Romney and Obama don’t disagree about everything when it comes to talking about the big things that are wrong.
Both say the economy is in sorry shape, and they’re right about that. It’s the slowest economic recovery since World War II, and still weakening.
The U.S. Labor Department reported that 12.5 million people were unemployed in August, three years and two months after the recession officially ended in June 2009 — some 8.1 percent of the labor force.
In addition to these 12.5 million people, the Labor Department counted millions more who were out of work but not out of work in precisely the way it takes to be included in the calculation of the official unemployment rate.
By the Labor Department’s own count, on top of the 12.5 million, there were 8.0 million people in August who were "involuntary part-timers" and not counted to any degree as unemployed and therefore excluded when determining the unemployment rate.
To be "involuntary part-timers," either "their hours had been cut back" or they were looking for work and "unable to find a full-time job."
Additionally, the Labor Department reported that another 2.6 million people were unemployed in August but officially categorized as"discouraged" or only "marginally attached" to the labor force because they "had not searched for work in the four weeks preceding the survey." They, too, are excluded in the calculations of the official unemployment rate.
In other words, a jobless person gets to be both unemployed and uncounted if he’s insufficiently upbeat about his job chances, too "discouraged" to keep beating on the same doors without skipping a month.
Add the 8.0 million involuntary part-timers and the 2.6 million who were inadequately optimistic to the officially unemployed 12.5 million and the unemployment rate for August nearly doubles from 8.1 percent to 14.9 percent, not counting the jobless who’ve ended up in jail or a mental institution, returned to college, killed themselves, gone missing, or been sidelined to the couch by an early and involuntary retirement.
Romney and Obama agree about the need for higher levels of economic growth, more jobs, and lower federal deficits. Both also acknowledge that current rates of growth in the federal debt are unsustainable.
Both candidates also see how these things fit together — more growth and more jobs deliver lower federal deficits as unemployed tax receivers become employed taxpayers.
Unfortunately, the economy is still moving in exactly the wrong direction. It takes a three percent growth rate in GDP to make a significant dent in the unemployment rate. In the first quarter of 2011, real GDP, adjusted for inflation, was expanding at an annual rate of 3.9 percent. That GDP growth rate was cut in half during the first quarter of this year, dropping to 2.2 percent. In the second quarter of this year, April through June, the GDP growth rate again declined, to 1.25 percent.
What Romney and Obama don’t agree about is how to turn things around.
Obama sees economic advances coming by way of a bigger role for government, more infrastructure spending and higher taxes on the rich to pay for it – more roads, more windmills, a centralized health care system, more miles per gallon, more federal funds for education –overall, a more government-directed marshaling and allocation of resources.
Romney, in contrast, sees economic growth coming by way of smaller government, lower taxes, and larger roles for private enterprise and individual incentives – overall, an economy organized and directed by markets.
Ralph R. Reiland is an associate professor of economics and the B. Kenneth Simon professor of free enterprise at Robert Morris University in Pittsburgh.
Ralph R. Reiland
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