If Grandma had wheels we could end this recession!
People, I just can't take it anymore. I can't stick my fingers in my ears and cover my eyes and avoid dealing with the "lack of government jobs is holding back the recovery" BS any longer. The one that pushed me over the edge was from the usually excellent Neil Irwin at Wonkblog (hat tip to Mark Thoma):
One of the reasons for quiet optimism about the economy over the last few months has been the possibility that state and local governments have finished their long retrenchment and that government hiring might soon contribute to job creation.
From July 2008 to January 2013, the sector shed more than 737,000 jobs. Had the jobs merely been maintained, the unemployment rate would be as much has half a percentage point lower. Indeed, the state and local pullback is one significant reason that this recovery has been weaker than those in the past.
Gentle readers, I humbly submit to you the case that in all likelihood, it's the weak recovery that has caused the state and local pullback, not the other way around!
We have had a much worse recession than previous ones, along with a crash of housing prices. State and local governments are fully funded by tax revenues, and at the local level, property tax revenues are a big factor.
So it's entirely likely that the size and nature of this "great recession" has caused state and local government employment to be very weak compared to previous recoveries.
Irwin (and countless others) are making the same mistake as taking Rogoff-Reinhart's numbers and claiming high debt slows growth, when there is a clear case for the opposite view, that slow growth creates high debt.
Exercises like, "if this sector had done this, then the economy would have done that" are just meaningless. They are the equivalent of "if grandma had wheels she'd be a bicycle", but with fancy charts.
Causality is not inherently ideological, though appeals to causal problems often seem to be.