Economics 101

Governor Corbett might want to get out his old economics textbook for a refresher. There is no evidence that his current economic policy – slashing essential public services while giving away billions to corporations – ever works.

After feeling the heat on his announcement that he would give away $1.7 BILLION to Shell Oil Co., Gov. Corbett went on the offensive last week. (See “Can Shell Educate Our Kids?”) He sent three of his cabinet secretaries to Beaver County Community College to tout the jobs his proposed petrochemical refinery plant would create. It was an ironic setting, given the governor’s simultaneous proposal to slash 30% from higher education.

Yet there they were, touting that the Shell cracker plant might employ up to 400 people and could create up to 10,000 temporary construction jobs. The American Chemistry Council estimates that another 2,400 jobs might be created in a manufacturing industry that could grow up around the plant. (That’s because Shell will have no state tax liability and could spend the money to build up associated industries.) [Penn Live, 6-14-12] That’s a lot of “mights” and “coulds.”

Those watching Harrisburg report that the Shell tax credit deal will “likely” pass, though “Republicans want some kind of assurance that the money will guarantee that jobs come with it.” And they note, “It helps that organized labor groups from the Pittsburgh area are supportive.” [New Jersey Herald, 6-17-12]

But best-case scenario, we’re looking at a couple thousand permanent jobs. Meanwhile, Gov. Corbett’s austerity budget has already eliminated over 14,000 public K-12 education jobs with many more losses to come. And many of those were actually good union jobs.

It seems that Governor Corbett shares a playbook with former Massachusetts governor, Mitt Romney, who blasted President Obama recently: “He says we need more firemen, more policemen, more teachers.” Then he snorted, “It’s time for us to cut back on government and help the American people.” [Washington Post, 6-8-12]

Princeton economics professor Paul Krugman took this slash and burn theory to task in his New York Times op-ed column over the weekend, saying “Conservatives love to pretend that there are vast armies of government bureaucrats doing who knows what; in reality, a majority of government workers are employed providing either education (teachers) or public protection (police officers and firefighters).” Krugman asked, “So would getting rid of teachers, police officers and firefighters help the American people?” Here is how Krugman answered:

“We now have a lot of evidence bearing on that question. … Conservatives would have you believe that our disappointing economic performance has somehow been caused by excessive government spending, which crowds out private job creation. But the reality is that private-sector job growth has more or less matched the recoveries from the last two recessions; the big difference this time is an unprecedented fall in public employment, which is now about 1.4 million jobs less than it would be if it had grown as fast as it did under President George W. Bush. And, if we had those extra jobs, the unemployment rate would be much lower than it is — something like 7.3 percent instead of 8.2 percent. It sure looks as if cutting government when the economy is deeply depressed hurts rather than helps the American people.”

Professor Krugman went on to explain how Europe is teetering on the brink of economic catastrophe due to austerity measures. Yet it’s ironic that “While Republicans love to engage in Europe-bashing, they’re actually the ones who want us to emulate European-style austerity and experience a European-style depression.”

Maybe Governor Corbett and his cabinet secretaries could enroll in Economics 101 at Beaver County Community College, assuming they are still able to offer that course after this year’s state budget cuts.

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