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Time for the revolution?

New jobless claims rose to 500,000 this week. Meanwhile:

Karin Wilzig has a hard time choosing a favorite color from among the 64 that she and her husband can use to illuminate the 14 1/2- foot, 450-gallon aquarium in their TriBeCa town house. The default is fuchsia, which turns the dozen koi a deep pink.

“Not pink,” said Mrs. Wilzig, 40, an artist and a mother of two small children. “Alan, go to the turquoise.”

Her husband, Alan Wilzig, 45, a former banker who collects motorcycles and prides himself on the orange tanning bed in his basement, goes to the James Bond-like control panel in the kitchen, where a touch of a button turns the fish — which are specially bred to be colorless — a vivid blue.

To be fair, it's actually good for rich people to buy fancy aquariums. Economic activity is economic activity. But it's odd to read these sorts of articles in a world where one of the two major political parties wants to borrow $700 billion for a tax cut for the rich but says we don't have enough money to offer further relief for the jobless and the struggling.

By Ezra Klein  |  August 19, 2010; 11:11 AM ET
 
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Comments

Wow, usually you're more subtle when trying to deflect bad economic news that doesn't jibe with the recovery story the Democrats are trying to tout. Interesting that blatant deflection is the de rigueur course at this point and that critical inspection of what this data tells us about the economy is decidedly absent.

Posted by: chackney | August 19, 2010 11:24 AM | Report abuse

Let's be blunt. Republicans believe that the Wilzigs' should get a massive tax cut so they won't be limited to only 64 colors in the fish tank. Meanwhile, the jobless can suck it. That's all that they believe, and they aren't embarrassed about fighting for it. When are the rest of us going to fight back?

Posted by: steveandshelley | August 19, 2010 11:48 AM | Report abuse

Businesses aren't going to start hiring until the cuts expire,

and workers aren't going to start taking jobs until their benefits expire.

We know this, so why do we dwell on news that tells us what we already knew?

Posted by: eggnogfool | August 19, 2010 11:53 AM | Report abuse

eggnogfool, come on, that's just ridiculous. There are five times more unemployed people than available jobs. The people on unemployment benefits aren't just sitting around declining jobs because they love being unemployed. If we had huge demand for workers and simultaneously had huge unemployment numbers you'd have a point, but that's just not the world we live in.

Posted by: MosBen | August 19, 2010 12:31 PM | Report abuse

Well, at least companies that make colored lighting for big-ass aquariums are hiring. Right?!?

Posted by: dpurp | August 19, 2010 12:39 PM | Report abuse

Actually Republicans aren't advocating "tax cuts" for the rich (people making over $250,000 per year) they are advocating the continuance of the Bush tax cuts that were voted into law 10 years ago. What Ezra is advocating is in reality a tax increase. Even if as Ezra advocates the Democrats allow the taxes on the "rich" to increase after this year it will only make a microscopic dent in the massive Obama deficits.

Posted by: RobT1 | August 19, 2010 12:49 PM | Report abuse

Nice try pinning the massive deficits on Obama when Bush was the one that signed TARP into law and got us involved in a war no one is willing to fund. Obama has a lot of flaws but blaming him solely for this financial mess is a joke.

Posted by: saratogian | August 19, 2010 12:58 PM | Report abuse

BTW, regarding tax cuts for the rich vs. helping the poor . . . is anyone advocating deep tax cuts for the middle class (and I don't mean funky, social-engineering ones, I mean, they're just cut, plain and simple) as part of a deal for letting tax cuts for the rich expire?

Just curious. Because Republicans should support more tax cuts for the middle class, even if they don't support more government checks going out to them.

Posted by: Kevin_Willis | August 19, 2010 1:30 PM | Report abuse

We need higher taxes- it's that simple. We need lower expenses too. We need to "right-size" the federal economy.

I just don't want to see the tax increase only applied to 5% of people, when there are tons of other people that will benefit from increased taxes much more than me, but don't want to contribute.

The not raising taxes on the middle-class BS is just the Democrats way of doing the exact same nonsense "no more taxes" act as the Republicans. We need new taxes just to pay for what are already getting, not to mention the expanded benefits the learned helplessness crew will be demanding next year.

Posted by: staticvars | August 19, 2010 1:55 PM | Report abuse


maybe someone could make a living, getting a grant to study the effects of ultraviolet light affecting the nervous system of koi.
one less unemployed person.


(i refuse to lose my sense of humor.)

Posted by: jkaren | August 19, 2010 2:00 PM | Report abuse

"Actually Republicans aren't advocating "tax cuts" for the rich (people making over $250,000 per year) they are advocating the continuance of the Bush tax cuts that were voted into law 10 years ago. What Ezra is advocating is in reality a tax increase. Even if as Ezra advocates the Democrats allow the taxes on the "rich" to increase after this year it will only make a microscopic dent in the massive Obama deficits."

First, no, the Republicans wrote the tax cut to expire in 10 years. That was their decision. "Extending" the cuts means creating new cuts. The Republicans made this bed. They have to sleep in it. Saying "in reality" allowing the Republican cuts to expire as planned is a tax increase is gibberish.

As for the rest of this, sticking "Obama" in front of something doesn't make it Obama's. Obama inherited the ruined country handed to him by George Bush and the Republican Congresses who, with the help of a lot of centrist Democrats, passed Bush's ill-founded policies. Most of the deficit belongs to Republicans.

FDR passed the New Deal. Social Security is his legacy. Democrats own that, for better or ill, to this day. Bush brought shame on this nation and destroyed its finances. Republicans own that.

Posted by: dfhoughton | August 19, 2010 2:45 PM | Report abuse

SO, till gulf seafood is certified as safe, are we supposed to eat koi?

Posted by: AMviennaVA | August 19, 2010 3:21 PM | Report abuse

The NYTimes has bizzaro world pieces like this all the time. Halfway through I find myself asking "Is this satire?", before I stop reading in disgust.

Posted by: dollarwatcher | August 19, 2010 3:30 PM | Report abuse

@Mosben:

The world we live in is a world where every empirical measurement has shown that unemployment benefit extensions inflate measured unemployment numbers, with estimates of the effect of a 73 week extension in the range of adding 2 to 3%.

The relevant unemployment number of 6-8% is certainly still bad, but we know that businesses aren't going to start hiring until the cuts expire (and/or they see unemployment falling).

Posted by: eggnogfool | August 19, 2010 3:30 PM | Report abuse

I think your nog went bad somewhere eggnogfool. Every empirical study does not show that unemployment benefits do what you say, particularly when the actual economic environment is included. For starters to get unemployment benefits one must actually look for work. Sure there are those that haven't been unemployed for too long that may still be trying to get a job similar to their old job, but these are balanced by those stopping looking for work and those that do take a lower caliber job. These last to categories go into the U6 un/underemployed rate as they represent a considerable loss of demand in the economy. The effect I remember reading (although I can't remember where as it was not too recent -- thus take this as a McEstimate) is about 0.4% on U3.

In any case U3 isn't really the best measure of unemployment since it was picked to exclude many categories most countries count in their unemployment, so we would look better. U6 is much closer to other countries and how unemployment was counted in the Depression

Posted by: williamcross1 | August 19, 2010 8:17 PM | Report abuse

My 0.4% number comes from http://www.frbsf.org/publications/economics/letter/2010/el2010-12.html

Posted by: williamcross1 | August 19, 2010 8:20 PM | Report abuse

"To be fair, it's actually good for rich people to buy fancy aquariums. Economic activity is economic activity."

Yes, but would you rather the economy be stimulated with giant color changing aquariums or with education, alternative energy, basic scientific and medical research, productivity creating infrastructure, free universal pre-school and bachelors degree, etc.?

Posted by: RichardHSerlin | August 19, 2010 11:53 PM | Report abuse

All these high-end aquarium shoppers are just imitating Wee-Bey.

Posted by: jacobh | August 20, 2010 6:11 AM | Report abuse

@WilliamCross:

Yeah, I'm familiar with that work, but there numbers actually support a 3% figure more than the 0.4% they give. Three problems with their analysis:

(1) Their numbers (i.e., the difference between the red and black line in the figure) jump around a lot month to month, but they opt to choose one data point from their set (last December) and declare it to be broadly applicable. Had they arbitrarily chosen last October instead, they would have gotten a figure close to 5% (i.e., inflating measured unemployment by over 7 million workers) instead of their reported 0.4%.

I get that December was their 'most recent data point', but when you have a set of data points ranging from 0.4% to 5%, and averaging around 3%, selecting reporting 0.4% to be your figure is questionable. I'd think an average over 2009 would make more sense (and as it happens, appears it would give you a number close to 2.5%).

(2) They assume that new entrants/job losers etc. react to recessions the same way outside of the influence of benefits. Is that true? I can imagine that if I were running a business, I'd be happy to hire experienced workers (losers) if I had existing contracts that required more workers to perform. I doubt I'd be interested in hiring new entrants unless I was planning on expanding. Or maybe that type of effect is minimal, or canceled by some other effect.

We could look at data from previous recessions to properly base our expectations, but the authors choose not to.

(3) They assume that recession effects are additive, other data suggests multiplicative.

Which is to say, in their interpretation, going from 16 to 29 weeks is 'an increase of 13 weeks', going from 13 to 30 is 'an increase of 17 weeks'. Gives you a 4 week differential. However, 16 to 29 is an 81% increase; 13 to 30 is a 130% increase. An 81% increase on 13 would be 23.4 weeks; giving a 6.6 week benefit effect. That's 65% higher than what their analysis would have concluded.

They don't explain why they assume an additive effect where unemployment subgroups have traditionally inflated in a multiplicative manner; I doubt they considered it.

It's not clear what effect factors (2) and (3) had on their results, we would need data they don't provide. But from (1) we can say that despite their cherry picked reported result, this empirical study supports that the current effect of benefits on reported unemployment is on the order of 2-3%.

Posted by: eggnogfool | August 20, 2010 8:47 AM | Report abuse

Ez, some of us believe that extending unemployment benefits actually prolongs unemployment. We also think tax cuts will have a more simulative effect than the unemployment benefits.

With that being said, isn't this position defensible even if you don't happen to agree with it? We've tried the libral solutions, perhaps the conservative solutions should get a shot now.

Posted by: kingstu01 | August 20, 2010 6:04 PM | Report abuse

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