Why the GOP wants High Unemployment

Paul Krugman at the New York Times: Republicans Against Reality

"For a long time the Republican establishment got its way by playing a con game with the party’s base. Voters would be mobilized as soldiers in an ideological crusade, fired up by warnings that liberals were going to turn the country over to gay married terrorists, not to mention taking your hard-earned dollars and giving them to Those People. Then, once the election was over, the establishment would get on with its real priorities — deregulation and lower taxes on the wealthy."

(Note: I almost agree with everything Robert Reich says.) Robert Reich, August 3, 2013:

They [the GOP] and their patrons want unemployment to remain high and job-growth to sputter. Why? Three reasons:

First, high unemployment keeps wages down. Workers who are worried about losing their jobs settle for whatever they can get -- which is why hourly earnings keep dropping. The median wage is now 4 percent lower than it was at the start of the recovery. Low wages help boost corporate profits, thereby keeping the regressives’ corporate sponsors happy.

Second, high unemployment fuels the bull market on Wall Street. That’s because the Fed is committed to buying long-term bonds as long as unemployment remains high. This keeps bond yields low and pushes investors into equities -- which helps boosts executive pay and Wall Street commissions, thereby keeping regressives’ financial sponsors happy.

Third, high unemployment keeps most Americans economically fearful and financially insecure. This sets them up to believe regressive lies -- that their biggest worry should be that “big government" will tax away the little they have and give it to “undeserving" minorities; that they should support low taxes on corporations and wealthy “job creators;" and that new immigrants threaten their jobs. [Yes, new immigrants threaten their jobs --- and further drives down wages.]

He should have added: Because the GOP will always want the exact opposite of what Obama proposes. Robert Reich says we should counter the GOP with three basic truths:

• First, the real job creators are consumers, and if average people don’t have jobs or good wages this economy can’t have a vigorous recovery.
• Second, the rich would do better with a smaller share of a rapidly-growing economy than their current big share of an economy that’s hardly moving.
• Third, therefore everyone would benefit from higher taxes on the wealthy to finance public investments in roads, bridges, public transit, better schools, affordable higher education, and healthcare -- all of which will help the middle class and the poor, and generate more and better jobs.

And also noted by Dean Baker (via Paul Krugan), Republicans like Eddie Lazea are saying "An analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment.

Also from Dean Baker: "So when this recession started a number of years ago, you had 63, something like that, out of 100 Americans in the labor force. Now we're down, fewer than in [the employment to population ratio is now 58.7 percent] -- than when the recession started. And so that suggests we have got some deep structural problems. It probably has a lot to do with technological change. People are not hiring -- companies are not hiring human beings. They're hire machines."