Tuesday, June 10, 2014

Real Unemployment Numbers And The Failure Of Keynesian Economic Policy



  It really irritates me how the media overemphasizes unemployment figures when Republicans are in power and they deemphasize them when Democrats are in power. Democrats and the media downplayed the accomplishments of Ronald Reagan and how his leadership led us out of the worst recession since the Great Depression. When Reagan took office he inherited a GDP of 3.2%. Two and one half years later it was at 5.1%. One quarter later it grew to 9.3%. Obama inherited a GDP of 4.9% and two and a half years later it was 1.3%. It has steadily declined ever since. Reagan inherited an inflation rate of 11,8% percent. Obama inherited a inflation rate of 0.3%. Two and a half years after Reagan took office it was 2.46%. Two and a half years after Obama took office it was it rose to 3.56%. Reagan inherited an interest rate of 20.5%. Two and one half years later it dropped to 11.0%. I can attest for this because the real estate business was virtually dead because nobody could buy a house. Obama inherited 3.25% and two and a half years later it remained unchanged. Reagan inherited a national debt (adjusted for inflation) of 908 billion dollars Two and a half years later the debt had increased 390 billion more. Obama inherited a debt of 10.1 trillion. Two and one years after Obama took office it increased by 4.4 trillion. Reagan inherited 7.5 % unemployment Two and a half years later it rose to 9.4% but soon fell to 7.6% and steadily declined to 5.3%. Obama inherited an unemployment rate of 7.3%. It rose to 9.2% two and a half years later and is now at 6.7% over five years later. These Obama figures are the official government unemployment rate and not the real unemployment figures which do not reflect those that have quit looking for jobs and those that are under employed. Last but not least Reagan did not go around blaming Carter and griping and complaining about the bad economy like Obama has done. Five years later it is still Bush's fault according to Obama. 

  I am by no means an economic expert but as a layman I have a fair understanding of the difference between the philosophy of Karl Marx, and Adam Smith. Since the advent of John Maynard Keyes book in 1936 "The General Theory of Employment, Interest and Money" the American economy has been heavily influenced by Keynesian economics to our detriment.Without going into a long explanation I will say that Keynesian economics advocates a mixed economy, mostly private sector but with government intervention during recessions. Although Keynes book came out during the middle of the Great Depression the government had heavily involved itself already in trying to end the depression. Hoover had begun the process of government involvement but he was blamed for the depression and defeated by Roosevelt. Roosevelt continued Hoovers policies along with his own. This government tampering prolonged the depression in my view, just like Obama's tampering has prolonged the economic malaise that we are in now. If a Republican had the economic numbers that Obama has had the media would be pounding him daily. Obama gets a pass. The following is the unemployment numbers of Roosevelt during the depression.

1929- 3.9%

1930- 8.67%

1931- 15.82%

1932- 23.53

1933- 24.75

1934- 21.60%

1935- 19.97%

1936- 16.80%

1937- 14,18%

1938- 18.91%

1939- 17.05%

1940- 14.45%

1941- 9.66%


  If you notice America only came out of the depression when we began preparing for war and by 1942 we were well on our way to recovery. During the oil shock and stagflation of the 1970's Keynesian economics fell out favor. Reagan's economic plan was successful because it was centered around four things. Tax cuts, spending cuts, government deregulation, and carefully managing the money supply. He was successful on all fronts with the exception of spending cuts. For much of his presidency the Democrats owned both houses of congress and between building our defenses in order to win the Cold War and the Democrats refusing to cut social spending the deficit grew. However the media and the Democrats pounded Reagan on deficit spending all during his presidency and they still refer to that today while ignoring the fact that Obama has spent more money than all of the previous presidents put together. Reagan's policies spurred the longest period of economic growth in American history. George H.W.Bush, Bill Clinton, and George W. Bush all benefited from this growth. Now Obama has created this long recession and anemic economy because of re- instituting Keynesian economics. His policies like Obamacare, government regulations and other policies have created vast uncertainty in the marketplace and among industry which plays havoc on an economy. The following are official unemployment figures vs actual unemployment figures since 1949.




Official Actual

1949 5.9% 8.0%

1959 5.5% 7.0%

1969 3.5% 5.5%

1979 5.8% 8.9%

1989 5.3% 10.1%

1999 4.2% 11.0%

2009 9.8% 18.2%

Since 2009 Obama's real unemployment figures have hovered from as high as 18% to a low today of about 14% showing the failure of Keynesian economics and the uncertainty created by Barack Obama.

No comments:

Post a Comment