Saturday, December 3, 2016

The Media and the Economy

In the two hours that President-elect Donald J. Trump spent flying to Indiana on Thursday to boast that he saved 1,000 jobs, about 6,000 private-sector jobs in the United States were probably destroyed.

It’s a surprising statistic — one that speaks to the constant state of change in the labor market. My calculation is based on government data that shows that every three months roughly 6.7 million private-sector jobs are destroyed, which in an expanding labor market is offset by the creation of nearly 7.2 million jobs.

Over a full presidential term, more than 100 million jobs will be destroyed. Mr. Trump can’t expect to stanch much of that flow.
Since 2010, 302,000 new jobs have been added in Indiana.

I think that understanding an economy of 150 million jobs is a task for which both our minds and our media are totally unprepared. This drove me crazy during the 1992 election. TV news had decided that the recession was selling, and night after night the first item would be, "Today in Indiana another factory closed, eliminating 250 jobs. . . ." I had to stop watching the news altogether because it made me so mad. I think the drumbeat of bad news about what was really a moderate recession did a lot to elect Bill Clinton and create Ross Perot. It also scared people needlessly; I remember chatting with a 20-year-old clerk in a grocery store who said she was surprised to see so much business at Christmas because "everybody's getting laid off and nobody's got any money" – this when unemployment in Maryland was about 6 percent. It would have been ludicrous if she hadn't seemed so distressed.

Seeing the whole picture of a huge economy requires a real mental effort, and it requires looking beyond your own surroundings to other parts of the country and other kinds of people. This can only be done statistically, using weak parts of our brains that are easily overwhelmed by compelling stories and images. We typically understand big, complex phenomena mainly through symbols. So that is what the media gives us, usually in a very misleading way.

Wrangling firms like Carrier may work out very well for the President politically, since most of us think in symbols and 1000 jobs saved may turn out to be a potent one. But economically, it is a waste of time. Or worse; several economists have written essays recently arguing that putting pressure on individual firms over their business decisions is a terrible way to run an economy. If Trump wants to make a long-term difference he will have to change the calculus in a deeper way, for example by big tariffs. But the economists also think that would be a long-term disaster, more likely to spark a trade war that hurts everyone than to help American workers.

My hope is that the president-elect will stick with his roots in showmanship and continue to emphasize the symbolic, rather than really trying to overhaul the economy. Because I don't think anyone understands the world economy well enough to know what changes would really help ordinary people enmeshed in a global system, and I am certain that Trump does not.

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