A Good Joke, Circa 2009: Unemployment Rate Predictions.

A Good Joke, Circa 2009: Unemployment Rate Predictions.

I stumbled across this humorous relic from 2009, a year overflowing with Reaganesque “Morning in America” fuzziness from the recent election of Barack Obama. Obama’s top economic court jesters, Christina Romer and Jared Bernstein, released this chart to sell the newfangled legislation of the day, the “American Recovery and Reinvestment Act” (ARAA). According to Romer and Bernstein, the ARAA simply had to be passed, lest unemployment reach unnecessarily high levels. They released this straightforward chart to support their theory:


Seemed simple enough; with the ARAA, unemployment would be capped at 8%, and would decrease much more quickly.

Four years go by; here we are in 2013. You may wonder how this prediction panned out. Feast your eyes on the hilarious chart below.

The ARAA was passed into effect. The ARAA, we were told, was going to keep unemployment under control. Not only were Romer and Bernstein wrong about the level which unemployment would reach under the ARAA, but conditions became even worse than their without-plan prediction.

According to Romer and Bernstein, we should already be sitting at an unemployment level near 5%. Needless to say, they were quite off; recent unemployment stats released by the Department of Labor suggest unemployment near 7%. Of course, even this is optimistic; as most have heard by now, the Labor Department does not count those who give up looking for work, or who have been unemployed for a certain amount of time. The real unemployment rate is more likely near 11%.

The ARAA was nothing more than an ill-conceived “spend-yourself-into-recovery” scheme. It was classical Keynesian baloney. The ARAA merely rewarded cash to the businesses with the most effective lobbyists. Especially rewarded were numerous “green” industries, of whom many had been enthusiastic Obama campaign contributors; they were rewarded handsomely for their efforts. Many, such as the now-infamous Solyndra, went on to declare bankruptcy shortly after.

The key lesson to take away from this? Establishment Economists are buffoons. This includes Christina Romer and Jared Bernstein. Thome’s Rule of Understanding Government #2: “Never trust economists who work for the government. “ The second an economist hops on the government payroll, their job is no longer “to provide sound and honest economic analysis”, and instead their job becomes “to tell politicians what they want to hear, and become apologists of the ruling elite to the general public.”

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