "pricing" that is almost entirely out of the hands of American workers. We simply cannot price ourselves any lower. Taxes, fixed expenses and regulatory costs alone consume so much of the average worker's income that there's no possible way that an American worker could compete.

Consider the cost of education alone. A four year engineering degree from a state school will cost you at least $30k-$40k. While that same degree in India will cost $1700 USD. There is no comparison.

3. As for the tech bubble being unpredictable, I submit to you the large growth that went on there is/was a result of investments during the Reagan years.

Incorrect. The catalyst for the tech bubble was HTML, invented by a scientists at CERN. This had nothing at all to do with anything done by Reagan. Additionally the modern Internet, as we know it, came about as a collective agreement between the major trunk carriers to mutually absorb the cost of content. Previous to that agreement there was a great deal of contention over the value of content originating from each separate network. This agreement allowed for the free flow of data and information between commerical networks irrespective of government mandates, controls or regulations.

None of which could be predicted.

Clinton was the beneficary of this, undeserving or not, but neither Bush nor Reagan had anything to do with it. Keep in mind that I absolutely revere Reagan for his accomplishments. But I will not ascribe to him something that he did no do.

4. The economic specifics are never predictable ...

In a world where the dominant theme is outsourcing, there is *no* connection between investment and job creation. I hope I've made that point clear.

Assume a public company ABCD corporation based in Maryland. All manufacturing, shipping, HR, accounting, clerical and one half of marketing is outsourced to India as a wholly owned subsidiary. The only elements remaining are a few executive positions and a small secretarial pool. This company is largely owned by foreign interests based in the EU with no stock owned by any domestic investor, small or institutional.

Now. If the stock price of ABCD corporation rises and investment money flows into ABCD corporation, please explain why and how jobs will be created in Maryland.

5. Will that happen again?

Essentially the effect of outsourcing is to return the era of modern controlled capitalism to the previous era of unrestrained capitalism of the 19th century. Everything comes in cycles which means that unions should eventually make a comeback.

If you haven't read up on 19th century capitalism I'd suggest you do so. The Jungle is a good book. So are any history books on 19th century Russia.

6. We were on our way to that goal when 9/11 occurred, I think.

Yes. We were started on the spiral downward. Frankly 9/11 is vastly overrated as a cause in business thinking. The dockworkers strike along the west coast of America did far more business damage than 9/11 did. Anyone who tries to use 9/11 as an excuse is frankly dodging reality.

Can I point out that as many, or more, Americans die each month from automobile accidents than died at 9/11?

...

Fact is that this economy is, again, an eggshell. It is fragile, brittle and decaying rapidly. Consumer condfidence is dropping slowly, but is also accelerating. If the jobs situation, which won't happen btw, doesn't change for the better by June/July, consumer confidence will drop like a rock.

At that point the economy will be gutted.

The primary drivers for this economy are home refinancing and construction. And construction is being financed by home refinancing. So when the last home is refinanced and the tax refund is spent, then what? Where will the money come from to keep this fragile economy going?

I think that's enough in the way of questions to keep you busy.

Hmmm. I'm a mobious poster. :)

"Assume a public company ABCD corporation based in Maryland. All manufacturing, shipping, HR, accounting, clerical and one half of marketing is outsourced to India as a wholly owned subsidiary. The only elements remaining are a few executive positions and a small secretarial pool. This company is largely owned by foreign interests based in the EU with no stock owned by any domestic investor, small or institutional."

Here's a question for anyone.

Would money shifted by ABCD corporation to it's wholly owned subsidiary in India be counted as foreign investment into India and investment out of America? The reason I ask this is because I think that there is a huge amount of hidden capital flowing that isn't being observed.

So is money shifted by the internal mechanism of a company treated the same as money invested by outside interests?

I seriously don't think so. This might account for the relative disparity between published investment numbers and the reality of outsourcing.

hello?

anyone out there?

lol.

Ed;
Got a new car last night, among all the rest of life (Life? What's THAT?) and been rather busy.

The pump has been "primed" and running for almost two years now. Still the best that this economy can do is +21k jobs in Feb 2004?

Somewhat more than this, actually. Of late, those figures are invariably corrected upwards after a few weeks time. And in any event, the accuracy of those figures are already subject for some argument, even in here.

We simply cannot price ourselves any lower.

Well, we could, but the unions control the issue, so here we sit.

The catalyst for the tech bubble was HTML

LOL... You're kidding, right?THe bubble started long before HTML was out. Indeed, being someone who works with HTML, I should think HTML was responsible for slower growth, if it had any effect at all.

In a world where the dominant theme is outsourcing, there is *no* connection between investment and job creation. I hope I've made that point clear.

We know that's what you think, yes. But I keep coming back to my wife, who is working for a startup, and that based on the money from the investors.

And then, too, you've also defeated your own argument, where you say:

Additionally the modern Internet, as we know it, came about as a collective agreement between the major trunk carriers to mutually absorb the cost of content.

So, how'd they do that, without investments, eh? Who paid the freight and WHERE'D THEY GET THE CASH?

Yes. We were started on the spiral downward. Frankly 9/11 is vastly overrated as a cause in business thinking. The dockworkers strike along the west coast of America did far more business damage than 9/11 did. Anyone who tries to use 9/11 as an excuse is frankly dodging reality.

well, yes, and no. But such is investment. Consider the investment angle again, which I think was what this was all about.

You know full well that most of the investment game is the perception of the prospective investor. Among the many things that attack was, (and I don't mean to minimise the other aspects) it was a psychological ploy. Think it was mere accident that the financial center was the biggest target of attack?

The reason I ask this is because I think that there is a huge amount of hidden capital flowing that isn't being observed.

Which in turn would seem to suggest the economy is in far better shape than we're being led to think. No? Here, we suffer from our own tax the rich, tax business' policies.

Dr. Drezner fails to point out that President Bush could have done a lot more with the tax cuts than he did for economic stimulus. The big 8.2% growth quarter happened when low- to moderate- income people got their child tax credits. All the huge tax cuts to the very rich have phased in without anything like those blips, because those tax cuts don't do too much to stimulate demand.

BTW, that Child Tax Cut that went to low- and moderate- income people only got added at the insistance of Democrats on the Hill.

The whole Household Survey thing sounds too technical to get into. I don't trust those sorts of arguments until I see a paper done by a university professor that doesn't have the Cato, Heritage, EPI, or Brookings Institute logo on it. Most of what any of those institutions do in terms of economic research is at best quick and somewhat suspect estimation and at worst crude partisan hackery.

Hi.

1. Somewhat more than this, actually. Of late, those figures are invariably corrected upwards after a few weeks time. And in any event, the accuracy of those figures are already subject for some argument, even in here.

Ummm. No. They've actually been corrected *downward* for the last three months or more. Sorry man.

2. Well, we could, but the unions control the issue, so here we sit.

Sorry again but I've never belonged to any union in my entire life and I've worked since I was 12 years old. Unions have neither the clout nor the membership that they once did. Nor are unions responsible for either the tax structure or the regulatory structure that sets a definite minimum income level that an American worker must have to survive.

3. LOL... You're kidding, right?THe bubble started long before HTML was out. Indeed, being someone who works with HTML, I should think HTML was responsible for slower growth, if it had any effect at all.

No I'm serious. The tech bubble came into existence entirely because the investing public believed that an entirely new paradigm would overtake and eliminate the old paradigms. This belief fueled the massive investment craze that allows Priceline.com, as an example, to have a $1.5billion valuation with only $650k of annual gross sales.

And the basis for all this was HTML. The belief that web based delivery would completely supplant all other forms of media. Which is why Time Warner bought a pig when it took over AOL.

4. We know that's what you think, yes. But I keep coming back to my wife, who is working for a startup, and that based on the money from the investors.

Congrats. But really, so what? There's still no connection between investment dollars and jobs. Those same investors could have just as easily started their company in India or China. That they decided to do so in America means nothing. There is still no connection.

Just because someone invests money in an American company does not mean that it will translate into American jobs. This is the point that is being made. There once was a correlation but that correlation has been broken. The whole concept of "Buy America" means nothing now because American companies are largely not.

5. So, how'd they do that, without investments, eh? Who paid the freight and WHERE'D THEY GET THE CASH?

Umm. This happened about twenty years ago man. Outsourcing is a rather more recent evolution. And I'm afraid that I don't understand the point you're trying to make so let me try again.

Back about twenty years or so a number of independent commerical networks, such as Comp-U-Serve btw, came together to allow interconnections between their networks. They did this by dropping any demand for compensation for handling traffic from another network. Prior to this if a customer of UUNet wanted to send data to a customer of Comp-U-Serve there was the issue of Comp-U-Serve having to deal with the expense of handling the data without compensation. This resulted in a number of 'islands' of connectivity.

Once these networks allowed unlimited interconnections this resulted in the modern Internet as we know it. I don't know if you remember but you generally could only send data, email or whatnot, to other members of the same network.

What fueled this? Well they did have all that money from their customer accounts. But it was also the desire for more business and a rather selfless, amazingly enough, desire to provide a truly remarkable service. this evolution eventually killed off most of the commerical networks, which does say something.

Did that spell it out? Remember that this was long before outsourcing hit anything but manufacturing.

6. You know full well that most of the investment game is the perception of the prospective investor.

*shrug*

But the dip in investments lasted only a relatively few number of months. Again I iterate that 9/11 as a business cause is vastly overrated. It's used as an excuse, but I find that not credible.

7. Which in turn would seem to suggest the economy is in far better shape than we're being led to think. No? Here, we suffer from our own tax the rich, tax business' policies.

Ummm. No.

What that means is that the inflow of investment capital, that many people here on this blog and others tout so highly, are entirely deceptive. The assumption that a number of people are making, including yourself I believe (though I might be wrong), that a significant amount of inflowing investment capital will result in an increase in jobs.

But, as I pointed out before, I believe that there is a disconnection between investment and jobs. Just because there is an inflow of investment into America it does not then logically follow that there will be a surge in jobs. That same inflow of investment dollars could just as easily flow out, under the radar so to speak, to other countries.

That is why I asked that question. If capital transferred between elements of the same corporation are treated as foreign investment when it crosses national boundries. I'm thinking that it doesn't.

In which case America is simply acting as a way station between the source of investment and the ultimate destination. Subsequently America will then neither gain jobs nor will it gain any benefit from this investment capital. There will instead be the *illusion* of health, but not the reality of it.

...

*shrug* As I've written before. I want to believe I'm wrong. I'm not looking forward to a future where my neices might not bother going to college because there aren't any suitable jobs.

Ummm. No. They've actually been corrected *downward* for the last three months or more. Sorry man.

You must not be reading the same reports I'm seeing, then, I guess.

Sorry again but I've never belonged to any union in my entire life

Beside the point. The unions themselves argue that they affect everyone's pay and benefits.. even non members. They're correct, in this at least.

Nor are unions responsible for either the tax structure or the regulatory structure that sets a definite minimum income level that an American worker must have to survive

Oh, so it's just coincidental that the unions are in the pocket of the Democrats and versa -visa?

Congrats. But really, so what? There's still no connection between investment dollars and jobs. Those same investors could have just as easily started their company in India or China. That they decided to do so in America means nothing. There is still no connection.

Other than the idea that without the investment, those jobs would not exist... a point which I suggest you cannot get around. Your concern about the numbers of jobs going overseas is noted. However, you cannot disconnect the investment from the job creation. And as has been pointed up here, even assuming... even if... the vast majority of the jobs created by a given investment are overseas... this still ends up creating jobs here in the states. This is a matter of numbers other than ones and zeros.

Back about twenty years or so a number of independent commerical networks, such as Comp-U-Serve btw, came together to allow interconnections between their networks. They did this by dropping any demand for compensation for handling traffic from another network.

Correct.... and I submit this is a move thay couldn't have done without the investment cash to back it up. This move created jobs. I couldn't care less if they were outsourced, or not. Jobs were created becase of the investments. Get it now?

*shrug* As I've written before. I want to believe I'm wrong. I'm not looking forward to a future where my neices might not bother going to college because there aren't any suitable jobs.

You can relax.

Hi.

1. You must not be reading the same reports I'm seeing, then, I guess.

*shrug* IHT, NYT, New York Post, Yahoo! News? The number of jobs created has been shifted downward pretty regularly over the past few months.

2. Beside the point. The unions themselves argue that they affect everyone's pay and benefits.. even non members. They're correct, in this at least.

You're not serious about that are you? I know a guy who blacks out anything with his name or address because he thinks the CIA is spying on him. That doesn't mean I'm going to take that at face value.

Fact is that unions aren't that big a deal and they simply do not wield the clout that they once did. I'd suggest that they would say something like that to make people think they're still a force. That doesn't make them so.

3. Oh, so it's just coincidental that the unions are in the pocket of the Democrats and versa -visa?

Which has nothing to do with anything. PETA is associated with the DNC, but that doesn't mean anything either.

I really don't see whatever point you're trying to make. I'd suggest fewer soundbites and more detail.

4. Other than the idea that without the investment, those jobs would not exist... a point which I suggest you cannot get around.

Sorry but that example of yours simply proves nothing whatsoever. An prime example would be IBM. IBM's stock is rising and the company is flush with money. However IBM is planning on moving 4,000 jobs from America to points overseas.

I.e. the investment going to IBM, headquartered in NY, does not translate into jobs. I can't make myself any plainer than that.

5. And as has been pointed up here, even assuming... even if... the vast majority of the jobs created by a given investment are overseas... this still ends up creating jobs here in the states.

There is absolutely zero evidence to support this. I offer as my evidence the fact that outsourcing has been in evidence for years now and the economies of both India and China have been exploding. China particularly at above 9% GDP per year.

Yet the trade imbalance has reached a deficit of nearly $44 billion in just January. So, where are the jobs that those robust economies should be producing here in America?

Well? Detail it please.

6. Correct.... and I submit this is a move thay couldn't have done without the investment cash to back it up.

sigh.

They didn't have investment cash to do that agreement. That agreement had nothing to do with investment cash.

7. This move created jobs. I couldn't care less if they were outsourced, or not. Jobs were created becase of the investments. Get it now?

sigh.

Let me explain my point **AGAIN**, and for the last damn time btw.

Years ago investment inflow into America and American companies directly translated into job creation. But, due to the principles of outsourcing, this connection no longer exists. Instead investments no longer have a direct connection to job creation because those investments no longer necessarily create jobs.

read. understand. learn.