Does Jeb Bush Understand Economics?

Republican presidential candidate Jeb Bush gestures as he speaks at a town hall meeting in Henderson, Nevada June 27, 2015. David Becker/Reuters

Republican presidential candidate Jeb Bush set off a firestorm this week by appearing to say in a newspaper interview that Americans should work longer hours. Democrats pounced, even as the Bush campaign said his comments were taken out of context.

But everyone is missing the real story. Whether Bush's comment was a criticism of American workers or a lament about a weakened job market, his words demonstrated such a lack of knowledge of economics that it's virtually impossible to understand what was the context of his words.

Bush's full statement was: "My aspiration for the country and I believe we can achieve it, is 4% growth as far as the eye can see. Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and, through their productivity, gain more income for their families."

This word salad mixes together different economic terms as if they mean the same thing and reaches for statistics that are, quite simply, ridiculous. Perhaps Bush was just sloppy in his language, but whatever aide is prepping him on economics needs to do a better job–maybe by working longer hours.

The key terms in his statement are growth, workforce participation, productivity and income. His campaign insisted that when he said "people need to work longer hours," he was referring to them being able to obtain jobs that are full-time or offer close to full-time hours. Bush speaks of these economic concepts as if they are all interlinked; some are, some aren't.

Start with 4% growth "as far as the eye can see." Lots of problems there. Constant growth at that rate has never been achieved in the history of the United States. In fact, the average from the boom of 1947 to this year is 3.26%. Even the Republican saint, Ronald Reagan, only achieved an average of 3.5%. The longest period during which the United States achieved 4% or greater growth was four years, under President Bill Clinton. So essentially, Bush has as his aspiration something that has no precedent in history.

But this part of Bush's comment has both a logical flaw and a sign he hasn't been paying much attention to political language over the years. As should be obvious, no one can see growth rates into the future, so the idea of growth "as far as the eye can see" is the kind of clumsy infelicity that should raise an eyebrow. "As far as the eye can see," though, is a common term used by politicians in reference to one element of economics: deficits.

The phrase was first popularized during the Reagan administration by David Stockman, then the director of the Office of Management and Budget. In a 1981 interview with the journalist William Grieder, Stockman let slip the dirty secret of the Reagan budgets: that there would be $200 billion deficits "as far as the eye can see." (Just $200 billion? Ah, those were the days.) Since then, politicians on both sides have used the term endlessly to refer to deficits. (John Boehner, the speaker of the House, said it just a few months ago.) Given that rapid deficit growth started under Reagan, reversed under Clinton and then exploded to astronomical heights under Bush's brother, using phrases that make no logical sense and are connected to huge economic blunders isn't smart.

Just as with the growth rates, Bush's original–and revised–statements about employees working more hours is statistical hooey. The average annual hours per worker has essentially been unchanged for many, many years. Let's take the best full economic year during the George W. Bush presidency–2005–and compare it to the worst under President Barack Obama–2011. Under Bush, American workers put in an average of 34.6 hours of work a week. Under Obama, they worked an average of 34.3 hours a week. That's a difference of of 3 minutes and 36 seconds a day, which translates for the median worker salary to $1.62 (for minimum wage workers, it's 39 cents). The problem is that American business believes–unwisely–that using contractors and part-timers boosts profits. How does Bush plan to make economic growth rates translate into longer hours when that hasn't happened in the past 15 years? He doesn't–he's just saying things.

Bush's statement about workforce participation is correct–sort of. No doubt the low workforce participation rate signals a weak recovery. But unlike the unemployment rate, the participation rate is a complex amalgam of issues. According to a just-released report by the American Enterprise Institute–a respected center-right think tank in Washington–the meaning behind the statistics is much more complex than Bush implies. AEI says workforce participation has shrunk 3% since the Great Recession, but it cites a report from Barclay's attributing two points of that drop to the aging population. The report also notes that women have been dropping out of the workforce in a constant pattern since the mid-1990s. Still, there is no doubt that there are plenty of chronically unemployed people who have dropped out of the job market, so Bush gets a point.

But the rest of his comment makes him a loser in this game.

He says, "We have to be a lot more productive," and then later refers to productivity. This clearly demonstrates he has no idea what has been going on in the economy. Productivity means something in economics. As a comparison, it would be like saying the word "inflation" in an economic statement but then arguing you were referring to the expanding American waistline.

When it comes to productivity, American workers have been doing a great job. Productivity, which is the economic output per worker, has grown relentlessly since 1947 in almost a straight upward line. Implying that Americans aren't being productive enough is about the same as saying McDonald's doesn't sell enough hamburgers. How much is enough to Bush? If record productivity–with a cumulative growth of almost 300% since 1947–doesn't cut it, what does?

There is no context where "we have to be more productive" means anything other than "push yourselves past record levels, workers!" That is, unless Bush doesn't know what the word means.

But with this full statement, he has also demonstrated that he has no idea of the real problem facing American workers. No doubt, he is blaming them for their stagnant wages–all that's needed is more hours of work, and wages will improve significantly.

As history proves, that's hokum. America went through nearly a century where the profits generated by growth in worker productivity was shared–the more they produced, the more money everyone made. What Bush and far too many Republicans refuse to acknowledge is that wages and productivity became uncoupled around 1973: Productivity goes up, corporate profits go up, the rich get wealthier, but the financial benefits don't trickle down to workers. Since the great uncoupling, the only times there was significant percentage wage growth that even vaguely mimicked productivity growth were in the Carter and Clinton administrations. (Both George W. Bush and Obama had short periods of wage growth, but nothing to brag about.)

American history's most productive workers are not responsible for the fact that they aren't paid enough. Do Bush and his GOP cohorts really believe that the wealthy are sitting in their offices, twiddling their thumbs, waiting for workers to demand more money that will then be handed over gladly? Wages are growing at their lowest level since World War II. In fact, income inequality is worse today than it was in 1774, even when slavery is included in the numbers, according to a study by the National Bureau of Economic Research.

The bottom line: Folks are missing the real news in Bush's jumble of economic words. He doesn't know what is happening in the economy, he doesn't know what economic terms mean and he is willing to blame workers for their own stagnant wages by proclaiming all that is needed is for them to get more hours a week at the job. And what he leaves off the table? That the problem is his friends in corporate America, whose wages keep skyrocketing because of growing productivity per worker, which allows the companies to shed workers, creating a larger pool of labor going after a shrinking number of jobs, putting more downward pressure on wages–an unbreakable cycle that will continue as far as the eye can see. Add to that corporate outsourcing of jobs overseas, and Bush's simplistic "work more hours" blather–regardless of whether he meant what the Democrats says or his campaign says–is shown up for the nonsense it is.

Bush needs to–but certainly won't–take a new approach. Rather than telling employees that record workforce productivity needs to be even higher, he needs to let his wealthy friends know that record-high income is enough. Already, several of the super-rich have warned their compatriots that the type of massive economic inequality being experienced in the United States has never ended well throughout global history, and that policy changes are needed before mobs start slamming heads on pikes. Unfortunately, with his recent comment proving his feeble understanding of economics and his willingness to attribute low wages to largely irrelevant issues, Jeb Bush has proved he does not have the courage or the knowledge to lead that policy transformation.

Does Jeb Bush Understand Economics? | The Scoop