A hard truth about unemployment

This little, under-reported development in China is likely to have vastly greater impact on North Carolina’s unemployment rate than all of the conservative tax giveaways to corporations and the wealthy combined.

Economist-extraordinaire  Dean Baker explains:

China’s central bank announces job creation program for the United States

That may be a bit of an overstatement, but the comments from Yi Gang, a deputy governor at China’s central bank, deserved much more attention than they received. According to Bloomberg, YI announced that the bank would no longer accumulate reserves since it does not believe it to be in China’s interest. The implication is that China’s currency will rise in value against the dollar and other major currencies.

This could have very important implications for the United States since it would likely mean a lower trade deficit. Since other developing countries have allowed their currencies to follow China’s, a higher valued yuan is likely to lead to a fall in the dollar against many developing country currencies. A reduction in the trade deficit would mean more growth and jobs. If the deficit would fall by 1 percentage point of GDP (@$165 billion) this would translate into roughly 1.4 million jobs directly and another 700,000 through respending effects for a total gain of 2.1 million jobs.

Since there is no politically plausible proposal that could have anywhere near as much impact on employment, this announcement from China’s central bank is likely the best job creation program that the United States is going to see. It deserves more attention than it has received.”

But don’t worry, the folks in charge in North Carolina will claim credit anyway.

7 Comments

  1. Alex

    November 25, 2013 at 4:10 pm

    It’s a sad day in this country when we have to depend on the Chinese to create jobs.A smart person might say we don’t have the right economic policies in place.

  2. Alan

    November 25, 2013 at 7:26 pm

    And a very dumb person would blame it all on President Obama.

  3. Alex

    November 25, 2013 at 7:35 pm

    An even dumber person Alan would be one who absolves Obama and his administration of all blame. Then it is truly the blind leading the blind !

  4. Alan

    November 25, 2013 at 7:48 pm

    And the dumbest person would be one who reflexively blames Obama for everything, ignoring the fact that is was Bush’s economic policies that crashed the US, and global, economy. The facts are the facts, no matter how Team Civitas tries to spin it. That would be the dumb leading the dumb, wouldn’t it?

  5. Alex

    November 26, 2013 at 8:57 am

    Poor Alan seems to be obsessed with Team Civitas, even more than his buddy esmay. He seems to think that every conservative works for them !

  6. Civitas Sockpuppet #1

    November 26, 2013 at 10:03 am

    Poor Alex has an obsession with obtaining the last word. If that makes you feel better, go for it..

  7. ML

    November 26, 2013 at 11:43 am

    I think the dumb thing is to try and pin all of our failures as a country on any one person. While bush’s “cut and run” the country into two costly wars approach has done a lot of damage, Obama’s stimulus plan, which was piggybacked off of bush’s bank bailout, has done little to make it better. Obama, not for lack of trying, has not been able to get a jobs stimulus plan that would help the poor and middle class either.

    It may be easier to blame one man either past or present but both have failed us when comes to increasing jobs and economic growth. But Alex, our economic policies have been crafted and changed over the course of decades and mostly by congress, not the president. You would need to be more specific as to which recently enacted policies are harming the economy bc many of the economic policies have been in place for decades and are not the creation of one man or even one party. The blame game is not the answer when we as a country have all had a hand in creating disastrous policies. Maybe suggest something that hasn’t been tried in the last 3 decades bc cutting taxes and shrinking government (resulting in looser regulations) has helped put us in this hole. So more of the same won’t do, that doesn’t mean I’m advocating some socialist reform but instead look at the policies themselves to see what works and not simply at who or what party created them.

    Some civility would be nice guys, there is no need for name calling.