Friday, October 19, 2012

Another Mystery of Romneynomics

I want to get this out today because I won’t have time to post anything over the weekend.  I’ll be out sailing on the Cheasapeake Bay, helping to deliver a friend’s boat from Galesville just south of Annapolis to Solomons in the Patuxent River.   Hey, it’s a burden, but someone has to do it.

But I’ve been puzzling about one comment from the second Presidential debate, a comment that Romney made as Obama was ending his response about Candy Crowley’s question about jobs lost to China, toward the end of the debate.  I’ll quote the whole relevant section, so we have the context:

“MS. CROWLEY: Let me go to the president here, because we really are running out of time. And the question is can we ever get — we can’t get wages like that. It can’t be sustained here.
PRESIDENT OBAMA: Candy, there are some jobs that are not going to come back, because they’re low-wage, low-skill jobs. I want high- wage, high-skill jobs. That’s why we have to emphasize manufacturing. That’s why we have to invest in advanced manufacturing. That’s why we’ve got to make sure that we’ve got the best science and research in the world.
And when we talk about deficits, if we’re adding to our deficit for tax cuts for folks who don’t need them and we’re cutting investments in research and science that will create the next Apple, create the next new innovation that will sell products around the world, we will lose that race. If we’re not training engineers to make sure that they are equipped here in this country, then companies won’t come here. Those investments are what’s going to help to make sure that we continue to lead this world economy not just next year, but 10 years from now, 50 years from now, a hundred years from now.
MS. CROWLEY: Thanks, Mr. President.
Governor Romney —
MR. ROMNEY: Government does not create jobs. Government does not create jobs. (Chuckles.)

MS. CROWLEY: — but Governor Romney, I want to introduce you to Barry Green, because he’s going to have the last question to you first.

The italics are mine, but he said these words with great emphasis, as though this were a point he needed to make that the world was not quite getting, as though he were talking to people who were hard of hearing, or who were too ideologically stubborn to get this basic fact.  This appears to be a fundamental element in his economic philosophy: “government does not create jobs”.  It seems to be a fundamental element in the economic philosophy of the right, so I understand that he was calling out to his base when he said that.  But it’s an odd thing to say, in my opinion, and an odd thing to think.

The curious thing is that this is clearly false on the face of it, at least at the visible, factual level.  At that level this isn’t a matter of philosophy, it’s a matter of plain numbers: governments at various levels directly employ more than 22 million people.  (To be clear, only about 3 million of those jobs are federal, the rest are state and local government jobs.  I’ll throw in a graph from FRED below to illustrate.)   And these are only the jobs that are direct government employment; in addition to these jobs, the government hires contractors to do immense amounts of public work---to help build roads and dams and airports, to build ships and aircraft and tanks and all-terrain trucks for defense, and to help with all of that science research Obama mentioned in the quote above.   Governor Romney certainly knows that these jobs exist, and that the government creates them.  Why don’t all of these jobs count in Romney’s philosophy? 

But I think Romney’s idea is that aside from these jobs that government creates directly or by contract to accomplish public work---many of which he might think are unnecessary, even wasteful---the government’s role is negligible, that government efforts don’t have a big role in creating private sector jobs, which in his inner heart are the only real jobs.  His idea might be that the work of government simply gets in the way of private industry.  If that’s what he means, he might want to consider this letter to the editor of the Las Vegas Sun.  The writer, Mark Bird, points out that in Las Vegas government has done a few things that matter:

“Government created Hoover Dam, Interstate 15 and McCarran International Airport. Does any rational person really believe the MGM, Mirage or Venetian hotels are responsible for more jobs than these three government projects? Lake Mead supplies 90 percent of the water used in Las Vegas. Would these hotels have been built without the water source?”

Mr. Bird might have also mentioned the existence of police, EMT, firefighters, national defense, and numerous other public services that allow business people to go about their work in safety.  But this has all been said before, and I think that Governor Romney knows that these government efforts are vital to a healthy private sector. 

Or he might mean that in spite of all of the jobs the government creates directly or by contract as the nation’s largest customer, and the indirect jobs that are enabled by the existence of government’s products and services, the government also does harm by, for example, regulating industries that, if they could only work unfettered, might create many new jobs.  In that case he might want to consider his own words from the first Presidential debate:

“MR. LEHRER: All right. So, to finish quickly, briefly, on the economy, what is your view about the level of federal regulation of the economy right now? Is there too much, and in your case, Mr. President, is there -- should there be more? Beginning with you -- this is not a new two-minute segment -- to start, and we’ll go for a few minutes and then we’re going to go to health care. OK?
MR. ROMNEY: Regulation is essential. You can’t have a free market work if you don’t have regulation. As a business person, I had to have -- I needed to know the regulations. I needed them there. You couldn’t have people opening up banks in their -- in their garage and making loans. I mean, you have to have regulations so that you can have an economy work. Every free economy has good regulation.”

Once again, the italics are mine, but the emphasis is clear in his voice in his response.
So Governor Romney seems to understand that government, through regulations, creates the framework in which private business is conducted, and that having a framework like that (like having rules in a football game) can make the difference between a productive private sector and a brutal free-for-all in which no one wins.   And he clearly also knows about the people who work directly for government at various levels, and those whose businesses depend on the government as their customer.   He surely understands that even if those jobs don’t seem real to him they are very real to the people who do them.  And he knows as well that businesses do depend on the availability of clean water, power, roads and airports, and so on.  He’s sometimes complained while campaigning about the fact that the U.S. infrastructure is “crumbling”.  

Government is central to all of this, and in playing its role it provides jobs.  Romney knows this.  The right side of the political spectrum has to know all of this.  

So why is there such urgency and emphasis in Governor Romney’s denial of government’s role in the economy?  Why is this so important to the right?    

It’s a mystery.


Here’s the FRED graph.  The big blue line at the top is total government employment, at all levels; the red line at the bottom is federal government employment---notice that it’s been pretty level since the fifties, in spite of all the population growth since then.  The green is state government employment, and the orange is local government employment.


  1. More folks need to point out the message you've laid out above.

    Cynically Romney claims that government doesn't create jobs, and then in the next breath claims that his governing would create 12 million.

    His math on jobs doesn't add up, just like his math on the 5 trillion dollar tax cut doesn't.


    1. Yep. I don't want to say that there's nothing at all underneath this conservative mantra about government and jobs, but whatever it is it's well hidden. Maybe this eruption during the debate was just a blast against government in general from his libertarian core (if he has one), or a random verbal thrust at Keynes. But on the surface level, and for several levels down, the statement that "government does not create jobs" seems just flatly counterfactual to me.