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Last week,
supporters of the current administration rejoiced over job numbers released
by the Bureau of Labor and Statistics (BLS). For the first time since the
administration came to power, the official unemployment number fell below 8%.
Keynesian cheerleaders all claimed the numbers meant we are surely on the
road to economic recovery, just in time for Christmas, and also, the
election. Others saw through this ruse.
The
situation on the ground looks nothing like a recovery. 23 million people are
still out of work or chronically underemployed. This number is expected to
rise dramatically next year. The situation in Washington should not give
anyone cause for optimism. Politicians refuse to look honestly and
intelligently at the cause of our economic malaise, and so real solutions are
not taken seriously or acted upon. It is much easier and less painful to
simply recalculate the numbers and redefine the terms until a rosier picture
is presented. There is only blind hope that at some point, for some reason,
things might change. But nothing will change for the better if we only stay
the course.
The truth
is the long term solutions to our economic quagmire involve some short term
pain. Re-evaluating the economic role of an institution as insidious and
behemoth as the Federal Reserve will inconvenience some people, and those
people happen to have a lot of power. Similarly, the idea of ending
government programs and closing down superfluous departments will always
upset someone because it means someone will stop getting a government check.
No one
wants to upset the apple cart, even if all the apples are rotten.
Not all of
the unemployed are counted in the BLS unemployment numbers. This is no
secret. In 1994 government statisticians came up with the term
"discouraged worker" to remove entire swaths of people from the
unemployment statistic. Now all the government has to do to improve the
unemployment numbers is discourage people from looking for a job.
Far more
unintended consequences are created in Washington than jobs.
Ideally,
the business sector should be able to depend on sound numbers from the BLS,
but smart business leaders know that trust in these numbers leads to bad
decisions and failure. In regards to the recent jobs numbers, investor Jim
Rogers recently stated “I have learned not to take advice from the
government, especially the US government, which frequently misleads its
citizens." He also noted the election just around the corner, suggesting
timing as an extra incentive to keep fudging the statistics.
The real
drivers of the productive economy can't afford to take risks based on false
numbers. This is why economist John Williams created Shadow Government
Statistics, utilizing more traditional methodologies and definitions to show
business decision makers the real economic picture, warts and all. He shows
the real unemployment rate to be a staggering 22.8%.
This is a
difficult figure to accept as the actual truth. Perhaps if the politicians did,
the people would finally demand real change and real solutions. Perhaps they
would consider that all of the so-called stimulus spending, quantitative
easing and mountains of regulation from Washington has
only crippled the economy. Perhaps people would come to understand that fewer
checks handed out from the public sector would mean more checks available in
the private sector, and a return to real prosperity instead of just the
appearance of it.
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