Friday, March 8, 2013

Unemployment: The Household Survey Story

Yeah, yeah.  Unemployment was down this month from 7.9% to 7.6%.  Hurray! A robust recovery is finally here!

Only it ain't.  As all red-blooded Americans know, the Unemployment Rate is computed from the Labor Department's Household Survey, using the Labor Force and the Employment Level numbers.

Last month the Employment Level was up by 170,000.  Which is OK, a so-so number.

But last month the Labor Force number was down by 130,000 people.  A bad number.

Here's what the numbers would look like if we got into a real recovery.  You would see the Employment Level going up by 300,000 to 500,000 per month.  And initially, you would see the Labor Force number going up even faster.

Why?  Because when discouraged workers get the word that there are jobs out there they start to look for work.  And then they get included in the Labor Department's count of the Labor Force of people that have jobs and people that want jobs.  So, in a robust recovery, the Unemployment Rate may actually go up for a while.

So the fact is that we are still not in a solid recovery.

No surprise there.  You want a solid recovery?  Then you, the government, need to implement policies that encourage people to produce and consume.  You need to produce a solid monetary policy, not an inflationary monster that merely keeps the government's interest cost down.  You need to curb crony capitalism in all its guises.  And you need to cut government spending.  You need to cut tax rates.

Our liberal friends have lately taken to whining that cuts in government spending reduce the gross domestic product.  So they do, because government spending is included in the GDP.  That's what happens when the indices are designed by people that believe in Keynesianism.

But in reality government spending, all government spending, is a weight on the economy.  It leaches wealth and prosperity out of the economy.  You want to fix a sluggish economy?  Then cut government spending.

Done that?  Good.  Then cut spending some more and while you are at it, cut tax rates.

That, Mr. President, is what I call a balanced program to fix the budget and revive the economy.

The reason we have all this stupid Keynesianism and inflationism is that the people getting government spending handouts screech like banshees when the checks stop coming.  I mean everyone, from Social Security recipients like me to crony capitalists getting lots of lovely green subsidies.

(Golly, who knew that dear old Uncle Warren Buffet was getting green subsidies from his investments in wind and solar?  That guy sure knows how to make a buck on the government's dime.  Right now he is benefiting from the delay of the Keystone pipeline, 'cos the Bakken oil has to move over his railroad instead of environmentally cleaner pipelines.)

Politicians are practical people, so they listen to experts that come up with rationalizations for what comes to them naturally.  The Keynesians give the politicians a reason to delay biting the bullet.  So they do.

People want free stuff, and politicians give it to them.  Until the money runs out.  Then the politicians move on and the people are stuck eating the paint off the walls.

1 comment:

  1. Your amateurish grasp of economics is truly frightening.