Economic Arithmetic.

We can all agree that persistent unemployment is harmful. Idled workers don’t pay taxes yet draw benefits from the public coffers. People without jobs have lower self-esteem and often find themselves in trouble with the law. Workers with long periods of unemployment in their resumes forever pursue their careers at a disadvantage because of missed training, experience, and networking that comes with work. Unemployed workers tend to postpone marriage and childrearing.

In this, the greatest of all recessions since the Great Depression, no metric is more politically important than the national unemployment rate which has hovered around 9.5% since May of 2009. In early 2010, the rate seemed to be trending lower. But in August and September, the rate crept back up. The trend line is particularly important because it helps answer the question - When will this period of high unemployment end? If the trend line doesn’t bend down again, the answer is “never”.

The Government proudly trumpets job creation brought about by the $750,000,000,000 stimulus. The current tally is 750,000 “saved or created jobs." If I were a publicist working for Obama, I would recommend hiding that statistic because it calculates to approximately $1 million per job “saved or created.” Economic arithmetic is revealing.

In 2008, America had an unemployment rate of 5.8%. In 2009, it rose to 9.3%. Germany, in contrast, has pursued a strategy of relative economic austerity during the period America pursued its economic stimulus strategy. German unemployment in 2008 was 7.5%. In 2009, it rose to 7.8%. It peaked at 7.9% in the summer of 2009 and by August 2010, it was at 7.2%. In economics, there are no perfect experiments to test the various economic hypotheses. But this comparison is as close as it gets. America tested its stimulus hypotheses. Germany acted as the “control” to test the outcome with no stimulus. America’s situation got worse. Germany’s situation got better.

The economic stimulus program makes no economic sense. I am employed and I will not fire myself, saving a job, for a mere $500,000, 50% less than the other jobs Obama saved. In fact, I would not fire myself for a mere $200,000. After further thought, I will hire a person, creating a new job, for a mere $100,000. And so on. Get it.

Guest Blogger David Dawson.

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