BUSH AND UNEMPLOYMENT

I suggested in a post a while back that the Bush administration may, because of its close ties to business, tend to pursue policies that increase unemployment, without realizing that it's doing so; and this because a bit of unemployment is useful for business, since it makes it easier to hire workers, and makes the threat of firing more effective as a disciplinary device. I didn't have any specific policies in mind at the time, but this may be an example.

Daniel Gross (the author) cites a change in rules about how companies account for depreciation:

Depreciation is an accounting principle that recognizes the fact that if you buy something, its value declines over time. Thus, if a new printer is supposed to last for five years, a company can write off 20 percent of its value each year for five years against profits, thus lowering the tax bill.

This creates an incentive to invest in more capital, by reducing the tax bill on it, and thus, since capital and labor are substitutes, to hire fewer workers. This is not a conspiracy theory here. I think businessmen just say to themselves "What do we really want?", and they talk to their Republican politico friends, and who think, "if it's good for business, it's good for the economy," and pass it. That what's good for business is good for the economy is close to the truth, but not quite: sometimes good macroeconomic management means making things hard for business. We need a Wall Street-loving Clintonite Democrat party to offset the Main Street-loving pro-business Republican party. That would be a healthy political arena. There may even be faint signs that Kerry is moving in that direction. As Slate reports:

Kerry offered a taste of his new message Monday morning at one of his "front porch" campaign stops in Canonsburg, Penn., but he waited until the afternoon in Racine, W.V., to unveil his new stump speech in full. The new message: Go vote for Bush if you want four more years of falling wages, of Social Security surpluses being transferred to wealthy Americans in the form of tax cuts, of underfunded schools and lost jobs. But if you want a new direction, he said, vote for Kerry and Edwards.

It's a simple and obvious message, but Kerry hasn't used it before. There were other new, even more Clintonesque wrinkles, too. Kerry talked about the same issues—jobs, health care, Social Security, education—that he's talked about in the past, but he had a new context for them: how Bush's policies were taking money out of taxpayers' pockets. The deficit, the Medicare prescription drug plan that forbids bulk-price negotiation and the importation of drugs from Canada, and the "$200 billion and counting" Iraq war all "cost you money," Kerry said, by increasing the cost of government. Kerry even pushed his health-care plan as a selfish device to put more money in voters' wallets (rather than an altruistic plan to cover the uninsured), in the form of lower health-insurance premiums ($1,000, he says).

After Kerry's massive-spending convention speech, and his general flip-flopping incoherence, and in view of his charisma deficit, it's too late for Kerry to run and be elected as a New Democrat. But (assuming Bush wins) I'll be interested to see what the Democrats have to offer in 2006. Bush's big weakness is THE DEFICIT. Possible Democratic campaign line in 2006: "Bush didn't cut your taxes! A deficit is a tax on borrowing, on business investment, on share prices, on job creation. To really cut taxes is to reduce federal spending, and nothing else."