INDIANAPOLIS - Indiana’s unemployment rate in July was 10.1 percent; this was the twelfth highest of the 50 states. Nevada was running at 14.3 percent to lead the nation while the lowest rate was 3.6 percent in North Dakota. We’re much closer to the worst than we are to the best.
Are these the best of times or the worst of times? In material terms, these might be the best of times. Many of the poorest walk around with cell phones to their ears; children go to air conditioned schools that are downhill (both ways) from home; machines for washing dishes and clothes stand ready for duty in many homes where baseball games are watched in HDTV on screens longer than the arm of any adult in the house.
Psychologically, these are bad times. Uncertainty is rampant in the economy. Fear and anxiety are responses to uncertainty that plague many households and businesses. Most, however, responded to the current economic uncertainty with caution. They cut back on spending, increased cash balances, reduced debt and assumed an adamant position sitting on their wallets.
Nonetheless, these are not the worst of times. As we scan the records of unemployment rates from January 1976 to the present, July 2010 was the worst month for only one state (Nevada, 14.3 percent). Indiana’s highest unemployment rate in those 34 years was 12.7 percent in January 1983. It was during that 1982-83 recession that 29 of our 50 states experienced their peak unemployment rates.
That long term view offers some comfort, but does not tell us if we are better off now than a year ago. Indiana’s unemployment rate in July was 10.1 percent compared to 10.3 percent a year earlier. But we have learned that an improvement in the unemployment rate is not necessarily the sign of a healthy economy.
Over the past year, the number of persons employed in Indiana has declined by nearly 52,000 persons (1.8 percent) which is the fifth worse case in the nation. Simultaneously, we saw the number unemployed fall by 11,000. Put those two numbers together and Indiana’s labor force dropped by 63,300, a two percent decline, the sixth worse case in the U.S.
Our state’s economy remains in bad shape. We are one of 17 states that had the numbers of employed and unemployed persons both drop in the past year. We’re in the same class as New York, Michigan, Wisconsin, Ohio, and Kentucky. Normally, when people lose jobs, the number unemployed rises. These times are so tough that people who already are unemployed leave the labor force along with those losing their jobs. The result is that the unemployment rate may improve although the underlying conditions are worsening.
Indiana had 39 counties in which the number of employed persons grew in the past year. As the number of employed persons grew in 26 of these counties, the number unemployed declined while the labor force grew. Kosciusko (Warsaw) is an example: employment grew by 2,100, unemployment fell by 900, and the labor force increased by 1,200.
The majority of Indiana counties (53) saw the number employed fall.
In 22 of these counties, the decline in employment was accompanied by a rise in unemployment. Vanderburgh (Evansville) exemplifies these counties with a 2,500 decline in employed persons and a rise of only 900 in those unemployed. The result was a labor force shrinkage of 1,600.
By contrast, there were 31 counties where the numbers employed and unemployed fell, depressing the labor force. Shelby County, for example, saw a 900 person decrease in its labor force, the combination of a loss of 700 persons with jobs and a decline of 200 in those unemployed.
As ever, the full story is always deeper than the headlines.
Mr. Marcus is an independent economist, speaker, and writer formerly with IU’s Kelley School of Business.
12/11/2009 2:23:00 PM HPI Interview: David Hoffman on Lugar, Nunn and the Reagan diaries
By BRIAN A. HOWEY
INDIANAPOLIS - David E. Hoffman was researching his book “The Dead Hand: The Untold Story of the Cold War Arms Race and its Dangerous Legacy” - on the delegation that Sen. Richard Lugar and Nuclear Threat Initiative Chair Sam Nunn took to Russia, Ukraine and Albania in August and September 2007. HPI’s Brian A. Howey traveled there as well. On Tuesday we interviewed Hoffman about his book that was published last month:
HPI: Are you aware of any comparable Congressional-led foreign policy initiatives that would be in the same league as Nunn-Lugar?
Hoffman: It’s hard to be absolutely comprehensive about Congress. But if you look at some of the most important issues on the collapse of the Soviet Union, this has got to be the most important legislation of the generation. The Senate has to give its consent for arms control. If you look at a bunch of them, they didn’t. The Comprehensive Test Ban Treaty was rejected by the Senate. So sometimes Congress is a brake on the executive. The great thing about Nunn-Lugar is that it was the reverse. It was the creative, assertive, affirmative program instead of a brake. That’s pretty rare. Judging Congress on foreign policy is often difficult because their role is to approve requests. Look at Afghanistan. “Charlie Wilson’s War” was a movie about a congressman who made a difference in foreign policy. Frankly, they could make a movie about Nunn and Lugar that would have the same kind of affirmative role. Nobody was lobbying for this. There were loose nukes, but loose nukes don’t have a lobby. That’s why it was such a remarkable, visionary thing.
HPI: How instrumental was Lugar in getting Congressional Republicans and the first Bush White House on board with Nunn-Lugar?
Hoffman: The country was going into a mild recession (in 1991-92). Nunn realized he needed an authoritative Republican. When the Nunn-Aspin bill failed, Lugar joined him and that did the trick. By working together they got enough votes in Congress to pass it. I don’t think they ever got Bush enthusiastically on board. The fact is that Bush signed it, though he did it in a kind of desultory way. There’s a famous picture of them coming out of their meeting and Bush was looking kind of grim. Bush never really embraced it.
HPI: I don’t think either of the Bush presidencies were enthusiastic about Nunn-Lugar. Would that be fair to say about the second Bush administration?
Hoffman: That is absolutely fair to say. Just take a look at the amount of money spent in Iraq and Afghanistan and the amount of money spent on this program (about $1.4 billion a year). Just huge amounts of money were spent for Iraq. Afghanistan - you can argue - we were attacked and there was a need. I think the Iraq funding was part of the debate we haven’t had yet. We just spent an enormous amount of blood and treasure. It just dwarfs the amount we spent securing weapons of mass destruction.
HPI: If Sen. Lugar hadn’t stepped up, would there have been another Republican?
Hoffman: I think he was the obvious person. Lugar had been a participant in a number of arms control working groups that went back to the mid-80s. Because Lugar was conversant with this - because he knew the Russian participants - he was a much more natural choice. The interesting thing was Nunn’s concern - a hair-trigger alert; accidental launch; and reducing the risk. I don’t see Lugar as animated by that as with other things. Ash Carter had told them your problem isn’t necessarily with a rogue general, it’s with a rogue janitor, or a rogue sergeant. We had a new situation there and they had to deal with a new situation and that’s what makes it extraordinary.
HPI: Was it fateful that Sam Nunn was in Budapest at the time and could get to Moscow as the Soviet Union disintegrated? If he hadn’t been there, could this have been an epic missed opportunity?
Hoffman: I don’t think it was inevitable. Maybe if Sam Nunn had been in Atlanta, he would have flown to Moscow anyway. What I think is really interesting is this: The nature of the danger. You could be reading the newspapers at the time and come away with a sense of danger. So why is it then, that the senators didn’t act by reading the papers? Nunn is jostled on the streets. Gorbachev can’t tell him whether he lost control of the nuclear suitcase (during the coup d’etat).
HPI: Amazing.
Hoffman: The people who took action here, they not only had the information available to all of us, they had something even deeper, personal and direct that prompted them to act.
HPI: Was the Soviet’s Dead Hand doomsday computer system known to U.S. intelligence in real time? Or is this a revelation in your book?
Hoffman: A Soviet mistake was to build such a threatening thing and not to tell us. If they had told us, it would have been part of deterrence. By not telling us, they did a stupid thing. They took on risk without any deterrence value.
HPI: It was a chilling part of the book. Is Perimeter still functional at this point?
Hoffman: I don’t think we know. My interview suggests that the hardware system - the underground bunkers, the guys there, the command rockets, the command system - still exist. The key question that I cannot answer is do they still have this trigger mechanism in which the leader of Russia would pre-delegate? It may be with the collapse of the Soviet Union they took that down because it was too hair-triggered.
HPI: The stories you tell - the flocks of geese mistaken on radar for missile launches, and the decrepit, dysfunctional Soviet computers - how close did we come to having a mistake setting off a nuclear holocaust?
Hoffman: It’s really hard to quantify how close. When the super powers were at their peak hair-triggered confrontation of the early 1980s, a lot depended on quick reactions. You can understand the human nature on both sides. All the technicians were trying to do was give their leader more time to make a decision. So giving their leader more time, you had to subtract time from the rest of the system, which meant that everything was on a hair trigger. The story at the beginning with Stanislav Petrov where he has to make a decision - he has to give his leader time - so he has to make it himself. The interesting thing about this story is there is a false alarm and he is in the middle. It’s not only a false alarm that one missile is coming; he gets a signal that five are coming. He makes it based on his understanding of what nuclear war might be, his instinct at what he was looking at. A lot of this pressure for speed relied on human beings. It wasn’t only machines getting us into war, it was human miscalculations. So many of them didn’t follow orders when the alert level went up. That was typical of the chaos of the Soviet system. It was not nearly has monolithic as what we once understood.
HPI: Most Americans are aware of the close brushes with nuclear war in 1962, 1967 and 1973 with Cuba and the Arab/Israeli wars. Most probably don’t realize how great the Soviet paranoia was in 1983-85. Can you provide some context to the difference between the outright confrontations and the creeping paranoia you describe during the Reagan/Andropov/Chernenko era?
Hoffman: From what I read in Michael Dobbs’ recent book, the Cuban Missile Crisis was undeniably the most dangerous period of the Cold War. The Soviets had moved those weapons to Cuba and Dobbs’ book is a good recounting of that. What makes 1983 more interesting was that in 1983, we had signaled to the Soviet leaders that we wanted to decapitate them. They were in our crosshairs. We had done that as a part of a strategy that would stand up to them and we did it through an official presidential directive. So they worried a lot about that. This is something that didn’t exist in the 1960s. I tell the story in the book about the military exercises in the summer of 1983 in the Pacific, those exercises were intended to be very provocative. They were designed to, as one person called it, “fly right up Ivan’s nose.” Their systems were rusty and they failed to respond in time. The pilots on the early warning system got reprimanded for that failure. So when the Korean airliner got off track that September, one of the reasons it got shot down was a stupid mistake made by panicky officers who had gone through that previous experience. It was another sign of the rot within their system. The Kremlin leadership was extremely paranoid about nuclear war and the KGB had put out an all points bulletin all over the world looking for signs of preparation for nuclear war. So I would put this in second place behind the Cuban Missile Crisis. Maybe not quite so much an imminent war, but more mysterious and shadowy period of threat because in this case, the missiles were so much closer to Moscow and to Washington.
HPI: You covered the White House during the Reagan years (beginning in 1982). Did you understand at the time, the emotional and strategic pivot Reagan was making on nuclear weapons? Did it raise eyebrows in the press room?
Hoffman: A completely new Reagan emerged for me in the research. One of the reasons is we have the advantage of his diary. This diary is an incredibly good record. Reagan wasn’t all that introspective, but when he was, it’s a very, very helpful document. That changed some of my views. The press room view was always of a guy who was first, anti-communist, secondly very strongly patriotic in terms of building up our defenses and standing up to the Soviets. The press room view rarely gave us an understanding of a third part of Reagan which was that he was a nuclear abolitionist. I had heard him talk about one day wanting to get rid of all nuclear weapons, but when I read his diaries, interviewed people and looked more into his decisions, I realized this was not simply some kind of slogan put into a speech. To me the really telling moment is in January 1986, Gorbachev - in office less than a year - proposes in a major address to eliminate all nuclear weapons by 2000, and chemical weapons. He did this in a very complex, phased way. Reagan, that very day, gets the translation of the speech. It’s rushed to him even before (Secretary of State George) Shultz can talk to him. About 2 in the afternoon Shultz comes over to the Oval Office and Reagan has already got the thing in his hands and the first thing Reagan says is, “Why wait until the year 2000?”
HPI: The three weeks between Reagan’s “Evil Empire” speech on March 8, 1983 and his March 23 Strategic Defense Initiative address was an amazing period. What are your thoughts?
Hoffman: My understanding of what happened during that period was the Joint Chiefs got fed up with the deadlock in Congress on the MX Missile, and Reagan’s Star Wars speech was simply an end run around the Congress; just another way to deal with the deterrence issue. I wrote this in a 1985 piece in the Washington Post. I always thought that was a better history than Bill Broad wrote in the New York Times at the time that Star Wars was invented by Edward Teller and was a product of the crazies. I went carefully back through all this material in writing this book and I now think both of us were wrong. What I conclude was the amazing thing about Reagan was his ability to absorb ideas from lots of different corners. He wasn’t a one-note guy. He took a little from here, he took a little from there. There is no evidence that the preparation of that speech, for a major shift in American strategic doctrine, was ever worked out in any kind of intergovernmental bureaucratic process. It all came together in his head. It was a classic decision that Reagan would make. It shows that the journalists in the press room don’t always get it right because so much is hidden. And a major, major part of this book is showing what was happening on the Gorbachev side. Nobody had ever shown how Gorbachev had reacted to SDI. We had his propaganda, his speeches, but this book uses original material to show how Gorby really reacted. It wasn’t that Star Wars bankrupted the Soviet Union. Actually Gorby ducked and by ducking he didn’t take the bait.
HPI: I grew up in a little town of Peru, Ind., right next to Grissom AFB where one of the three presidential doomsday command jets was based. I was fascinated that Reagan realized that a Soviet sub could level Washington in minutes, decapitating the U.S. government and Reagan basically said of his vice president, “George you’re going to get on the plane, I’m staying here.” The presidency will continue, not necessarily the president. That’s amazing stuff. Is that breaking new ground, historically?
Hoffman: I’m not the only person to find this; Jim Mann’s book - “The Vulcans” - also made a big contribution. We in the press room were thinking very conventionally. In a nuclear standoff through 40 years of history, and he (Reagan) didn’t think that way. He didn’t believe in Mutually Assured Destruction. He didn’t think about leaving the Oval Office and getting on a helicopter to escape a nuclear attack, because if it came, we’re all toast. At that moment, where they came up with a plan to save the presidency, to get other people evacuated and not the president, they are trying to fit Reagan’s own nuclear abolitionism, which we had no clue about in the press room.
HPI: Most Americans believed that in an attack, the president would get on Marine One, rendezvous with Air Force One or one of the doomsday jets, and fly over the Great Plains like President Bush did on Sept. 11. That’s absolutely fascinating.
Hoffman: We never knew that at the time. What we really didn’t understand was he had a much more conceptual sense about nuclear weapons and what would happen. He had a biblical sense of Armageddon. He didn’t think you could have a limited nuclear war. He had an almost everyman’s idea of the dangers of nuclear power, than a sophisticated tactician’s idea.