Alex Tabarrok reads my post on unemployment and says “nonsense.” Then he quotes Historical Statistics of the United States showing the almost-twenty-percent unemployment rate.
Rauchway knows this but wants to measure unemployment using an alternative series which shows a lower unemployment rate in 1938 (12.5%). Nothing wrong with that but there’s no reason to call people who use the official series liars.
The problem is, Tabarrok quotes the old, bicentennial edition of HSUS. And in that edition, you find Lebergott’s unemployment data, which was assembled before Michael Darby, Robert Margo, and David Weir’s work. As Tabarrok should know, and as readers of this site do know, in the current edition of HSUS, when you look for an unemployment time series, you find Weir’s.
Tabarrok says,
Rauchway thinks that counting people on work-relief as unemployed is a right-wing plot. If so, it is a right-wing plot that exists to this day because people who are on workfare, the modern version of work relief, are also counted as unemployed.
Here is what Weir says about that:
For 1931 to 1943, I accept Lebergott’s employment estimates as accurate, except for a major conceptual conflict regarding the classification of federal emergency relief workers. Darby challenged the standard classification followed by the census, the CPS, and Lebergott that counted such workers unemployed. Lebergott has argued eloquently that counting them as unemployed is a more accurate depiction of the failure of the private economy to generate unemployment. Margo has found that the labor supply behavior of relief workers shared some characteristics of both employed and unemployed workers, and suggests that at least some should probably be classified as employed. In the absence of a clear basis for distinguishing employed from unemployed relief workers, I agree with Darby that counting all relief workers as employed is more consistent with modern theoretical interpretations of unemployment, so I include them as government workers.
It’s true, HSUS should put Weir’s series, which is in its current edition, on the web instead of the old series.
But I believe all this means that I am right, and Tabarrok is wrong.
The Edge of the American West 
90 comments
November 7, 2008 at 8:05 am
Ergonomic Slingshot
So you agree that current unemployment measures should be revised downward?
November 7, 2008 at 8:07 am
eric
I don’t read that as an implication of Weir’s statement; Weir says “counting all relief workers as employed is more consistent with modern theoretical interpretations of unemployment.”
November 7, 2008 at 8:19 am
Richard
As someone who dropped studying Economics because Economists are annoying in favor of Graduate School in History, this spat is fantastic.
November 7, 2008 at 8:22 am
Ergonomic Slingshot
Wasn’t part of Tabarrok’s point that the modern theoretical interpretation of unemployment does not include people on the modern equivalent of work relief?
November 7, 2008 at 8:25 am
JPool
What is the modern equivalent of work relief?
November 7, 2008 at 8:26 am
Richard
Ergonomic-
Maybe Tabarrok’s point is belied by the fact that work relief (WPA, TVA, etc.) during the Great Depression is fundamentally different than work relief in today’s society?
November 7, 2008 at 8:38 am
Ergonomic Slingshot
Isn’t Weir’s rationale, which you seem to accept, just logically bizarre. The chain of reasoning from “shared some characteristics with employed workers” to “some should be classified as employed” to “I’m going to count them all” is just absurd on its face.
Makework stamplicking is LIKE working. The issue is to what extent it adds to the output of the economy. If relief workers are producing valuable public goods, then that’s great. That should get counted. But you need to estimate avg. productivity per relief worker to see how it compares with the productivity of employed low-skill workers. To do these, we need to estimate a value for the goods relief workers are producing, and see how many workers over how much time it takes to produce them. If the avg. productivity of relief workers is, say, 1/2 an employed low-skilled laborer, then include half of them in the employment numbers. But to argue, as Weir does, that since they’re all doing something that’s sort of like work, so let’s just count them as employed is just silly.
November 7, 2008 at 8:39 am
Ergonomic Slingshot
JPool, Workfare.
November 7, 2008 at 8:40 am
Richard
ES-
So you propose, for relief workers, measuring unemployment by measuring their productivity, but for non-relief workers, whether or not they collect a paycheck is what matters. That seems like an inconsistent standard.
November 7, 2008 at 8:46 am
politicalfootball
I don’t know what all the argument about. Famous public intellectual George Will straightened this all out in a memorable column not too long ago:
So as Will demonstrates, government action to stimulate demand is worse-than-useless.
(It’s a great column – a classic of its kind. Can there be any question that George Will is a leading light of intellectual conservatism? What this says about intellectual conservatism will be left as an exercise for y’all.)
November 7, 2008 at 8:50 am
Ergonomic Slingshot
Richard, Workers in the private labor market are not employed if they are not productive. The fact of their employment is confirmation of contribution to output. When the government gives people money for performing tasks, we have no way of knowing whether those tasks create economic value. That’s why it would be important to estimate the value of those tasks, and then estimate the efficiency of relief workers in performing them. That would give us some sense of the economic value of their labor. With labor market workers, we can just look at their wage.
November 7, 2008 at 9:04 am
politicalfootball
Richard, Workers in the private labor market are not employed if they are not productive.
ES, I’m guessing you don’t have much experience in the private labor market.
The central question is: What are we measuring with the unemployment statistic. In one of Eric’s previous posts, he proposes several possible things we might want to measure, and includes discussion of different measures. You propose this one:
The issue is to what extent it adds to the output of the economy.
But the employment rate isn’t the best way to measure that. Eric posted the GDP graf, too, and its growth seems to correlate nicely with the New Deal.
November 7, 2008 at 9:21 am
TF Smith
Was a 19-year-old in the CCC or the WPA in 1936 any less a productive laborer than a 19-year-old in the Army, Navy, Marine Corps, or Coast Guard?
November 7, 2008 at 9:48 am
washerdreyer
Yes, private firms are rational actors with perfect access to information and there are no costs, transaction or otherwise, associated with them firing workers. Also, no one spends their time at work reaading blogs and posting snarky comments to them.
November 7, 2008 at 9:54 am
silbey
The fact of their employment is confirmation of contribution to output
Should members of the military then be counted in the unemployment figures?
November 7, 2008 at 9:54 am
washerdreyer
Also, what’s logically ruled out by the statement some should be counted as workers is the possibility of counting none, not the possibility of counting all. “Some men are mortal” implies that “all men are not mortal” is false. It does not tell you the truth value of “All men are mortal.”
November 7, 2008 at 10:03 am
Colin
When I worked for a private college, man, was I efficient and productive. My paycheck had “economic value” written all over it. Then I got this job with a state school and it’s all so murky.
November 7, 2008 at 10:03 am
Ben Alpers
Slightly OT, but why is HSUS quite so extraordinarily expensive? If it cost, say, $400, I’d even consider purchasing a copy. But at $1225 (or even the low, low, low Amazon.com price of $978.09) it’s just out of the question.
Is it just an irrational prejudice on my part, or am I right in thinking that only Cambridge University Press would dream of charging this much per volume ($245) for a book? The OED, in contrast, lists for about $1200 for twenty volumes (or $60 per volume).
November 7, 2008 at 10:25 am
Michael S.
I don’t see that you’ve rebutted Alex’s main charge, which is that calling somebody a liar, simply because he uses a different measurement of unemployment, is a bit silly.
Both measurements have their uses and surely there are arguments for using each. The fact that the updated official US measurements reflect your preferred way of looking at unemployment does not mean that the other is without use. There are many ways of measuring money, inflation, etc and most economists recognize that some measurements are better suited to some problems than are other measurements.
November 7, 2008 at 10:27 am
Sam-I-am
Tabarrok seems to focus on that particular tree, and miss the wider point.
First: the recession shown in the data was the result of _tightening_ of welfare spending, in turn the result of pressure from what Conrad Black calls “economic extremists.” QED
Second: as Eric pointed out, the question of whether you should include make work as unemployment depends on what question you are asking.
a) Did it relieve suffering? YES
b) Were those people _really_ productive? Let’s see, infrastructure uniformly credited for much economic growth in the 1950s. YES
[I re-read my grandfather’s account of building roads during the depression, and I’m sure he’d have a pretty word for anyone who claimed his “make work” wasn’t productive!]
In any account, it appears Tabarrok’s political leanings have encouraged him to pick a fight the facts can’t win.
P.S. I like FDR, but I’m still leaning towards voting for Lincoln.
November 7, 2008 at 10:29 am
Richard
Michael S. wrote:
“I don’t see that you’ve rebutted Alex’s main charge, which is that calling somebody a liar, simply because he uses a different measurement of unemployment, is a bit silly.”
That’s because Alex’s point was stupid–Eric called the WSJ a liar for all the lies in the op-ed, not just for the use of a different unemployment statistic.
November 7, 2008 at 10:33 am
Ben Alpers
The sidewalks in my neighborhood were all made by the WPA and still bear “WPA 1938” (or some other year) marks on them. I’d certainly call that productive!
For those who didn’t read Eric’s original post on this subject (linked above in this post), it’s worth quoting again Lebergott’s footnote explaining his decision to exclude relief workers from the employed:
These estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930’s this concept, however, does include one large group of persons who had both work and income from work—those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930’s when persons in the labor-force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment.
If that’s not ideological special-pleading, I don’t know what is!
November 7, 2008 at 10:42 am
Alex Tabarrok
The difference between Eric and I is summed up in his statement, “I am right, and Tabarrok is wrong.” In reality, as I explained in my post there are different measures of unemployment and it is a judgment call – which may vary depending on the question asked – which one is “right.” Calling someone a liar because they use a different statistic than the one you prefer is not justifiable.
November 7, 2008 at 10:42 am
eric
calling somebody a liar, simply because he uses a different measurement of unemployment, is a bit silly.
Calling someone a liar because they use a different statistic than the one you prefer is not justifiable.
That’s not why I called him a liar, and Alex, you know that. The WSJ op-ed says,
There’s no sense in which this is not dishonest, for reason (1) below; reason (2) makes it merely indefensible, not dishonest.
(1) “As late as … remained” means the unemployment rate *stayed* high. The truth is, the unemployment rate was *again* high, after going significantly down 1933-37.
And the reasons it was significantly down 1933-37 almost certainly owe to intelligent government intervention—I would call it banking and monetary—by the Roosevelt White House. In other words, by part of the New Deal.
As to why it was *up* again in 1938, there are different stories about this, as I’m sure you know: Keynes blamed both Roosevelt’s fiscal stringency *and* his rhetorical excesses against bankers; modern econ historians (Lester Chandler, if memory serves) blame the Fed.
(2) The phrase “after almost a decade of governmental ‘pump priming,'” is wrong, too—maybe not so obviously wrong as to be dishonest, but it’s wronger than a careful economist or historian should be. As you know, I’m sure, E. Cary Brown long ago pointed out that the thing about fiscal policy in the New Deal was that it was never sufficient to have Keynesian effects. The implication of the WSJ op-ed is that *all this* pump priming didn’t work. The truth seems to be, there never was enough pump-priming to work.
November 7, 2008 at 11:09 am
dana
Richard, Workers in the private labor market are not employed if they are not productive.
Without commenting on the larger issues, I just have to say I love it when this form of assertion comes up in blog comments during the work day.
November 7, 2008 at 11:26 am
andrew
WHY OH WHY CAN’T WE HAVE A BETTER ECONOMICS PROFESSION?
November 7, 2008 at 11:57 am
Dr J
Andrew, I’m reminded of an old chestnut that was attributed to Gov. Lester Maddox when I was but a lad in Georgia (but is probably too good to be true).
When asked how the state should go about reforming its execrable prison system, he (supposedly) said, “We’ll never get any prison reform around here until we can get a higher class of prisoner.”
November 7, 2008 at 1:03 pm
MikeF
No, Tabarrok is right. If you want to quibble about which accounting method is preferable, fine. But there are valid justifications for using either one; the WSJ was not being disengenuous by picking one over the other. And the fact remains that having nearly 10% of the working-age population enrolled in government labor programs is hardly evidence of the New Deal’s success.
November 7, 2008 at 1:07 pm
ari
No, Tabarrok is right.
Are we to accept this as a simple statement of fact, despite all the evidence arrayed suggesting that he (and you) are actually wrong? Seriously, what’s going on here? We’ve got a scholar, Rauchway, saying that a data set is filled with numbers that have been cooked in a particular ideological oven. He has evidence that this is so. And nobody seems to be arguing that he, or the evidence he has arrayed, is wrong. But yet those numbers are still fine. Social science much?
Also, I can’t believe I’ve been drawn into this argument. When really, the more important point is that Lincoln pwns Roosevelt.
November 7, 2008 at 1:25 pm
silbey
But yet those numbers are still fine. Social science much?
It’s fascinating because it goes back to another issue that eric has discussed, with some vehemence: the role of the public scholar. Shlaes is essentially offering scholarly endorsement to a message that the right-wing noise machine wants to push. That message–that government intervention and regulation is bad–is particularly critical at the moment, because the economy going down to the crapper. So the WSJ, in its role as part of that noise-machine, condenses and propagates the scholarly endorsement in the op-ed. Things like the actual truth and accuracy of Shlaes’ argument are essentially irrelevant to the WSJ. What they want is the signage of the scholarly endorsement; anyone attacking the value of that simply has to be shouted into silence or discredited. Thus Tabarrok jumps on Eric, and McArdle (and others) appreciatively laud the jumpage.
That’s the challenge that Eric highlighted a while back in discussing public scholars. Their scholarship has to fit into the partisan frame and cannot deviate.
We have always been at war with Eurasia.
(Next up, all of those Republican legal scholars who argued so forcefully for untrammeled executive power pirouette on a dime to argue against it)
November 7, 2008 at 1:27 pm
politicalfootball
The implication of the WSJ op-ed is that *all this* pump priming didn’t work. The truth seems to be, there never was enough pump-priming to work.
Or, as George Will put it:
Of course, George uses this in support of Shlaes’ argument, but I guess that’s the sort of insight you need when you’re a great public intellectual with a syndicated column.
November 7, 2008 at 1:31 pm
blackadderiv
Let me see if I understand this. The original op ed said that unemployment in 1938 was around 20%.
Prof. Rauchway responds by saying that this is a lie and right-wing distortion, because if you don’t count people on work relief as unemployed, unemployment was only around 12%.
Prof. Tabarrok replies that there are different ways to calculate unemployment, and that one shouldn’t call people liars for using one method rather than another.
Prof. Rauchway retorts by quoting a Prof. Weir, who says: there are different ways to measure unemployment, and in the absence of a compelling reason not to I’m going to count people on work relief as employed.
Why Prof. Rauchway believes this validates his position rather than Prof. Tabarrok’s is beyond me.
November 7, 2008 at 1:36 pm
Richard
blackadderiv-
You miss the point where Rauchway points out that Tabarrok is using old, inaccurate data.
November 7, 2008 at 1:37 pm
politicalfootball
Things like the actual truth and accuracy of Shlaes’ argument are essentially irrelevant to the WSJ.
There’s a lovely, slender philosophical volume that takes up this issue in a novel way. It’s called On Bullshit.
The author distinguishes bullshit from lying by arguing that bullshit involves complete disregard for the truth, and is therefore even less respectful of the truth than outright lying is.
November 7, 2008 at 1:39 pm
silbey
anyone attacking the value of that simply has to be shouted into silence or discredited.
I should have added: commenters in the post threads will repeat points refuted earlier again and again.
November 7, 2008 at 1:40 pm
washerdreyer
Let me see if I understand this.
Prof. Rauchway responds by saying that this is a lie and right-wing distortion
You don’t understand this. He said people should stop lying about Roosevelt’s record (it was the title of the post) and in that post he gave multiple examples of things in the article which were stated as true about Roosevelt’s record and weren’t true. The argument about the proper measurement of unemployment doesn’t change this.
and that one shouldn’t call people liars for using one method rather than another.
Prof. Tabarrok failed to note that this didn’t happen, and I type this as someone who has read pretty much every marginal revolution post since late 2004.
Why Prof. Rauchway believes this validates his position rather than Prof. Tabarrok’s is beyond me.
Eric was noting that if anyone is using the official series, it’s him.
November 7, 2008 at 1:45 pm
ari
blackadderiv, do you really not get it? Or are you being disingenuous? I’m guessing the latter. But in case it’s the former, here goes:
1) The numbers that Shlaes used are cooked. Rauchway has demonstrated this to be true.
2) Rauchway also notes that there are other numbers available that haven’t been cooked.
3) To rely upon the cooked numbers, then, as Shlaes did, is either an error or evidence that her argument is ideologically motivated. In case there was any doubt, Shlaes, in her worse-than-worthless book, notes that she chose to use the cooked numbers rather than the numbers untainted by ideology.
4) The WSJ chose to rely on Shlaes to construct its attack on the New Deal.
5) Tabarrok then leapt to the WSJ‘s defense, noting, among his many arguments, that it’s okay to calculate unemployment in a variety of ways.
To which I’d say, really? It’s okay even if your calculation relies on cooked numbers? Let’s hope he’s not teaching the methods class in his department.
November 7, 2008 at 2:12 pm
When is it lying? « The Edge of the American West
[…] is wrong about describing the data he cites as “official” and mine as “alternative”. […]
November 7, 2008 at 2:56 pm
MrTimbo
Also — on the subject of adderiv’s understanding — the charge of dishonesty doesn’t rest on which numbers you use. Rauchway’s argument with respect to this particular part of the overall column is that the word “remains” contains the falsehood. Even with the data in the WSJ piece, the unemployment did not “remain” high, it rose to a peak in 1938 that was preceded and followed by a decline.
November 7, 2008 at 3:04 pm
blackadderiv
blackadderiv, do you really not get it? Or are you being disingenuous? I’m guessing the latter.
Well, obviously I’m being disingenuous. I mean, I claim to disagree with you, after all.
There’s nothing either “cooked” or “inaccurate” about the Lebergott series. They are simply calculated in a different way than Weir’s series. If Prof. Rauchway’s argument is that Lebergott’s series was ideologically motivated, then his quotation of Weir (who calls Lebergott’s explanation on the point “eloquent[]”) is not really supportive).
November 7, 2008 at 3:06 pm
urbino
Thanks, Herr Timbo. I was waiting for somebody to point that out.
November 7, 2008 at 3:16 pm
ari
Well, obviously I’m being disingenuous.
You see, I thought so. And let’s not worry about whether I was right. Because I’ve carefully selected data, albeit qualitative, to suit my preconceptions.
November 7, 2008 at 3:18 pm
ari
Also, I’d be grateful if you’d read Eric’s various posts before you weigh in on the ideological valence of the Lebergott series.
November 7, 2008 at 5:45 pm
Stop lying about Roosevelt’s record. « The Edge of the American West
[…] I suppose you’ve noticed that Tabarrok is wrong. […]
November 7, 2008 at 9:16 pm
John
Rauchway is wrong about something else, the HSUS he cites. the millennial edition, is not an official publication of the Bureau of the Census – it’s a book published by Cambridge University Press. No doubt it is a good book but Tabarrok is correct that the series he cites is the official series.
November 7, 2008 at 10:03 pm
silbey
Rauchway is wrong about something else the millennial edition, is not an official publication of the Bureau of the Census – it’s a book published by Cambridge University Press
Oh God. (falls, slumped over and bleeding from the nose). Have you ever heard of ‘outsourcing’?
Holy God, make the trolls stop!??
November 8, 2008 at 6:33 pm
matt w
Shlaes is essentially offering scholarly endorsement to a message that the right-wing noise machine wants to push.
And an interesting aspect of this is that Shlaes is not a scholar. I mean, I can’t see any scholarly background in her bio; she’s worked as a journalist, and that may be dignifying her work on the WSJ page overmuch. I guess there’s that article in Tax Notes. But really, Shlaes seems to be a part of the arm of the right-wing noise machine that’s tasked with sounding scholarly.
November 8, 2008 at 7:02 pm
Rich Puchalsky
Hey, silbey, since everyone else is pushing their favorite hobby-horse — weren’t you one of the people saying that I was being too harsh on the wingnuts? That it was unfair to dismiss them all sight unseen; that we had to wait and let them make their individual arguments, that we shouldn’t be mean to them, etc. etc.? How do you feel about that now, huh? (please play ‘laughs maniacally’ soundtrack here)
November 8, 2008 at 7:09 pm
Ben Alpers
(please play ‘laughs maniacally’ soundtrack here)
Would you settle for a Wilhelm scream?
November 8, 2008 at 7:27 pm
silbey
Hey, silbey, since everyone else is pushing their favorite hobby-horse — weren’t you one of the people saying that I was being too harsh on the wingnuts?
Hey, Rich, I was one of the people saying that you didn’t have to turn *every* conversation into a hate-fest for the wingnuts. Conversations that the wingnuts turn into a hate-feat all by themselves are fair game.
Think about it and write a 2 page paper analyzing the difference.
November 9, 2008 at 1:10 am
Kim
Does Rauchway or Weir give any substantive explanation for *why* their methodology is preferred? Tabarrrok offers multiple reasons on behalf of his preference, including this one:
“Moreover, it’s quite reasonable to count people on work-relief as unemployed. Notice that if we counted people on work-relief as employed then eliminating unemployment would be very easy – just require everyone on any kind of unemployment relief to lick stamps. Of course if we made this change, politicians would immediately conspire to hide as much unemployment as possible behind the fig leaf of workfare/work-relief.”
Does this mean Rauchway, Weir, Krugman, et al. are in favor of 100 percent employment efforts? Or they just think methodology should tilt in a direction that depicts a Franco’s Spain more employment-healthy than, say, a Clinton’s America?
November 9, 2008 at 6:48 am
matt w
Tabarrok says “there is no right-wing plot to raise unemployment rates during the New Deal,” yet the defenders of Lebergott’s statistics have returned to Lebergott’s ridiculous comparison of work-relief to fascism and communism.
Anyway, there’s an answer at the link I just supplied. Besides, Tabarrok’s substantial reasons tend to be circular or, as in this case, irrelevant. “If we count things this way, then it would be really easy to game the system” is an incredibly stupid argument against using a statistic for retrospective evaluation. Did Eric travel back in time and convince FDR to institute the WPA so that, later, Eric would be able to argue that the New Deal had succeeded using cooked numbers?
Frankly, it’s also a pretty stupid argument going forward. Cooking statistics isn’t going to affect the way people vote on the economy. Obama didn’t win because people opened the paper and saw that the unemployment rate is high, it didn’t save McCain’s bacon that a recession hasn’t officially been declared yet, and Roosevelt didn’t win overwhelming reelection because of the statistics people were using. The economy has real direct effects on people’s lives, and that’s going to affect how they vote.
Now, people might wind up voting for makework programs when they keep them from starving to death, but that’s not a problem, is it?
November 9, 2008 at 6:50 am
Richard
I don’t see how people who were placed in government programs
1) that were specifically created to take up otherwise unemployed people,
2) that only took up otherwise unemployed people, and
3) were immediately abolished when when a true national emergency (that would be WWII) required everyone’s labor force participation (including women and minorities whose participation had been previously been discouraged)
can be counted as employed.
Except the WPA mural painters, photographers, writers, and theatre actors-directors-writers, who in reality were employed as government propagandists.
As to citing a new interpretation of the data, I suspect the change between the bicentennial edition and millennial edition of the HSUS had more to do with some busy-bee Democratic academics trying to keep the shine on FDR’s record than discovering a new and better interpretation of the facts.
November 9, 2008 at 6:53 am
matt w
Also, has Tabarrok ever argued that prisoners should be counted as unemployed? Because it seems to me that this makes it easy to eliminate unemployment — pass a vagrancy law — and in fact that politicians have been conspiring to drive the unemployment rate down by imprisoning more people than any other country. Tabarrok should look into that.
November 9, 2008 at 6:55 am
matt w
Richard, you guys might be more convincing if you could finish a single post without devolving into spittle-flecked ideology-mongering.
November 9, 2008 at 7:33 am
silbey
Does Rauchway or Weir give any substantive explanation for *why* their methodology is preferred?
What, you mean, except for the *entire* post dedicated to explaining why he thinks that methodology is preferred? Except for that one? No. He just sprinkled Magical Liberal Pixie Dust(tm) on it.
November 9, 2008 at 8:13 am
dana
What’s really strange about this discussion is that people are acting like there’s a Platonic form of Unemployment statistics. Like, they normally only count those that are employed by the private sector, and those whose employment is meaningful and creates wealth. (I think the latter might be new to this internet argument.) But there’s all sorts of considerations that compilers of these statistics have to decide: we don’t count stay-at-home moms as part of the unemployment rate, or people who have stopped looking for work, or children, or prisoners, or college students. We only count people who are part of the labor force as eligible to be employed.
And since we’re not after Platonic forms of Unemployment statistics, there have to be judgment calls. This doesn’t mean that anyone’s interpretation goes: Eric’s using the interpretation that’s recognized by most scholars (and Weir gives good reasons); the WSJ relies on work that uses out-of-date methodology that just so happens to help them make an argument. And then they go further and ignore the larger trends in favor of one year where by tightening spending, the economy worsened.
Hey, but let us be scholars! What are the arguments here for adopting the older statistics instead of using the current ones? Curiously, most of them seem to revolve around the idea that the work people were performing didn’t count because it wasn’t for the private sector. But that doesn’t seem right — surely all the Senators and Congresscritters don’t count as unemployed. So then maybe the problem is that it wasn’t *productive* work. That seems wrong in plenty of cases — even Reagan praised some of the results of the various programs — but even if it were correct, that’s a huge shift in goalposts. We have other ways to measure GDP (it seems to go up, too), and we don’t normally only count people as working if they contribute a lot to the economy. Getting paid usually suffices.
One could make that case, but actually having read the various pieces and the debates, it seems that this isn’t really an argument that only the producers of wealth should be counted as unemployed, but that Tabarrok made a mistake because he didn’t know about the latest version of HSUS (because it’s not online). And that’s fine, but there’s no reason to go around constructing arguments that actually, he chose to use the wrong dataset.
November 9, 2008 at 8:43 am
Michael Turner
Treating ideological spittle-flecks as coherent for the sake of argument:
Reality test: to a good first approximation, an itemization of spending on WPA would also suggest the rough proportions of classes of occupations. So how did WPA spending break down?
Wikipedia on WPA:
These people were working, they were mostly creating consumable value or adding consumable value to something or other, and they being were paid for it, often gaining marketable skills in the process, thus building latent consumable value. You could call it underemployment, and in both hours (limited to 30 per week) and matching of work to available skills (catch as catch can), that’s probably true enough. You could call it inefficient employment, and I’m sure with some justice: “We Poke Along” had some truth to it.
One thing you can’t really call it, though, is unemployment. If you drive your car across a bridge, or walk into a public library, can you tell (without looking at some dedication plaque) whether it was built with WPA workers or non-WPA workers? If not, what made the WPA workers “unemployed”, but the non-WPA workers “employed”?
Gee, maybe we should count all government workers as unemployed? Why not? It makes about as much sense. Just sprinkle Magical Libertarian Pixie Dust(tm) on the concept, and you’re set!
Let’s make a deal first, though. Let’s agree on this: after every economic bubble that, through the Magic of the Market, naturally forms and pops, we will measure how many people were employed doing stuff that didn’t actually meet any normal market demand, and retroactively categorize them as having been unemployed during the bubble. After all, wasn’t that spending also “wasteful” and “inefficient”?
November 9, 2008 at 8:45 am
Kim
Silbey,
Can you actually point me to the *why* in Rauchway’s post? Krugman’s post? All I’m reading here is the assertion, over and over again, that Weir’s methodology is preferred and any other methodology is “cooked.”
matt w,
I was under the impression unemployment rates are intended to tell us something substantive about the reality of employment at any given place and any given time. If someone is being “employed” by the government as a traffic coordinator at an intersection that clearly does not need traffic coordination, then I have trouble putting this “employment” in the same category as market-driven forms of employment. The reason most economists value employment isn’t merely because any given individual is getting paid to do something. It’s also because there’s an actual demand for the work being done, thus adding to the overall efficiency of the economy. I have no problem acknowledging, somewhere in the methodology, that x percentage of population was on work relief (as we already do for other forms of non-market-driven employment), but to make no distinction here strikes me as not only sloppy methodology, but unhelpful.
None of this concerns Rauchway’s/Krugman’s other objections, particularly the one about using 1938 as a reference point, or the lack in actual “pump-priming” that year, both of which strike me as more reasonable retorts.
November 9, 2008 at 8:58 am
dana
. If someone is being “employed” by the government as a traffic coordinator at an intersection that clearly does not need traffic coordination, then I have trouble putting this “employment” in the same category as market-driven forms of employment. The reason most economists value employment isn’t merely because any given individual is getting paid to do something. It’s also because there’s an actual demand for the work being done, thus adding to the overall efficiency of the economy.
Interestingly enough, Weir makes this argument in the blockquote you haven’t managed to read (the third one in this post, by the way) from the other direction: without a principled way to distinguish productive government employment from unproductive government employment, Weir figures that counting the workers as employed (because they had paychecks) is more in line with how we calculate those figures now.
Of course that’s not the only reason economists are interested in unemployment, but that’s why the unemployment rate isn’t the only statistic used to evaluate the performance of an economy.
November 9, 2008 at 9:02 am
Rich Puchalsky
I guess that Kim was too young to have lived through the Internet bubble. The overall efficiency of the economy increased so much due to all those privately employed workers! The economy truly needed all those people to do customer service for soon-to-be-bankrupt firms that sold dollars for less than a dollar. Yes, if Kim had been around during that distant period in history, he or she would have even better arguments for why public employment is make-work for lazy slackers while private employment, guided by the invisible hand of the market, adds to our efficiency.
November 9, 2008 at 9:10 am
Kim
Ok, so this is why I try to stay off internet comment threads (even academic ones). So much childishness! Sheesh.
I look forward to discussing this subject, intelligently, with others who happen to disagree, in person, the old-fashioned way. At least then, we’ll be accountable for what we say.
November 9, 2008 at 9:12 am
Ben Alpers
Rich,
You still don’t get it. The bubble only burst due to government regulation. Otherwise, what with perfect information, no externalities, and rational expectations, market corrections would have been instantaneous and everyone would have gotten rich (other than the undeserving poor and the congenitally unfit). QED [/snark]
November 9, 2008 at 9:14 am
Rich Puchalsky
“Hey, Rich, I was one of the people saying that you didn’t have to turn *every* conversation into a hate-fest for the wingnuts. Conversations that the wingnuts turn into a hate-feat all by themselves are fair game.”
No, actually, I was saying true things. It’s not a hate-fest if you call a racist a racist, or a liar a liar — it’s just accurate, and it’s a good thing to bring up in contexts in which people are starting to admire said liar. I’m also not really impressed with the idea that you just have to follow along, that it’s out of your control how you respond. When I make fun of wingnuts, it’s because they’ve already chosen to believe in an evil, corrupt, inaccurate, damaging, and ridiculous system of belief. Doing so because they did it first is kind of childish.
November 9, 2008 at 9:15 am
matt w
And, as silbey says, there are lots of people employed in the private sector who do not add to the overall efficiency of the economy. If we’re going to try to use employment figures as a measure of contribution to the efficiency of the economy, then we have to go back over the last several years and reclassify many people in the financial service industry as unemployed. Actually, we should probably reclassify them as holding a negative number of jobs.
Or we could use measures of the efficiency of the economy to measure the efficiency of the economy, and we could use measures of unemployment to measure how many people have jobs. Weir (in, as dana says, the third blockquote) talks about how the labor supply behavior of workers on relief resembles and differs from the behavior of unemployed workers and private-sector workers; isn’t that an argument rather than an assertion about classifying those workers? It’s certainly more than anything you’ve supplied.
And, if you’re going to make your stand on “Only productive workers count,” what reason does that give us to count all the relief workers as unemployed? (That’s what you need, BTW, since Eric’s run the numbers if we take the relief workers out of the labor pool entirely, and they don’t look good for your side.) Do you have evidence that no relief workers contributed productively to the efficiency of the economy? Then where did all those bridges come from? Or all those bridges unnecessary? More unnecessary than the access road to the unbuilt Bridge to Nowhere? Do people working on that access road actually count as unemployed? Do you have a plan for doing the hard work of distinguishing the productive relief workers from the unproductive relief workers? If not, what’s the analytical usefulness of your tool?
November 9, 2008 at 9:16 am
ari
Oddly, Kim, some might say that there’s greater accountability online, where the comments are archived in perpetuity, and where it’s harder for someone to weasel out of their previous assertions (though that hasn’t stopped Tabarrok, who really is coming off as something of an intellectual coward in this whole exchange). But again, as with so many other commenters in these threads, you seem unwilling to do the reading. And given that the title of this post is, “Please read before posting,” I suppose you at least get points for irony.
November 9, 2008 at 9:16 am
Rich Puchalsky
“At least then, we’ll be accountable for what we say.”
So says the person with no last name.
November 9, 2008 at 9:20 am
matt w
So much childishness! Sheesh.
You know, a lot of people have responded to you in good faith, at fair length, without any personal invective; while you started out by invoking Franco’s Spain and insisted that our side was only making assertions while ignoring the arguments we’d made, and your compatriots ascribed the changes in the calculations to Democratic partisans trying to save Roosevelt’s reputation (presumably traveling in time to foresee exactly this argument). Now, unable to provide a substantive rebuttal, you take your ball and go home. Good riddance to bad rubbish.
November 9, 2008 at 9:24 am
dana
What’s the phrase? Can lead a horse to water but can’t make him drink? What’s the online equivalent? Can let them browse to your page but can’t make them read the post?
November 9, 2008 at 9:37 am
kid bitzer
that might be the phrase. or it might be ‘fuck you and the link you rode in on.’
November 9, 2008 at 9:53 am
Tiny Hermaphrodite
While kid bitzer’s comment is great (oh I really liked your meditation on dead fishes in the mail btw) you can’t go wrong with the classics .
November 9, 2008 at 9:54 am
grackle
Harsh, kid, harsh.
November 9, 2008 at 10:13 am
kid bitzer
i wasn’t always this grumpy.
it only started when obama refused to schedule those town hall meetings.
November 9, 2008 at 11:11 am
Colin
Well, the underlying idea is that everything gummint does must be wrong, and is by its nature diverting resources that could be used privately. If people want to state that and measure accordingly — say that they are *only* interested in private-sector employment — then fine.
There’s a disjunction between neoclassical polyannaishness (all private firms are efficient all the time) and a more robustly competitive view in which entrepreneurs eat the lunch of laggards and vie for monopolistic gains. On that view there’s plenty of inefficiency at any moment in the private sector, and that’s fine. But you then need more thoughtful arguments about government. Schumpeter explained all this 60 years ago, but Tabarrok’s fanboys don’t read him either.
November 9, 2008 at 11:42 am
silbey
No, actually, I was saying true things. It’s not a hate-fest if you call a racist a racist, or a liar a liar
I’ll stay with my summary, thanks.
November 9, 2008 at 11:46 am
silbey
Can you actually point me to the *why* in Rauchway’s post?
Why, yes, Kim, I can. In the original post, Eric linked to a larger post on the New Deal, which included this discussion:
“One could say a few things about that.
(1) Wow, that’s a lot of ideology to cram into a single data series;
(2) if you’re using the unemployment data to answer the question, “did the New Deal help people,” then this data set is going to give you the wrong answer, because it’s going to show people suffering unemployment who in real life had a job, as Lebergott says;
(3) but what if people in emergency work acted like the unemployed—i.e., they were looking for a job and
(4) what about the “real” economy—the private industrial economy—how did it do?
Now, as it happens it looks like the answer to (3) is, mainly they didn’t—people who had an emergency job acted like they had a job (perhaps because they had a job) and probably shouldn’t count as unemployed.4″
Note (3) and the followup.”
You may disagree with it, or find it arguable, but it’s hardly not explaining why Eric’s reached that position, with the subtle insinuation that it’s just for partisan reasons.
November 9, 2008 at 2:09 pm
Walt
I have a question. If you worked for the WPA, were you supposed to keep looking for a job? Was it like being on unemployment insurance?
November 10, 2008 at 1:09 am
David Nieporent
One of the statistical measures by which law schools are judged is by the percent of graduates who are employed within X months after graduation. So what many law schools do is offer temporary jobs to unemployed graduates so that they can claim more of their graduates are employed, thus boosting the schools’ rankings. Technically, those students are employed — but what does counting them as such actually tell us about the ability of the school to produce employable graduates? Not much.
Similarly, there’s a technical definition in which people on work relief are employed — but it doesn’t tell us much about the state of the economy — about the ability of the economy to generate jobs — to count them as such, does it?
If the issue is the behavior of those on work relief, then perhaps research shows that they behaved like employed people and it makes sense to treat them as such. But that wasn’t the context for which the topic was being raised.
(Some people argue, “Well, they did some productive things, such as build bridges.” But the very fact that these were temporary emergency relief programs suggests that on the whole, people didn’t value their productivity. Otherwise, why not keep employing people to do these things permanently?)
November 10, 2008 at 5:31 am
matt w
But the very fact that these were temporary emergency relief programs suggests that on the whole, people didn’t value their productivity. Otherwise, why not keep employing people to do these things permanently?
Interesting lack of a subject in the last sentence here. The question is “Why didn’t the government keep employing people to do these things permanently?” And, like you I’m no scholar of the era, but I’d guess the answer might be that a permanent government takeover of a large part of the economy wasn’t considered desirable. You don’t have to make a priori assumptions about productivity in order to see why FDR might not have wanted to institute actual socialism.
As for why private employers didn’t want to employ people to do these things permanently, I believe that’s the whole point behind a recession — private employers weren’t in a position to employ people even to do productive things.
But really the productivity thing is a total red herring. If you want to measure the productivity of the economy, there are statistics about that. Unemployment statistics measure who’s working. Both of these statistics tell us that FDR’s policies did a lot to lift the economy out of the hole it was in when he took office, even though things were still in a bad way, because the hole was so deep.
November 10, 2008 at 6:22 am
Michael Turner
It’s been said before, above (or somewhere near), but it bears repeating: it’s fine to have various measures of the employment situation. And in fact we do. When many or most conservatives/libertarians/libcons were saying all these recession warning signs were just crazy talk, look at headline unemployment, Paul Krugman dragged out U6, a measure of unemployment and underemployment to show that, yes, we really were in trouble.
The problem is, this still doesn’t stop the delusional: PK gets called a liar (comment 25) for calling it unemployment, when PK clearly says it’s both unemployment and underemployment.
November 10, 2008 at 1:33 pm
Diversity
Sometimes old age does add perspective.
In the year June 1940 to June 1941 I was in a relatively prosperous part of Massachusetts. Everyone regarded the Depression as being in the past, but equally there was a consciousness of a lot of unemployment. I remember adults grumbling that the WIA could not be closed down yet because of the unemployment.
I reckon that if people who liked and did not like FDR’s policies agreed at the time that the policies had cured the Depression (it was capitalised in everyone’s mind), but left us with high unemployment, then that was probably what was going on.
There are, of course, a range of measures of labour unemployment. They share common characteristics: all of them are pretty rough round the edges and not fully consistent with themselves over time. But they are far better than our guesses at the degree of unemployment and/or underemployment of capital.
November 10, 2008 at 1:37 pm
eric
Thanks, Diversity. I was just this morning listening to some of the voices from the Great Depression recorded by Studs Terkel—it’s always excellent to have first-hand testimony.
November 10, 2008 at 1:41 pm
David Nieporent
Matt, you write, “Unemployment statistics measure who’s working.” But obviously that’s too simplistic; if they really were just measuring “who’s working,” then we wouldn’t have the concept of the labor force. Whether you’re retired, 12 years old, a stay-at-home-mom, a full-time college student, discouraged, disabled, etc., you’d be counted as unemployed. But while statistics as to people in these categories certainly exist, _nobody_ cites all of them when discussing the unemployment rate.
Why? Because what unemployment statistics are _really_ intended to measure is the ability of the economy to generate jobs, not just the raw number of people working or not working. Since (at least some) stay-at-home-parents are unemployed by choice rather than because of the state of the economy, it doesn’t tell you anything useful to count them among the ranks of the unemployed when calculating the unemployment rate.
You write: “Both of these statistics tell us that FDR’s policies did a lot to lift the economy out of the hole it was in when he took office, even though things were still in a bad way, because the hole was so deep.”
But — even etting aside the post hoc, propter hoc fallacy inherent in your comment — those statistics don’t tell us that. Just as when a law school employs graduates temporarily its employment figures don’t tell us how good the school is at making its graduates employable, when the government creates temporary make-work jobs, the unemployment statistics don’t tell us whether the economy was being lifted out of its hole. Now, I don’t suggest that FDR was trying to “game” the statistics in the same way the law schools are; he was trying to deal with the effects of unemployment rather than trying to make the statistics look superficially better. But that doesn’t change the fact that the statistics really _are_ misleading.
November 10, 2008 at 1:46 pm
Vance
Because what unemployment statistics are _really_ intended to measure is the ability of the economy to generate jobs, not just the raw number of people working or not working.
Really? Why do you say this? And why is “intent” relevant?
November 10, 2008 at 2:35 pm
matt w
the unemployment statistics don’t tell us whether the economy was being lifted out of its hole.
I said “both of these statistics.” GDP tells the exact same story. Yes, if you declare that a certain measure of unemployment is the One True Measure of economic health, rig it so as to make it look as bad as possible for Roosevelt, and cherry-pick your dates, you can tell a story on which the New Deal wasn’t effective, but isn’t that an awful lot of effort?
And if you want to say post hoc ergo propter hoc — well, maybe the recovery was just a coincidence. So if Roosevelt’s policies didn’t affect the recovery, thank heavens he did things that ameliorated people’s plights, instead of letting them starve to death the way our original Liberty League commenter wanted.
November 16, 2008 at 2:41 pm
“Deliberate misrepresentation of the facts.” « The Edge of the American West
[…] 1, 2, 3, 4, […]
November 16, 2008 at 2:43 pm
Woodshed? Spanked? Sez you. « The Edge of the American West
[…] truth squadding | by dana Well, now, isn’t this interesting. Not that Eric really needed the […]
January 21, 2009 at 4:25 pm
Weftentignhut
Nothing seems to be easier than seeing someone whom you can help but not helping.
I suggest we start giving it a try. Give love to the ones that need it.
God will appreciate it.
January 28, 2009 at 2:36 pm
Jenbluenow
My friend Christy sent me a link to a movie about radical muslims in America. These guys are absolutely nuts…
they want to take over our country.
http://www_thethirdjihad3_tk
January 28, 2009 at 4:30 pm
silbey
Because what unemployment statistics are _really_ intended to measure is the ability of the economy to generate jobs, not just the raw number of people working or not working.
Alert! I have a false dichotomy in aisle 5! Clean-up needed!
(for the humor impaired: I suspect that unemployment is *neither* of those things, thank you)