The participation rate is the number of people in jobs plus the number looking for a job. Conditions are so bad in the USA at the moment that a lot of people have given up looking for work. That reduces the participation rate and -- crazily -- makes the unemployment figures look better than they are: Because only those "participating" are counted
The decrease in the participation rate in the U.S. economy has left our understanding of what the real unemployment rate is a little cloudy. The latest unemployment report showed huge revisions, but little reality, as to where we really stand.
Albert Edwards of Societe Generale has put together this chart to provide a little context. It shows what the U.S. unemployment number would look life if we were at the peak participation rate of 67%, which occurred around 2000.
At that participation rate, unemployment would be about 4 percentage points higher than the current headline figure of 9%. Edwards says that 4% is the equivalent of 6.7 million more unemployed people.
So if the participation rate increased 3% (from its current 64% to 67%), unemployment would actually be 13%. That gap is partially made up of long-term, structurally unemployed construction workers left behind after the housing bust, and is a significant number.
What Obama didn’t say in his sermon to the Chamber of Commerce
In his recent sermon to the U.S. Chamber of Commerce, Barack Obama came across as the most pedestrian, pedantic, preachy, and professorial president since Woodrow Wilson left Princeton to go into politics and eventually the White House. His ivory-tower comments accomplished the Herculean task of making George W. Bush look smart by comparison and have sullied the reputations of his alma maters of Columbia and Harvard.
He was an embarrassment to himself, to his supporters, and to all graduates of Columbia and Harvard. It was even more embarrassing when you consider what he didn’t say.
First, he didn’t mention the good news that manufacturing output in the USA has increased 120 percent in inflation-adjusted dollars since 1970.
Much of this achievement was the result of productivity improvements; that is, producing more with fewer people. Approximately 19 million Americans were employed in manufacturing in 1970, versus about 12 million today, for a decline of 36.8 percent. It sounds counterintuitive, but such productivity gains are necessary for higher wages and societal wealth.
The problem is that new manufacturing businesses and factories aren’t coming on line fast enough to take up the slack in manufacturing employment caused by productivity gains. There are many reasons for this, but Obama didn’t address the following ones.
* The USA leads the world in the ratio of lawyers to total population. For example, the USA has 281 lawyers per 100,000 people, while France has 30 per 100,000 people. Obama is a lawyer, and so is half of Congress. All of these lawyers and lawyer-politicians excel at driving businesses and factories offshore with excessive litigation and regulations.
* If the growth in government employment at the state and local levels had kept pace with population growth since 1946 instead of exceeding it, there would be 12.4 million fewer government workers today. Coincidentally, this number is about equal to the number of manufacturing workers who have lost their jobs due to productivity gains. Or maybe it isn’t a coincidence. Capital that is taken by the government for excess public-sector employment is capital that can’t be invested in new businesses and plants.
* Measured by stagnant SAT scores and a huge increase in per-pupil K-12 spending over the last 50 years, the productivity of public schools has declined by 70%. Universities have seen similar declines in productivity, due to a flood of student loans and grants, which remove the incentive for colleges to do more with less.
* It’s a well-known fact that most American students are deficient in math and science and are taking easy majors in college instead of majoring in science and engineering. But even students with the intellect and academic achievement to major in science and engineering are choosing more lucrative disciplines, especially finance. For example, five percent of Harvard undergraduates majored in finance in the 1960s, versus 20 percent now. They are going where the profits are. In the 1970s and 1980s, finance companies accounted for about 15 percent of all U.S. profits. By 2005, they accounted for 25 percent.
* Much of the finance industry operates as a government-sanctioned cartel, with profits virtually guaranteed by Federal Reserve policies and the real and implied backing of the federal government in the event of a financial meltdown. Obama preaches about obscene salaries and the need for companies to share their profits, but he is in bed with the cartel and embraces corporatism instead of true free-market capitalism.
* His selection of General Electric chief executive Jeffrey Immelt to be his business guru is telling. GE is one of the largest nonblank financial institutions in the country, a result of taking cash from its industrial businesses for decades to fund its financial arm of GE Capital. During the recent financial meltdown, GE Capital was able to issue billions of dollars in new debt at below-market interest rates because the debt was backed by the federal government’s Temporary Liquidity Guarantee Program--or more accurately, it was backed by you and other taxpayers. Even the industrial side of GE engages in corporatism by lobbying for subsidies for “green” initiatives.
* Obama used his political connections to land a $200,000 job for his wife Michelle in public relations at a Chicago hospital when they lived in the Windy City. Later as president, he lambasted the profits and executive salaries of the health care industry, an industry that is half-socialist and half-corporatist.
In closing, it’s difficult to decide what’s worse: what Obama said to the Chamber of Commerce or what he didn’t say. Either way, he should have worn a black uniform during his address in honor of Mussolini, whose corporatism he emulates.
Billions spent on programs without knowing if they work
One of Washington's biggest lies about federal spending will be endlessly repeated in coming weeks by President Obama, congressional Democrats, special interest advocates and the liberal mainstream media. The myth is that the federal budget really cannot be cut except on the margins because government programs are managed efficiently, with minimal waste, fraud and abuse, and they deliver essential services that cannot be provided any other way.
Two reports focusing on federal job training programs -- one from the Government Accountability Office and the other from Sen. Tom Coburn, R-Okla. -- that were made public Wednesday put the lie to such claims.
Nine federal agencies simultaneously operated at least 47 work force training programs at a cost of $18 billion in 2009. That total represented a $5 billion increase since 2003, thanks to added funding from Obama's economic stimulus program. Here are some examples from among many Coburn cited on how those tax dollars were spent:
* Grants to an admitted thief: In West Virginia, Martin Bowling -- an admitted thief with a long rap sheet -- was the main beneficiary of a $100,000 federal worker training grant, and was put up for another federal job training grant worth $1 million by his mother, a state official at the time.
* Tampa Bay binge: The Tampa Bay WorkForce Alliance in Florida used federal job training funds for lunches at Hooters, valet parking for lunch at the Cheesecake Factory (topped with $9 dollar slices of cheesecake), $20 delivery fees for cupcakes, $443.99 on flowers, 300 koozie drink holders and more.
* $4 for bureaucrats, $1 for workers: A Montana trade union that was supposed to manage a half-million-dollar federal job retraining grant spent four times as much on salaries as it did training displaced workers.
* Ghost employees: A U.S. Department of Labor official approved fraudulent invoices for ghost employees in exchange for cash bribes and a vehicle paid for by a Jobs Corps contractor.
* Job training executives frequent casinos during work hours: Iowa work force executives conspired to enrich themselves with $1.8 million in bonuses -- paid for with federal funds -- while engaging in sexual relationships and frequenting casinos during work.
Do any of the 47 programs achieve their goals? The government doesn't know, according to GAO: "Only five programs have had an impact study completed since 2004 to assess whether outcomes resulted from the program and not some other cause. Almost all federal employment and training programs, including those with broader missions such as multipurpose block grants, overlap with at least one other program in that they provide similar services to similar populations."
These results emphasize the truth of Coburn's observation that "we create new programs with great fanfare, then never bother to measure their effectiveness." So politicians and others who claim in the weeks ahead that a $4 trillion annual federal budget can't be cut by hundreds of billions of dollars simply aren't telling the truth.
Deliberate Leftist blindness
The arrest of abortionist Dr. Kermit Gosnell at his grisly Philadelphia abortuary “wasn’t about abortion.” Feminists and other liberals insist there’s no association and if you say there is, you’re a hateful, misogynist bigot who would deny women their constitutional rights.
Gosnell and others are charged with murdering seven babies by cutting their spines with surgical scissors. Clinic workers familiar with Gosnell’s habits testified to the grand jury that he killed hundreds of babies by this method or just by “slitting their necks.” He’d been doing this for decades and would be still if federal agents hadn’t burst into his clinic. According to the Philadelphia Inquirer:
“The investigation began last February, after federal and state drug agents and Philadelphia police raided the clinic at 3801 Lancaster Avenue on suspicion that Gosnell was illegally dispensing narcotic painkillers. (The federal drug-trafficking investigation is ongoing.) What they found, according to the report, was ‘filthy, deplorable, and disgusting’: Blood on the floor. The stench of urine. Cat feces on the stairs. Semi-conscious women moaning in the waiting or recovery rooms, covered with blood-stained blankets. Broken equipment. Blocked or locked exits.”
Abuses at the clinic were reported over and over for decades, but regulatory agencies ignored them. For some macabre purpose, Gosnell preserved amputated feet of the babies he killed. There were lines of them on shelves throughout the “clinic.” Investigators found little corpses in freezers. One worker at the clinic said Gosnell tried to joke as a baby squirmed while he cut its throat saying it acted like a chicken with its head cut off. How could abortion clinic inspectors fail to act all those years? The Sargent Shultz routine of politically-correct liberals in government and the mainstream media for whom abortion is sacrosanct: “I see nothing. I know nothing.”
If you can believe abortion Doctor Gosnell isn’t about abortion, you can believe radical Muslim Doctor Malik Hasan shooting forty-three US soldiers at Fort Hood, Texas while shouting “Allahu Akbar!” wasn’t about Islam. Liberals insisted fifteen months ago when the massacre occurred that there was no association. If you still insist there was, you’re an intolerant, hateful, racist, Islamophobic bigot.
The denial reached absolutely unbelievable proportions. According to a report by US Senators Joseph Lieberman and Susan Collins, the federal government knew Hasan exchanged emails regularly with radical imam Anwar Al Awlaki of al Qaeda on the Arabian Peninsula and ignored it. Fellow officers knew of his radical Muslim beliefs because he was anything but secretive about them, but he was not arrested. He was not imprisoned. He was not courtmartialed. No. He was promoted! He was actually promoted by politically-correct, multicultural officers afraid of giving offense to a Muslim. We’re talking about our senior military here in a state of war with radical Islam. If we’re afraid even of offending them, how are we going to defeat them?
As the Lieberman/Collins report puts it: "The officers who kept Hasan in the military and moved him steadily along knew full well of his problematic behavior . . . They collectively had sufficient information to have detected Hasan's radicalization to violent Islamic extremism but failed both to understand and to act on it.”
Are you with me so far? Okay. Let’s take it one step further. If you can believe Dr. Gosnell isn’t about abortion and Dr. Hasan isn’t about Islam, then you’ll also believe that hundreds of homosexual priests raping thousands of altar boys for decades wasn’t about homosexuality. If you still believe it was, you’re a hateful, homophobic bigot. In spite of report after report after report that upwards of forty percent of Catholic priests were homosexual and 85% of their victims were adolescent boys, the mainstream media outlets like The Boston Globe, which broke the story, insist homosexuality had nothing to do with it.
Abortion, multiculturalism, homosexuality. Are there three more sacred cows in politically-correct America? I don’t think so. Whenever they report on these things, we can expect our mainstream media’s Sargent Shultz routine to continue for as long as most Americans remain willing to accept it.
ObamaCare Is Starting to Unravel
The egg that is the president’s health care reform legislation is starting to crack. A court has ruled the bill unconstitutional. The Senate has moved to repeal by a huge margin the onerous paperwork nightmare the bill imposes on small businesses. More significantly, a select group of Democrat senators are looking for ways to legislatively roll back the individual mandate provisions of the law -- undermining key partisan unity that is keeping the law in place.
Sens. Jon Tester (Mont.), Joe Manchin (W.V.), Claire McCaskill (Mo.) and Ben Nelson (Neb.) (aka the “vulnerable caucus”) -- all of whom are up for tough re-election battles in 2012 and who represent states Obama lost in 2008 -- are poised to give Republicans the votes necessary to decimate a major provision of the legislation.
Republicans are at a critical strategic juncture. Repeal of the individual mandate is like breaking a leg of a three-legged stool -- the chair will topple.
Facing the reality that outright repeal is not possible in the Senate this year, Republicans should begin breaking the bill up, forcing critical votes on its most unpopular provisions. The Senate vote on repealing the onerous 1099 provision on small businesses found 17 Democrats willing to defend the provision. Other provisions are harder to support.
It’s a strategy that has succeeded before. In 2000, Republicans tried to pass a major tax-cut bill to send to the president but had trouble getting it out of the House, due to unified Democrat opposition. Democrats railed against “tax cuts for the rich” and held together on the big package. Instead, the Republican leadership broke up the provisions of the bill and brought them to the floor individually.
Each provision passed with large number of Democrat votes -- the same provisions Democrats had voted against in the larger context. The time has come to do the same with health care. Start with the individual mandate. Then move on to rationing.
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)