"Decency, security and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen.
In a government of laws, existence of the government will be imperiled if it fails to observe the laws scrupulously. Our government is the potent omnipresent teacher. For good or ill, it teaches the whole people by it's example.
Crime is contagious. If the government becomes a law breaker, it breeds contempt for the law; it invites every man to become a law unto himself; it invites anarchy." Supreme Court Justice Louis Brandeis, Olmstead v. United States
"And they healed the pain of my people disgracefully, saying: Peace, prosperity, when there was no peace or prosperity." Jeremiah 6:12
The problem of official US statistics not fully reflecting the actual economic situation is reasonably well-documented and accessible to any literate person. It is remarkably underreported and unremarked upon by the economic and media establishment however.It may often be crap, but it is the crap we use to buy and sell, trade, derive values, and base policy decisions. It does not matter to the buyers and sellers in the short term, but in the longer term it can be seriously misleading, as witnessed by our latest financial crisis.
Peer pressure discourages negativity and outlying opinions amongst many economists, so recognition of trend changes and innovation in ideas become particularly problematic. This is an issue in the leading edge of many sciences, particularly in those that are rapidly evolving such as theoretical physics. Exegesis succumbs more readily to eisigesis in what might be described as a nascent science like economics with so many conflicting opinions and theories influenced by political agendas and ideology.
Nouriel Roubini is hailed as a prophet for predicting a downturn that common sense and an examination of the statistics should have made obvious to a first year economics student in March at the latest. Roubini was a maverick in that as a tenured professor with a reputation he dared to state the obvious before it became painfully obvious to everyone.
There are others who were equally forthcoming, if not as famed, in "telling it like it is." Meredith Whitney and Yves Smith are two outstanding examples of those who are led by the data, who are remarkable in the integrity of their thought processes, even when they might be incorrect as we all are.
Why is there a reluctance to state the probable amongst the economic establishment? It is most likely the fear of appearing foolish, of being wrong, because the methods and measures underlying the work of all the economic schools is simply unreliable. In an atmosphere such as this, playing safe and building 'reputation' and a place in a pecking order becomes a higher priority than innovation and advancement of understanding.
It fosters an ideological balkanization of knowledge, and the tendency to impress and intimidate rather than illumnate, because the economic professional understands that they simply do not know the answer with certainty, but can never admit it or explain it sufficiently to a non-practioner or even worse, a client. Perhaps that is why some of the best information has been coming from those who have less vested interest in the established order. There is a certain freedom conferred by the glass ceiling or a lack of material need and ambition.
Then there are the economists who act as hired opinion slingers or unpaid angry villagers for ideological causes and think tanks, tending to dominate the landscape in the short term because it is easier to declare yourself and work for a group of true believers whose first principles you hold, whether in true love or a paid embrace. And you will be right every so often, and will always find a place to hang your hat and park your shoes.
And on the far end of the spectrum are the used car salesmen of the economic and financial industry, who appear in the news and on television program generally with a 'pretty' interviewer as a set piece to promote a view of reality that favors the pocketbook of their employers, with a shamelessness that is almost comic at times, and would almost certainly not be so tolerated in any other aspect of human endeavor.
Can you imagine the state of the food and drug industries if such blatantly fallacious claims and interpretations of the prognosis and prior results were tolerated? It recalls the early days of traveling medicine show salesmen.
Gratefully there are more independents these days, with a forum provided by the internet for their thoughts, who operate outside of the conventional journals and channels of economic orthodoxy. Independent minds like Mark Thoma's Economist's View, Paul Kedrosky's Infectious Greed, Barry Ritholz's Big Picture, Yves Smith's Naked Capitalism, Eric Janszen's iTulip, and of course the benchmark for all, Calculated Risk, among others listed in the Divertissement Éducatif section on the left side of this blog. Their task is too often thankless but a candle lit in the darkness nonetheless.
Change is coming, and a renewal of thought is in the air. Monetarism has clearly run its course, and Keynesianism needs a significant update if not transformation from a genius equal to the original. It also may be time for a radical change in rethinking old ideas of how an economy can operate efficiently, ironically by often viewing even older ideas and theories in the light of new experience.
Out of the destruction of our current system will arise new ideas, new concepts, new attempts to promote the advancement of knowledge, a difficult marriage of economic science and public policy which don't quite speak the same language or have the same core principles, and at least a new look at the operation of human financial interactions.
Numbers Racket: Why the Economy Is Worse Than We Know - Kevin Phillips 1 May 2008 - Harper's Magazine
Down and Out: Discouraged Workers - Time Magazine, 9 September 1991
NY Times
Grim Job Report Not Showing Full Picture
By DAVID LEONHARDT and CATHERINE RAMPELL
December 6, 2008
As bad as the headline numbers in Friday’s employment report were, they still made the job market look better than it really is.
The unemployment rate reached its highest point since 1993, and overall employment fell by more than a half million jobs. Yet that was just the beginning. Thanks to the vagaries of the way that the government’s best-known jobs statistics are calculated, they have overlooked many workers who have been deeply affected by the current recession.
The number of people out of the labor force — meaning that they were neither working nor looking for work and that the government did not consider them unemployed — jumped by 637,000 last month, the Labor Department said. The number of part-time workers who said they wanted full-time work — all counted as fully employed — rose by an additional 621,000.
Take these people into account, and the job market may be in its worst condition since the early 1980s. It is still deteriorating rapidly, too.
Already, the share of men older than 20 with jobs was at its lowest point last month since 1983, and very close to the low point of the last 60 years. The share of women with jobs is lower than it was eight years ago, which never happened in previous decades.
Liz Perkins, 24 and the mother of four young children in Colorado Springs, began looking for work in October after she learned that her husband, James, was about to lose his job at a bed-making factory.
But the jobs she found either did not pay enough to cover child care or required her to work overnight. “I can’t do overnight work with four children,” she said. She has since stopped looking for work.
The family has paid its bills by dipping into its savings and borrowing money from relatives. But Ms. Perkins said that unless her husband found a job in the next three months, she feared the family would become homeless.
Even Wall Street economists, whose analysis usually comes shaded in rose, seemed taken aback by the report. Goldman Sachs called the new numbers “horrendous.” Others said “dreadful” and “almost indescribably terrible.” In a note to clients, Morgan Stanley economists wrote, “Quite simply, there was nothing good in this report.” HSBC forecasters said they now expected the Federal Reserve to reduce its benchmark interest rate all the way to zero.
Such language may sound out of step with a jobless rate that, despite its recent rise, remains at 6.7 percent; the rate exceeded 10 percent in the early 1980s. But over the last few decades, the jobless rate has become a significantly less useful measure of the country’s economic health.
That is because far more people than in the past fall into the gray area of the labor market — not having a job and not looking for one, but interested in working. This group includes many former factory workers who have been unable to find new work that pays nearly as well and are unwilling to accept a job that pays much less. Some get by with help from disability payments, while others rely on their spouses’ paychecks.
For much of the last year, the ranks of these labor force dropouts were not changing rapidly, said Thomas Nardone, a Labor Department economist who oversees the collection of the unemployment data. People who had lost their jobs generally began looking for new work. But that changed in November.
Much as many stock market investors threw in the towel in early October, and consumers quickly followed suit by cutting their spending, job seekers seemed to turn darkly pessimistic about the American economy in November. Unless the numbers turn out to have been a one-month blip, large numbers of people seem to have decided that a job search is, for now, futile.
“It’s not only that there’s nothing out there,” said Lorena Garcia, an organizer in Denver for 9to5, National Association of Working Women, a group that helps low-wage women and women who are looking for work. “But it also costs money to job hunt.”
Just how bad is the labor market? Coming up with a measure that is comparable across decades is not easy.
The unemployment rate has been made less meaningful by the long-term rise in dropouts from the labor force. The simple percentage of people without jobs — including retirees, stay-at-home parents and discouraged would-be job seekers — can also be misleading, though. It has dropped in recent decades mainly because of the influx of women into the work force, not because the job market is fundamentally healthier than it used to be.
The Labor Department does publish an alternate measure of unemployment, which counts part-time workers who want full-time work, as well as anyone who has looked for work in the last year. (The official rate includes only people who told a government surveyor that they had looked in the last four weeks.)
This alternate measure rose to 12.5 percent in November. That is the highest level since the government began calculating the measure in 1994.
Perhaps the best historical measure of the job market, however, is the one set by the market itself: pay.
During the economic expansion that lasted from 2001 until December 2007, when the recession began, incomes for most households barely outpaced inflation. It was the weakest income growth in any expansion since World War II.
The one bit of good news in Friday’s jobs report, economists said, was that pay had not yet begun to fall sharply. Average weekly wages for rank-and-file workers, who make up about four-fifths of the work force, rose 2.8 percent over the last year, only slightly below inflation.
But economists said those pay gains would begin to shrink next year, if not in the next few weeks, given the rapid drop in demand for workers. “Wage increases of this magnitude will be history very soon,” said Joshua Shapiro, an economist at MFR Incorporated, a research firm in New York.