Mad Social Scientist

Nice Krugman column today explaining a simple economic point, which is that economic performance this year is subpar, despite the rhetoric coming out of the Bush administration. As usual, its a story of low employment, and widening inequality, and as Krugman explains, a different administration, with better priorities and policies, would have produced different outcomes:

If you want a single number that tells the story, it's the percentage of adults who have jobs. When Mr. Bush took office, that number stood at 64.4. By last August it had fallen to 62.2 percent. In June, the number was 62.3. That is, during Mr. Bush's first 30 months, the job situation deteriorated drastically. Last summer it stabilized, and since then it may have improved slightly. But jobs are still very scarce, with little relief in sight.

Bush campaign ads boast that 1.5 million jobs were added in the last 10 months, as if that were a remarkable achievement. It isn't. During the Clinton years, the economy added 236,000 jobs in an average month. Those 1.5 million jobs were barely enough to keep up with a growing working-age population.

...

And economic growth is passing working Americans by. The average weekly earnings of nonsupervisory workers rose only 1.7 percent over the past year, lagging behind inflation. The president of Aetna, one of the biggest health insurers, recently told investors, "It's fair to say that a lot of the jobs being created may not be the jobs that come with benefits." Where is the growth going? No mystery: after-tax corporate profits as a share of G.D.P. have reached a level not seen since 1929.

What should we be doing differently? For three years many economists have argued that the most effective job-creating policies would be increased aid to state and local governments, extended unemployment insurance and tax rebates for lower- and middle-income families. The Bush administration paid no attention — it never even gave New York all the aid Mr. Bush promised after 9/11, and it allowed extended unemployment insurance to lapse. Instead, it focused on tax cuts for the affluent, ignoring warnings that these would do little to create jobs.

After good job growth in March and April, the administration declared its approach vindicated. That was premature, to say the least. Whatever boost the economy got from the tax cuts is now behind us, and given the size of the budget deficit, another big tax cut is out of the question. It's time to change the policy mix — to rescind some of those upper-income cuts and pursue the policies we should have been following all along.

Let me second two points: the president's policies do affect the economy, including how growth gets distributed to rich and poor, and, more subtly, just having a president with a brain and some concern for the working man would make a difference---he doesn't need a secret plan to save the economy; he just needs to be the right sort of administrator to make choices as they come up.