WASHINGTON -- Three days after the president-elect announced in a radio address that he had directed his "economic team" to devise a plan "that will mean 2.5 million more jobs by January of 2011," he told a news conference that he favored measures "that will help save or create 2.5 million jobs." To the extent that his ambition is clear, it is notably modest.
It is, however, unclear. How will anyone calculate the number of jobs "saved"? In what sense saved? Saved from what? Saved by what? By government action, such as agriculture subsidies or other corporate welfare? What about jobs lost because of those irrational uses of finite economic resources? Should jobs "saved" by, say, protectionist policies that interfere with free trade be balanced against jobs lost when export markets are lost to retaliatory protectionism?
In recent years, in normal conditions, the economy has "lost" tens of millions of jobs through capitalism's "creative destruction" (Joseph Schumpeter's phrase). It also has created a few million more than that, which is why the destruction is creative. Investor's Business Daily reports:
"Since Eisenhower's first term, the economy has created an average of 1.5 million new jobs each year. Since Reagan's first term, the average has been about 2.5 million a year. And Reagan, who inherited an economy as bad if not worse than the current one, saw 6.3 million new jobs created four years after he entered the White House."
Because the economy's job-creation is not quite as predictable as a solar eclipse, Obama, by promising 2.5 million jobs by 2011, is a bit more audacious than was Mark Twain's Connecticut Yankee, who astonished King Arthur's court by commanding an eclipse that he knew was due. Still, because scores of millions of today's jobs will exist two years from now, who will be able to dispute a presidential claim that administration policies "saved" some portion of them?
If you must forecast tomorrow's weather, you will be tolerably accurate more often than not if you say it will be sort of like today's. In normal times, the rule for forecasting next year's economy is similar. The problem is that economic forecasts matter most in abnormal times, such as these. The question is: How abnormal are these times?
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