Saturday, April 6, 2013

Faulty Excuses

The Journal Sentinel recently reviewed Scott Walker's job creation record. The findings, as we've all seen, are quite disappointing. Yet, the Journal believes we shouldn't be pointing fingers or finding fault. They don't think such things matter. The Journal feels we should just "focus on policies that will help give the economy a boost over the long-term."

So, right off the bat, since it is the subheader to their article, if they're so concerned with boosting long-term economic prospects, why did the Journal support Scott Walker's refusal of nearly a billion dollars in federal aid for a train which, when completed, would have better connected a crucial economic mega-region - Minneapolis, Madison, Milwaukee and Chicago?

I guess if I were partially responsible for such an generation-altering economic blunder I wouldn't want to focus on fault, blame, or finger-pointing either.

Hilariously, the Journal believes the only two choices for fault are either: 1) it's Walker's fault or 2) it's the recall election organizers fault. No responsibility for the largest newspaper in the state? Nope. As the public keeper-of-record, the watchdog, our fourth estate, they have no responsibility in presenting truth, what works and what doesn't, what is right or wrong? Hmmm, how about it's mostly Walker's fault, but he couldn't have done all the damage he has without the support and endless articles, apologies and endorsements from the Journal Sentinel.

Their obfuscation tour continues, "But his political finger-pointing is pointless. Not that Walker doesn't deserve responsibility - he's the governor. But the problems facing the state's economy go far beyond the power of a single person to solve." This seems like a much different tone from the newspaper than when it was endorsing Walker during his campaigning. We were going to be "open for business" and the Journal agreed. But now that we're not open for business, the Journal feels its "pointless" for the public to remember who steered them wrong.

At this point the article veers off into the Journal 'buzz-words as policy' section. They talk of "entrepreneurial," "risk-takers," "research," and "venture capital." Here, again, they stump for a state-funded venture capital fund. Another Scott Walker-supported idea that has fizzled and proven unimpressive elsewhere. Again, ideas - whose were they? Were they successful? Right? Wrong? This will be another one of those ideas Walker and the Journal push for, but when it fails (doesn't produce anywhere near the results they expect), they would like us all to forget whose idea it was.

They point to an economic lethargy among upper Midwest states as an explanation for our poor performance. All these states have large manufacturing sectors, which have been underperforming, thus  things are bad. Yet, as this chart from UW-Madison economist Menzie Chinn shows, our Midwest neighbor states have outperformed Wisconsin.

Next, the Journal goes back to another well-worn (false) explanation - structural unemployment - the skills mismatch. The Wisconsin unemployment rate is hovering around 7 percent. One percentage point of that may be structural, but the majority of our unemployment is not. And, this is normally the case, even in a recession (although structural unemployment may increase slightly toward the 1.5 percentage point range). Structural unemployment can exist, but it's not the majority of our unemployment, thus is does not explain, nor provide the prescription for, unemployment. UWM professor Marc Levine recently released his own study debunking this skills mismatch meme the Journal continually tries to push.

The Journal then points out that construction and its ancillary jobs are down and they imply they don't think they'll be coming back. Hello?! Housing bust? Great Recession? Now, I don't think they'll come back to the housing bubble numbers (that's why it's called a bubble), but they will no doubt recover and stabilize as the economy does the same. We'll always need windows, doors and construction.

"Should we hold Walker responsible? Of course. He's the one who promised that 250,000 private-sector jobs would be created during his first term -  a pledge that he is far from fulfilling. But politicians always get too much blame when the economy is weak and too much credit when it is strong. We think that's the case here," the article hedges. Talk about having your cake and eating it, too. So, yeah, he's kinda responsible, but can he really do that much anyway? He's trying, that's all that matters. Lets just stick our collective head in the sand and move on. It almost seems this article merely used the 'whose to blame?' question as a springboard for a rant about pet projects and policy prescriptions favored by Walker and the Journal Sentinel.

Now, the Journal turns back to another of their favorite "development" ideas - venture capital. To believe such is a panacea, we must ignore, "Josh Lerner, of Harvard, has found the number of exceptional venture capitalists is very small. Harold Bradley, of the Kaufmann Foundation, believes venture capitalists have plenty of money, but allocate it very inefficiently, and therefore should not be receiving additional public dollars with the hope of boosting a local economy. Bradley and Carl Schramm, in an article for Business Week, write that the current focus on fees has promoted start-up flipping rather than nurturing." Scott Walker and the Journal Sentinel want venture capital to be a centerpiece, a major investment, of our economic development playbook. This disregards the fact that venture capital, overall, has been a bad/subpar return on investment. And, when it has been successful, only a very select few were rewarded.

Plus, we're just exiting an economic downturn caused by speculation and gambling - casino capitalism. We've seen how destructive this can be. Scott Walker, Alberta Darling, and the Journal Sentinel's answer to this is to double-down and speculate with venture capital (supported with public dollars).

The article closes with a buzz-word bonanza and one more debunked idea - young companies are the answer, they create new jobs. As I've written before, "The pace of hiring may be strong in young companies, but what they also fail to mention is that the pace of firing is also higher amongst younger companies."

So, whose fault is it anyway? It's largely Scott Walker's. But the Journal Sentinel also bears responsibility for supporting his election and for pushing his debunked ideas. And, all this does matter.

No comments: