Rate cuts and unemployment

You would think by now that the dismal economic recovery in the United States would alert others to what doesn’t work, but seems not. So down interest rates have gone to record lows at 2.25%. No doubt the banks will be browbeaten into passing the cuts along, but hopefully not.

This is all part of the Keynesian idiocies. Try to revive an economy from the demand side. Make it easier (cheaper) for governments to fund their debt. Deepen the misallocation of resources, and distort the economy just a little more.

And like with public spending itself, it has the superficial look of doing something positive that will allow those who do not understand how an economy works – voters say, or Treasury officials – to think something useful is being done.

As for how well our economies are responding to treatment, there is this from Jim Clifton who is the Chairman and CEO at Gallup in the US. This is someone who might just perhaps know something about surveys, and this is what he says about unemployment data in the US. We have discussed this before, but for a change it is up on Drudge. It’s not the kind of thing that opposition parties make much of either, since they one day will become the government themselves. But here is Jim Clinton pointing out the well-known statistical facts:

Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment. . . .

There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.

The supposed recovery in the labour market he describes as lies. They are, but if it’s the Media Party lying, you are never going to know.

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