Robert Samuelson Trots Out the Second Great Depression Bogeyman Again

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Sunday, 02 January 2011 22:15

The economy is doing well compared with the Great Depression, but not by any other measure. This is why Robert Samuelson and other spokespeople for the rich and powerful are so anxious to raise the prospect of the Great Depression. It implies that we should somehow be thankful for 9.8 percent unemployment, as he said in his column today. As informed observers know, this is a joke.

In a worst case scenario where the banking system did literally collapse, the Fed could have brought it back to life through its unlimited ability to print money. The first Great Depression was not the result of bad decisions at its onset. Rather it was the result of a decade of inadequate policy response. If the government had spent large amounts of money to boost the economy, as it finally did to fight World War II, the depression would have ended much sooner.

Samuelson uses the second half of his column to repeat Fox News talking points about how firms are not hiring because of concerns over the cost of the health care reform bill. If the Post required its columnists to have some evidence for its assertions Samuelson would have been forced to show that the firms most affected by the coverage requirement in the bill are more reluctant to hire than other firms. This would presumably mean that firms with just under or just over 50 employees are hiring fewer workers than other firms. This would be the case because almost all larger firms already provide health insurance for their workers and smaller firms will not be affected by the coverage requirements in the bill. Of course the data does not show any weaker hiring performance in firms of near 50 than in firms of larger or smaller size.

If firms are seeing enough demand for labor that they would be hiring in the absence of the big bad health care bill then we should expect to see them meet this demand in other ways. For example, they could hire more temporary employees. If the Post required Samuelson to support his assertions with evidence he would discover that temporary employment is still down more than 15 percent from its pre-recession level.

Firms that are reluctant to hire could also increase the number of hours per worker to meet their demand for labor. However the data won't support this story either, since average hours per worker are still down by more than 1 percent from their pre-recession level.

In other words, there is no evidence whatsoever to support Robert Samuelson's Fox talking point that firms are reluctant to hire because they are worried about the cost of President Obama's health care bill and other regulations. This is just a Fox talking point. The fact that such unsupported assertions can appear in the Washington Post is one reason that it is known as "Fox on 15th Street."