Cart Before The Horse
Economic wisdom from George W. Bush (from last nights FOX interview)
BUSH: There's an employment lag that generally accompanies a recovery. The economy gets going and after a while employment catches up.
But this is an unusual marketplace in that…productivity is very high, which means growth has to be higher than productivity in order to add jobs.
Or productivity has got to level off some and growth be robust.
I believe we're going to add jobs, because I believe this economy is strong.
HUME: How soon do you expect that to start happening?
BUSH: Well, you know, I don't know.
You ask these economists, they'll say, on the one hand here and the other hand here.
There's a fundamental cart-before-the-horse going on here. Productivity is the measure of how much is being produced by the economy per worker in that economy. Bush seems to think that productivity drives GDP and employment when it is simply a measure of the ratio of those two. If productivity levels off then it means either GDP has gone down and/or employment has gone up. So it is employment and GDP that drive productivity, not the other way around.
By focusing on productivity the Bushies can distract attention away from bad employment numbers. And when they are called on those low numbers they can simply spout this kind of goobleygook to suggest that everything will just fine just so long as we can bring productivity down.
The only thing I'm not sure of here is whether Bush really understands that productivity is just a measure of other economic factors, not a prime factor itself, and that he is just pushing this stuff in order to dazzle people or whether he actually thinks it has any relevance to the discussion. I'm not sure which is worse.