When people see the word 'economics' they often stop reading right there. It is so boring. It is much more exciting to focus on popular causes, such as climate change, equal rights, biogenetic engineering, or even alien life, anything but economics. It involves too much thinking and numbers. Everyone knows that numbers can be manipulated. As the saying goes, "figures lie and liars figure."
But as this economic tsunami threatens to subsume all other issues it is high time we focus where it really matters. History is clear on this subject. When an economy falters, so does its political structure. If the political structure fails, war follows. When war overwhelms societies, popular issues are thrust far into the background and mere survival becomes the most critical day-to-day concern. As we plunge into economic chaos we must be mindful where this path leads so that we can avoid losing all the good work we have accomplished so far, not to mention our very lives.
Bloomberg is not known for its support of left wing politics. Therefore, when Bloomberg reports economic conditions one can assume it is not to promote some radical left wing agenda. If anything, the opposite is true. Therefore when they reported that unemployment is far worse than the 'official' statistics are telling us, we should pay close attention. After all, we are told the economy is recovering even in the face of increasing unemployment. That alone should raise the red flag. How can an economy recover when jobs are being lost? Are not jobs part of the economy? Is not consumer spending the very foundation of the economy? How can we have consumption without employment? How can we have an economy without jobs?
As I have said consistently for the past three years, job estimates are just that, a guess of probable values. Estimators use tools to guess. Statisticians and statistics can be very accurate when used properly. Oh yes, we all know that the media misuses and abuses statistics, but we should not throw out the baby with the bath water. Good statisticians are extremely accurate when the base data is correct.
Bloomberg reports that the method used for estimating unemployment is failing (http://www.bloomberg.com/apps/news?pid=20601068&sid=aGBkhROUjNds ). In the face if this terrifying economic catastrophe, these methods just do not hold up.
The method the government uses to "estimate" job loss includes guessing how many new jobs have been created by small business. The Bureau of Labor Statistics has not made any accommodation for the bad economy in their numbers. They "assume" that small businesses are still adding jobs at the same rate as the year before.
Therefore, at the year end calculations, they find out the truth...oops! Gee there were many more jobs losses than we have been reporting and unemployment is much higher than we figured.
What is interesting to note is that only a few years ago this adjustment was made EACH MONTH. The actual figures came from the state's payroll records, where they can see exactly how many people are having taxes withheld from their paychecks. This measurement was removed to "save money" and is now done only once a year.
Add to this that the method of calculating unemployment was greatly changed in 1993 (Thank you Clinton!!) reducing the unemployment number drastically to make Clinton and other politicians look good.
We are told that unemployment is at its worst since 1983. I was working in 1983 and I tell you we had many more people employed in 1983, as a percentage, than today. These news reports are false. But even the progressive media is repeating these statistics without any proper questions being asked. Americans are being told untruths, AGAIN. If we use the same method to calculate unemployment that was used in 1983, the unemployment figures would be somewhere in the range of 16% to 22%... no one knows exactly, of course, because this has been buried effectively by corrupt politicians in both parties. (Hurray for the two party system!!) But it would be much larger than the numbers we are hearing. This is no surprise to those who have lost jobs or to those who are underemployed. They know well how bad it really is out there. But who is interviewing the homeless and unemployed?
Finally, in places like California, unemployment could be as high as 25%, one point higher than the Great Depression...starting to not look so "Great" after all.
Add to this that the extended period of unemployment is the longest "since records have been kept" and we unquestionably have a full-blown depression on our hands.
Wait, I am not finished. The outlook for jobs in the coming months and years is as bleak as ever, meaning that job loss is going to continue unabated. There is NOTHING in the marketplace or economy that would suggest this condition will turn around anytime in the foreseeable future....NOTHING AT ALL!!!!
America has been stripped of its jobs by NAFTA and other free trade agreements (Thank you Clinton - AGAIN! - and the Republican Party who wrote the legislation). But it seems our nation's leaders are not even looking at this issue. It is as if it does not even exist. If they start looking at it, which I doubt they will, it will take another couple years of controversial debate before they "do" anything. You know how Congress is.
So Milton Friedman and all his 'theories' of trickle down economics are now shown to be totally bankrupt. It took many years to come to this. Some economic changes take years to take effect...others take effect almost immediately.
So what do we do? The so-called 'free marketeers' who believe the market will answer all our problems, have forgotten that a free market is not the same as a monopoly market. We have monopoly market now and it can easily be shown using classical and even Friedman's economic analysis that a monopoly market drains an economy of its resources and concentrates them into the hands of a very few people and corporations. These circumstances cause consumption to decline in an ever-greater spiral. This condition is exactly what we are facing now. The evidence is undeniable.
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