Red State Economics

Public-sector job losses don’t count.

Except when they do.

One way to dramatize just how severe our de facto austerity has been is to compare government employment and spending during the Obama-era economic expansion, which began in June 2009, with their tracks during the Reagan-era expansion, which began in November 1982.

Start with government employment (which is mainly at the state and local level, with about half the jobs in education). By this stage in the Reagan recovery, government employment had risen by 3.1 percent; this time around, it’s down by 2.7 percent. [NOTE: That’s a net difference of 5.8%!]

Next, look at government purchases of goods and services (as distinct from transfers to individuals, like unemployment benefits). Adjusted for inflation, by this stage of the Reagan recovery, such purchases had risen by 11.6 percent; this time, they’re down by 2.6 percent. [NOTE: A net difference of 14.2%]

And the gap persists even when you do include transfers, some of which have stayed high precisely because unemployment is still so high. Adjusted for inflation, Reagan-era spending rose 10.2 percent in the first 10 quarters of recovery, Obama-era spending only 2.6 percent. [NOTE: A net difference of 7.6%]

Frankly, conservatives just don’t understand economics anymore.  They lost that ability when they pledged fealty to Friedman and the “Free Marketeers.”  They’ve forgotten that GDP is a simple formula:

\mathrm{GDP} =<br />
C + I + G + \left ( \mathrm{X} - M \right )

GDP = Consumption + Investment + Government Spending + Net Exports

They’ve forgotten that we’re all in this together, as a nation.  We’re more than a base collection of atomized individuals of Ayn Rand fantasy novels, we’re a people, a nation, a society and we’re fucking it all up because we’ve lost sight of that.


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