Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, January 07, 2006


"How Journalists Ought to Cover the Economy": Readings for first week of classes: Employment and Unemployment:

Some background graphs:

Payroll Survey Employment Growth since 1994
Long-Term Unemployment
Unemployment and Underemployment
The Employment-to-Population Ratio
Three Years of the Unemployment Rate

Immediate Stories:

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Reuters: Reuters's initial story on the January 6, 2006 BLS Employment Report: "Job growth below expectations in December" Fri Jan 6, 2006 9:20 AM ET: By Glenn Somerville..."

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Wall Street Journal Morning: The Wall Street Journal's Friday morning story about the January 6, 2006 Employment Report: "U.S. Nonfarm Payrolls Grew By 108,000 Jobs Last Month: Hiring slowed down in December as U.S. employers were more cautious in taking on new workers as 2005 drew to a close. But job growth in prior months was stronger than initially thought, and the unemployment rate declined..."

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Economist Forecasters' Immediate Reactions to the Employment Report release.

After Taking a Breath:

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: AP Story : The end-of-the-day AP story about the January 6, 2006 BLS Employment Report: "U.S. Job Growth Slows a Bit in December as 108,000 Are Created.... Businesses boosted payrolls modestly in December, and the unemployment rate dropped to 4.9 percent -- evidence, President Bush said, of the economy's resiliency in the face of last year's hurricanes and high energy costs. For all of 2005, employers added 2 million new jobs..."

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Tim Duy Looks at the Fed: and guesses what the Federal Reserve's reaction will be to the January 6, 2006 Employment Report.

The Following Morning:

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Greg Ip : writes about Friday's employment report for the weekend edition of the Wall Street Journal.

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Edmund Andrews's next-day article on the June 6, 2006 Employment Report.

Broader Perspectives:

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Mark Thoma of the University of Oregon tries to provide perspective on the January 6, 2006 Employment Report in perspective.

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Kash Mansouri of Colby College on the January 6, 2006 Employment Report: "the US economy continues to disappoint when it comes to the creation of new private-sector jobs."

Brad DeLong's Semi-Daily Journal: Employment Report: January 6, 2006: Heritage Foundation's Tim Kane.

Recent movements in the unemployment rate:


Unemployed, those without jobs but still marginally attached to the labor force, plus part-time workers who want full-time jobs--all as a percentage of the labor force plus the marginally attached:


The employment-to-population ratio:


Long-term unemployed (greater than fifteen weeks) as a percentage of the labor force:


Payroll-survey employment growth since 1994:


The Economist is bemused at the unexpected strengthening of the dollar in 2005:


Tim Duy guesses what the Federal Reserve's reaction will be to the January 6, 2006 Employment Report:

Economist's View: Fed Watch: A Little Something for Everyone : Tim Duy looks through the eyes of monetary policymakers at today's employment report and its impact on the course of monetary policy:

What better way to return from a long winter break than to tackle a muddled labor report! I suspect that we will find many stories told about this report, and I will try to summarize all of them (Kash at Angry Bear was out of the gates early with the pessimist’s take). But what is most important – from a FedWatch perspective – is the view at Constitution Ave. I tend to think that despite a few setbacks in the details, policymakers will walk away with a relatively upbeat perspective on the labor markets. And that means it may be premature to think the Fed will shortly be done for good.

But first, a quick look back at the Fed minutes. Wall Street’s stamp of approval implies a wide expectation of “one and done” for this tightening cycle. That’s not quite my interpretation, although I can’t blame traders for looking for good news after a dreary December. Instead, I left the minutes with the sense that another rate hike at the end of the month is in the bag, but beyond that, future changes in policy are not automatic but instead data dependent. That is decidedly not the same thing as “done.” “Done” means you are betting against the economy – and I doubt the Fed is ready to make that call just yet.

As far as the labor report goes, the headline payroll gain of 108,000 was clearly a disappointment. But optimists will point to the revision that pushed the October gain to 305,000 jobs, which yields a respectable two-month average of just over 200,000. Optimists will point to the decline in the unemployment rate to 4.9%; pessimists will focus on the decline in the labor force participation rate. Pessimists will focus on the slight fall in aggregate hours worked; optimists will point to the 5 cent wage gain.

Some other details popped out at me. The 18,000 gain in manufacturing employment should be happy news to many, although my initial scan of the blogs does show a focus on this number. In contrast, the decrease in construction employment could reflect cooling housing markets. While many expect those jobs will eventually show up in Gulf Coast rebuilding efforts, only in macroeconomic textbooks does a worker move from San Diego to New Orleans instantaneously and at zero cost.

So, what will policymakers make of all of this? First of all, it is always important to remember that one month of a single data report is not likely to fundamentally alter the perceptions on Constitution Ave. We will have two more of these reports – not to mention dozens of other data points – by the time the March meeting rolls around. If, then, the overall trends are what is important, can we find some consistency in the data of the optimists and pessimists? For this I turn to Table A12 of the employment report, a personal favorite of mine. Table A12 reports different measures of labor underutilization.

The most optimistic measure is: Percent of Civilian Labor Force Unemployed 15 Weeks & Over. The most pessimistic measure is: Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time For Economic Reasons, As A Percent Of All Civilian Labor Force Plus All Marginally Attached Workers. The headline unemployment rate at 4.9% basically splits the difference.

What do both of these pictures have in common? Both measures place labor market utilization near the rates seen prior to the great boom of the late 1990’s. Do policymakers believe that the late 1990’s can be repeated? Or was that period an aberration, and attempts to recreate that environment will only lead to higher inflation expectations?

I tend to believe that policymakers favor the latter interpretation. That implies if overall economic data points to stabilization in these measures, the Fed will be content to sit back after this next hike and wait to see how their medicine works. But if these measures continue to decline in concert with strong coincident and leading data, the Fed will feel obligated to move rates higher in March and possibly beyond. I believe this interpretation will not be well received by the labor market pessimists.

What about the employment to population ratio? PGL an Angry Bear points to a decline over the past five years as a sign of a weak labor market. This short run view of the data raises the same question: Was the push higher in the late 1990’s a reflection of a once-in-a-generation stock market boom? Do we really want the Fed to recreate those conditions? Do we really expect them to? And a longer run view raises another batch of questions: Employment to Population Ratio.

Here you are stuck with disentangling the cyclical behavior with the secular trends. If we attribute rising employment participation to increased female participation in the labor force, and if that trend has pretty much been maxed out while male labor force participation continues to slide, and we believe the boomers are starting to retire, then I am not sure we can expect much higher employment to population numbers short, again, of 1990’s style boom.

Similar thoughts can be said of Mark Thoma’s questions regarding stagnant numbers among marginally attached workers in the post below this one. You have to raise the question of what type of environment is necessary to draw these workers back into the labor force, and will the Fed attempt to do so?

Truth be told, I honestly don’t know the “correct” level for any of these measures of the labor market. Nor would I, or anyone at the Federal Reserve, say the job market is as strong as in the late 1990s. My point is that from a policy perspective, the last cycle may not be the relevant reference point. Pointing to the Clinton Era might be like pointing to the 1980’s in Japan – remember when Tokyo had all the answers? It was fun while it lasted, but it isn’t likely to happen again. If instead, we assume that the Fed sees labor markets as relatively healthy, and that they see this view as supported by rising wages (accelerating to 3.1% over the past year), then the next step for the Fed is to determine the impact on the inflation outlook. And that again raises enough questions to keep a central banker awake at night:

To what extent do rising wages reflect productivity gains, tight labor markets, and pass through from this summer’s surge in headline inflation? How much of the wage gain will firms be able to pass through to core prices? Has past monetary policy already put enough tightening into the system to head off any pass through to core prices? What about the pressure exerted through rising commodity prices? Note that oil prices are creating upward toward $70 again. Also watch metals (copper and gold). Is the housing market slowdown turning into a full blown bust?

With so many variables in play, it is not surprising that the Fed wants to change the game plan. To date, policy has been driven by the desire to normalize interest rates. But now that we are at a more neutral level, the next policy steps aren’t so clear. This is why policy is now data dependent, and why anything beyond Greenspan’s final move is fuzzy.

Economic forecasters' immediate reactions to the Employment Report: - Economists React: January 6, 2006 10:02 a.m.: Hiring rose in December, but only modestly, as employers added 108,000 jobs to nonfarm payrolls -- about half the increase many forecasters had been expecting. However, last month's weak hiring totals came off of a much higher base, as the Labor Department raised its November reading on payrolls to show growth of 305,000 jobs during the month instead of the earlier reported 215,000 jobs increase. Meanwhile, December's unemployment rate fell to 4.9% from 5% in November. For all of 2005, the economy added around two million jobs -- a solid amount and about the same as last year. The unemployment rate averaged 5.1% last year, an improvement from the 5.5% average registered in 2004. What do the numbers reveal about the state of the economy? Here's a sampling of economists' opinions:

This report is very consistent with the status quo: payrolls are still growing by about 200,000 a month, i.e. more than 50,000 faster than would be consistent with a stable jobless rate. Thus, the unemployment rate should remain on a downtrend. Finally, the new development is that, between the data and the anecdotes, there are increasing signs that wage gains may be picking up. This view of the world is very inconsistent with the consensus projection that the economy is cooling and the Fed is on the cusp of stopping. -- Stephen Stanley, RBS Greenwich Capital

These data continue a recent saw-tooth pattern, with November's strength obviously a rebound from hurricane-suppressed September/October levels, and December's softness probably at least in part due to some payback from overly strong November results. Moreover, the jobs plentiful component of the Conference Board's consumer confidence index points to labor market strength, as does the underlying level of initial unemployment claims. We expect better job growth in the future, but for the time being today's report feeds market sentiment that is increasingly tilted toward the feeling that the path for Fed tightening is "one and done". -- Joshua Shapiro, MFR Inc.

The slow tightening in the labor market is gradually boosting hourly earnings but the absence of any bargaining power and a flat workweek is keeping that gain relatively modest. The flat workweek indicates that businesses remain very cautious. As interest rates rise and it becomes more difficult to extract home equity, gains in hourly earnings will become increasingly important in sustaining consumer spending. -- Steven Wood, Insight Economics

Construction employment declines may reflect seasonal difficulties in counting the data, but the Bureau of Labor and Statistics claimed that weather was not a factor behind the sluggish 108,000 non-farm advance. Weak Retail employment (-16K) was concentrated among discounters and department stores and reflects caution heading into the Christmas season. Both construction and retail payrolls have a good chance of reversing in Q1 of 2006. -- Stephen Gallagher, Societe Generale

Employment indicators in December were inconsistent, in our judgment, with a payroll gain of only 108,000. In addition, the sharp upward revision to November serves as a reminder that the last word on job creation has yet to be heard. However, putting payrolls aside, the Phillips-Curve mix of a falling unemployment rate and rising wage increases is not a comfortable one from the Fed's perspective. We look for these trends to continue in 2006 and the Fed to respond by raising rates gradually to 5%. -- John Ryding, Conrad DeQuadros, Elena Volovelsky, of Bear Stearns

It was a year of big bonuses and hefty raises for highly skilled professionals and executives but slim pickings for the ordinary working Joe. Such tepid wage growth is particularly disappointing given the strong productivity advances posted by the private business sector over the last year. Moderate wage growth and strong productivity growth should soon convince the Fed to end its cycle of interest rate increases soon. The Fed will increase the federal funds rate to 4.5 percent on January 31 but increases beyond 4.5 percent are less likely. -- Peter Morici, University of Maryland

An important reason that job growth in December was much smaller than we had expected is that the jobs in the construction industry fell by 9,000, the first monthly drop since February 2004. Our forecast, like many others, had assumed that the rebuilding activity in the hurricane afflicted Southern states would attract a lot of construction workers from the North who would normally be facing winter time furloughs. That appears not to be happening just yet but the severe cold that spanned much of the nation during the first half of December may have forced builders to cut back on-site activity. If the weather cooperates, we still expect job growth in the construction trades to be above average in the coming few months. -- David Resler and Gerald Zukowski, Nomura Securities International

Mark Thoma of the University of Oregon tries to put the January 6, 2006 Employment Report in perspective:

Economist's View: And Never is Heard a Discouraging Word?: The Labor Department reported today that employment increased by 108,000 over November, a number that is lower than expected, and the unemployment rate held steady at 4.9%. This is a brief follow-up to PGL's post at Angry Bear on the unemployment, labor force participation, and discouraged worker numbers (Kash has more). A sign of an improving labor market is a fall in discouraged workers. However, report from the BLS:

Persons Not in the Labor Force (Household Survey Data): The number of persons marginally attached to the labor force was 1.6 million in December, about the same as a year earlier. (Data are not seasonally adjusted.) These individuals wanted and were available to work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they did not actively search for work in the 4 weeks preceding the survey. Among the marginally attached, there were 451,000 discouraged workers in December, essentially the same as a year earlier. Discouraged workers were not currently looking for work specifically because they believed no jobs were available for them. The other 1.1 million marginally attached persons had not searched for work for reasons such as school attendance or family responsibilities. (See table A-13.)

It's puzzling why the number of marginally attached discouraged workers isn't falling if the labor market is strengthening. The news is a bit better relative to a year ago for part-time workers wanting to work full-time:

Total Employment and the Labor Force (Household Survey Data): Total employment, at 142.8 million in December, was little changed over the month but was 2.6 million higher than a year earlier. The employment-population ratio held at 62.8 percent in December, 0.4 percentage point higher than a year earlier. The labor force participation rate, at 66.0 percent, was unchanged over the year. (See table A-1.)

The number of persons who work part time for economic reasons, at 4.1 million, was about unchanged in December but was down by 327,000 over the year. This category includes persons who indicated that they would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs. (See table A-5.)

See PGL's post for a look at these figures over a longer time period. With both employment and real income behaving sluggishly by historical standards, the labor market is not as robust as would be expected in a recovery.

Kash Mansouri of Colby College on the January 6, 2006 Employment Report:

Disappointing Job Growth, Again: I couldn't help but notice that the US economy continues to disappoint when it comes to the creation of new private-sector jobs. From this morning's BLS news release:

Total nonfarm payroll employment increased by 108,000 in December, and the unemployment rate was little changed at 4.9 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The December increase in payroll employment followed a gain of 305,000 in November (as revised). Several industries added jobs over the month, including food services, professional and business services, health care, and manufacturing.

I've just Googled the term, and find (much to my... er... disappointment) that I've felt compelled to use the term "disappointing" literally scores of times over the past two years when describing the performance of the US economy. The following picture helps to illustrate why. Even the very best 3-month job creation of this economic recovery was beaten numerous times during the period 1994-2000. And over the past couple of years average job creation has generally been in the neighborhood of 100-200k per month, far below what we have come to expect during an economic expansion, and just barely enough to keep up with population growth. Disappointing indeed.

Tim Kane of the Heritage Foundation talks about the January 6, 2006 Employment Report:

The Silver Lining of 2005: Jobs Boom Should Protect Tax Reform: by Tim Kane, Ph.D. January 6, 2006:

The year 2005 will be remembered as a rough one for Republicans, and understandably so. Conservatives were first frustrated, and now appalled, by the so-called Republican revolutionaries who promised to downsize the government and streamline Congress but have instead produced more pork, more partisanship, bigger deficits, and now we learn, the same special-interest lobbying scandals of yore. When conservative activists fought for conservative causes like Social Security reform and estate tax repeal, politicians failed to produce permanent legislation in Congress. President George W. Bush, who has championed these causes, suffered setback after setback and bled political capital all year long. So there is plenty for conservatives to be depressed about.

But for other reasons, 2005 was a great year, and here’s why.

First, economic perceptions will only improve. Low approval ratings for President Bush and economic pessimism have nowhere to go but up, especially considering that the negatives were shaped by rare events like hurricanes Katrina and Rita. Indeed, initial reports of a net loss of 35,000 jobs during the hurricane-heavy month of September were revised not once, but twice, and now the Bureau of Labor Statistics (BLS) reports that there was a 17,000 net gain of payroll jobs during the month. Perceptions will inevitably catch up with reality, but will the administration use its momentum to pursue pet projects or to restore basic spending discipline?

Second, the economy was strong. Critics have no credibility if they carp that the economy was weak in 2005. Americans are waking up to the fact that despite years of hearing that the sky is falling, the U.S. economy is actually stronger than ever. No, the dollar has not collapsed. No, outsourcing has not slowed the American jobs machine. No, higher interest rates and a surge in the price of oil did not burst the housing bubble or diminish aggregate demand.

Third, job creation was robust. Productivity and GDP growth are robust for the year, but the most important measure for the voting public is jobs. Yesterday the Labor Department reported the lowest number of weekly initial jobless claims in five years. This statistic is a key leading indicator for the future. BLS published the final monthly jobs report for 2005 today, with the following highlights:

Unemployment dropped to a rate of 4.9 percent in December 2005, down 0.1 percentage points from last month and down from an average rate of 5.5 percent in 2004.

During 2005, 2.0 million new payroll jobs were created, and the total number of workers rose by 2.6 million. In December, the preliminary data indicate an additional 108,000 payroll jobs, just enough to keep up with population growth. The big surprise is that November job gains were revised upwards to 305,000.

Job gains were broad-based across all sectors. Some 90 percent of job gains in 2005 were in the service sector, which is where more than 80 percent of Americans work. The economy created half a million new jobs in professional services, 360,000 in private health and education, 240,000 in leisure and hospitality, 26,000 in trade and transportation, 19,000 in finance, and even 10,000 teaching jobs at the local level. Jobs Boom May Save Tax Reform In the battle of ideas, the strong economy of recent years is a vindication of the economic policies of lower taxes and lighter regulation, both of which have been embraced by President Bush. His signature economic issue has been tax cuts, which stimulate incentives to work, save, and invest. And the net result economically is that employment is up significantly from when he took office.

For those who see the budget deficit as an economic threat, there are only two solutions: higher taxes or lower federal spending. The jobs boom of 2005 effectively takes tax hikes off the table. Indeed, Congress should take the initiative to make the temporary tax reforms of 2003 permanent. That means cutting spending is the only game in town and will be the measure of real leadership in 2006.

Tim Kane, Ph.D., is the Bradley Research Fellow in Labor Policy in the Center for Data Analysis at The Heritage Foundation.

Next-day article on the June 6, 2006 Employment Report by Edmund Andrews:

U.S. Gains 108,000 More Jobs, but Pace of Growth Slows - New York Times: January 6, 2006 By EDMUND L. ANDREWS

WASHINGTON, Jan. 6 - The United States continued to generate new jobs at a strong pace through the end of 2005 as the unemployment rate edged down to 4.9 percent in December, the Labor Department reported today.

The government estimated that the nation added 108,000 jobs in December, significantly less than most forecasters had expected. But it also said that the nation added far more jobs in November - 305,000 - than it had estimated last month.

Taken together, the new jobs created over the past two months allowed the United States to end the year with about two million more jobs than it had 12 months earlier.

President Bush and other top administration officials immediately incorporated the news into a broader campaign today to promote their economic track record and Mr. Bush's effort to permanently extend and expand on his tax cuts of the past five years.

"These tax cuts make a real difference in the lives of those who work hard in this country," Mr. Bush said in a speech before the Economic Club of Chicago today. "By cutting taxes on income, we helped create jobs."

The president added, "To keep this economy growing, to keep the entrepreneurial spirit alive, to make sure that the United States of America is the most productive nation in the world, the United States Congress must make the tax cuts permanent."

Along with Mr. Bush, Vice President Dick Cheney and other administration officials fanned out across the country today to promote what they view as their underappreciated success on economic policy. At a Harley-Davidson motorcycle plant in Kansas City, Mo., Mr. Cheney asserted, "The president's strategy of cutting taxes delivered the pro-growth results we expected."

But while economic growth and job creation were robust last year, despite the mammoth destruction of Hurricane Katrina and soaring energy prices, analysts say Mr. Bush's policies played a relatively small role.

Most forecasters predict that economic growth will continue at a respectable pace through 2006, though many also predict that the pace will be slower and caution that there are some major uncertainties.

Perhaps the biggest uncertainty is about the housing market, which has expanded at an explosive pace for the past several years as a result of extremely low interest rates. With mortgage rates now climbing and homebuyers less confident that house prices will keep rising, demand is expected to slow and homeowners could sharply scale back on home-equity loans.

Investors reacted warily to the data on employment. Bond prices slipped and the yield on the 10-year Treasury note rose moderately, as investors worried that the Federal Reserve might raise interest rates more than they had expected in order to prevent the economy from overheating.

The dollar dropped against the euro and the Japanese yen, an unusual response in the face of strong economic news.

But the new unemployment data provided mixed signals about the economy's underlying strength.

Retailers shed 15,600 jobs in December, despite the yearend holiday shopping rush, the Labor Department reported. Over all, employment at department stores and other general merchandise retailers was down, the government said, because seasonal hiring was lower than usual and the industry's overall employment has been "trending down."

Employment at construction companies declined by 9,000 jobs, the biggest drop in that category since February 2003 and a possible indicator of a retrenchment in the home-building market.

In contrast to the 108,000 new jobs reported outside the farming sector in December, Wall Street had been expecting the nation to add about 200,000 jobs last month. But November's job growth of 305,000 was revised upward from the initial report of 215,000 new jobs.

The unemployment rate edged down from 5.0 percent in November to 4.9 percent in December. But that decline had little to do with the comparatively small addition of new jobs. Rather, it stemmed from the fact that more people dropped out of the work force.

The unemployment rate has ranged from 4.9 percent to 5.1 percent since last March.

Greg Ip writes about Friday's employment report for the weekend edition of the Wall Street Journal: - Job Growth Slows In Sign Economy Might Be Cooling: By GREG IP Staff Reporter of THE WALL STREET JOURNAL January 7, 2006; Page A3:

Job growth slowed in December, a sign the economy may have lost some steam, but the labor market was still healthy enough for wage growth to pick up.

Nonfarm payroll employment rose just 108,000 from November, the Labor Department said Friday, about half the increase Wall Street economists expected. However, November's job gains were revised up sharply to 305,000 from 215,000. Economists said the 206,500 average for the two months is a better indication of underlying employment growth than the figures for November or December alone.

There were many encouraging signs in the report. The unemployment rate slipped to 4.9% from 5%, matching October's four-year low, according to revised data. Hourly wages rose 0.3% from November and 3.1% from a year earlier, the biggest annual gain in almost three years -- though still below the most recently reported inflation rate. Manufacturing employment rose 18,000, its third straight increase. Moreover, claims for unemployment insurance in recent weeks have been low, suggesting employment growth maybe stronger in January than in December.

Still, the softer December job creation followed a report earlier in the week that manufacturing activity, too, had slowed unexpectedly in December. A survey by the National Federation of Independent Business found that fewer of its small business members are hiring: just 13% added jobs in December, down from a 17% average in the prior two months, while 12% reduced jobs, up from 6%. This handful of indicators suggests overall economic growth may have slowed from its 4% pace of the past two years.

Monthly employment growth averaged 188,000 jobs from January 2004 through last August, before Hurricane Katrina pummeled the Gulf Coast states. Maury Harris, chief U.S. economist at UBS Securities, predicted average monthly gains would fall to 145,000 this year as the housing market cools. He noted that real-estate-related occupations, such as mortgage and real-estate brokerage jobs, specialty trades, furniture manufacturing and construction, have been adding jobs at the rate of 25,000 a month for the past two years. That won't continue this year, he said: "You've seen all the signposts" of a slowdown.

Construction employment fell by 9,000 jobs in December, the first drop in nearly two years, but that followed a hefty 42,000 gain in November. Retail employment also dropped, by 16,000. The actual number of retail jobs went up, as it usually does around the holiday period, but the Bureau of Labor Statistics adjusts the data to eliminate recurring seasonal effects. "Seasonal hiring was less than usual," BLS Commissioner Kathleen Utgoff said in a statement. Some economists predict fewer post-holiday layoffs than usual in January, leading to a rebound once the data are seasonally adjusted.

Many economists blamed the weakness in construction and retail hiring on cold weather during the week for which the BLS surveyed employers and households. Morgan Stanley economist Dave Greenlaw noted that the household survey, used to determine the unemployment rate, estimated that 253,000 people didn't work that week because of weather, 100,000 more than the December average of the prior five years.

But Angie Clinton, a BLS economist, said, "Typically, weather does not impact employment that much," though wet weather in the Southeast and on the East Coast may mean working hours were trimmed. She said that retail employment has tended to rise less in December in the past five years than in the prior six years. But she also noted that retail employment, seasonally adjusted, has declined in four of the past five months. That suggests underlying weakness, not a shift in holiday hiring patterns, may be the cause.

The latest employment report sends mixed signals to the Federal Reserve, which is mulling when to stop raising interest rates. After raising its overnight lending rate target to 4.25% in December, Fed officials concluded that the likely number of additional increases is "not large," according to minutes of that meeting released Tuesday.

Write to Greg Ip at

The Wall Street Journal's Friday morning story about the January 6, 2006 Employment Report: - U.S. Nonfarm Payrolls Grew By 108,000 Jobs Last Month: A WALL STREET JOURNAL ONLINE NEWS ROUNDUP:January 6, 2006 10:08 a.m.:

Hiring slowed down in December as U.S. employers were more cautious in taking on new workers as 2005 drew to a close. But job growth in prior months was stronger than initially thought, and the unemployment rate declined. The Labor Department said Friday that nonfarm payrolls climbed by 108,000 jobs last month -- about half of the 215,000-jobs gain that economists polled by Dow Jones Newswires and CNBC had been expecting, on average. However, the mild gain came atop a stronger foundation, as the November reading on payrolls was revised to show growth of 305,000 jobs during the month, instead of the earlier reported 215,000-jobs increase.

"The December payroll figure was sharply weaker than expected, but practically everything else was surprisingly strong," said Stephen Stanley, chief economist at RBS Greenwich Capital. "It appears to me that the unusually frigid weather during the survey period helped to dampen hiring."

The unemployment rate fell to 4.9% from 5.0% in November. There were 150.2 million workers in the U.S. labor force, with 7.4 million of those out of work. The average work week shrank six minutes to 33.7 hours. The average time the unemployed spent searching for work in December was 17.3 weeks, an improvement from the 17.6 weeks in November.

For all of 2005, the economy added around two million jobs -- about the same as last year. The unemployment rate averaged 5.1% last year, an improvement from the 5.5% average registered in 2004.

Average hourly earnings in December rose five cents to $16.34 -- a 3.1% increase in year-on-year terms and the fastest increase since February 2003. Economists have been watching wage data carefully in recent months for signs of increasing inflation. Peter Morici, a business professor at the University of Maryland, said Friday's data show "wages are advancing less rapidly that productivity, indicating that a tightening labor market poses little threat of igniting inflation."

Job losses in construction, retail and transportation during December helped to blunt job gains in manufacturing, professional and business services, education and health services, government and elsewhere.

December goods-producing hiring rose by 12,000 jobs. The manufacturing sector increased payrolls by 18,000 jobs, after an 8,000-job advance the month before. The construction sector cut 9,000 jobs last month. Service-providing employment went up by 96,000. Retail jobs fell by 16,000.

Joshua Shapiro, chief U.S. economist at MFR Inc. in New York, wrote in a note to clients that the weakness seen in retail hiring "could have been due to less than normal seasonal hiring in anticipation of a weak holiday selling season. If so, there would be less than normal layoffs in January, which would translate into strength on a seasonally adjusted basis. We'll see next month."

In an appearance on CNBC television, Treasury Secretary John Snow said there is further room for unemployment to drop, particularly if Congress votes to extend or make permanent the Bush administration's tax cuts. He noted that growth in productivity, combined with strength in the overall business environment, could allow companies to hire more workers and pay them more without feeling a need to significantly pass on costs.

The end-of-the-day AP story about the January 6, 2006 BLS Employment Report:

U.S. Job Growth Slows a Bit in December as 108,000 Are Created - New York Times: By THE ASSOCIATED PRESS Filed at 5:46 p.m. ET: WASHINGTON (AP) -- Businesses boosted payrolls modestly in December, and the unemployment rate dropped to 4.9 percent -- evidence, President Bush said, of the economy's resiliency in the face of last year's hurricanes and high energy costs. For all of 2005, employers added 2 million new jobs.

The employment report released by the Labor Department on Friday suggested that the job market headed into the new year in pretty good shape, analysts said. On Wall Street, the Dow Jones industrials closed up 77.16 points.

December's jobless rate was down from November's 5 percent rate. Payrolls grew by 108,000 last month -- a figure that was restrained by job losses in construction, which were blamed on bad weather in some parts of the country, as well as job cuts in retailing.

Employers, however, ended up adding 71,000 more jobs in October and November combined than previously reported. That took the sting out of December's figure, which was about half of what had been expected.

In 2005, the economy added 2 million jobs -- an amount that economists described as solid -- and in line with the 2.2 million jobs created the year before. The economy lost jobs in 2001 and 2002 but saw a small gain in 2003. The unemployment rate averaged 5.1 percent last year, an improvement from the 5.5 percent average registered in 2004.

''We have a sturdy job market,'' said Mark Zandi, chief economist at Moody's He expects another 2 million jobs will be created this year and the average unemployment rate for all of 2006 will drop to 4.9 percent.

Bush, whose standing with the public has improved but still remains relatively low, has shifted into a campaign-like mode to shine a spotlight on the economy's good points in speeches around the country, including an appearance in Chicago on Friday. His economics team also fanned out to talk about the economy.

''The American economy heads into 2006 with a full head of steam,'' Bush declared.

''We've been through a lot,'' he said, referring to the 2001 recession, terror attacks, corporate accounting scandals, high energy prices and the Gulf Coast hurricanes that have punctuated the economic landscape over the last five years. Bush credited his tax cuts with helping the economy and called on Congress to make them permanent.

Democrats contend that the tax cuts mostly helped the wealthy and thrust the nation's balance sheets into red ink. The middle class, they say, is getting squeezed by high health care and energy costs.

''The Bush administration's call for another round of tax cuts for the wealthy few when middle-class families are struggling to pay their bills is another example of misplaced Republican priorities,'' said House Democratic Leader Nancy Pelosi of California.

In other economics news, consumer confidence sank in early January. The RBC CASH Index, based on polling by Ipsos, showed that consumer confidence dropped to 78.2 this month from 85.5 in December. The decline mostly reflected Americans' anxiety over the economy's prospects and their own financial positions in the coming months. But they also felt less confident about the jobs climate.

On the jobs front, employees' average hourly earnings climbed to $16.34 in December, up 0.3 percent from November -- slightly more than economists anticipated.

Compared with a year ago, hourly earnings were up 3.1 percent. ''Wages weren't keeping pace with inflation last year,'' which is estimated to be around 3.8 percent, said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. So workers are feeling pinched, analysts said.

To keep inflation in check, the Federal Reserve is expected to boost short-term rates at its next meeting on Jan. 31. That will mark the last session for chairman Alan Greenspan, who will retire that day after 18-plus years at the helm.

Another rate increase could come at the following meeting on March 28 -- the first one to be presided over by incoming Fed chief Ben Bernanke. Either way, many economists believe the Fed's nearly two-year credit-tightening campaign will be winding down this year.

The employment report also showed that the average time the unemployed spent searching for work in December was 17.3 weeks, an improvement from the 17.6 weeks in November.

Most private economists predict the economy will grow respectably this year -- topping 3 percent. Friday's jobs report ''suggests decent but not stellar economic growth,'' said Nigel Gault, economist at Global Insight.

Reuters's initial story on the January 6, 2006 BLS Employment Report:

Reuters Business Channel | Job growth below expectations in December: Fri Jan 6, 2006 9:20 AM ET: By Glenn Somerville

WASHINGTON (Reuters) - U.S. employers added a smaller-than-expected 108,000 new jobs in December but that followed a much stronger wave of hiring than previously thought in November when rebuilding after hurricanes was getting under way, a government report on Friday showed.

In its monthly report on employment, the Labor Department said the unemployment rate fell in December to 4.9 percent from 5 percent in November.

The December new-jobs total was well below Wall Street forecasts for 200,000 jobs. But it came after an upwardly revised 305,000 new jobs in November -- the strongest hiring month since April 2004 -- instead of 215,000 that the department reported a month ago.

Analysts saw the report as reinforcing chances that the Federal Reserve was on course for a relatively early end to rate rises after hiking the federal funds rate 13 times since mid-2004 to 4.25 percent.

"The report is probably a shade on the weak side and it increases the chance that the Fed is more likely to stop raising rates at 4.75 percent at the middle of the year, rather than going higher," said Cary Leahey, senior managing director at Decision Economics in New York.

There also was a revision in the October jobs totals -- to an increase of 25,000 rather than 44,000 -- but for the two months October and November the net effect was 71,000 more jobs than the government previously had estimated.

On average over 2005, some 168,250 new jobs were created each month -- a steady if unspectacular pace of growth.

U.S. manufacturers hired 18,000 new employees in December on top of 8,000 in November and 13,000 in October -- the first time since March-May 2004 that manufacturers have hired for three months in a row. But construction jobs declined by 9,000 last month, a reversal from November's 42,000-job addition.

Overall, the employment figures imply a relatively strong hiring outlook. But modest gains in employment income -- with average hourly earnings up 5 cents in December to $16.34 -- may help to heighten expectations that the Fed will soon be able to bring its 1-1/2-year rate-rise cycle to an end.

Financial markets were jolted by the payrolls data, uncertain how to interpret the report. U.S. Treasury bond prices initially were modestly lower as investors apparently worried that higher average earnings kept inflation fears alive. Stock futures rose on hopes that softer job growth might mean fewer interest-rate hikes.

Peter Cardillo, chief market analyst and chief strategist at SW Bach and Co. in New York, said December's job gain was solid.

"This is a fairly good number. Lower than expected but still showing that job creation growth is still intact," Cardillo said.

Economist Chris Low of FTN Financial in New York said the December report demonstrated the effectiveness of Fed policy over the past 1-1/2 years.

"They've raised rates enough to take some of the steam out of economic growth and hopefully prolong the expansion," Low said, and the key remaining risk was "if they continue to tighten they may overdo it."

Well, it looks like Susan Rasky and I will be teaching a course on covering the economy to some of Berkeley's Journalism School students this semester. So it is time for me to start assembling materials...

At 8:30 AM Eastern time on the first Friday of each month, the Bureau of Labor Statistics issues its monthly employment report, and the Commissioner of Labor Statistics issues a statement. Here is the pdf version of the January 6, 2006 Employment Report:

Well, it looks like Susan Rasky and I will be teaching a course on covering the economy to some of Berkeley's Journalism School students this semester. So it is time for me to start assembling materials...

At 8:30 AM Eastern time on the first Friday of each month, the Bureau of Labor Statistics issues its monthly employment report, and the Commissioner of Labor Statistics issues a statement. Here is the Commissioner's Statement from the January 6, 2006 Employment Report:

Advance copies of this statement are made available to the press under lock-up conditions with the explicit understanding that the data are embargoed until 8:30 a.m. Eastern Standard Time.

Statement of Kathleen P. Utgoff: Commissioner Bureau of Labor Statistics: Friday, January 6, 2006:

Nonfarm payroll employment increased by 108,000 in December, and the unemployment rate, at 4.9 percent, was little changed. In November, payroll employment rose by 305,000, and October employment was about unchanged (+25,000), as revised. Over the year, payroll employment increased by 2.0 million. Over the month, employment increased in manufacturing, food services, professional and business services, and health care. Construction employment was little changed in December.

Manufacturing added 18,000 jobs over the month. There were noteworthy gains in wood products and in computer and electronic products. The factory workweek declined by 0.1 hour to 40.7 hours, and overtime was unchanged at 4.5 hours.

Construction employment was little changed over the month, following a gain of 42,000 in November. In 2005, construction employment rose by 246,000. In December, employment in residential building construction continued to increase. Employment in heavy construction declined in December, following a large gain in November.

Within the service-providing sector, health care added 21,000 jobs in December and 271,000 jobs in 2005. Over the month, employment continued to trend up in hospitals and in doctors' offices.

Employment was up by 33,000 in professional andbusiness services in December, following a much larger increase in November (+76,000, as revised). Over the year, this industry added 486,000 jobs. In December, employment continued to trend up in architectural and engineering services, management and consulting services, and accounting services. Employment in temporary help services was little changed over the month; over the year, the industry added 156,000 jobs.

In December, employment increased by 36,000 in food services and drinking places; over the year, the industry added 220,000 jobs. Employment growth continued in financial activities over the month; in 2005, the industry added 188,000 jobs. Strength in the housing market contributed to job growth in credit intermediation (up by 84,000 over the year), and in real estate (up by 56,000 over the year).

Retail trade employment was little changed in December.

After seasonal adjustment, employment declined in general merchandise stores, as seasonal hiring was less than usual. Building material and garden supply stores employment increased over the month.

Average hourly earnings of production or nonsupervisory workers on private nonfarm payrolls rose by 5 cents in December to $16.34, following a 1-cent gain in November (as revised). Over the year, average hourly earnings were up by 3.1 percent.

Turning now to our survey of households, I would remind data users that, with the release of December's data, we revise seasonally adjusted estimates. Data going back 5 years--to January 2001--are subject to revision. All of the seasonally adjusted household data released today reflect the revisions.

The unemployment rate was little changed in December at 4.9 percent; a year earlier the jobless rate was 5.4 percent. The number of unemployed persons, at 7.4 million in December, was down from 8.0 million a year earlier. The employment-population ratio was unchanged over the month at 62.8 percent. After trending up earlier in the year, the ratio has been 62.8 percent for 5 of the past 6 months. The labor force participation rate, at 66.0 percent in December, was unchanged from a year earlier.

With today's release, we have the third month of data derived from a special series of questions that were included in the household survey to identify and solicit information from survey respondents who had evacuated from their homes due to Hurricane Katrina. It is important to note that the estimates do not account for all evacuees. We do not gather information on those evacuees who remain outside the scope of the survey, such as those currently living in hotels or shelters.

The December data indicate that there were about 1.1 million persons age 16 and over who evacuated from their August residence due to Hurricane Katrina. By December, about 600,000 persons, or a little more than half, had returned to the home from which they had evacuated; the remainder had not returned.

Of the estimated 1.1 million evacuees identified in December, 58.2 percent were in the labor force, and their unemployment rate was 12.4 percent. Those evacuees who returned home had a lower unemployment rate in December (5.6 percent) than those evacuees who had not returned to the residence they occupied in August (20.7 percent). The proportion of evacuees participating in the labor force in December was similar for both groups--58.4 percent for those who had returned to their homes, and 58.0 percent for those who had not returned.

To summarize December's labor market data, payroll employment increased by 108,000, and the unemployment rate was little changed at 4.9 percent. Over the year, payroll employment rose by 2 million, and the Nation's jobless rate was down by half a percentage point.

Friday, January 06, 2006

Tyler Cowen and commentators wrestle with the difficult problems of the economics of recipes:

Marginal Revolution: What does a recipe maximize? : Brad DeLong's daring but unsound cinnamon gambit led me to wonder what a recipe is intended to do. I see at least two possibilities: 1. A food recipe is designed to put you on the highest indifference curve possible, taking into account market prices and constraints. 2. A food recipe is designed to taste as good as possible, ignoring market prices and constraints. Bring on the caviar.

Cookbooks by famous chefs are more likely to fall into #2. The chef makes money not just from the cookbook but also from TV appearances, endorsements, and other ancillary products.... Knowing this, how should you adjust recipes? It depends on the quality/price gradient. You could cut back on the most expensive ingredients, cut back on all ingredients, or perhaps add more spices and buy a quality of meat lower than suggested. At the very least you should cut back on your labor input and take shortcuts. This is in fact what most home cooks do....

If you have a not-very-clearly-branded cookbook, you might be better off following the instructions to the letter. They are hoping to make money from happy book-buying cooks.... [I]t is hard to predict the direction in which relative prices have changed, but at the very least wages have probably gone up. So you are back to making adjustments and taking some extra shortcuts to stay on your highest possible indifference curve.

If the recipe is from a supermarket, cut back on the high-margin items. Use more canned goods and less expensive cheese, relative to what is suggested. (Hey, what about blog recipes?)

Lunchtime Pho with Alex contributed to these ideas; I enjoyed the food but I believe the restaurant followed #1. I spent $6.45. Comments are open. Posted by Tyler Cowen on January 6, 2006 at 06:47 AM in Food and Drink.


on the blog thing - I know something about what I do to recipes I am about to distribute.... I rewrite the recipe to make the ingredients and directions easy to find/follow - then I provide a commentary on what I did differently than the recipe... and what I will do the next time.... --Dana

Cutting back on the amount of labor expended is a smart strategy, as at least in my experience the suggested preparation times in most recipes are unrealistically low. It always ends of taking a lot longer than you are led to believe. --Peter

For old recipes -- ones written when prices were higher relative to wages -- it may make sense to substitute upwards in the ingredient inputs. That marinara sauce tastes fine with canned tomatoes, but it'll probably taste even better with the organic farm-fresh heirloom tomatoes.... --James Grimmelmann

...I think you've answered your own question: a recipe, like an article or blog post, exists in a context and reflects the intent of its author, whether it is to promote a product (as in recipes on the back of the can of pumpkin) or to simply reproduce a previous, favorable cooking result (my mother in law's cake recipe). So what the recipe maximises depends completely on the author's intent. Martha Stewart maximises for different factors than the author of a jail-kitchen recipe. It is good to have at least one comprehensive, well-branded cookbook simply because most recipes will have seen some research and experimentation to create a quality product.... [C]ooking (making a roasted chicken, or a marinara sauce for example) much more of an art form with the ability for wild improvisation, while baking is more of a science: a cake has a precise ratio of flour, water, eggs, sugar, butter (or other fat), and leavening for a reason, and varying arbitrarily from the recipe can lead to disasterous results. I would happily triple the garlic in a lasagna recipe but I would never dare to triple the number of eggs in a cake recipe.... --unstablehuman...

The children have taken to going into the kitchen late at night, using the serrated bread knife to cut pieces off of the Scharffenberger bittersweet baking chocolate, and eating it.

Should we be worried about this?

Impeach them. All. Now.

Extra Armor Could Have Saved Many Lives, Study Shows: By MICHAEL MOSS: [M]arines who have been killed in Iraq from wounds to their upper body could have survived if they had extra body armor... available since 2003 but until recently the Pentagon has largely declined to supply it to troops despite calls from the field.... In at least 74 of the 93 fatal [upper body] wounds that were analyzed in the Pentagon study of marines from March 2003 through June 2005, bullets and shrapnel struck the marines' shoulders, sides or areas of the torso where the plates do not reach. Thirty-one of the deadly wounds struck the chest or back so close to the plates that simply enlarging the existing shields "would have had the potential to alter the fatal outcome," according to the study....

For the first time, the study by the military's medical examiner shows the cost in lost lives from inadequate armor, even as the Pentagon continues to publicly defend its protection of the troops.... [T]he Marine Corps did not begin buying additional plates to cover the sides of their troops until this September, when it ordered 28,800 sets.... The Army... is still deciding what to purchase....

The military's medical examiner, Craig T. Mallak, told a military panel in 2003 that the information "screams to be published." But it would take nearly two years. The Marine Corps said it asked for the data in August 2004; but it needed to pay the medical examiner $107,000 to have the data analyzed. Marine officials said funding and other delays resulted in the work not starting until December 2004. It finally began receiving the information by June 2005. The shortfalls in bulletproof vests are just one of the armor problems the Pentagon continues to struggle with....

Meanwhile, the Pentagon is still relying on another small factory in Ohio to armor all of the military's principal transport truck, the Humvee, and it remains backlogged with orders.... [T]he Marine Corps said it is still waiting for about 2,000 of these vehicles to replace other Humvees in Iraq that are more lightly armored....

The Times obtained the 3-page Pentagon report after a military advocacy group, Soldiers for the Truth, learned of its existence. The group posted an article about the report on its website earlier this week. The Times delayed publication of this article for more than a week until the Pentagon confirmed the veracity of its report. Pentagon officials declined to discuss details of the wound data, saying it would aid the enemy.

"Our preliminary research suggests that as many as 42 percent of the Marine casualties who died from isolated torso injuries could have been prevented with improved protection in the areas surrounding the plated areas of the vest," the study concludes. Another 23 percent might have been saved with side plates that extend below the arms, while 15 percent more could have benefited from shoulder plates....

To help defeat roadside ambushes, the military in May 2005 contracted to buy 122 Cougars whose special V-shaped hull helps deflect roadside bombs, military officials said. But the Pentagon gave the job to a small firm in South Carolina, Force Protection, that had never mass-produced vehicles.... A dozen prototypes shipped to Iraq have been recalled from the field to replace a failing transmission. Steel was cut to the wrong size before the truck's design drawings were perfected. Several managers have left the firm.... The Army, which is buying the bulk of the vehicles, asked for its trucks to be delivered before the Marine vehicles, and company officials said that move upended their production process until the Army agreed to get back in line behind the marines...

A post-Iraq-conquest insurgency--a replay in Mesopotamia of what happened after Ariel Sharon's "Peace for Galilee" in Lebanon--was always on the minds of everyone as a possibility. On the minds of everyone, that is, except George W. Bush, Richard Cheney, Donald Rumsfeld, Condi Rice, and Paul Bremer. Impeach them all. Do it now.

The Left Coaster: Bremer: We Didn't See The Insurgency Coming: I remembered this story today when I just saw this hit the wires, just in time for the Sunday chatfests:

Paul Bremer, who led the U.S. civilian occupation authority in Iraq after the 2003 invasion, has admitted the United States did not anticipate the insurgency in the country, NBC Television said on Friday. Bremer, interviewed by the network in connection with release of his book on Iraq, recounted the decision to disband the Iraqi army quickly after arriving in Baghdad, a move many experts consider a major miscalculation.

When asked who was to blame for the subsequent Iraqi rebellion, in which thousands of Iraqis and Americans have died, Bremer said "we really didn't see the insurgency coming," the network said in a news release.


Bremer also said he was deeply concerned about fighting insurgents and "became increasingly worried about the Pentagon's push to downsize the number of U.S. forces in Iraq by spring 2004," the network said. Bremer said he raised his concerns about the numbers and quality of forces with President George W. Bush, Defense Secretary Donald Rumsfeld and senior military officials. But he told NBC "there was a tendency by people in the Pentagon to exaggerate the capability of the Iraqi forces and I felt it was not likely we would have professionally trained forces to allow us to withdraw American forces in the spring of 2004."

Asked if he believes he did everything he could do in Iraq, Bremer replied, "I believe I did everything I could do. ... The president, in the end, is responsible for making decisions," the network reported.

Just ignore for a moment the appearance that Bremer is now setting the stage to say "I tried my best, but after I f----- up the first two major decisions I had to make, it really is the president's fault that it all went to hell." Just ignore for a moment that Bremer reported to Rummy, who reported to Bush, and now Bremer wants to sell books by blaming the botched occupation on his superiors solely because he believes that he "did everything (he) could do in Iraq."

Instead, focus on the fact that Bush has already admitted he f----- up when it came to the WMDs, and now Bremer is admitting that the administration f----- up when it came to the occupation. This means that Bush is 0-2, and still trying to tell us that he is the only guy who can see this through to "victory", whatever the hell that means.... [T]he issue of competence has raised its ugly head again with these remarks by Bremer. "We really didn't see the insurgency coming?"... Why should the American people have confidence in an administration that couldn't see the insurgency coming?

Michael Hiltzik rubs his eyes at the replacement of Arnold Schwarzenegger by a left-wing pod person:

Golden State: Who Are You, And What Have You Done with Gov. Schwarzenegger? : The alien life form that took to a Sacramento podium Thursday evening in an Arnold Schwarzenegger suit made the sort of modest moves toward political sanity that had eluded the real-life governor for two years. Through sleight of hand at some point during the state of the state address, the E.T. returned the mike to the genuine article, so the transformation wasn't complete... the New Arnold, like the Old one, doesn't have a discernable political philosophy, [but] one must say that a governor who abjures picking fights with working persons and who recognizes the virtue of improving access to the state university and colleges to all, giving some of the worst-paid workers in the state a bit of a hand, and looking ahead to rebuilding infrastructure is preferable to the snarling lout of yore.

It's beyond question that Schwarzenegger's change in attitude has borne immediate benefits. For one thing, it provoked Hugh Hewitt, a man profoundly in love with the sound of his own voice, momentarily to put a sock in it.... Hewitt... ceded the tooth-gnashing duties to one Carol Platt Liebau, who evidently harbors a deep-seated distaste for improved roads, schools, hospitals, public safety, etc.... The governor's new program is still full of the inevitable contradictions that arise when one proposes a huge increase in spending but no increase in revenues. When his mention of $70 billion in infrastructure borrowing was followed instantly by the cavil, "we can do it without raising taxes," math majors all over the state gave their pocket calculators a sharp rap, because numbers in the real world don't support that kind of pledge.

There were a few other jarring notes in the speech. The governor came out in favor of an increase in the minimum wage, similar if not identical to proposals he has vetoed twice.... For all his railing against "autopilot" spending, a theme he continued this year, he still didn't address one of the most prominent autopilot measures of recent years--the Proposition 49 after-school program, which will kick in this year as a permanent drain on the budget of $428 million a year or more. This measure was, of course, placed on the ballot and muscled to enactment by Arnold Schwarzenegger. He still hasn't come to grips with the contradiction.

Then there's prescription drugs, the reimportation of which from Canada he now evidently supports. So, one wonders, why did he veto a package of bills last year to do exactly that? And why did he allow, by his own inaction, two prescription drug plans to wind up on the special election ballot, inspiring Big Pharma to spend $100 million to, er, educate the electorate?

The bottom line is that there's as yet no good evidence that this Arnold Schwarzenegger is the genuine article, or that his pledges and proposals for the future are worth taking seriously. Still, at least this time around he's talking the talk. There's no use pretending that an Arnold Schwarzenegger making nice to everybody won't be a tough candidate to beat for reelection, assuming he stays in the race. I'm not convinced he's in it for the long haul, but it seems more like it now than it did six months ago. Possibly he'll turn into a good governor after all.

I can't post to typepad to tell people that typepad is sick and won't let me post, can I?

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If you see this, it means that the typepad database is no longer hosing itself, and this message is no longer relevant.

Prarie Weather directs us to Doug Henwood channeled through the Gadflyer:

Prairie Weather: The hitch is, we're not all in this together : Intelligent commentary on the "booming" economy from Jonathan Weiler and Doug Henwood about...

...Why the current "boom" feels so un-boomy. First, as Henwood has noted previously, this recovery is the second weakest since World War II. In other words, even just considering GDP growth, the current rates are comparatively quite unimpressive. Second, Henwood points out that median household income fell every year between 1999 and 2004.

Henwood writes, "this is the first time since the census bureau began publishing figures for household income in 1967 that there have been five negative signs in a row." (there were four in a row each in the early 80s and early 90s). Third, income inequality in the United States in 2004, as measured by GINI coefficients, was higher in 2004 than it had been at anytime since the early 1940s.

Many people like to think of inequality as left-wing harping when leftists can't think of anything else to complain about. But, inequality is directly germane to Joshua's article: if the economic gains of a particular period are significantly skewed to benefit a relative few (i.e - there's growing inequality) - why is it a mystery why most people don't feel that they've benefitted from the supposed boom?

With the coming of RSS, my blogroll is no longer a good guide to what I find worth reading. So let me try to remember to, every Friday, create a link to something that would be at the top of my list of weblogs-to-read if that list were still current.

Today's entry is:

Golden State : Michael Hiltzik on business, economics and more with a California edge

Charlie Maier reviews Tony Judd's Postwar:

Europa, Europa : Writing in the early days of the cold war, Raymond Aron declared: "In our times for individuals as for nations the choice that determines all else is a global one, in effect a geographical choice. One is in the universe of free countries or else in that of lands placed under harsh Soviet rule." Tony Judt cites this with approval but also includes Aron's warning that politics compelled realism: "It is never a struggle between good and evil, but between the preferable and the detestable." There is a breed of European liberal intellectual that admires Aron for his lucid tough-mindedness--a supercool Isaiah Berlin, closer in spirit to Clausewitz than to Herzen or Herder. Aron's most consistent subtext was always: no kid stuff, no utopias, no illusions and, above all, no acting out. But let's face it: The history of Europe has included massive spells of acting out, from the springtime of the peoples in 1848 to May '68, from the French Revolution to the Velvet Revolution.

Postwar, Judt's learned, massive and often quite wonderful summary of European public life since World War II, is a vast effort to square periodic acting out with Aron's injunction to cast a cold eye--more precisely, to applaud Eastern Europe's acting out in Budapest, Prague and finally in 1989, and to dismiss Parisian acting out in 1968. Judt's book is a retrospective battle with the forces of Stalinist despotism and its useful idiots on the left (Judt certainly has no truck with the murderous bullies on the right, but they were largely defeated in 1945 and really reappear only in the Balkans after 1989). Postwar follows the struggle to re-establish a politics of decency after Nazism and Communism, and it recognizes that this battle was won in Western Europe less by grand gestures of purge and absolution than through the politics of stabilization, institution building, continual compromise with some unattractive holdovers from Hitler's Europe and the willingness to reweave Germany into civic life, to adjourn the quest for socialism and to accept the welfare state instead. This was also a struggle to overcome the great descent into totalitarianism, World War II and the ensuing poverty, demoralization and exhaustion.

What makes Postwar particularly laudable, aside from a narrative stamina sustained over sixty crowded years and nearly 900 pages, is that it explicitly sets out to treat the two halves of Europe as a single continent. Romania, Czechoslovakia, Hungary and Poland belong to Judt's Europe as integrally as France and Germany. He tells the story of Eastern Europe's subjugation by the Soviets with detail and clarity, from the purges just after the war (notably in Hungary, where one-tenth of the population faced arrest, interrogation or far worse), to the thaw under Khrushchev, to the disintegration of state socialism in the 1980s. Yet despite his preoccupation with the ghosts of Stalinism, Judt is also attentive to the ways in which Europe's economic and social revival from the mid-'50s to the late '80s--the subject of the book's splendid middle sections--transcended, and often defied, any neat division between the capitalist West and the Communist East.

Readers of Judt's work, particularly his incisive essays in The New York Review of Books, may be familiar with his trajectory. Trained originally as a historian of modern France, Judt felt it urgent to recover the suppressed aspirations of Eastern Europeans--the travail, above all, of the Czechs after 1968--when he examined the pro-Soviet apologias of French leftist intellectuals in his 1992 book Past Imperfect. His judgmental tone can exact a price, flattening the complexities of intellectual debates or leading to a readier acceptance of the defects of Western positions. In Postwar, for instance, Judt briefly cites the CIA's secret funding of the non-Communist left. Some of those who received support were, as Judt rightly says, admirable intellectuals badly in need of support in the postwar struggle for liberalism and social democracy. But the issue raised by CIA funding, which I believe is revealingly understated here, was not just the war against Stalinism but the impact of secrecy on public intellectuals. After all, as Judt clearly understands with respect to the post-Stalinist deformation of Eastern European life, secret collaboration--the fabric of privilege exchanged for private betrayal--constituted the basis of Communist rule once the sanguinary and disgusting show trials were abandoned. Václav Havel is Judt's hero precisely for his clearsighted exposé of the shabby compromises that stabilized the regimes of the 1970s and '80s...

Mark Thoma sends along an essay about the Cow Palace:

Keeping the faith, by Gray Brechin, 7/EDG2IGCOES1.DTL : Seventy-two years after it first emerged from President Franklin Roosevelt's post-inaugural Hundred Days of epochal legislation, the New Deal rises from the grave to haunt those who hoped they had buried it for good. Its eternal foes ironically resurrected "that man's" memory by attempting to privatize his most popular and enduring legacy. Social Security -- a program whose very name invokes the communitarian ethos that makes the New Deal satanic for those who would privatize risk along with everything else in the public domain -- still easily has enough voting friends that Republicans backed off tampering with it before next year's midterm elections.

But nothing did so much to freshen the fading memory of the New Deal as hurricanes Katrina and Rita. In their ruinous wake, liberal commentators called for similar federal activism to rebuild the South while reactionaries sought to tamp back its dreaded specter.... Among the latter, New York Times columnist John Tierney predicted ("Losing the Faith," Sept. 24) that the "1930s nostalgia craze" would quickly founder on the rocks of a public cynicism.... Tierney related how he had lost faith in government after working with a federal antipoverty program in the 1970s. There, he witnessed bored teenagers paid to do little or nothing.... The Bush administration's calamitous bungling of a natural catastrophe, according to conservatives such as Tierney, only buttressed their own ideological antipathy to the shared risks and responsibilities inherent in New Deal programs. A Louisiana laborer told the columnist that government's unresponsiveness taught him that "The lesson is to save money and be self-reliant." John Wayne rides again.

A 1939 Dorothea Lange photograph reminded me that Tierney's tale of redundant teens was as stale as those of FDR's enemies, who savaged the Works Progress Administration for useless make-work projects. Lange's camera captured a 1939 parade of WPA laborers in San Francisco protesting congressional funding cutbacks. One carried a sign asking, "Was the Cow Palace Built Leaning on Shovels?" (a reference to the city-owned exhibition building that has been paying dividends since it opened in 1941 by hosting everything from Republican Party conventions to Billy Graham revivals, rodeos and the Beatles). Few know that federal workers and grants built the Cow Palace, and that they did so with not a whiff of graft. As waves of corruption and mismanagement charges engulf the present administration, those who have lost faith in government cannot conceive of a regime notable for little scandal even as it employed millions of men and women on public-works projects.

For most Americans, the ubiquitous public landscape of the New Deal is as invisible as it is essential for the functioning of a modern nation. One of the New Deal's first alphabet soup agencies -- the Civil Works Administration -- lasted only for the dire winter of 1933-34. Within three weeks, CWA Director Harry Hopkins put 2 million people to work, a number that soon doubled as legions of laborers built or repaired more than 800 airports, 3,700 athletic fields and 255,000 miles of roads. ... the CWA built or modernized 4,000 school buildings, hired 50,000 teachers for rural schools, and controversially employed about 3,000 artists and writers who, Hopkins insisted, "had to eat, too."

In the coming years, Hopkins' CWA and the Public Works Administration (under "Honest" Harold Ickes) put millions more to work building a network of levees, roads, airports, military bases, schools, community colleges, civic auditoriums, water-delivery systems, sewers, hospitals, zoos and parks still in use today. New Deal workers restored the Statue of Liberty, the Washington Monument and San Francisco's Palace of Fine Arts, and they built the Triborough and San Francisco-Oakland Bay bridges, the Lincoln Tunnel, TVA dams, Treasure Island and the spectacular Timberline Lodge on Mount Hood. Without WPA flood-control projects, last winter's storms would have devastated Southern California at a cost of billions of dollars to taxpayers and insurance companies. Civilian Conservation Corps "boys" stationed in thousands of rural camps meanwhile reforested the nation and clocked in 6.5 million days fighting forest fires. They built 204 museums, restored almost 4,000 historic buildings and constructed 3,116 fire towers and more than 46,000 bridges. While saving families and individuals from destitution, the CCC made the nation's proliferating parklands so gracefully accessible that few who use them are aware of the peacetime "tree army's" heroic contributions to our collective well-being.

FDR called upon Americans to overcome their fear even as his works programs vastly enlarged the public domain ... Those who -- like Tierney -- have lost their faith in what government can accomplish for the common good have but to look around themselves to regain it. The evidence of intelligent design is everywhere; it bears the name of Roosevelt, and it points to the future we could have if we but remembered we once had it.

We all remember Washington Post national political editor John Harris's declaration that the Post's "only asset [is its] credibility" as an objective reporter of the news. Here we have a Post reporter and a non-Post reporter writing about exactly the same thing:

The New YorK Times's David Sanger on Bush's photo-op with thirteen ex-Secretaries of State and Defense:

Visited by a Host of Administrations Past, Bush Hears Some Chastening Words - New York Times: Colin L. Powell said nothing - a silence that spoke volumes to many in the White House on Thursday morning. His predecessor, Madeleine K. Albright, a bit stirred up after hearing an exceedingly upbeat 40-minute briefing to 13 former secretaries of state and defense about how well things are going in Iraq, asked President Bush whether, with the war "taking up all the energy" of his foreign policy team, he had let the nuclear programs in Iran and North Korea spin out of control and allowed Latin America and China policy suffer by neglect. "I can't let this comment stand," Mr. Bush shot back, telling Ms. Albright and the rare assembly of her colleagues, who reached back to the Kennedy White House, that his administration "can do more than one thing at a time." The Bush administration, he insisted, had "the best relations of any country with Japan, China and Korea," and had active programs to make alliances around the world.

That was, it appears, one of the few heated moments during an unusual White House effort to bring some of its critics into the fold and provide a patina of bipartisan common ground to the strategy Mr. Bush has laid out in recent weeks for Iraq. But if it was a bipartisan consultation, as advertised by the White House, it was a brief one. Mr. Bush allowed 5 to 10 minutes for interchange with the group - which included three veterans of the Vietnam era: Robert S. McNamara, Melvin R. Laird and James R. Schlesinger - before herding the whole group into the Oval Office for what he called a "family picture." Those who wanted to impart more wisdom to the current occupants of the White House were sent back across the hall to meet again with Stephen J. Hadley, the national security adviser, and Gen. Peter Pace, the chairman of the Joint Chiefs of Staff. But as several of the participants noted, by that time Mr. Bush, Vice President Dick Cheney, Secretary of State Condoleezza Rice and Defense Secretary Donald H. Rumsfeld had gone on to other meetings...

And here is the Washington Post's Jim VandeHei on the same meeting:

Voices From History Echo Anew: President Bush summoned most of the living former secretaries of state and defense to the White House yesterday for what participants described as a cordial but pointed discussion about the future of Iraq. The bipartisan advice-seeking was virtually unprecedented for this White House, which has drawn criticism even from Republicans for being insular in its deliberations and dismissive of dissenters.

The session in the Roosevelt Room came complete with a photo opportunity and presidential statement after Bush spent an hour with such prominent foreign policy voices as Robert S. McNamara, a Democratic secretary of defense during the Vietnam era 40 years ago, and James A. Baker III, the secretary of state for Bush's father during the Persian Gulf War of the early 1990s.

While the president was challenged once or twice in the meeting, according to participants, White House aides believed they accomplished their twin goals of portraying a more solicitous president and underscoring the broad bipartisan agreement that a speedy withdrawal from Iraq would be unwise and potentially devastating to U.S. interests...

Does anybody think that this kind of thing enhances the Post's

reputation for "objectivity"?

Thursday, January 05, 2006

David Sanger of the New York Times writes:

Bush and Former Cabinet Members Discuss Topic No. 1: Iraq - New York Times: Colin Powell said nothing - a silence that spoke volumes to many in the White House today.... 13 living former secretaries of state and defense [were told] how well things are going in Iraq. Saying the war in Iraq was "taking up all the energy" of President Bush's foreign policy team, she asked Mr. Bush whether he had let nuclear programs in Iran and North Korea spin out of control, and Latin America and China policy suffer by benign neglect. "I can't let this comment stand," Mr. Bush shot back, telling Ms. Albright and the rare assembly of her colleagues, who reached back to the Kennedy White House, that his administration "can do more than one thing at a time." The Bush administration, the president insisted, had "the best relations of any country with Japan, China and Korea," and active programs to win alliances around the world....

[I]f it was a bipartisan consultation, as advertised by the White House, it was a brief one. Mr. Bush allowed 5 to 10 minutes this morning for interchange with the group.... Then the entire group was herded the Oval Office for what he called a "family picture." Those who wanted to impart more wisdom to the current occupants of the White House were sent back across the hall to meet again with Stephen J. Hadley, the national security adviser, and Gen. Peter Pace, the chairman of the joint chiefs of staff. But, as several of the participants noted, by that time Mr. Bush, Vice President Dick Cheney, Secretary of State Condoleezza Rice and Defense Secretary Donald H. Rumsfeld had gone on to other meetings.

When cameras were in the room, though, Mr. Bush was appreciative...

Thirteen Secretaries of State and Defense. Ten minutes--half of which is spent with Bush talking. Five minutes times sixty seconds per minute divided by thirteen equals twenty-three seconds per Secretary.

Impeach George W. Bush. Impeach Richard Cheney. Do it now.

Wednesday, January 04, 2006

Barry Nalebuff writes, apropos of

Date: Mon, 2 Jan 2006 17:19:48 -0500
To: delong@econ.Berkeley.EDU
From: Barry Nalebuff
Subject: Honest Tea:

Dear Brad,

Our Peach Oo-La-Long is what the gods drank on Olympus. Beats the pants off Snapple. And now you can, too. Get it in glass at Whole Foods. And our Lori's Lemon Iced tea won't disappoint, either.

With best wishes for the new year,


So what led Andrea Mitchell to ask this question? And what made NBC disappear it from the transcript?

Eschaton : The Mystery of the Missing Question: So, on an NBC transcript of an interview by Andrea Mitchell of James Risen we had this exchange:

Mitchell: Do you have any information about reporters being swept up in this net?

Risen: No, I don't. It's not clear to me. That's one of the questions we'll have to look into the future. Were there abuses of this program or not? I don't know the answer to that

Mitchell: You don't have any information, for instance, that a very prominent journalist, Christiane Amanpour, might have been eavesdropped upon?

Risen: No, no I hadn't heard that.

The first Q&A is there, the second has been disappeared. Why

And John Aravosis writes:

AMERICAblog: Because a great nation deserves the truth : What it means to John Kerry, Wesley Clark, and Bill Clinton if Bush wiretapped CNN's Christiane Amanpour by John in DC - 1/04/2006 03:23:00 PM: NBC's Andrea Mitchell - based on some information she clearly hasn't yet made public - is asking if Bush specifically wiretapped CNN's Christiane Amanpour. The fact that the question was asked so publicly and so specifically means that Mitchell knows something.

Why would Bush do this? Because, as I reported a few weeks ago, journalists have some of the best contacts out there and it's not unusual for journalists to talk to both sides of the story, or in this case, the good guys and the "evil doers." What a better, if not illegal, way to find the terrorists and their associates?

But before you say "yeah, go for it," consider the implications of tapping Christiane Amanpour's phones:

1. Such a wiretap would likely include her home, office, and cell phones, and email correspondence, at the very least.

2. That means anyone Christiane has conversed with in the past four years, at least by phone or email, could have had their conversation taped by the US government.

3. That also means that anyone who uses any of Christiane's telephones or computers (work or home) could also have had their conversation bugged.

4. This includes Christiane's husband, former Clinton administration senior official Jamie Rubin, who was spokesman for the State Department.

5. Jamie Rubin was also chief foreign policy adviser to General Wesley Clark's presidential campaign, and then worked as a senior national security adviser to John Kerry's presidential campaign.

6. Did Jamie Rubin ever use his home phone, his wife's work phone, his wife's cell phone, her home computer or her work computer to communicate with John Kerry or Wesley Clark? If so, those conversations would have been bugged if Bush was tapping Amanpour.

7. Did Jamie Rubin ever in the past four years communicate with any elected officials in Washington, DC - any Senators or members of the US House? Any senior members of the Democratic party?

8. Has Rubin spoken with Bill Clinton, his former boss, in the past 4 years?

Now you understand how potentially broad a violation of privacy the Bush doctrine on illegal domestic spying really is. Everyone who's anyone is a degree or two of separation away from a terrorist.

Stan Collender writes about how the Republican leadership will spend 2006 digging us deeper into the budget deficit hole they have dug over the past five years:

It's hard to see how anything positive will happen this year on the federal budget. Here are the reasons why.

It's An Election Year. The president's budget has not been a real fiscal blueprint for some time.... Bush's fiscal 2007 budget is very likely to be [even] more of a pure political statement... the White House is going to want to release the equivalent of a campaign platform for Republicans running for election.... This will... doom most of what the president proposes to the budget graveyard.... Second... the White House will... again underestimate revenues and economic growth and then take credit later in the year for what appears to be an improved budget outlook....

There's No Time, Part 1. The president is expected to submit his budget on Monday, Feb. 6, so the budget debate will begin on almost the latest possible date allowed by the Congressional Budget Act.... There's No Time, Part 2. The late start of the congressional session on the last day of January and the submission of the president's 2007 proposal on almost the last possible date allowed will limit the amount of time available... the situation will be even worse because of the election-year congressional schedule that will maximize the amount of time representatives and senators can spend campaigning.... There will be even be a new recess -- for St. Patrick's Day. From Feb. 6, when the Bush budget is expected to be sent to Congress, until the start of fiscal 2007 on Oct. 1, there are only about 65 legislative days.... There's No Time, Part 3. Two other problems will add to the fiscal 2007 budget scheduling woes.... Congress did not complete work on the 2006 spending or taxing reconciliation bills before it finally left town.... Treasury Secretary John Snow advised Congress last week that the federal debt ceiling will have to be raised by the middle of March... require the House to take the stand alone vote on a debt ceiling increase it always tries to avoid....

There Are No Easy Votes. It's always difficult for a federal budget to be considered in an election year. But a federal budget considered in an election year in a sharply divided and highly partisan Congress where control of one or both houses could be at stake will be murderous....

There is the very difficult budget equation that emerged last year: The spending reductions that are likely to be even marginally politically possible will make little or no dent in the deficit so they are not likely to be seen by many members of Congress as being worth the effort. The changes that would have a significant impact are not politically possible. Put all of this together and you quickly get a picture of a budget debate in 2006 that is likely to accomplish little...

The past was another country. Nick Szabo brings us a letter from the early stages of the British Industrial Revolution: the Darbys do the Lord's Work:

Unenumerated: A letter from the industrial revolution: Here's an interesting letter from the dawn of the industrial revolution. It was written in 1775 by Abiah Darby, mother of Abraham Darby (III) and wife of Abraham Darby (II), the son of Abraham Darby (I), who invented the process of smelting iron with coke made from coal. The Darby family were Quakers and produced several early industrialists and engineers. This small letter makes or implies several points that may have been crucial to the growth of industry that makes modern wealth possible:

  • The importance of property rights and market prices in maintaining a sustainable balance between the supply and demand of wood. ("woods for charcoal became very Scarce and landed Gentlemen rose the prices of cord wood exceeding high"). Although wood became expensive, there remained a sufficient supply of wood for the buildings, mine works, wagons, rails, etc.
  • The ability of people living with sufficient technology and secure property rights to bypass and surpass ecological limitations (in this case substituting coal for wood, and later due to this cheap iron-making process, iron and steel for wood).
  • Decentralized money issue. Abiah points out that the remote area of Coalbrookdale, where coal and iron were available, still often operated as a barter economy. Thus apparently Abraham had to either coin tokens or open a bank to issue notes (common during this era) so that the Darbies could pay their workers.
  • Darby II's invention of the iron-tracked railroad (improving the productivity of the horses by over six times and precursor to the later steam-powered railroad).
  • The ability to securely establish large machine works and lay 20 miles of track out in the boondocks and not have them be torn up by trespassers and used for other purposes or confiscated or taxed into oblivion by local lords. In most of the rest of the world that could not be taken for granted.
  • The use of atmospheric pressure (Papin/Savery/Newcomen) steam engines to drain the mines and supply water to the waterwheel pond. (The atmospheric engine apparently wasn't up to the job of directly powering the bellows for the blast furnaces; that came later with the Watt steam pressure engine). Steam engines allowed water to be pumped out of mines at a far greater rate, and thus allowed coal and iron mines to be dug far deeper, creating a large and inexpensive new supply of coal and iron.

The link is a Word document, which I don't recommend opening for security reasons, but I've copied the contents below:

Mrs. Abiah Darby on developments in the Darby ironworks at Coalbrookdale, 1708-1763

Esteemed Friend,

Thy very acceptable favour of the 9th ulto. claim'd my earliest acknowledgments, which I should immediately have made, had not thy kind condescension in taking notice of my late honour'd Husband, and requesting to be inform'd of any circumstance which may be interesting relating him, caused my delay--to recollect what might occur concerning his transactions or improvements in the Manufactory of Iron, so beneficial to this nation. But before I proceed further, I cannot help lamenting with thee in thy just observation, "that it has been universally observed, that the Destroyers of mankind are recorded and remembered, while the Benefactors are unnoticed and forgotten". This seems owing to the depravity of the mind, which centres in reaping the present advantages, and suffering obscurity to vail the original causes of such benefits; and even the very names of those to whom we are indebted for the important discoveries, to sink into oblivion. Whereas if they were handed down to posterity, gratitude would naturally arise in the commemoration of their ingenuity, and the great advantages injoyed from their indefatigable labours--

I now make free to communicate what I have heard my Husband say, and what arises from my own knowledge; also what I am inform'd from a person now living, whose father came here as a workman at the first beginning of these Pit Coal Works. Then to begin at the original. It was my Husband's Father, whose name he bore (Abraham Darby and who was the first that set on foot the Brass Works at or near Bristol) that attempted to mould and cast Iron pots, &c., in sand instead of Loam (as they were wont to do, which made it a tedious and more expensive process) in which he succeeded. This first attempt was tryed at an Air Furnace in Bristol. About the year 1709 he came into Shropshire to Coalbrookdale, and with other partners took a lease of the works, which only consisted of an old Blast Furnace and some Forges. He here cast Iron Goods in sand out of the Blast Furnace that blow'd with wood charcoal; for it was not yet thought of to blow with Pit Coal...

Sometime after he suggested the thought, that it might be practable to smelt the Iron from the ore in the blast Furnace with Pit Coal: Upon this he first try'd with raw coal as it came out of the Mines, but it did not answer. He not discouraged, had the coal coak'd into Cynder, as is done for drying Malt, and it then succeeded to his satisfaction. But he found that only one sort of pit Coal would suit best for the purpose of making good Iron.

These were beneficial discoveries, for the moulding and casting in sand instead of Loam was of great service, both in respect to expence and expedition. And if we may compare little things with great--as the invention of printing was to writing, so was the moulding and casting in Sand to that of Loam. He then erected another Blast Furnace, and enlarged the Works. This discovery soon got abroad and became of great utility. This Place and its environs was very barren, little money stiring amongst the Inhabitants. So that I have heard they were Obliged to exchange their small produce one to another instead of money, until he came and got the Works to bear, and made Money Circulate amongst the different parties who were employed by him. Yet notwithstanding the Service he was of to the Country, he had opposers and ill-wishers, and a remarkable circumstance of awful Memory occurs; of a person who endeavour'd to hinder the horses which carried the Iron Stone and Coal to the Furnaces, from coming through a road that he pretended had a right to Oppose: and one time when he saw the horses going alone, he in his Passion, wished he might Never Speak More if they should Ever come that way again. And instantly his Speech was stopped, and altho' he lived Several years after yet he Never Spoke More!

My Husband's Father died early in life; a religious good man, and an Eminent Minister amongst the people call'd Quakers.

My Husband Abraham Darby was but Six years old when his Father died--but he inherited his genius--enlarg'd upon his plan, and made many improvements. One of Consequence to the prosperity of these Works was as they [were] very short of water that in the Summer or dry Seasons they were obliged to blow very slow, and generally blow out the furnaces once a year, which was attended with great loss. But my Husband proposed the Erecting a Fire Engine to draw up the Water from the lower Works and convey it back into the upper po6ls, that by continual rotation of the Water the furnaces might be plentifully supplied; which answered Exceeding Well to these Works, and others have followed the Example.

But all this time the making of Barr Iron at Forges from Pit Coal pigs was not thought of. About 26 years ago my Husband conceived this happy thought--that it might be possible to make bar from pit coal pigs. Upon this he Sent some of our pigs to be tryed at the Forges, and that no prejudice might arise against them he did not discover from whence they came, or of what quality they were. And a good account being given of their working, he errected Blast Furnaces for Pig Iron for Forges. Edward Knight Esqr a capitol Iron Master urged my Husband to get a patent, that he might reap the benefit for years of this happy discovery: but he said he would not deprive the public of Such an Acquisition which he was Satisfyed it would be; and so it has proved, for it soon spread, and Many Furnaces both in this Neighbourhood and Several other places have been errected for this purpose.

Had not these discoveries been made the Iron trade of our own produce would have dwindled away, for woods for charcoal became very Scarce and landed Gentlemen rose the prices of cord wood exceeding high--indeed it would not have been to be got. But from pit coal being introduced in its stead the demand for wood charcoal is much lessen'd, and in a few years I apprehend will set the use of that article aside.

Many other improvements he was the author of. One of Service to these Works here they used to carry all their mine and coal upon horses' backs but he got roads made and laid with Sleepers and rails as they have them in the North of England for carring them to the Rivers, and brings them to the Furnaces in Waggons. And one waggon with three horses will bring as much as twenty horses used to bring on horses' backs. But this laying the roads with wood begot a Scarcity and rose the price of it. So that of late years the laying of the rails of cast Iron was substituted; which altho' expensive, answers well for Ware and Duration. We have in the different Works near twenty miles of this road which cost upwards of Eight hundred pounds a mile. That of Iron Wheels and axletrees for these waggons was I believe my Husband's Invention.

He kept himself confined to the Iron Trade and the Necessary Appendages annex'd thereto. He was just in his dealings--of universal benevolence and charity, living Strictly to the Rectitude of the Divine and Moral Law, held forth by his great Lord and Saviour, had an extraordinary command over his own spirit, which thro' the Assistance of Divine Grace enabled to bear up with fortitude above all opposition: for it may seem very strange, so valuable a man should have Antagonists, yet he had.

Those called Gentlemen with an Envious Spirit could not bear to see him prosper; and others covetious; strove to make every advantage by raising their Rents of their collieries and lands in which he wanted to make roads; and endeavour'd to stop the works. But he surmounted all: and died in Peace beloved and Lamented by many.