It’s election season, and by now, if you haven’t made your
decision, you haven’t been paying attention. This election is the most
important in our nation’s history; at least that’s what we’re meant to believe
from watching cable news. Don’t get me wrong because I do believe this is an
important election, but not really for any of the reasons that are actually
talked about. Alternatively, some things that are talked about can’t be
changed, and certainly not by any difference in each of the candidate’s policies.
Consider, if you will, all the coverage on climate change.
Even after hurricane Sandy, very
little has been said by Romney or Obama on the subject (the argument over a
single hurricane being evidence of global warming notwithstanding). This is one
of the most important issues to address, or at least talk about. However, the
discussion on this topic is pretty much boiled down whether or not climate
change exists or not.
I didn’t actually intend to write an entire post on climate
change because such a post would either be read by those who generally agree or
ignored by those who don’t. Unfortunately, too many people have their ears
closed for that one.
I’m more interested in the latter- the things we hear about
endlessly, with virtually no chance of relevance. The unemployment rate is a
prime example. Romney said Obama said unemployment would be 5.4% by now.
Who said what and when in what context isn’t relevant here, this claim has gone
around the fact checkers and I’ll leave that to them. Today’s unemployment rate is about 7.8%. So, the big question- what is a reasonable best-case scenario for the unemployment rate in 4 years? Both
candidates talk about changing unemployment, but it’s not an easy thing to
change, and certainly not something that’s changed quickly.
It doesn’t really matter who you think will do a better job
of this, because outside of a fundamental change to economic policy (very
likely a bigger change than either candidate is willing to actually put in
place), we won’t see the behavior of unemployment change.
Take a look at the following graph. It shows the
unemployment rate over the last 50 years. We’ve seen some massive swings, and
several recessions are readily apparent. Mind you, completely unmathmatically,
I highlighted the ups and downs on this graph. Notice that in almost all cases,
the unemployment rate goes down slower than it goes up.
 |
| Bureau of Labor Statistics |
For example, in 2001, the unemployment rate went from 4% to
6% in roughly 18 months. It took 3 years for it to drop down to a new low of
4.5%. The important point is that a drop in unemployment takes longer than a
raise.
Fast forward to the financial crisis, which shows a raise in
unemployment that we really haven’t seen since the great depression. It took
just over two years to go from around 4.5% to 10% in late 2009. It’s a large
crisis not only for the large amount but also how fast it happened.
In the last 50 years, unemployment has dropped at about 2%
over 4 years. And, given that the peak happened in late 2009, an unemployment
rate of 7.9% is well in line with historic trends.
So, as this election has largely focused on what the Obama
administration has done about unemployment, it would seem that they’ve done
about the same as every other administration in the last 50 years. Or, how a
Republican congress has obstructed the administration has actually tried to do, then blamed the administration for
inaction.
That’s not exactly news worthy of arguing over during
election season, is it? Can we wrap up this fight and talk about something that
we can actually do something about now?
