jobs report is quite disappointing

[Azazello1313]

taken for face value, I agree with his sentiment. But what he fails to mention or include is his analysis is:

 

1. The cost to pay unemployemnt benefits to the workers who have otherwise been employed by stimulus-related programs

3. The jobs saved by stimulus-related programs, preventing higher levels of unemployment.

2. the effect of the spending power those that were employed, or remained employed, have had on the economy.

3. The homes that were saved due to workers remaining employed.

 

...and so on, and so on. Had all of the above (and those items I listed were just off the top of my head) not happened, I'd think that out economy would have had just as serious issues as we are facing today, and perhaps even worse.

 

Moreover, how can the author ignore these exceptionally-important factors in his analysis?

 

he's not ignoring them at all, he is saying that when you finance debt to move money INTO exactly those projects, you take that financing away from other potential uses. the question is whether that is really productive and efficient. here is how he frames his own argument in a nutshell:

1. Bailouts and stimulus plans must be financed.

 

2. If the financing takes the form of additional government debt, the added debt displaces other uses of the funds.

 

3. Thus, stimulus plans only enhance incomes when they move resources from less productive to more productive uses.

 

you asked how government stimulus puts a strain on private sector spending, there is your answer. in any case, the big question comes down to his #3...are the projects the stimulus moves money TO more productive than the uses it would have gone to otherwise. too often, proponents of the stimulus try to view jobs created in the spending of that $800 billion as a zero-sum game, ignoring that there is another side of the coin.

[i_am_the_swammi]

They don't have the same benefit. Unemployment until recently anyway has always been viewed as temporary. Government job with the exception of census workers are rarely temporary so they would cause a continued strain on the economy long after those that were unemployed found work in the private sector. Unfortunately government rarely shrinks.

 

Agreed...but I thought sure I read somewhere that the bulk of the gov't jobs created via the stimulus (census, short-term projects, etc) had a short shelf-life, and wouldn't extend in future years? they were viewed as jobs to help us get "from here to there". The stimulus funds were not used, if I am correct, to staff agencies and projects for long-term employment. Since the stimulus funds are short term, so are the jobs they created.

 

Is there anything that shows how many of these newly-created stimulus jobs are permanent in nature? I would guess less than 15%.

 

EDIT: terrible spelling

Edited June 4, 2010 by i_am_the_swammi

[Perchoutofwater]

Agreed...but I thought sure I read somewhere that the bulk of the gov't jobs created via the stimulus (census, short-term projects, etc) had a short shelf-life, and wouldn't extend in future years? they were viewed as jobs to help us get "from here to there". The stimulus funds were not used, if I am correct, to staff agencies and projects for long-term employment. Since the stimulus funds are short term, so are the jobs they created.

 

Is there anything that shows how many of these newly-created stimulus jobs are permanent in nature? I would guess less than 15%.

 

EDIT: terrible spelling

 

I'm not sure that census workers which appears to be the largest increase of jobs are actually funded by the stimulus. If they are funded by the stimulus, I'm not sure why, as this would seem to be a regularly budgeted for item, as the government knows when it is to occur, and it was my understanding that the stimulus was a one time, well two, ok we might go for three thing to help dig us out of a one time event.

[Caveman_Nick]

I never said they were an improvement....I merely stated the hard fact that, if the goverment hadn't funded these jobs, they would have funded a similar amount in paying unemployment benefits. The cost would have relatively remained the same, and the toll on the private sector would have remained the same.

 

Which sounds better to you: jobs funded by the government, or unemployment benefits funded by the government? They both have the same net effect.

 

No, they do not. Not when the jobs become permanent. Jobs also typically pay more than unemployment, and have benefits costs, pension plans, etc.

 

Collecting unemployment is a temporary status by definition. It's also something that you are only eligible to collect if you have worked and paid into unemployment, and then how long and how much dictates what you can collect.

 

The two are nothing alike.

[TimC]

he's been hanging out with dubya.

 

Wiegie is a changed man now that George W. Bush has taught him about Bushanomics. It wouldn't surprise me if Wiegie resigns now that he realizes his retirement is being paid by stealing from poor widdle college kids that will never be able to enjoy such a life. He'll probably start a private company called Weatherman and Economists, 25% right ain't bad.

[wiegie]

he's been hanging out with dubya.

this is actually true (for one night anyway)

 

what's the rate of job growth again that the economy would have to add per month just to keep up with population growth? I remember that was something you talked about all the time during the bush administration.

about 150,000 new jobs per month if I recall correctly... we need to add a LOT more than that though over the next few years if we want to return to something close to what was normal for the past 15 or so years

 

Were they showing you first hand how not to run an Economy?

 

How was Portugal, always wanted to go there, have heard it is beautiful and that the food is pretty good.

Portugal was very nice. Food and scenery were amazing. Our conference was in the north (in Braga about 30 minutes north-east of Porto) and I didn't venture down to Lisbon, but I have heard that it is a wonderful place.

 

As for the Portuguese economy, it is definitely something to worry about. If Greece falls, it is hard to see how Portugal won't also fall. Interestingly enough, because I am the past-president of the society who hosted the conference, I was able to attend a lunch (along with 10 other people) with the Finance Minister of Portugal (he was one of our keynote speakers). I'll be honest, he didn't share any state secrets about the Portuguese economy, but it still was pretty cool to have lunch with him under armed guard.

[wiegie]

Wiegie is a changed man now that George W. Bush has taught him about Bushanomics.

You will be happy to learn that George W. openly announced on Wednesday night that in his opinion the greatest American president was Abraham Lincoln.

[Ursa Majoris]

I was at an economics conference in Portugal.

 

Right now the only place that would be more ironic for an economics conference would be Greece.

[bpwallace49]

Perch, if the health care legislation will ADD millions of people that need insurance (and therefore use health care facilities) and the boomer s are still getting older and using health care facilities . . . why is it the end of all your projects? The hospitals still have sick people right? The popuation didnt sudden all stop being sick or stop aging did they?

 

So why are hospitals canceling all your new construction? Does the fact that record numbers of people are defaulting on medical debt because they dont have jobs that would adversely affect any capital spending? Or is the sole reason that they "just dont understand" the health care bill?

 

Seriously asking, because all of your reasons to get into hospital construction are very sound, and the legislation will ADD coverage for millions. It seems counter productive for them to stop building facilities with increased demand unless they are simply looking to maximize profits and not spend any money on new construction.

[Perchoutofwater]

Perch, if the health care legislation will ADD millions of people that need insurance (and therefore use health care facilities) and the boomer s are still getting older and using health care facilities . . . why is it the end of all your projects? The hospitals still have sick people right? The popuation didnt sudden all stop being sick or stop aging did they?

 

So why are hospitals canceling all your new construction? Does the fact that record numbers of people are defaulting on medical debt because they dont have jobs that would adversely affect any capital spending? Or is the sole reason that they "just dont understand" the health care bill?

 

Seriously asking, because all of your reasons to get into hospital construction are very sound, and the legislation will ADD coverage for millions. It seems counter productive for them to stop building facilities with increased demand unless they are simply looking to maximize profits and not spend any money on new construction.

 

Part of the reason is many of them still aren't certain about what is in the bill. Part of the reason is the bill will increase the role of medicare and medicaid both of which short change the health systems in their payments. They just don't yet know how big of an impact this will have. Another reason is indicated in the link below which I posted in another thread. There are various reason, and a whole lot more uncertainty. If health care was changed incrementally and didn't discriminate against physician owned hospitals it probably would have little to no negative impact. As it is there is just way too much uncertainty as to how the bill will affect the health systems profitability and thus their ability to pay back the bonds they take out for construction.

 

Link

 

This mentions one of the projects I was going to be working on. That 50,000 square foot expansion was going to be about a $12,500,000 project, that we would have been building. That project would have paid for 1/3 of my overhead next year, and would have employed on average 50 workers for a year. I know of two other projects similar to this we were to be involved in that have been shelved because of Obamacare. Those or just projects I know about that we were either going to be involved in or had a very good chance of being involved in.

[Azazello1313]

Perch, if the health care legislation will ADD millions of people that need insurance (and therefore use health care facilities) and the boomer s are still getting older and using health care facilities . . . why is it the end of all your projects? The hospitals still have sick people right? The popuation didnt sudden all stop being sick or stop aging did they?

 

So why are hospitals canceling all your new construction?

 

man, I really think you are on to something here. let's just do some math. you have increasing demand, because of all these new people with coverage. you have contracting (or at least non-expanding) supply, because providers aren't sure new construction and new ventures can be profitable in this environment.

 

I see two possible outcomes down the road:

1) skyrocketing prices for care

2) price controls and rationing

 

edit to add: the fact that providers are NOT hurriedly ramping up supply to meet the surge in demand would seem to indicate they are betting pretty heavily on 2).

Edited June 4, 2010 by Azazello1313

[SEC=UGA]

I was able to attend a lunch (along with 10 other people) with the Finance Minister of Portugal (he was one of our keynote speakers). I'll be honest, he didn't share any state secrets about the Portuguese economy, but it still was pretty cool to have lunch with him under armed guard.

 

Did any of them Draw Down on you?

 

But seriously, sounds really cool.

[westvirginia]

You will be happy to learn that George W. openly announced on Wednesday night that in his opinion the greatest American president was Abraham Lincoln.

 

I tolja shrub was a statist trcker at heart!

[westvirginia]

man, I really think you are on to something here. let's just do some math. you have increasing demand, because of all these new people with coverage. you have contracting (or at least non-expanding) supply, because providers aren't sure new construction and new ventures can be profitable in this environment.

 

I see two possible outcomes down the road:

1) skyrocketing prices for care

2) price controls and rationing

 

He never really thinks it through to the end, does he?

[Jimmy Neutron]

Within three miles of my office there are roughly 7 retail centers (60 to 200K SF) that are dark and in different stages of completeness. There is no sign that this side of the industry is coming back in a major way for a couple of years. There will be projects here and there, as certain markets rebound or have remained stable (MD, VA, DC area, Huntsville, Raliegh is pretty good, parts of NY state, etc...), but overall it is going to be a rough ride.

 

My own observations and forecast are similar.

 

man, I really think you are on to something here. let's just do some math. you have increasing demand, because of all these new people with coverage. you have contracting (or at least non-expanding) supply, because providers aren't sure new construction and new ventures can be profitable in this environment.

 

I see two possible outcomes down the road:

1) skyrocketing prices for care

2) price controls and rationing

 

edit to add: the fact that providers are NOT hurriedly ramping up supply to meet the surge in demand would seem to indicate they are betting pretty heavily on 2).

 

Exactly.

[bpwallace49]

man, I really think you are on to something here. let's just do some math. you have increasing demand, because of all these new people with coverage. you have contracting (or at least non-expanding) supply, because providers aren't sure new construction and new ventures can be profitable in this environment.

 

I see two possible outcomes down the road:

1) skyrocketing prices for care

2) price controls and rationing

 

edit to add: the fact that providers are NOT hurriedly ramping up supply to meet the surge in demand would seem to indicate they are betting pretty heavily on 2).

 

Serious question Az.

 

If demand for services are increasing with millions of new customers, and our health care system profit is based on volume of procedures, why do they think they wont be profitable? Your math says.

 

Increased customers and business = LESS profit?

 

But doesnt that solely apply to medical providers that focus their business on Medicare recipients only?

[westvirginia]

Serious question Az.

 

If demand for services are increasing with millions of new customers, and our health care system profit is based on volume of procedures, why do they think they wont be profitable? Your math says.

 

Increased customers and business = LESS profit?

 

But doesnt that solely apply to medical providers that focus their business on Medicare recipients only?

 

Oh, your serious?

 

You'd be correct if the market were free. If the government sets costs at a point where they aren't break-even or better, no one here will perform them. Only your hated, evil, putrid, disgusting, evil, nasty, callous, self-centered rich will be able to jet off to countries with more freedoms and get those procedures.

 

Think of it this way - if it costs you $3/bale for your pine straw but it's only worth $2/bale to you, you won't provide pine straw on your golf course, will you?

[bpwallace49]

Oh, your serious?

 

You'd be correct if the market were free. If the government sets costs at a point where they aren't break-even or better, no one here will perform them. Only your hated, evil, putrid, disgusting, evil, nasty, callous, self-centered rich will be able to jet off to countries with more freedoms and get those procedures.

 

Think of it this way - if it costs you $3/bale for your pine straw but it's only worth $2/bale to you, you won't provide pine straw on your golf course, will you?

 

Then dont base you business solely around gubmnet supplemented patients? Isnt that the point of the "free" market?

 

Sooo the people that "cant make a profit" have been doing so . . off the gubmnet insured people for quite some time . . . and now are pissed that the gubmnet wont subsidize their business at much as they would like . . is that about right WV? Maybe you missed the memo . . . there ISNT a single-payer system (yet). So what is the problem with competing? The gubmnet sets costs for medicare/medicaid. I guess it sucks if you have structured your business around gubmnet welfare plans, but wasnt that their CHOICE to do so?

 

I just find it curious that the people that are railing against the gubmnet and not expanding their hospitals were recieving the majority of their paymnets from . . . the gubmnet. I cant keep track of whether they are the enemy or the ally here. On one hand they cant do a massive expansion because of restrictions that they either cannot or choose to not do. On the other hand they put themselves into the position of being able to plan a multimillion dollar expansion because of federal gubment entitlement programs.

 

Either way, it sucks for Perch and his company that he is affected. Seriously.

[Azazello1313]

man, I really think you are on to something here. let's just do some math. you have increasing demand, because of all these new people with coverage. you have contracting (or at least non-expanding) supply, because providers aren't sure new construction and new ventures can be profitable in this environment.

 

I see two possible outcomes down the road:

1) skyrocketing prices for care

2) price controls and rationing

 

edit to add: the fact that providers are NOT hurriedly ramping up supply to meet the surge in demand would seem to indicate they are betting pretty heavily on 2).

 

Serious question Az.

 

If demand for services are increasing with millions of new customers, and our health care system profit is based on volume of procedures, why do they think they wont be profitable? Your math says.

 

Increased customers and business = LESS profit?

 

But doesnt that solely apply to medical providers that focus their business on Medicare recipients only?

 

the answer is right there in my post, especially clearly in the "edit to add" part. let me clarify a bit for you. of the two possible responses I list, 1) (increased prices and/or increased supply) is the typical market response. 2) is what happens if providers are prohibited, by some external source, from raising prices. providers are betting on not being able to really raise prices. why would you spend however many millions of dollars on a new facility, if you know you that all you are going to be able to do with them is take new patients at un-profitable or barely-profitable reimbursment rates? maybe at some point, when some of the uncertainty dies down, providers will start to figure out how they can make a profit filtering out all but people with "good" insurance (that will pay them profitable rates) -- and you'll start to end up with a two-tier health system. and then people will whine about this revoltingly "unfair" disparity of the free market.

[bpwallace49]

the answer is right there in my post, especially clearly in the "edit to add" part. let me clarify a bit for you. of the two possible responses I list, 1) (increased prices and/or increased supply) is the typical market response. 2) is what happens if providers are prohibited, by some external source, from raising prices. providers are betting on not being able to really raise prices. why would you spend however many millions of dollars on a new facility, if you know you that all you are going to be able to do with them is take new patients at un-profitable or barely-profitable reimbursment rates? maybe at some point, when some of the uncertainty dies down, providers will start to figure out how they can make a profit filtering out all but people with "good" insurance (that will pay them profitable rates) -- and you'll start to end up with a two-tier health system. and then people will whine about this revoltingly "unfair" disparity of the free market.

 

You entire assumption id that medicare medicaid are the only patients available. Cant this clinic compete and draw in patients that ARENT on public aid? If not, isnt that the free market at work?

 

they are prohibited by raising prices by CHOOSING who they accept as patients. I am pretty sure they are not forced to Az . . .I agree that if this was a single payer system and the gubmnet set all prices that you would be 1000% right. But it isnt. They CHOOSE to accept these patients.

 

Az, do you have a graph that shows what the profit margin is on procedures? Like how much a doctor makes when they charge 100 bucks for a 10 minute visit? Wouldnt that help put this in perspective of how these patients are now "unprofitable"? or is it just "less profitable than before"? (not saying it is right, but you are very good at providing charts and graphs on issues . . . I hoped you might have one for this)

[Azazello1313]

You entire assumption id that medicare medicaid are the only patients available. Cant this clinic compete and draw in patients that ARENT on public aid? If not, isnt that the free market at work?

 

they are prohibited by raising prices by CHOOSING who they accept as patients. I am pretty sure they are not forced to Az . . .I agree that if this was a single payer system and the gubmnet set all prices that you would be 1000% right. But it isnt. They CHOOSE to accept these patients.

 

the part you are missing is that it's not just medicare and medicaid. the government is now also a major player in all of these "exchanges", where people who won't be getting insurance through their employer can take their government subsidy to purchase insurance. gov't is going to have a lot of power to dictate rates there as well.

 

so right now, pre obamacare, government is basically the payer for half of all health care expenses, through medicare, medicaid, VA, states' budgets, etc. I haven't read anything estimating what that percentage will be once medicaid is expanded, the baby boomers hit medicare, and all of these exchanges are in effect -- let's just guess for argument's sake and say it will be something like 70-80% where government has near absolute say in what rates providers will be paid. like I said in my last post, "maybe at some point, when some of the uncertainty dies down, providers will start to figure out how they can make a profit filtering out all but people with "good" insurance (that will pay them profitable rates) -- and you'll start to end up with a two-tier health system." some doctors kind of do that already, by refusing to treat medicare patients (at a loss). but for now, providers are obviously very nervous about being able to profitably expand their business in the near future.

[dmarc117]

I was at an economics conference in Portugal.

 

 

how bad is it there, really?

[wiegie]

how bad is it there, really?

Unless you knew what was going on, you would have had NO idea that there was even an inkling of any problems.

[dmarc117]

Unless you knew what was going on, you would have had NO idea that there was even an inkling of any problems.

 

 

i get that sense walking around here too. im bombarded by the news all day, everyday. seems like the general public has no idea. kinda scary.

[TimC]

how bad is it there, really?

 

They thought wiegie was cute. Downright horrible there.