Smog in L.A.

Smog in L.A.

The jobs numbers were released on Friday.  It was disappointing news for those looking for a recovery.  The November job gains now look like an outlier.  There were 85,000 jobs lost in December.  Unemployment is still at 10% (of those who are still counted I should add.  It is likely a bit higher).  Certainly not good news.  Why is the recovery taking so long?  Kudlow explores that with the panel (embed below).

Some things that certainly work against a recovery are the regulations on businesses for environmental ends–the money spent is great for very little gain it seems:

The new smog standards, proposed by the Environmental Protection Agency, could compel power plants, refineries, gas stations and other businesses to take steps to reduce emissions of chemicals that help form smog. The EPA estimated that the costs of complying with the new standards could range between $19 billion and $90 billion annually, depending on the final standard. Much of the cost will be in the form of new technologies.

The standards could also lead to new restrictions on construction, farming and other activities that generate what is known as ground-level ozone, a primary cause of smog.

The proposal would lower the permitted level for ground-level ozone, which has been linked to respiratory illnesses. By reducing smog, the EPA hopes to reduce the incidence of asthma, particularly in children, whose developing lungs are more sensitive to smog.

Under the proposal, the EPA would set the acceptable ozone level in the air between 0.06 and 0.07 parts per million, stricter than the current 0.075 ppm. EPA officials and public-health groups claim the new standards would mean fewer visits to the emergency room for children with asthma, and longer lives for people with chronic lung disease — saving the U.S. $13 billion to $100 billion annually. “Using the best science to strengthen these standards is a long-overdue action that will help millions of Americans breathe easier,” EPA Administrator Lisa Jackson said.

So, billions of dollars would be spent to decrease one-hundredth parts per million.  If you are on the business side of this equation, you are not going to hire employees.  Couple this with Obama’s new green tech jobs initiative, and toy have another $2.3 billion on 17,000 jobs, or $135,000 per job.  Again, if you are a business, or investor, you are cautious given this new spending initiative.  Government spending and high taxes are making business cautious about hiring.  The point is not to choose between economic recovery and the environment, but the choices that are made by the government and the self-interested reaction from employers.  What decisions would be better here?

Next up:  Harvard Economics professor underscores the problems in this small graph:

Greg Manikiws Jobs & Stimulus Graph

Greg Mankiw's Jobs & Stimulus Graph

Robert Reich, and Mankiw is amenable to it, says that the recession was worse than thought and that accounts for the economic persistent woes.  But was it/is it?  It is a difficult question.  Reich says that we should spend even more money to get out of the current economic straight-jacket.

Friday’s WSJ editorial predictably disagrees:

We can’t blame employers for their caution. With so much policy uncertainty out of Washington and the state capitals, no one can be sure what they will pay for energy (rising oil prices, cap and trade) or new regulation (antitrust), how high their taxes will rise, and how much each new employee will cost (health care). In this kind of world, employers will wait as long as possible to add new workers.

With trillions of monetary stimulus in the pipeline, the economy will grow and employment will rise in 2010. The sooner Congress stops doing damage, the faster that will be.

But taxes are, at this point, going up for all Americans in 2010.  That will harm any recovery, even with this resilient U.S. market.  Uncertainty with what Washington is doing certainly contributes to this non-recovery.  Much to think about here.

Larry Kudlow talked about all this on Friday night.  To the digital files: