Obama Thinks that High Unemployment Is Okay: Unwise for Government to Spur Hiring

Obama Does Not Care About Reducing Unemployment

As I’ve repeatedly documented, Obama is not concerned with reducing unemployment. Indeed, despite his faux populism, Obama’s policies increase unemployment. D.C. is like a separate country, and the politicians are increasing jobs … but only for their wealthy buddies, and not the average American.

Indeed, former Secretary of Labor Robert Reich says that Obama is simply trying to distract us, so we forget how grim the unemployment situation is. And, no, it is not bad advice from his advisers, but Obama himself which has made the calls on ignoring unemployment.

Americans are getting hammered, and so it is no surprise that unemployment is America’s number one concern.

Obama Considers Unemployment to Be a Good Thing

A new book by Ron Suskind shows that Obama thinks high levels of unemployment show that everything is fine the way it is:

A few weeks later the economic team was back to the discussion of stimulus versus deficit reduction. The October jobless figures, out in mid-November, were now clear: unemployment had jumped to 10.2 percent.


Both [Director of the National Economic Council Larry Summers and chair of the Council of Economic Advisers Christina Romer] were, in fact, were concerned by something the president had said in a morning briefing: that he thought the high unemployment was due to productivity gains in the economy. Summers and Romer were startled.

“What was driving unemployment was clearly deficient aggregate demand,” Romer said, “We wondered where this could have been coming from. We both tried to convince him otherwise. He wouldn’t budge.”

Summers had been focused intently on how to spur demand, and on what might drive a meaningful recovery. Since the summer, in meeting after meeting, he’d ticked off the possible candidates, and then dismissed them – “it won’t be construction, it won’t be exports, it won’t be the consumer.” But without a rise in demand, in Summers’s view, nothing else would work.


But productivity? The implications were significant. If Obama felt that 10 percent unemployment was the product of sound, productivity-driven decisions by American business, then short-term government measures to spur hiring were not only futile but unwise.

The two economists strained their shared memory of dozens of meetings: had they said something he’d misconstrued? At one point, Summers had mentioned how Keynes once wrote in a 1938 letter that the labor movement depressed productivity, and maybe Obama saw that the disruptions in the economy from the Great Panic gave employers an opportunity – an excuse, actually – to harvest latent productivity gains.

After a month, frustration turned to resignation. “The president seems to have developed his own view,” Romer said.

Obama is wrong. Economists Lawrence Mishel, John Miller, Jeannette Wicks-Lim, Mike Konzcal, and many others have shown that unemployment is not a good sign, and that this episode of joblessness is not caused by increased productivity.

As the Wall Street Journal reported last year:

[In] a new paper[,] Steven Davis of Chicago Booth School of Business, R. Jason Faberman of the Philadelphia Fed and John Haltiwanger of the University of Maryland — take a deep dive into Labor Department data and come up with an estimate of what they call “recruiting intensity,” a measure of employers’ vacancy-filling efforts including advertising, screening and wage offers.

Their finding: Employers haven’t been trying as hard as they usually do.


Depressing as it might seem, the finding is in some ways encouraging. It suggests that the trouble with hiring might be more a “cyclical” function of low business confidence than a chronic, “structural” ailment that will last for years to come.

As Business Insider notes, survey after survey shows that lack of demand is the main problem businesses face, and the main reason they aren’t hiring.

The rich may love unemployment, but small businesses don’t. Grim conditions for the average American means that small businesses are slowing down, rather than hiring.

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