July 7, 2004

#160: Figures don't lie, BUT....

P. Krugman

With Bye-Bye, Bush Boom (07/06/04) Paul Krugman has finally returned to his field of expertise and wrote about an economic issue. Nothing like a below-expectation Labor Department payroll report to put a spring in the step of all gloom-and-doom Democrats. At least this column gives us a brief respite from Krugman's recent ranting on everything from John Ashcroft's Justice Department to a review of Michael Moore's new movie. However, the column itself was little more than a rehash of the DNC's talking points on the U.S. Economy.

One issue he raised is worth refuting. He notes ominously that the percentage of the adult population with jobs has fallen under Bush.

"If you want a single number that tells the story, it's the percentage of adults who have jobs. When Mr. Bush took office, that number stood at 64.4. By last August it had fallen to 62.2 percent. In June, the number was 62.3. That is, during Mr. Bush's first 30 months, the job situation deteriorated drastically."
He's right on the numbers, but wrong on everything else. Of course the jobs/population ratio is falling when the denominator (as defined by the Bureau of Labor statistic) is all non-institutionalized adults over 16. And it will fall again in the next four years (and in the next four after that) no matter who is elected president. That's because we have an aging population and each year a larger proportion is living in retirement. This trend which began in the late 90s is entirely explained by demographics and is not at all measure of the scarcity of jobs as Krugman claims.

What's really troubling is that Krugman knows all of this. If he wanted to state the issue more correctly he would have cited the jobs/labor force ratio where the denominator includes only those eligible and interested in working. But then, those data would not have "made his case". So what Krugman's jobs as a percentage of population really measures is how far he has sunk into partisan politics and intellectual dishonesty.

[The Truth Squad is a group of economists who have long marveled at the writings of Paul Krugman. The Squad Reports are synopses of their discussions. ]

Posted by John Weidner at July 7, 2004 11:15 AM
Weblog by John Weidner