The Politics of Jobs Data

Posted by PITHOCRATES - April 8th, 2013

Economics 101

The Party of the Working Man misrepresents the Jobs Data and Lies to the People

Figures don’t lie but liars figure.  Something Mark Twain is said to have said.  Mark Twain is, of course, Samuel Langhorne Clemens.  But we know him by his pen name.  Mark Twain.  And the author of The Adventures of Tom Sawyer and Adventures of Huckleberry Finn.  But he was also a science buff.  And close friend of Nikola Tesla.  The father of AC power.  And he thought that most Congress people were liars and thieves.  With personal agendas.  Who will lie about facts and figures to get what they want.  And what do people in government want?  What all people in governments throughout time have wanted.  Wealth.  And power.

Every king, noble and aristocrat has acted selfishly in history to acquire wealth and power.  The privileged few.  Or one.  They held the power.  Traded favors.   And worked together.  Landowners amassed great wealth thanks to peasants working their land.  The king maintained the system that limited land ownership to a privileged few.  And the privileged few paid back the king with a share of their wealth.  By working together they exploited the masses to amass wealth.  So they could live the good life.  Comfortable in their wealth.  With the power to do whatever they wanted.  And this hasn’t changed over time.  Well, it has in one respect.  With the advent of democracy it is a little more difficult to do what you want when in elected office.

Today no one leaves Congress poor.  They are set for life.  With a generous pension.  And benefits most workers never get while gainfully employed.  And how do they do this?  The same way that kings, nobles and aristocrats have always acquired wealth.  By using political power to exploit the masses.  And the key to this is growing government as large as possible.  To give them that power.  And the ability to grant favors.  Throwing a few handouts to the peasants to win their love and admiration.  Thus pleasing enough of the electorate to win elections.  But the policies they use to make this happen have a major drawback.  They are anti-business.  And kill jobs.  Putting people out of work.  Which can be a problem when you’re the party of the working man.  And working woman.  So you have to at times misrepresent the jobs data.  And lie to the people.

The United States and Kim Jong Un have an Obesity Problem while the North Korean People suffer Famine

History has shown that low taxes and limited government grow economies.  This is what made the United States the number one economic power in the world.  Which was able to happen because it happened before the era of Big Government in the United States.  Right now there are emerging economies in the world going through a similar phase.  And their stellar economic growth will sputter out once the size of their governments grow.  Just like they have in many advanced economies that have transitioned into a social democracy.  For there is nothing that stamps out economic growth like higher taxes and greater regulatory costs.  Which is why the Soviet Union, the countries behind the Iron Curtain in Eastern Europe, The People’s Republic of China (under Mao), North Korea, Cuba, etc., have never been great economic powers.  Instead these countries that practiced fairness and redistributive policies suffered some of the most abject poverty and the lowest standards of living.  Not to mention having some of the most brutal and oppressive police states to keep their people from fleeing their social utopias.

But when it came to economic production these nations all lied to their people.  If you listened to the Soviet propaganda machine communism had won.  There was no way free market capitalism could match the managed communist economy.  They were growing bumper crops.  Their factories were putting out more goods than they could use.  And life was just peachy in the Soviet police state.  A lot of people in the West believed this.  And fought to undermine capitalism so they, too, could install socialist utopias in the West.  But the people living in those socialist utopias had a little more trouble believing the lies.  For they were waiting hours in lines to buy soap and toilet paper.  They saw stores with empty shelves.  And stores with shelves full of things no one wanted to buy.  They had to wait years before it was their turn to buy a car.  Or get an apartment.  And forever speak in hushed tones for fear the secret police might hear them utter some dissatisfaction of the socialist system.  Lest they disappear to some reeducation camp in Siberia.

And while the people suffered those in power did not.  In socialism everyone was equal.  But like George Orwell said in Animal Farm, some were more equal than others.  North Korea suffers from recurring famine.  And depends on food imports to prevent future famines.  So your average North Korean is not going to have an obesity problem.  While the United States suffers an obesity crisis because their people eat too much food North Korea suffers through recurring famines where people starve to death.  But you know who isn’t starving to death?  Kim Jong Un.  The new ruler of North Korea.  Who not only appears to be well fed.  But even looks obese.  And this in a country that suffers from recurring famines.  And it’s been the same throughout history.  Those champions of the people always lived better than the people.  For those in the inner party in the Soviet Union went to the front of the line when it came to cars and apartments.

Kings, Nobles, Aristocrats and those in the Federal Government act Selfishly to acquire Wealth and Power

This is why people want political power.  Because it is a pathway to wealth.  Especially for those people who don’t have the ability to create wealth on their own.  Like a small business owner.  So they need to use political power.  Favor.  Privilege.  And deceit.  Which is an important tool for today’s politician’s in a democracy.  Deceit.  Such as when they figure with the economic figures.  The Obama administration has implemented some of the most business unfriendly policies that have just stamped out all economic growth.  Which is why we have been wallowing in a jobless recovery following the Great Recession.  While some would even say the Great Recession lingers on.  Despite what the economic data says.  For they have little faith in the numbers anymore.  For with every jobs report the Obama administration highlights the new jobs the economy created.  And how even though the numbers could be better we are definitely on the right path.  As the unemployment rate continues to fall.  Dropping below 8% just in time for the 2012 election.  As no president ever won reelection with an unemployment rate above 8%.  So it was rather convenient it fell just in time for the election.  Perhaps a little bit too convenient.  Especially when you look at the other economic numbers (see Table A-15. Alternative measures of labor underutilization and Labor Force Statistics from the Current Population Survey).

U3 U6 Civilian Labor Force

The U3 unemployment rate is the official unemployment rate.  Which fell to 7.6% in March.  Yet another improvement.  But the U3 unemployment rate doesn’t count everyone who can’t find a full time job.  The U6 unemployment rate counts more people who can’t find a full-time job.  And it fell to 13.8% in March.  Which is an improvement.  But the number of people who can’t find a full time job is still in double digits.  And has moved little from around 14%.  One thing both the U3 and the U6 numbers have in common is that they have changed little in the last 6 months.  While the number of people in the civilian labor force has changed.  A lot.  So one of these numbers doesn’t appear to agree with the other two.  For if the unemployment rate was steady one would think the number of people in the civilian labor force would be steady, too.  Which makes one question the accuracy of the official unemployment rate.  And the constant reports of how the economy is improving.  How it’s on the right path.  As they talk about all the new jobs their policies have created.  Despite the stubbornly high unemployment numbers.  But if we look at that job creation and the changes in the size of the civilian labor force we get a different picture of that improving economy (see Employment Situation Archived News Releases).

Jobs Added Change in Civilian Labor Force

The latest jobs report shows 88,000 new jobs added to the economy.  Less than projected.  And a bit of a disappointment to those in the ‘the economy is on the right path’ crowd.  But they still find solace in the fact that the economy added jobs.  Just as it has for the previous 5 months.  If you add this job creation up during this 6-month period it totals 953,000 new jobs.  That’s about 1 million new jobs.  Not a strong recovery.  But not too shabby.  But if we look at the change in the civilian labor force we don’t see 1 million new jobs.  Over the same 6-month period we see a net LOSS of 28,000 people from the civilian labor force.  Which agrees more with the reality of the current economy.  And the U6 unemployment rate.  It’s bad.  People can’t find a full-time job.  And it’s because of the anti-business policies of the Obama administration.  But for the past 4 years or so they have massaged the jobs data to lead us to believe that they were creating jobs when they were actually destroying jobs.  Why?  Because kings, nobles, aristocrats and those in the federal government act selfishly to acquire wealth and power.

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FUNDAMENTAL TRUTH #73: “Politics is about overspending and vote-buying while getting some poor dumb bastard to pay for it.” -Old Pithy

Posted by PITHOCRATES - July 5th, 2011

Washington is Show Business for the Ugly

The founding of America heralded the end of aristocratic rule.  And this is a problem.  For aristocrats.  Those who feel they’re better than everyone else.  Especially those who aspire greatness, and wealth, through political office.  Such as Liberal Democrats.  And RINO Republicans.  Those who like to mingle in the world of the beautiful people.  Rubbing shoulders with the fabulously rich.  And A-List celebrities.  Attending the best parties.  Meeting the best people.  Eating the best food.  Drinking the best booze.  It’s a beautiful life.  The only problem is the price of admission.  You have to be rich and/or talented to get in.  And rich and talented aspiring politicians aren’t.

At least, not at first.  But politics offers them that opportunity.  Rush Limbaugh said Washington is show business for the ugly.  There may be a lot of truth in that.  You see, the beautiful people are, well, beautiful.  That’s their ticket to celebrity and fame.  And access to that beautiful life.  From movie stars being discovered sitting at a drug store counter to talentless reality stars.  Being attractive can be a shortcut to fame.  Beautiful people go the front of the line at the best clubs.  And often get a free pass in.  Because people want to be around beautiful people.  Even if they’re unknown.  That’s the power of being beautiful.  Which can be a problem for the beautifully challenged.

Of course, having talent is a way around not being beautiful.  Those nerds in high school went on to be millionaires.  Even billionaires.  Those geeky guys that never had a date in high school now have the most beautiful women chasing them.  For their money, of course.  But they are still chasing them.  And they learned something.  It’s not important to be beautiful.  As long as you’re rich.  Because it turns out that money can buy a lot of happiness.  Sure it’s the shallow and superficial kind.  But you’ll be at the best parties.  Rubbing shoulders with the other fabulously rich.  And A-list celebrities.  That’s a pretty sweet life.  And one that many covet.  But what do you do if you’re neither beautiful nor talented?  You, of course, go into politics.

You have to be a Real Good Liar

Those with no talent or ability can try to trade in on their appearance.  If they’re considered too ‘ugly’ to get by on their looks alone then they can enter a career of lying.  Politics.  Where you say you care about the little people and promise to give them things if only they will vote for them.  You do anything to get into office.  Because once you do you’re set for life.  Salary and benefits for Congress people are better than anything you’ll get working in the private sector.  And the retirement package is insane.  You live the rest of your life with a large percentage of your Congressional salary.  And you keep a lot of the perks from your Congressional days.  In other words, being elected to office is a ticket into a new aristocracy.  Just like in days of old.  And once you’re in people will treat you as if you are better than everyone else.

It’s a fairytale life.  And a lot of people want it.  People that you have to beat in some election.  Often without the help of any voter election fraud if you’re just starting your political career.  So you have to be a real good liar.  You have to suspend all reason and logic.  And promise, promise, promise.  Even with astronomically high deficits you promise to give people more if they vote for you.  Because you have a plan.  You’re going to shift the tax burden to those who can afford it.  Go after the rich who don’t pay their fair share.  And cut corporate welfare.  With these savings you will be able to spend more on the poor and disadvantaged.  It’s a powerful sales pitch.  And it works well if they are not well educated (thank you public education) and don’t understand taxes and their impact on the job-creating economy.  Also, the more poor and disadvantaged they are the better.  Because the rich and middle class aren’t going to vote higher taxes on themselves.  Only the poor and disadvantaged (who are not well educated on taxes and their impact on the job-creating economy) will continuously vote to raise taxes on those who have more than they do.  Classic class warfare.  So it’s important that your programs fail.  Because you don’t want to help these people.  Not if you’re relying on them to help you sustain your better life.

Of course having a large percentage of the population dependent on your government policies and programs isn’t enough.  It will make the elections easier but it isn’t going to pay the bills.  These people are, after all, a burden.  They consume a lot of the tax base.  But most don’t pay any taxes.  Sure, you can live a comfortable life on a Congressional salary.  But there’s so much more to be had out there with the power to write laws and regulations.  When you can decide winners and losers in the economy you wield considerable influence.  And that influence is worth something.  Especially to crony capitalists.  Who look to profit not by competing in the free market.  But by having friends in high places.  Friends who will reward them well in exchange for a little cash and perks thrown their way.  And by a little I mean a lot.  Of course the good politician makes sure these crony capitalists are only profitable with their help.  Because the less they need their special favors the less of their cash and perks find their way to Washington.

Higher Tax Rates ultimately Reduce the Amount of tax Dollars Collected

Politics is nothing more than a ballet of leverage.  Who has pull.  Who can use it best.  And who is willing to screw the little guy.  You use the poor and disadvantaged to win elections.  But you do everything within your power to keep them poor and disadvantaged so they can keep helping you win elections (we’ve been fighting a war to end poverty since LBJ‘s Great Society of the 1960s and we haven’t won it yet which should tell you something).  You use crony capitalism to enhance your wealth and wellbeing.  But you make sure this corporate welfare only serves one person.  You.  So you don’t necessarily want to see your crony capitalists doing well in the free market.  Far from it.  For if they can do well without your help they’re not going to stay your bitch.

So, to succeed in politics you need to do a couple of things.  You need to redistribute wealth from those who create it to those who don’t.  And form mutually exclusive relationships with crony capitalists.  We call it tax and spend.  And legislation.  They use the progressive income tax system to spread the wealth.  And write legislation that rewards their friends while punishing the enemies of their friends.  Taxes for revenue.  And legislation for power and wealth. 

But the revenue is never enough (as the deficits show).  Despite the progressive income tax system.  Where, in the name of fairness, the richer you are the more taxes you pay.  And the poorer you are the fewer taxes you pay.  But keeping as many people as poor as possible has its drawbacks.  The more poor there are the fewer there are paying taxes.  Which requires raising taxes on the non-poor.  The rich.  And the middle class.  Which has a real big side affect.  After a point, higher taxes reduce economic activity.  It’s the law of diminishing returns.  The higher tax rates ultimately reduce the amount of tax dollars collected.  So they consider other sources of revenue besides the income tax.  Money that is ‘outside’ of the economy.  Money that’s ‘parked’.  Untouched by income and excise taxes.  Such as estates of the dead.  And the wealth of the living.  There is an estate tax.  But no wealth tax.  Yet.  And, oh, do they want one.  Like in some European countries.  Because the rich don’t work.  They invest.  They don’t live on income.  They live on ‘investment’ income.  Capital gains.  Which is taxed at a lower capital gains rate.  Not the confiscatory rate of the progressive tax system.  Worse, as the government sees it, they only pay taxes on their capital gains.  Not their capital.  Their wealth.  And that’s a lot of money parked outside the economy that they want a piece of.

Something ‘outside’ the Economy to Tax

But a wealth tax has its problems, too.  You can move wealth.  If you tax wealth the wealthy will just invest their wealth elsewhere.  Like rich Europeans have done.  No.  They need something better.  Something the rich can’t escape.  And, ideally, finding something ‘outside’ the economy to tax.  Something like the Las Vegas model.  The casinos in Vegas bring a lot of money into the city.  The casinos are very profitable.  And Las Vegas and Nevada profit well, too (before the subprime mortgage crisis, at least).  Many other cities have tried to cash in on these fat profits but have failed to match the success of Vegas.  Caesars Windsor is doing well because it is in a smaller city across the border from a larger metropolitan area.  A metropolitan area with a lot of people.  And if just a fraction of them crossed the border it would swell the Windsor economy.  And like Vegas, Windsor does have a little vice to offer.  A bit of the naughty that you can’t get in that metro area.  For the good people of Metro Detroit have a higher legal drinking age.  They don’t have gentlemen’s clubs with nude dancers that serve alcohol.  And prostitution is illegal.  But all of these things (to a certain extent) are available in Windsor.  Just across the border.  Where, like Vegas, what happens in Windsor stays in Windsor.  Plus Windsor has an active nightlife.  Safe streets.  And a touch of an international flair.  The money poured into Windsor.  When Detroit finally added three casinos to get a little piece of that action that’s what they got.  A little piece.  The casinos were money makers.  But Detroit did not enjoy the boom that Windsor did.  Why?

Windsor did well for the same reason Vegas did well.  They’re both destination cities.  People travel to them.  They’ll fly there for a vacation.  Or cross an international border for a night out.  These are the people spending and losing their money in these casinos.  Not the good people of Windsor.  Or the good people of Las Vegas.  It’s outside money coming into the local economy.  Which is a net add.  The problem Detroit has is that it’s not a destination city.  It’s cold in the winter.  It’s suffered blight and decline.  And still has a reputation as being unsafe.  People aren’t going there.  It’s just the people already there that are gambling away their money.  These people are just going out to dinner less.  Going out to fewer movies.  Going out to fewer clubs.  Etc.  The problem in Detroit is that there is no new money coming into the economy.  All that casino money was just local money people were spending someplace else in the local economy.

Despite what they say, politicians know high taxes don’t stimulate economic growth.  It just transfers money from one person to another to spend.  There’s no net gain.  Like in Detroit with their casinos.  They would love a wealth tax.  But the rich could easily avoid it by moving their wealth.  But there is something that even they can’t avoid.  Taxing energy.  Rather, the emissions created by energy.  In the name of combating global warming.  Cap and trade.  Emissions trading.  Making people buy ‘permits’ for their emissions.  That can be traded.  Creating a permit exchange similar to a stock exchange.  Governments forcing private entities to buy ‘shares’ of pollution.  Brilliant.  Because you can’t escape the use of energy.  It is a part of our very existence.  So you can’t escape it.  And the Europeans have taken it to the Las Vegas model.  The European Union (EU) will force international airlines flying into EU airspace to pay in essence an extralegal tax.  Which is the greatest kind of tax a government can use.  A tax whose full benefits will go to their constituents.  But a not a dime of which their constituents will pay.  If you put this to a referendum, the people will pass it.  Because people will have everything to gain.  And nothing to lose.  Other than the trade war such an extralegal tax would most likely provoke.  And the accompanying economic crash and withering recession.

In the mean time, though, the ruling elite, the new aristocracy, will be able to maintain their privileged lives.  Mingling with the beautiful people.  The fabulously rich.  And A-List celebrities.  Which is really all they care about anyway.

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