Radio commentary, October 3, 2009

[No, not time travel—this is the version that will be delivered on the KPFA version of the show on Saturday morning. Much of it was on Thursday’s WBAI show, except for the bit about the September employment report, which was added for the KPFA and podcast audiences. Oh, and Chicago didn’t get the Olympics, but the analysis of the politics behind Obama’s huckstering is still relevant.]

Breaking news from the change we can believe in front! The Obama administration is opposing Congressional legislation to protect reporters from being jailed for refusing to reveal who disclosed confidential information to them. For national security reasons, of course. As Charlie Savage put it in a story in the New York Times the other day, “The bill includes safeguards that would require prosecutors to exhaust other methods for finding the source of the information before subpoenaing a reporter, and would balance investigators’ interests with ‘the public interest in gathering news and maintaining the free flow of information.’” Obama doesn’t like this. And he’d like judges to be told to be “deferential” to the executive branch when it screams “national security” in such cases.

And, as the inaptly named Jason Ditz reported on a couple of weeks ago, the administration is seeking the extension of several major provisions of the Patriot Act, including one that would allow the gov to subpoena library and bookstore records, and others that make it easier to wiretap on the executive branch’s whim.

Oh, and given Congressional Democrats’ opposition to sending more troops to Afghanistan, in the pursuit of god knows what, the admin is going to turn to the Republicans for backing. On issues of imperial war and the national security state, Obama 1 is looking more and more like Bush 3.

Olympic-quality payback

Speaking of Obama, his little junket to Copenhagen to plead Chicago’s case before the International Olympic Committee is rather strange. [Alas, it didn’t work.—Ed.] My first thought was that this is an odd mission for a president to undertake, especially one with a collapsed economy to revive, a disastrous health plan to promote, and a failed war to escalate. My second thought, on listening to Obama flack Keith Olbermann tout the economic development aspects of hosting the Olympics, was to be deeply suspicious. As I recall the history of the Olympics—a topic I covered when I was first doing this radio show, at the time of the 1996 Atlanta games—they’re typically a pretext for urban renewal, which is the polite way of saying displacing poor people in the interest of gentrification. So I concluded it was time to do a little research.

Thankfully, the Chicago Reader, especially in the person of their contributor Ben Joravsky, has done a lot of work on the issue, all of it conveniently available on their website. In a nutshell, the Chicago bid is a project of Mayor Richard Daley and the city’s real estate and business elite. (Polls show that city residents are about equally divided on whether the Olympics will be good for Chicago or not.) The roster of contributors to Chicago 2016, the group of local worthies leading the campaign, is a Who’s Who of Chicagoland’s corporate elite. Winning the games would greatly satisfy their lust for prestige—and money, of course. But the major recipients of that money would probably be the real estate interests who’d see buildings erected with public subsidy and neighborhoods cleared of troublesome poor people.

What about other economic benefits? There probably are some, mostly short-term ones—jobs for construction workers, parking lot attendants, and hot-dog vendors. But the evidence is that there’s little or no long-term payoff from hosting the Olympic Games. Even the accommodations industry might not gain all that much; the Reader’s Deanna Isaacs reports that European studies show that while there’s a boost to tourism from the games themselves, the number of visitors before and after the games often declines, resulting in a wash.

So what’s in it for Obama? Well, a lot of his friends are in on the game. His advisor and close friend Valerie Jarrett was on the board of Chicago 2016, and two current members were money people in his campaign. Many of the business cheerleaders for the effort were crucial early supporters. In other words, the trip is payback. So this is why the chief executive of the world bourgeoisie, as the folks at Workers Vanguard call the occupant of the Oval Office, is comporting himself like a big city mayor.

September employment: more bleeding

And now a special breaking news update prepared especially for the KPFA and podcast audiences. Friday morning brought the release of the September U.S. employment report, and it was pretty bad. About the only good thing you can say about it is that it wasn’t as bad as the ones we were getting early in the year. And that’s about it for good things.

As I always point out when reviewing these things, the monthly employment numbers are based on two surveys, one of about 300,000 employers, and the other of about 60,000 households. The first, known as the establishment or payroll survey, is the most reliable source of information on employment levels, along with wages and the length of the workweek; the second is the source of the familiar unemployment numbers.

The payroll survey reported the loss of 263,000 jobs in September. That’s a half to a third as much as we saw in the first part of this year, but it’s still an awful number. There was an unusually large loss of 53,000 government jobs, mainly at the local level. Some of this may be technical factors, like back to school oddities, but it’s also likely that fiscal troubles are really beginning to bite. The private sector lost 210,000 jobs, with hardly any major sectors showing even tiny gains. Hardest hit were construction and manufacturing, but retail also was down hard. Even the indefatigable health care sector added far less than usual.

September was the 21st consecutive month of job loss, the longest streak since monthly figures begin in 1939. Since the recession began, we’ve lost more than 7 million jobs. In percentage terms, this is easily the harshest recession since the post-World War II demobilization. Thanks to the recession’s severity and the weakness of the 2002-7 expansion, private employment is now well below where it was at its December 2000 peak. We’ve never seen anything remotely like that kind of long-term carnage in 70 years of monthly stats.

And that’s not all. The monthly surveys do a heroic job of trying to capture a complex and rapidly changing job market; I have no patience for anyone who says that government statistiicans are hacks or liars. But they have a hard time dealing with turning points. They have to make assumptions about business creation and destruction—and most of the time these assumptions are well-grounded. But when a recession is beginning, or a recovery is taking off, reality gets ahead of their assumptions. That’s why the numbers are benchmarked every year by comparing the monthly estimates with the rigorous, near-100% coverage of the employment universe provided by the unemployment insurance system. Most of the time, these so-called benchmark revisions are small, a few tenths of a percent. But not this time. Every October, the Bureau of Labor Statistics announces the likely size of the revision to be applied to the data for the previous March. This is only an estimate; the official, detailed revisions will come in February. And the numbers for this year are very big: -824,000. That is, 824,000 fewer people were employed in March than we thought. Since over 2 million jobs were lost in the first part of the year by the previous reckoning, that makes the bloodletting even more savage—now close to 3 million, in just a few months.

Wage growth was very weak, and the workweek also fell to a record low. The job market is very sick.

And the household survey was, if anything, worse than its establishment counterpart. The unemployment rate rose again to 9.8%; it’s likely to break 10% in a month or two. And the share of the adult population working, the employment/population ratio, fell hard, to its lowest level since 1983. This is a stunning reversal of history; the capitalist norm has been to bring more and more people into paid work. Today’s U.S. economy has thrown that into reverse.

But this is entirely consistent with how economies behave after severe financial crises. Several times I’ve mentioned the IMF’s studies of financial crises around the world. While the IMF has a lot to answer for, given its long history of torturing the world’s poor, their staff economists often do good research work, especially when they’re covering the rich countries. The latest instance of that is the October edition of their biannual World Economic Outlook, which extends the examination of post-crisis slumps they did in the April edition. The broad story is the same: the recessions that follow banking crises are savage and persistent.

A couple of things that stand out in their latest iteration of this research. One, the income losses after a financial crisis are on the order of 10%. These are permanent, and not recovered in the subsequent recovery. That is, the standard textbook pattern of a V-shaped recession—a sharp fall followed by a strong bounceback—doesn’t operate in such crises. And two, the job losses are also of a deep and sort of permanent sort. That is, the total number of jobs in the U.S. economy is likely to stay several million below what we otherwise would have seen had there been no crisis for many years to come. Again, no V-shaped recovery—more of an L, or the mirror image of a J. In other words, this recovery is going to resemble what happens in an intensive-care unit more than what happens in the Econ 101 textbooks.

5 Comments on “Radio commentary, October 3, 2009

  1. I have alway found your defense of the BLS fascinating. Now, even right wing Bloomberg seems to be disagreeing with you.

    Note the words “Alice in Wonderland” used to describe the Labor Department unemployment calculation methods. Do you still think that the official unemployment rate accurately reflects those that are unemployed?

  2. That Obama is partially a creation of local real estate and development elites in Chicago – the Pritzkers and others – is not really news. But that as Leader of the Free World he’d run an errand for them, which customarily would be handled by local Chamber of Commerce types, surprised even this grey-bearded cynic. A foolish, but revealing, thing to to do.

    President Barack Obama, local political hack.

  3. Hahahaha Obama won the Noble Peace Prize. Must have made the cranky cyncis’ day.

    Will they get a public option in the health care bill? I think they will. The new financial regulations will be okay too.

  4. Peter K. means, of course, that “the new financial regulations will be okay too” for the financiers, and by “public option,” he means public option to further enrich the insurance industry or die. I’m just giving him credit for some sense.

    …and those dead Afghans (substitute southwest asians of your choice here) – children, brides, gasoline seekers – are really hahahaing it up right now, Peter.

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