Tuesday, September 21, 2021
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Cooking the Books, Government Math

The U S Labor Department continues to report 9.1 % unemployment. It has been above 9% since mid-2009.

For how they do this, see here.

If you pay attention, and I won’t use complex graphs here, you will also have noticed that every month the government predicts some job growth (jobs expected to be created), gives an end-of-month estimate, all to drive positive news with AP or Reuters or NBC or CNN, then always revises this number down a week or so later, usually on a slow news day, such as Document Dump Friday, when everyone is doing something else, so that no one can see the disappointment on their faces.

This practice  has become so pervasive that even folks like Reuters have had to write stories denying their own previous stories, only never by name assigning blame or causation to themselves.

The State of Unemployment

Unemployment figures are based on 1) the number of people who report they are out of work, but are looking for work, versus 2) those who are working. The total is what the government and most economists consider “the labor force,” which is a gross misnomer.

This report is based on a weekly survey, not unlike a poll as phone calls are involved, of approx one-quarter of 60,000 revolving households. You can view the method and (if you can stay awake) arrive at your own judgment as to how the “number of people” looking for work is arrived at, but it takes Labor 2200 people to do this each week.

In times of normal economics, I guess this is a fair method of counting in part because people don’t care.  When unemployment is 4.2% or 4.6%, they can look around to see how good things are. No one needs to tell them.

But when things are bad, they actually do want to see if the government is seeing things as badly as their own eyes see it.

This is also when government feels most vulnerable, so it is when it wants to sugar-coat everything it can. Then makes the unemployment report a political act, not a statistical one.

In other words, the books can be cooked if there is a will to cook them.

A statistical analyst would likely say 1) Labor’s methodology is consistent with standard practices, and then say 2) any statistical system is subject to either human error or human  manipulation.

Mark Twain would simply say, “There are lies, damned lies, and statistics.”

(I won’t discuss illegals here, but Labor also knows approximately how many are in the work force, yet not counted, for these days most illegals have papers. These days it is more often the Americans who are working for cash under the table. And unlike earlier years, when it was argued these people did jobs other Americans would not, that is likely no longer the case. Many take jobs the Labor Department reports as unfilled have in fact been taken by illegals, but Labor, for political reasons cannot report them as such.)

Mort Zuckerman, no conservative, says that as many as 10 million jobs have been lost since 2008, 2.6 million reported in 2008 alone, 7.6m since, under Obama. These are jobs lost because employers are not hiring, and have had to cut staff/workers because fewer people are buying their product or service.

The real job losses are greater than the estimate of 7.5 million. They are closer to 10.5 million, as 3 million people have stopped looking for work. Equally troublesome is the lower labor participation rate; some 5 million jobs have vanished from manufacturing, long America’s greatest strength. Just think: Total payrolls today amount to 131 million, but this figure is lower than it was at the beginning of the year 2000, even though our population has grown by nearly 30 million.  (BC: emphasis mine).

In 1985, the total US labor force stood at 115 million, and at a rate of 2.7 million new workers added to the work force each year, this would bring the total available (willing) work force to app 158 million. This is how many people would want to be working, making a startling 27m not in the workforce who would normally want to me. (Many are, only in the informal (cash) economy. )

This, not the posted unemployment rate, is the language of Depression.

Real unemployment in America, especially as it might be correlated to any kind of real “Misery Index,” is closer to 17%, which is the number FDR carried with him through much of the Great Depression, from roughly 1933 to 1940, when they instituted the draft.

Private analysts no longer even try to account for more bad things but rather how long it will take to get back to where we were in say 2000, while spawning 2.7m new hungry workers each year. Many years, indeed.

All I can say is you’ll know it when you see it. Like the 30’s the reality of a turnaround will be known by you and felt by you before the government acknowledges it.  Confidence will build at the local level before Washington, even Wall Street will know it. Dare I say it, when there is hope, and change – you’ll be the first to know it.

Statisticians are, by and large, an honest lot, Mark Twain notwithstanding.  But in a large bureaucracy, and considering the methods they use in collecting data (Labor uses 2200 employees, full time) the manner in which this data is collected, then passed through at least 2-3 desks (computer systems now), there is at least one political desk across which the final data must pass, which probably has a “revision staff” all its own, to make the final outcome more palatable before being passed onto the public.

The Soviets called this desk “the commissar,” the representative of the Party. All things must pas through him.

The government does all sorts of statistical analysis, and even contracts much of it out, as in climate change statistical modeling, but one wonders, when they become as biased in their searches for facts as tobacco companies were reputed to be about cigarettes, why not step out of the statistics-competition game, and once again become a referee.

If we’re looking for people to get rid of in government, I’d start with the so-called commissars whose sole job over at Labor and other reporting agencies is to lie. Someone should take their names, add faces to those falsified numbers, including the supervisors or department heads, and pass them over to the next administration for appropriate action. Everyone wants good employees who do what they’re asked, promptly and efficiently, but to be willing to lie-on-demand should not be one of the terms of employment in government.

As for the 2200 honest compilers, let them find work with Booz Allen and fine actuaries, who will be hiring many many people if only the government will step away.

 

Bernard Chumm
Partner, The Sands Institute, head of the fearsome Scat Patrol, and Protector of the Innocent

2 COMMENTS

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2 COMMENTS

  1. I finished my monthly revenue today. Had to explain any variables and was there enough funding remaining for each project. I’m dealing with actual figures. Not pie in the sky it’s not that bad or what you think the Fed has a propensity in portraying.

    Are they without conscience or integrity to continue in this running charade every month?

    *bangs head against table*

  2. How many times to we have to see them revise the figures, not just by a tenth of a point, but by a half to a whole point, or miss ARRA by 43 billion dollars, or miss, when Medicare will go broke by five years, or scrap what the definition of a recession is to fit a PC stance, or use an Orwellian term like ‘Quantitative Easing’, before we realize these people are not serious, these people are not economists, these people do not know how to add an subtract. This is the New Math run amok. Just like climate change, it’s becoming apparent laymen know more about these people’s business than the experts do.

  1. I finished my monthly revenue today. Had to explain any variables and was there enough funding remaining for each project. I’m dealing with actual figures. Not pie in the sky it’s not that bad or what you think the Fed has a propensity in portraying.

    Are they without conscience or integrity to continue in this running charade every month?

    *bangs head against table*

  2. How many times to we have to see them revise the figures, not just by a tenth of a point, but by a half to a whole point, or miss ARRA by 43 billion dollars, or miss, when Medicare will go broke by five years, or scrap what the definition of a recession is to fit a PC stance, or use an Orwellian term like ‘Quantitative Easing’, before we realize these people are not serious, these people are not economists, these people do not know how to add an subtract. This is the New Math run amok. Just like climate change, it’s becoming apparent laymen know more about these people’s business than the experts do.

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