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Make-believe America: the US is said to have full employment, misleading statistics

Without growth in wages and salaries or in consumer debt, consumer demand cannot drive the economy and business profits.

Alex Christoforou

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This article was originally published on Paul Craig Roberts Institute for Political Economy.

Americans live a never-never-land existence. The politicians and presstitutes make sure of that. 

Consider something as simple as the unemployment rate.  The US is said to have full employment with a January 2018 unemployment rate of 4.1 percent, down from 9.8 percent in January 2010. 

However, the low rate of unemployment is contradicted by the long-term decline in the labor force participation rate.  After a long rise during the Reagan 1980s, the labor force participation rate peaked in January 1990 at 66.8 percent, more or less holding to that rate for another decade until 2001 when decline set in accelerating in September 2008.  

Today the labor force participation rate is the lowest since February 1978, reversing all of the gains of the Reagan years. 

Allegedly, the current unemployment rate of 4.1 percent is the result of the long recovery that allegedly began in June 2009.  However, normally, employment opportunities created by economic recovery cause an increase in the labor force participation rate as people join the work force to take advantage of employment opportunities. A fall in the participation rate is associated with recession or stagnation, not with economic recovery.  

How can this contradiction be reconciled?  The answer lies in the measurement of unemployment.  If you have not looked for a job in the last four weeks, you are not counted as being unemployed, because you are not counted as being part of the work force. 

When there are no jobs to be found, job seekers become discouraged and cease looking for jobs.  In other words, the 4.1 percent unemployment rate does not count discouraged workers who cannot find jobs.

The US Bureau of Labor Statistics has a second measure of unemployment that includes workers who have been discouraged and out of the labor force for less than one year.  This rate of unemployment is 8.2 percent, double the 4.1 percent reported rate.   

Source: Bureau of Labor Statistics

The US government no longer tracks unemployment among discouraged workers who have been out of the work force for more than one year.  However, John Williams of shadowstats.com continues to estimate this rate and places it at 22 or 23 percent, a far cry from 4.1 percent.

In other words, the 4.1 percent unemployment rate does not count the unemployed who do show up in the declining labor force participation rate. 

If the US had a print and TV media instead of the propaganda ministry that it has, the financial press would not tolerate the deception of the public about employment in America.

Junk economists, of which the US has an over-supply, claim that the decline in the labor force participation rate merely reflects people who prefer to live on welfare than to work for a living and the current generation of young people who prefer life at home with parents paying the bills. 

This explanation from junk economists does not explain why suddenly Americans discovered welfare and became lazy in 2001 and turned their back on job opportunities.  The junk economists also do not explain why, if the economy is at full employment, competition for workers is not driving up wages.

The reason Americans cannot find jobs and have left the labor force is that US corporations have offshored millions of American jobs in order to raise profits, share prices, and executive bonuses by lowering labor costs.

Many American industrial and manufacturing cities have been devasted by the relocation abroad of production for the American consumer market, by the movement abroad of IT and software enginering jobs, and by importing lower paid foreign workers on H1-B and other work visas to take the jobs of Americans. 

In my book, The Failure of Laissez Faire Capitalism, I give examples and document the devastating impact jobs offshoring has had on communities, cities, pension funds, and consumer purchasing power. See also this. 

John Williams of shadowstats.com questions whether there has been any real growth in the US economy since the 2008 crisis that resulted from the repeal of the Glass-Steagall Act.  Williams believes that the GDP growth rate is an illusion resulting from the understatement of inflation.  Just as unemployment is under-counted, so is inflation.  

Two “reforms” were introduced that result in the under-measurement of inflation.  One is the substitution principle.  When the price of an item in the basket of goods used to measure inflation goes up, that item is thrown out and a cheaper substitute is put in its place. 

The “reformers” argue that consumers themselves behave in this way. Thus, they claim this practice is reasonable.  However, the old way of measuring inflation measured the cost of a constant standard of living.  The new way measures the cost of a falling standard of living.

The other reform is to classify some price rises as quality improvements rather than as inflation.  The consumer has to pay the higher price, but he is said to be getting a better product, and so it is not inflation. 

There is some truth to this, but it appears it is over-used in order to report low inflation rates.  Both of these reforms are suspected of being motivated by holding down Social Security costs by denying cost-of-living (COLA) adjustments to Social Security recipients.

If inflation is under-measured, the use of the measure to deflate nominal GDP in order to arrive at real GDP leaves some price rises in the GDP measure. Therefore, price rises or inflation are counted as increases in real goods and services.  John Williams suspects that most of the GDP growth reported since the alleged recovery is simply price rises, not increases in real goods and services. 

The historically high stock averages are another feature of make-believe America.  The high price/earnings ratios do not reflect strong fundamentals, such as high rates of business investment, strong growth in real retail sales fueled by strong growth in consumer incomes.

The Federal Reserve has used an increase in consumer debt to fill in for the missing growth in consumer income for so long that consumers have no more room to take on more debt.  Without growth in wages and salaries or in consumer debt, consumer demand cannot drive the economy and business profits. 

What explains the high stock prices?  The answer is the trillions of dollars the Federal Reserve has created in order to stabilize the large “banks to big to fail” and bail out their extremely poor investment decisions. All of this liquidity found its way into the financial sector where it drove up the prices of stocks and bonds, enriching equity owners and denying retirees any interest income on their savings.

The values of financial instruments are supported by money creation, not by underlying fundamentals.  Yet, the stock averages are treated as proof of economic recovery and America’s first place in the world.

As I said, it is never-never-land in which we live.

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Pat Buchanan: “The Late Hit” On Judge Kavanaugh

Wha exactly is professor Ford’s case against Judge Kavanaugh?

Patrick J. Buchanan

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Authored by Patrick Buchanan via Buchanan.org:


Upon the memory and truthfulness of Christine Blasey Ford hangs the Supreme Court nomination of Judge Brett Kavanaugh, his reputation and possibly his career on the nation’s second-highest court.

And much more. If Kavanaugh is voted down or forced to withdraw, the Republican Party and conservative movement could lose their last best hope for recapturing the high court for constitutionalism.

No new nominee could be vetted and approved in six weeks. And the November election could bring in a Democratic Senate, an insuperable obstacle to the elevation of a new strict constructionist like Kavanaugh.

The stakes are thus historic and huge.

And what is professor Ford’s case against Judge Kavanaugh?

When she was 15 in the summer of ’82, she went to a beer party with four boys in Montgomery County, Maryland, in a home where the parents were away.

She says she was dragged into a bedroom by Brett Kavanaugh, a 17-year-old at Georgetown Prep, who jumped her, groped her, tried to tear off her clothes and cupped her mouth with his hand to stop her screams.

Only when Kavanaugh’s friend Mark Judge, laughing “maniacally,” piled on and they all tumbled off the bed, did she escape and lock herself in a bathroom as the “stumbling drunks” went downstairs. She fled the house and told no one of the alleged rape attempt.

Not until 30 years later in 2012 did Ford, now a clinical psychologist in California, relate, in a couples therapy session with her husband, what happened. She says she named Kavanaugh as her assailant, but the therapist’s notes of the session make no mention of Kavanaugh.

During the assault, says Ford, she was traumatized. “I thought he might inadvertently kill me.”

Here the story grows vague. She does not remember who drove her to the party. She does not say how much she drank. She does not remember whose house it was. She does not recall who, if anyone, drove her home. She does not recall what day it was.

She did not tell her parents, Ford says, as she did not want them to know she had been drinking. She did not tell any friend or family member of this traumatic event that has so adversely affected her life.

Said Kavanaugh in response, “I categorically and unequivocally deny this allegation. I did not do this back in high school or at any time.”

Mark Judge says it never happened.

Given the seriousness of the charges, Ford must be heard out. But she also needs to be cross-examined and have her story and character probed as Kavanaugh’s has been by FBI investigators as an attorney for the Ken Starr impeachment investigation of Bill Clinton, a White House aide to George Bush, a U.S. appellate judge and a Supreme Court nominee.

During the many investigations of Kavanaugh’s background, nothing was unearthed to suggest something like this was in character.

Some 65 women who grew up in the Chevy Chase and Bethesda area and knew Kavanaugh in his high school days have come out and spoken highly of his treatment of girls and women.

Moreover, the way in which all of this arose, at five minutes to midnight in the long confirmation process, suggests that this is political hardball, if not dirt ball.

When Ford, a Democrat, sent a letter detailing her accusations against Kavanaugh to her California congresswoman, Anna Eshoo, Ford insisted that her name not be revealed as the accuser.

She seemingly sought to damage or destroy the judge’s career behind a cloak of anonymity. Eshoo sent the letter on to Sen. Diane Feinstein, who held it for two months.

Excising Ford’s name, Feinstein then sent it to the FBI, who sent it to the White House, who sent it on to the Senate to be included in the background material on the judge.

Thus, Ford’s explosive charge, along with her name, did not surface until this weekend.

What is being done here stinks. It is a transparently late hit, a kill shot to assassinate a nominee who, before the weekend, was all but certain to be confirmed and whose elevation to the Supreme Court is a result of victories in free elections by President Trump and the Republican Party.

Palpable here is the desperation of the left to derail Kavanaugh, lest his elevation to the high court imperil their agenda and the social revolution that the Warren Court and its progeny have been able to impose upon the nation.

If Kavanaugh is elevated, the judicial dictatorship of decades past, going back to the salad days of Earl Warren, William Brennan, Hugo Black and “Wild Bill” Douglas, will have reached its end. A new era will have begun.

That is what is at stake.

The Republican Senate should continue with its calendar to confirm Kavanaugh before Oct. 1, while giving Ford some way to be heard, and then Kavanaugh the right to refute. Then let the senators decide.

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Arizona Senator Jeff Flake Opposes Vote on Kavanaugh Until Leftist Accuser Has Her Say

The end of the Republic inches closer as Identity Politics knows no bounds: Republicans join the fight to delay Brett Kavanaugh confirmation vote.

Alex Christoforou

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Via The Gateway Pundit


FLAKE OUT — ARIZONA SENATOR OPPOSES VOTE ON KAVANAUGH

Anti-Trump Senator Jeff Flake, a member of the Senate Judiciary Committee, said in an interview Sunday evening that until he learns more about the sexual assault allegation regarding Brett Kavanaugh, he is “not comfortable voting yes” on Kavanaugh.

It’s Flakes last chance to poke President Trump and the country in the eye before he rides retires and likely finds a job in the liberal media.

Via Mike Cernovich:

Kavanaugh’s accuser is a far left anti-Trump activist.

Via Zerohedge


Over the past few days, what appeared at first to be a merely token resistance to the nomination of Trump SCOTUS pick Brett Kavanaugh has morphed into something entirely more menacing. And for the first time since Kavanaugh’s name was first floated in June, his nomination may be in jeopardy.

After allegations of decades-old sexual improprieties first surfaced last week, it looked as if Kavanaugh would easily surmount this obstacle. But we have to give the Democrats credit: They have lined up their dominoes perfectly. And on Sunday, they set their plan in motion when the Washington Post published an in-depth interview with Kavanaugh’s accuser, Christine Blasey Ford. The story detailed a blow-by-blow accounting of Ford’s allegations, as well as her explanation for why she neglected to share her experience until decades later. Tellingly, the story also noted that Democrats have been sitting on the story since July, and that Ford only decided to out herself after some unscrupulous members of the Judiciary Committee shared her identity with the press – or at least that’s what California Sen. Dianne Feinstein’s office alleges.

While the allegations are relatively tame by #MeToo era standards (the incident allegedly unfolded when Kavanaugh was 17), it has apparently been enough for Democrats and a handful of turncoat moderate Republicans to successfully shut down a planned Thursday vote of the Judiciary Committee. Arizona Sen. Jeff Flake effectively shut down the vote last night when he revealed that he wanted to hear more from Ford before voting. Without Flake, the Republicans’ 11-10 majority on the Judiciary Committee shifts to a 10-11 vote in favor of the Democrats. While Committee Chairman Charles Grassley has said he’d like the vote to proceed as scheduled, media reports say he is quietly working to organize a private call involving Ford and curious Senators in an effort to help mitigate their concerns.

But looking further ahead, Republican leaders might have more difficulty as Tennessee Republican Bob Corker – who is not a member of the Judiciary Committee but could still hold up the final confirmation vote – said Sunday that he’d also like to see Thursday’s committee vote delayed.

Here’s more from Bloomberg:

“I’ve made it clear that I’m not comfortable moving ahead with the vote on Thursday if we have not heard her side of the story or explored this further,” said Flake, who has the power to stall consideration if all Democrats on the panel join him since Republicans only hold an 11-10 majority on the committee. Flake’s office didn’t respond to requests for comment.

Corker of Tennessee, who isn’t a member of the panel but whose vote is critical to confirmation, also doesn’t want the committee to vote on Kavanaugh’s confirmation until Ford’s allegations can be heard, said his spokeswoman, Micah Johnson. The senator wants the allegations to be heard promptly, she said.

The backlash intensified late Sunday when Alaska Sen. Lisa Murkowski told CNN that Thursday’s hearing should be delayed.

“Well, I think that might be something they might have to consider, at least having that discussion,” Murkowski.

[…]

“This is not something that came up during the hearings. The hearings are now over. And if there is real substance to this it demands a response.”

However, at least one of the Senate’s reputed moderates has stood up to the Democrats in an interview with the New York Times, castigating them for withholding this information until so late in the process (remember: Feinstein justified this decision by saying she had referred Ford’s allegations to the FBI, who reportedly added them to his background check file).

“What is puzzling to me is the Democrats, by not bringing this out earlier, after having had this information for more than six weeks, have managed to cast a cloud of doubt on both the professor and the judge,” Collins told The New York Times.

Collins asked if Democrats believed Ford, “why didn’t they surface this information earlier,” and if they didn’t believe Ford, “why did they decide at the 11th hour to release it?”

“It is really not fair to either of them the way it is was handled,” Collins said.

Collins comments come after Ford spoke publicly about the alleged incident for the first time during an interview with The Washington Post that was published on Sunday.

On Monday, in the latest sign that Ford could appear at an embarrassing public hearing, Ford’s attorney, Debra Katz, told “Today” that her client would be willing to testify publicly before the Senate Judiciary Committee. “She’s a credible person. These are serious allegations. And they should be addressed.”

The White House, for its part, is standing by Kavanaugh, and allowing the Senate to sort things out. According to Bloomberg, Kellyanne Conway said Ford should not be “insulted and ignored” in what appears to be an attempt to beat the Democrats at their own virtue-signaling game.

Still, according to a White House spokesperson, Trump isn’t giving an inch. Washington Post reporter Seung Min Kim, citing WH spokesperson Kerri Kupec, reported that Judge Kavanaugh “categorically and unequivocally” denied this allegation: “This has not changed. Judge Kavanaugh and the White House both stand by that statement,”she said.

In fact, as Axios reports, Senate Republicans could “play hardball” by calling on Ford to testify before Thursday’s scheduled vote. Though Republicans wouldn’t surprised if Ford holds a press conference or gives a TV interview, which Axios says “would raise the stakes considerably.” Chuck Schumer, meanwhile, has repeatedly called for an FBI investigation and a postponement of the vote

To be sure, the Democrats’ goals here are obvious. After Sen. Corey Booker’s “selfless” decision to release unauthorized documents about Kavanaugh’s time in the Bush Administration failed to even delay the process, Democrats have now played their Trump card – no pun intended. Their goal: Delay Kavanaugh’s confirmation at least until the Oct. 1 mark – the beginning of SCOTUS’s next term – to put a halt to any controversial decisions that could reverse important precedents. Of course, their ultimate goal is to stonewall the White House until after Nov. 6, when a few victories in the midterms might allow them to sink Kavanaugh’s nomination once and for all.

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University announces “White Awake” safe space for white students

The University of Maryland at College Park has set up a new diversity support group to create a “safe space” for white students to discuss their feelings.

Campus Reform

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Via Campus Reform:


Update: After publication of this article, University of Maryland-College Park changed the name of the group to “Anti-Racism and Ally Building Group,” along with a shorter description, which reads,  “Do you want to improve your ability to relate to and connect with people different from yourself? Do you want to become a better ally? Members will support and share feedback with each other as they learn more about themselves and how they can fit into a diverse world.”

In a statement provided to Campus Reform on Friday, the university explained the name change: “Our Counseling Center acknowledges that we did not choose the right words in raising awareness about this research-based initiative, and how this group has been perceived is counter to the values of inclusiveness and diversity that we embody. Therefore, we are renaming the group to better reflect our intention and values.”


The University of Maryland at College Park announced Friday a new diversity support group to create a “safe space” for white students to discuss their feelings about “interactions with racial and ethnic minorities.”

The support group, called “White Awake,” will help white students who may “sometimes feel uncomfortable and confused before, during, or after interactions with racial and ethnic minorities.”

“This group offers a safe space for White students to explore their experiences, questions, reactions, and feelings,” the description explains. “Members will support and share feedback with each other as they learn more about themselves and how they can fit into a diverse world.” The description asks students if they want to “improve [their] ability to relate to and connect with people different from [themselves]” or if they want to become a better “ally.” The new group is now one of four in the university’s “Diversity Issues” program series.The group is being led by Noah Collins, who works for the UMD Counseling Center, and will be held once a week. Collins specializes in group therapy and is interested “especially in the areas of racial and cultural awareness,” according to his faculty bio.The safe space has been met with harsh criticism from students on social media.

“I am ashamed over the execution of white awake nor do I fully understand its clause. ‘How they can fit into a diverse world’? Why do they need to attend therapy sessions on how to be a decent human being in society?” a UMD student wrote on Twitter. “Why do they need to have these sessions to learn how to coexist?”

“Just like classes. You can’t take one class and feel like you have all understanding over a certain subject,” the student added. “It takes practice, it takes problems, it takes more than one course, so ‘White Awake’ has good intention but I am skeptical over the fairytale result.”

Campus Reform reached out to Collins and UMD for comment but did not receive a response by time of publication. If and when a comment is received, the article will be updated.


Follow the author of this article on Twitter: @Grace_Gotcha

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