Economics and stupidity

I was listening to the news the other day, and the reporter (from CNN, of course) was almost going into hysterics over the latest unemployment numbers. "AMERICAN UNEMPLOYMENT IS AT 5.5%! OHMYGODWEREALLGONNADIE! EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEK!"

First thought out of my head - Isn't 5.5% about half as low as most of Europe?

Second thought out of my head - Why the increase when there haven't been any major layoffs or other reductions in employment?

Answer:

“It wasn’t Bush, it wasn’t greedy corporations, or free trade, or history’s most over-predicted recession. It was not the oil companies, income inequality, or the excesses of cowboy capitalism. None of these things caused the unemployment rate to jump a half a percentage point in one month. Ask yourself a few questions: Why did unemployment surge at a time when unemployment compensation claims are historically low? More to the point, how could unemployment spike this much without a coinciding spike in corporate lay-offs? The answer to all of these questions is same: because very few people lost jobs last month. This huge jump in the size of the unemployed comes from new entrants to the economy—hundreds of thousands of them. In short, well over 600,000 people who were not job seekers in April became job seekers in May. And who starts looking for work at the end of Spring? That’s right—students. Hundreds of thousands of students are looking for work right now, and they’re not finding it. Congress is to blame. Last year Congressional Democrats (along with some Stockholm-Syndromed Republicans) passed the Fair Minimum Wage Act of 2007, which started a phased hike of the minimum wage from $5.15 an hour to $7.25. Free market economists warned them that this would increase unemployment—that rapid increases in unemployment compensation hit teens and minorities the hardest. But the class-warriors are running the people’s house now, and they would hear none of that, so they took to the floor, let loose the dogs of demagoguery, and saddled America’s pizza parlors, municipal swimming pools, house painting businesses and lawn mowing services with a huge cost increase. Now, we see the perfectly logical outcome of wage controls—rising unemployment among the most economically vulnerable.” [my emphasis]

So, in short, what anyone with a brain predicted would happen if Congress dicked around with the minimum wage did indeed happen.

Congress should not be allowed to do a damn thing with the economy. Their collective knowledge of economics wouldn't fill a shoe box.