Regs, Spending Sink U.S. to 10th Place on Index of Economic Freedom Nation’s global score slips for fourth straight year January 12, 2012
Sharp increases in government spending and more costly regulations contributed to another decline in the United States’ ranking in the annual Index of Economic Freedom published by The Wall Street Journal and The Heritage Foundation.
A growing sense that policymakers put special interests above the public interest also was a factor as the U.S. score for economic freedom dropped by 1.5 points in the 2012 Index, to 76.3 on a 0-100 scale. When compared to its competitors, the U.S. ranking fell from ninth to 10th among 179 countries.
It was the fourth straight year of decline on the Index for the United States. As recently as 2008, the U.S. ranked seventh worldwide, earned a score of 81 and was considered a “free” economy. Today, the U.S. is only a “mostly free” economy, placing it in the Index’s second-highest category. Read more....
Financial Transactions Tax Would Hurt the Economy and Kill American Jobs January 11, 2012
The Congressional Budget Office (CBO) warns that a tax on certain financial transactions could “diminish the importance of the United States as a major financial market” and that, in the short run, “imposing the transaction tax would probably reduce output and employment.” While these effects would be “mitigated” if other financial centers introduced a similar tax, strong opposition in Britain and Canada makes such a universal tax very unlikely.
While the CBO letter deals with the effects of the recent Wall Street Trading and Speculators Tax Act, which was introduced as S. 1787 by Senator Tom Harkin (D–IA) and as H.R. 3313 by Representative Peter DeFazio (D–OR), the same judgment could also be applied to other versions of the tax designed to punish the finance industry for its role in the 2008 global financial crisis, lower the deficit or pay for new spending, or as an international scheme where multiple nations enact the levy to pay for climate change policies or fund the European Union. Read more....
Reduced Job Creation—Not Increased Layoffs—Explains High Unemployment November 29, 2011
Unemployment remains stuck at 9 percent because of low job creation, not higher job losses. In fact, job losses hit a record low in March 2011. Fewer entrepreneurs are starting new companies, and fewer business owners are expanding existing enterprises. Reduced job creation entirely explains the economy’s high unemployment. If job creation had returned to normal levels after the recession ended, employment would now have fully recovered.
High Unemployment
Between the start of the recession inDecember 2007and fall 2009, the unemployment rate jumped sharply from 5 percent to 10.1 percent. Since then, unemployment has only slightly recovered, and the unemployment rate remains at 9 percent.
This represents the longest stretch of such high unemployment in the postwar era. While the unemployment rate was briefly higher during the 1981–1982 recession, the economy quickly recovered from that downturn. This has not happened today. The job market has recovered at a slower pace than from any other recession in the past half-century. Payroll employment remains below recession levels by 4.7 percent, or 6.5 million jobs. Read more....
Economy and Jobs Issues for 2012
The Issue In a typical month, millions of Americans switch jobs or find work, and millions quit their jobs or are let go. The net of these millions is the change in total employment, usually a few hundred thousand jobs, while the ratio of those who are involuntarily unemployed to the total workforce provides the unemployment rate, typically around 5 percent at full employment. This remarkably dynamic process of job creation and destruction, hiring and layoffs, reflects the great labor mobility that is one of the abiding strengths of the American economy and allows the unemployment rate to dip so low.
During the 2008–2009 recession, the unemployment rate nearly doubled from its norm of about 5 percent to 9.8 percent, and it remains around 9 percent heading into 2012. Layoffs increased during this recession as one would expect, but they were not the primary cause of the nearly 10 percent unemployment rate. In fact, layoffs have been surprisingly mild, especially given the depth of the recession. In the 2000–2001 recession, for example, employers shed 2.6 million more jobs six quarters after the recession began. Read more....
"The policy of the American government is to leave their citizens free, neither restraining nor aiding them in their pursuits.” - Thomas Jefferson