Global Competition

I was born in 1954.  No thanks to me, the United States contributed 26% of the world’s economic output (GDP) in that year.  Western Europe produced 24%, and India/China together produced only 9%. 

America was the undisputed economic superpower in the 1950’s; the envy of the world back then.   Our cars had fins, our girls had curves, and our radios played Elvis, Chuck Berry, and the blues.  

China and India were the poorest places on earth; we were told to eat everything on our plates because children were starving there. 

That was a long time ago, and it feels even longer every time I have to lift something heavy.  Today, Europe has dropped from 24% of world economic output to 15%; the United States has dropped from 26% to 19%; and India/China has grown from 9% to 24%. 

Those Asian nations have been here before.  In 1813, India and China comprised 49% of world GDP, while Europe made up 23% and the fledgling United States contributed only 2% of world’s goods and services.   

A century later, in 1913, the Indian/Chinese economies had fallen to 16% of world output, while the Europeans increased their share to 33% and the United States had rocketed from nothing to 19% of world GDP.  

Credit to Angus Maddison for compiling and publishing world GDP statistics going back to year 1 AD; I have no idea how, but there is no reason to doubt the numbers.  There is a simple lesson to be learned from economic history and his world GDP statistics: the mighty fall.     

Under central government control and protectionist trade policies, China and India fell from their dominant positions in world output.  When they tried to isolate themselves from global competition in the 19th century, they became poor and weak. 

Conversely, when India and China liberated their economies in the 1990’s and began to trade again with the world, they started their rise back to the top.  This is no fluke; when the U.S. economy was its most free (19th century) is when we rose up from obscurity to become the dominant economic power in the world.  

We became rich and strong by embracing global competition.  The unprecedented economic freedom enjoyed by Americans after our independence ignited the industrial revolution.  Competition with the newly democratized nations of Europe pushed both of us to levels of productivity unimaginable by earlier generations.  Global competition is a good thing.  We like to win; we are Americans.     

Europe’s dominant economic position in the world began to erode over a century ago as they constructed their social welfare states and imposed protectionist policies to insulate their unions and industrial managers from global competition.  In the past half-century, the United States has gone down that same path and we are now seeing our economic power decline.  We trail the world average in economic growth, and a recent study revealed that 49% of American households are now dependent on government for at least some of their income.  

In the decades that I have been alive, the size of American government at all levels has more than doubled, minimum wage laws have been enacted, fiscal stimuli have been a fixture of government policy, as has monetary stimuli courtesy of the Federal Reserve.  Women entered the workforce to supplement family incomes, a record number of Americans have gone to college, and trillions have been spent to eradicate poverty.  We saddled ourselves with a crushing debt load, armed the world, and fought in five wars - a Keynesian prescription for boom times.    

And over that time, per-capita income has risen in the United States by 278% in constant (1990) world dollars.  Sounds impressive, doesn’t it - like maybe all those things worked.  I’m sure that’s how they write it up in the textbooks these days.   

What they probably don’t mention is that over an equal number of years, from 1854 to 1913 - the glory years for economic libertarians - per-capita income rose by 294% without doing any of those things. 

That’s right, when we bound government and trusted markets, we did better than when we trusted government and bound markets.  We outperformed the rest of the world back then and our standard of living rose faster than in any period before or since.   

Between 1850 and 1908 we had 13 years with 9% or more annual GDP growth in this country.  In 1908 government at all levels consumed less than 12% of GDP, there was no income tax, and no Federal Reserve.  Between 1950 and 2008 we had zero years with 9% or more GDP growth.  And there you go.   

1912 was the end of over a century of laissez faire capitalism that propelled us to #1 in the world with virtually no sovereign debt and no unfunded liabilities.  The next 100 years of the Federal Reserve and Keynesian economics has left us a nation in economic decline with a debt load and a mountain of unfunded liabilities that will depress our economic growth for the next 50 years. 

Since 1990, the world’s per-capita GDP has risen at a compounded growth rate of 2.17%.  The United States has lagged behind at 1.76% and so have Western Europe (1.56%), Latin America (1.78%), and Africa (1.24%).  The modern-day world-beaters are East Asia (4.12%), West Asia (3.90%) and Eastern Europe (2.42%).  

Why?  They work harder than us, they tax less than us, they regulate less than us, they trade more than us, they develop their natural resources, and they make things.  That’s 6 things we need to do better than them; it’s not very complicated. 

So why does Mitt Romney need 53 more things in his economic recovery plan?  And why doesn’t Barack Obama even have a plan?   That's what I want to know.



“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment.
 

What We Remember

This week’s first moment of clarity comes courtesy of my wife, Joanne, who astutely observed that politics is like a drug – too much of it causes you to do things you don’t want to do.

She is right, of course.  Politics drives honest people to lie, kind people to hate, optimists to turn dour, happy people to become angry, humble people to seek glory, balanced people to become obsessed, and content people to covet.   

Timid people join angry mobs and shout vile epithets.  People who would not utter an unkind word hurl insults in blog comments while hiding behind aliases and assumed names.  Property is vandalized, jobs are threatened, businesses are boycotted in the name of politics, as if  “it’s politics” was a hall pass to excuse criminal activity.     

Like drugs, we convince ourselves that the views we agree with are soothing, moderate, and healthy, while insisting that those we disagree with are toxic, frightening, and deadly.  When we gather with like-minded partisans, it is a benevolent wine tasting party; but when our opponents gather, those are crack-heads plotting a crime spree.

It is easy to see that the ends don’t justify the means, but our real hidden problem is that the ends – control of government – has become worth the means.  Kings and Queens would not trade their honor to be servants, and we are intended to be a nation of 310 million self-sovereigns.  Our government was not created to be the weapon by which we deny our neighbors’ liberty, and yet that is what it has become. 

Our great advances in the human condition were not brought about by government action; government was dragged kicking and screaming into the industrial age, the abolitionist movement, the prohibitionist movement, universal suffrage, racial integration, the communication age, the information age, and the global economy.

The middle class was not created by an act of Congress; institutional charity was not the result of an executive order to be charitable; we do not have smart phones because there is a federal Department of Very Cool Stuff.  Everything that is began as a new and radical idea inside of one free-thinking person’s head.  It is freedom - not government - that enables those new ideas to take root and disrupt the status quo. 

America is not a great nation because of our government; we became a great nation because we placed limits on our government.  Our Founding Fathers knew that concentrations of wealth and power corrupt human nature.  They took great pains to isolate government, to limit its reach, and to distribute its power.  We need only to look around at the mess we have made with our post-constitutional experiment to appreciate the wisdom of their vision. 

They set up a careful balance of powers between states and the federal government.  They constructed a representative Republic and divided that government into equal branches; legislative to make laws, executive to enforce them, and judicial to resolve disputes.  They placed our nation’s capital in a swamp, and not by accident. They gave us a Constitution which makes clear that all three branches exist only to protect our rights and preserve our self-sovereignty. 

That Constitution lists the enumerated and limited powers of Congress, specifies the roles and qualifications of the executive and judicial, and adds an additional perimeter firewall of defense in the Bill Of Rights to protect the rights of citizens from the encroachment of government.  

They understood clearly what we fail to grasp – that government is force and those who seek to expand its power are the enemies of liberty.  They knew that power intoxicates so they made it difficult to get a fix and nearly impossible to overdose.       

This weekend we honor the memories of all in who gave their lives to defend that Constitution and to protect the freedoms it enshrines. They were Republicans, Democrats, Libertarians, Constitutionalists, Whigs, Socialists, Bull Moose, Populists, Progressives, independents and members of dozens of other parties and factions whose names and slogans have come and gone over time. 

But they were not partisans when they died; they were Americans - kids, mostly.  For them there is only one country, one uniform, one flag, one oath, one white stone marker. 

They did not seek glory for themselves; they served their nation, they did their duty, they sacrificed their lives so that we could pursue happiness in ours.  They did not fight for a candidate, or a party, or a program; they fought for their country, they fought for each other, they fought for their families, and they fought for our freedom.  Their families grieved so that ours might prosper.

We remember their sacrifice with gratitude; that is the purpose of the holiday. We honor their memories when we live free and prosper, and we dishonor ourselves when we take our liberty for granted.  Have a happy and honorable Memorial Day.        
 
 

“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment.

It Worked

Opponents of the reforms enacted in Wisconsin by Governor Scott Walker and his Republican legislature are understandably beside themselves; he was able to do in a single legislative session what they could not accomplish in a decade.   

Last winter, an information campaign entitled “It’s Working Wisconsin” was launched to publicize the benefits of Act 10, the GOP budget repair bill that restricted collective bargaining privileges for public sector employees and gave municipalities new tools to address their budget shortfalls. 

Opponents say it’s not working, and I agree with them. It’s not work-ing; it worked. 

The Walker budget reforms are no longer a theory, an experiment, or a work in progress - they worked.  Cause and effect; action and reaction; input and output; stimulus and response; modification and result.  

You can hold any opinion you wish about Governor Walker his Republicans; you can oppose their agenda, you can abhor their ideology, you can object to their tactics, you can fear what they will do next.  But you can’t say that their fiscal reforms have not worked – not if you have a clue what the word “fiscal” means.

And you can have any opinion of public sector unions that you wish, but you can’t say they weren’t the problem – not if you truly believe that Walker busted them and you truly believe that his predecessor did everything possible to fix the state’s fiscal mess without busting them.  Walker did bust them; and it worked. 

A structural budget deficit of $3.6 billion has been turned to a $425 million surplus without raising taxes, gutting programs, or laying off large numbers of public employees.  Townships, cities, counties, and school boards have saved well over $1 billion - and counting - of taxpayer money in less than a year since Act 10 went into effect; property taxes actually declined state-wide for the first time this century. 

I know those are Walker’s campaign talking points, but they wouldn’t be if Act 10 didn’t work.  And they could have been former Governor Jim Doyle’s third-term talking points if he would have done what Walker did during any one of the eight years he sat in Madison with legislative majorities and swore up and down that nothing could be done about our deficits but raise taxes, beg for federal bailouts, raid trust funds, and spray some accounting voodoo around to cover the stink.   

Wisconsin’s business climate has risen from the bottom of the rankings to 20th in just two years, an historic turnaround.  Employers’ right track/wrong track surveys have gone from 90% wrong in 2010 to 90% right in 2012.  Tens of thousands of jobs have already been added in a rejuvenated private sector and another 30,000 openings exist due to a shortage of qualified candidates.  Did you catch that?  We went from a budget deficit to a deficit of skilled workers for high-paying jobs. 

Corporate tax revenues are up, personal tax revenues are up, sales tax revenues are up, the number of people working is up, the number of unfilled jobs is up, companies are hiring, exports are increasing, and Wisconsin is attracting business from surrounding states.  Unemployment is down, new claims for unemployment are down, and the average length of time on unemployment is down. 

Municipalities which took advantage of the budget tools the legislature gave to them found ways to save money and improve services.  Many school districts reduced class sizes and enacted merit pay to reward great teachers.  Liberated from state choke-holds, local units of government began to govern much better.  He busted the Madison bureaucracy, too; and it worked. 

Some cities and school districts rushed to extend union contracts to “protect” public employees from Walker’s Act 10.  Those are the ones who have had to lay off employees, cut services, and abandon projects.  Not because of Act 10, but because they rejected Act 10.  Some have subsequently come back to the legislature to seek Act 10’s protection from those very union contracts they inflicted upon themselves.   

While Wisconsin chose Walker, California and Illinois chose polar opposites.  Like Walker’s current recall opponent, those two un-Walker governors ran on empty feel-good rhetoric with no fiscal plan to offer voters.  Once elected, they raised taxes, cut services, laid of workers, and laid the lumber to businesses with taxes, fees, fines, and regulatory looting. 

Both states have melted down, and their wealthy citizens and businesses are fleeing.  This week, California Governor Brown admitted the state’s deficit will be $5 billion worse than he promised just 3 months ago.  He will now raise taxes again; this time by 10-30% on everyone making over $250,000 per year (think, a pair of teachers).  He will cut tens of thousands of additional state jobs, AND will ask public sector workers to contribute to their pensions and health care premiums. 

That is what we avoided here in Wisconsin.  That is what didn’t work – taxing and spending and debt and central control.  It didn’t work here before Walker; it didn’t work in California; it didn’t work in Illinois; it didn’t work in Washington, D.C.; it didn’t work in Greece or Portugal or Italy or Spain.  It has never worked anywhere but in the minds of liberal elitists and academics and socialist ideologues too busy yelling about what democracy looks like - to them - to notice what it really looks like to the majority of voters who rejected them in November of 2010.   

This will be the last post I will write on the Wisconsin recalls before the vote on June 5.  With over a year to think about it, the Democrats haven’t offered up anything that appeals to libertarians, the Republicans can defend their own candidates, and there is nothing further that needs to be said.    

In a regular election, it is fair game to argue over what each candidate might do, but a recall is about what somebody did.  What Governor Walker, Lt. Governor Kleefisch, Senators Fitzgerald, Wangaard, and Moulton did was take on the unions and the concentration of government power in Madison.   

And it worked.     


“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment.

The Big Flush

Since Wisconsin’s Democrats oppose the mining of iron ore, I am curious to see what material they have decided on to replace the steel in the tracks, wheels, frames, and motors of Mayor Barrett’s proposed downtown trolley system for Milwaukee.   

Any kind of metal is out – mining and smelting and all that carbon energy it takes to bend and form the stuff, you know.  Plastic is out, too - made from oil.  Can’t be wood - logging and habitat disruption and whatnot. Hemp, maybe – seems to be pretty versatile stuff and it could be grown locally.   Nope, illegal.  They might end up having to knit the thing.    

And speaking of iron mining, the Mayor just authorized another dumping of raw sewage into the Kinnickinnic River after a hard rain just two days before his victory in the recall primary. 

What the heck does dumping 16,250 gallons of poop water into the River K have to do with iron mining, you might ask.  Well, if you recall it was Barrett’s Democrats, led by urban legislators, who killed off the Mining Bill, putting the ki-bosh on thousands of jobs across the state and dashing the hopes of economic revitalization any time soon in Iron County. 

Their cover story was that their votes protected us from the unthinkable devastation that could be caused if a hard rain might wash some dirt into the streams that feed the Bad River.  Having grown up in that neck of the woods and drunk from those streams while hard rains pummeled the nearby slag heaps, I don’t fear the dirt as much as I do urban legislators.              

And although it has been nearly 40 years since I took an Ecology course, I’m pretty sure that dirt getting rained on is not pollution.  On the other hand, I am 100% certain that a union guy working for the city yanking a valve handle open to dump tens of thousands of government poo juice into a river on purpose - is. 

Where is the outrage?  Where are the environmentalists?  Where are the Native Americans?  Where are the Mother Earth people?  The Sierra Club?  The college students?  This was no accident; the guy followed a procedure.  If the letterhead on that authorization said Koch Industries, President Obama would have called the river to express his condolences. 

But because it says Metropolitan Milwaukee Sewage District (MMSD), that makes it ok, I guess.  In a coincidence of awful timing, MMSD’s Executive Director was given an award for environmental stewardship from UW-Madison just one day after Sunday’s big flush.  Very awkward – like trying to dance to a Rush song.  

This is not an anomaly.  The majority of Superfund priority sites in Wisconsin are government properties.  The EPA itself is being sued over dumping of sediment from a government reservoir into the Potomac River.  There is no corporation which has come remotely close to matching MMSD’s record of intentional dumping into waterways in recent times.   

Billions of gallons of untreated sewage water have been dumped during Mayor Barrett’s eight years in office - billions.  He did not invent the problem of Milwaukee’s sewage, but he ran his first campaign on a promise to fix it. One of his ads attacked his opponent’s foot-dragging, demanding to know why, “after more than 60 days in office, why Marvin Pratt hasn't even started to get these things done." 

The problem of pollution – air, land, water – is often thrown back in the libertarian’s face when we advocate for private property rights.  Air pollution is tricky, but the land and water issues are not.  The answer to the tragedy of the commons is to sell all public lands - including every single foot of waterfront property – and then strictly enforce private property rights though the courts. 

Why?  Because no one intentionally dumps toxic goo on their own property – that destroys its value.  And no one dumps toxic goo on their neighbor’s property, at least not as long as the 2nd amendment remains in force.  Proceeds from the sale of government land would replenish state trust funds that were raided by previous administrations. 

Adding more property to the tax base would reduce local tax rates and increase local school funding, which in turn would allow for the repeal of the statewide school funding formula that has screwed our northern districts for years now.   I don’t think any of those are bad things, but I realize that reasonable people can disagree. 

If the action of one property holder diminishes the value of another – through polluting a waterway, for example - the injured property owner would have recourse through the courts to be compensated for the loss.  No caps, no limits, no exemptions provided by government as patronage favors. 

Property owners who wish to develop their property could also purchase indemnification from their neighbors for a price, so that the prospect of lawsuits and courts is eliminated, or at least greatly diminished.  A private market would develop quickly to establish proper equilibrium values for insurance, indemnification, and risk.  And if you don’t think that country people aren’t shrewd when it comes to land values then you need to start hanging out with some farmers.

Here’s how it would work:  if I want to build a laboratory to discover the cure for cancer (why does it always have to be factories?) it might be worth it to me to pay all my neighbors to prevent them from suing me over every minor spill on my loading dock.  They may want to take a guaranteed $20,000 up front rather than wait for a chance to burn me for $50,000 in a lawsuit that may never come and in which they may not win unless they have actually been harmed economically. 

The more environmentally safe I am, the lower my cost will be in either event; thus my pursuit of maximum profit is entirely compatible with being a responsible non-polluting neighbor.  And while relying on profit maximization may not be as emotionally satisfying to some people as public pretention, it is far more effective.  It was the Great Healer, after all, who just dumped the public’s sewage into the public’s river this week, and just a few blocks from sacred Native American land to boot.  

If you think it is impractical to use courts to settle pollution claims, consider that nearly every environmental claim and preemptive challenge goes through the courts now.  Did you know that over the 30+ years of the SuperFund program, only 20% of the sites have been cleaned up and adjudicated?    

It would not be difficult to set up separate property courts to streamline the process, and cutting out the middleman (government) gives plaintiffs (citizens) more control over their cases and an incentive to settle them efficiently.  Bonus: the money collected from polluters would go to the people who were actually harmed by the pollution. 

When the state collects a fine or settlement today, those funds do not benefit the parties injured; they flow into general revenues and fund government expenditures totally unrelated to the offense.  Why should some foundry fine up in Ladysmith go towards adding Lasik surgery to the list of covered medical expenses for the spouses and domestic partners of UW professors?  How is that environmental justice? 

Like so many other things we have been conditioned to believe, government is not the only answer to the problem of pollution; and it is very often the source.  And like so many other seemingly intractable problems, individual liberty provides our best answer.  That’s why the Founding Fathers bet the ranch on it. 


“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment. 

Competing Interests

Here is a question for you:  why do you think a monopoly is illegal?

Monopolies are not illegal because they are staffed with criminals, or because they are formed with criminal intent; monopolies are illegal because in the absence of competition, the monopoly ceases to serve any interest but its own.  Always.

We call our statutes that outlaw monopolies “anti-trust” laws.  How ironic, then, that so many of us trust our government – the ultimate monopoly – to regulate our corporations, the ultimate instrument of competition. 

Corporations are the playing field upon which economic competition occurs.  A corporation must compete for customers, compete for employees, compete for stockholders, and compete for capital financing. 

We have been conditioned to believe that government is the only source of regulation and law-making; but in free markets, competition regulates firms and laws of economics determine outcomes.  It’s neither the sheriff nor the priest that keeps the first auto mechanic honest in a small town; it’s the second mechanic. 

There are millions of American corporations, but the term conjures up images of the largest few among them.  Size is not where the action is in terms of economic growth; it is the small firms that invent, innovate, adapt, and change the world.  And little guys getting bigger is what creates jobs and expands GDP. 

Why do you think that CEO’s of our largest corporations – Gates, Buffet, Immelt – favor increasing taxes on millionaires?  Because they are billionaires.  It is the millionaires, the owners of those smaller firms, who threaten the #1 perch held by the billionaire corporatists who have already made it to the top.  It is the millionaires who will displace them, just as Steve Jobs replaced IBM in his day. 

There is no act of Congress or executive regulation that commands invention; rebels invent new things.  Everything that now is was once a radical idea in the mind of one employee in one firm who was unsatisfied with things is they were.  Many, if not most, useful innovations were conceived while we were supposed to be working on something else.  One company fired Ole Evinrude for wasting time on his stupid idea of a motorized boat for personal use.  I have one of his sketches in my office.    

It is fashionable these days to hold all corporations in contempt; and many have indeed earned our scorn. Those who distrust markets and trust government reflexively demand more regulation, more mandates, more taxation, and more restrictions on competition to protect the “public interest” - as if the dairy farmer and the single mom both had the same fair price in mind for a gallon of milk.  

What the statists forget is that the government they trust is the ultimate monopoly, and the reason that monopolies are illegal is that they serve no interests other than their own.  Government employees do not exchange their human nature for angel’s wings when they take the job, and government workers are perhaps the least qualified to regulate a private economy.     

How could we possibly expect members of the government monopoly to imagine, let alone to enact, policies which expand competition and free exchange in the private sector?  How well could you referee a sport you never played, never watched, and whose rules you never bothered to learn?  What skill could you coach into that Julia person except for filing a grievance over lack of playing time?        

Has a monopoly ever given up power voluntarily so that competition can flourish?  We need only look at our government schools to see how vigorously a monopoly fights choice and competition, stifles innovation and improvement, and protects its grip on money and power.   Monopolies do not reform themselves.  

In a free market, if a corporation does not serve its customers’ interests, it dies.  If a corporation does not serve its employees' interests, it dies.  If a corporation does not serve its shareholders’ interests, it dies.  If a corporation does not profit, it dies.  The proper role for government in a system of free enterprise is to protect property rights and grieve silently when firms fail. 

In 2006, before the economy was shifted into Park, roughly 500,000 small businesses – nearly 1 in 10 - failed in the United States because they did not serve the interests of customers, employees, or shareholders.  But an even larger number of new ones were formed to take their place - that is how a healthy economy grows.  

It is that constant churn, the perpetual weeding of the garden, which made our American free enterprise system different from the other variants of capitalism, particularly the European socialist strain we are now trying to impose on ourselves here.  It is why we were – past tense - the envy of the world for over a century. 

That European socialist model of corporatist protectionism has produced 40 years of job and wage stagnation over there; and we are in year number four of proving it was no fluke.  In 2009 – the most recent year of U.S. government data on business mortality – there were 171,000 fewer new businesses formed in the United States than the number that failed.  

In Wisconsin, over 12,000 firms went out of business in 2009.  With them went 103,000 jobs that are never coming back.  No amount of seasonal adjustment to monthly BLS job estimates will change that.  It is the formation and growth of new businesses that will lift this state and this nation out of the mire.   

The fact that 2009 is the most recent data our government has compiled on business formation tells us how little the government monopoly understands about the American economy it has taken upon itself to regulate. 

How can a government that still doesn’t know the number of business starts, stops, expansions, and contractions from 2010 expect to regulate the economy in 2012, or enact policies that promote economic growth in 2013?  Can any candidate for any office from either party cite a single business formation statistic while he/she is bloviating about jobs and employment?

The government monopoly can’t possibly do a good job of centrally managing a real-time global economy using information that is three years old.  And yet, they are about to add health care, energy, and our banking system to the scope of their direct control - how could that possibly turn out well for us?   

The short answer is that it won’t; and government will fail us for same reason that a monopoly is illegal in the private sector– it does not serve any interest but its own.          


“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment.

One Last Time

Monday's MOC post on the March BLS employment statistics for Wisconsin caused a bit of a stir, and since the April data will be published in between the recall primaries and the recalls themselves, this may be our last chance to cool heads down so they can prevail.  

So, one last time explaining BLS data and that’s it from me.  Apparently, some people thought my link to a historical table in the other post was an attempt to trick the reader or invent my own data.  Believe me - I have neither the time nor the inclination to trick you.  So this time I will use only the data found on the very same BLS press release that the media quoted last week when they ran their stories that Wisconsin led the nation in job losses over the past year.  Here’s the link, nothing up my sleeves.


http://www.bls.gov/news.release/pdf/laus.pdf       

You will see it starts with an executive summary that is very familiar, many of its phrases were lifted verbatim by the media who reported its findings.  And if you scroll down, you will see a whole section on methodology and notes on what the data means and how it is gathered and corrected for sampling error and other statistical “noise”.  Nothing sinister about them; routine statistical caveats.   

One key definition is the term “labor force” which is defined as “the sum of employed and unemployed persons”.   Because the table only displays two of those three data points, it was necessary for me to subtract in order to derive the other.  Subtracting is not inventing numbers; please do not start.  

And after methodology comes the data – ten tables and two maps that show both seasonally adjusted non-unadjusted data that the executive summary describes.  Tables 2 and 3 are labor force tables, unadjusted and seasonally adjusted - they are the numbers of people in the labor force and people not working. Tables 4 and 5 are the establishment tables that estimate the number of jobs people work at in firms.     

So, how many jobs have been gained or last in Wisconsin from March of 2011 to March of 2012?   That is a very good question that has many correct answers. 

If you ask people, the answer is a gain of 21,600. 

If you ask establishments, the answer is a loss of 13,900.  

If you apply “seasonal adjustments” the people answer changes to a gain of 7,200. 

If you apply “seasonal adjustments” the establishment number becomes a loss of 23,900. 

That last number is the only one you read about in all the headlines last week.  Pick the one you like and knock yourself out; whatever you believe is true for you. 

Nobody has said much about those seasonal adjustments and they should. It is only after the seasonal adjustments have been applied to the establishment data that Wisconsin’s losses exceed the range of statistical error.   BLS fully discloses that it uses different adjustment factors for each state so any state-to-state comparisons are tricky at best.  It’s not their fault people don’t read their warning labels – i.e. the methodology notes - and it doesn’t help that their own executive summaries disregard the cautions of the statisticians who develop the data sets.    

Since economic data influences the stock market, the investment community has long been critical of BLS inaccuracy and contradictory data, and no one outside of BLS really understands how data is adjusted for seasonality. 

When the economy is moving, little wobbles in seasonal adjustment method were insignificant, but now that we have been basically stagnant for three years, fluctuations in seasonal adjustments suddenly become very important to understanding the relevance of the summary data reported.     

How relevant?  In March of 2012, the results of labor force survey were “seasonally adjusted” to add 15,100 people to Wisconsin’s labor force, reduce the number of unemployed by 22,100 and increased the number employed by 37,200.  So the adjusters are more powerful than Scott Walker. 

“Hello, this BLS, are you employed?” 
“No, I’m not.” 
“I’m adjusting you to yes.” 
“But I’m not employed!” 
“You are now.” 
“Why?” 
“Because it’s March.” 
“Oh.” 

This year’s adjustment is big, but last year’s was even bigger - BLS March 2011 seasonal adjustment increased the number of employed by 51,600.  So Wisconsin “lost” 14,400 “jobs” year to year just in the difference of seasonal adjustments to the labor force survey. And if that is not confusing enough, different adjustment factors were used to adjust the CES totals than were used to adjust labor force data.  Advil, please.       

Remember, we are counting two different things – two way-different things.  Before any seasonal adjustments, there were 144,500 more people who said they were working (labor force table) in March of 2012 than the number of jobs the establishments (CES table) reported.  That in itself seems unlikely.

But after seasonal adjustments, that gap shrinks to 126,100; two different adjustment factors are being used for seasonality.   How does that work?  Does spring come earlier for people working than to the establishments they work at? 

People matter; and the number of them that are working is the important metric – that and how much they make, which nobody is even talking about anymore.   Wisconsin’s real job growth is bad; there is no need to pile on Governor Walker with adjustments and statistical deviations that turn slight gains to slight losses and confuse everyone. 

It would be terrific if we had a diligent press that would at least inform us that the BLS provides contradictory data instead of only reporting one number out of four as if it were precise right down to the individual job.  I don’t want to rely on campaign ads to get my economic news and you can bet the next few weeks the outside groups will be citing data all over the place about Walker, Barett, and Falk.  There is a good reason that you have to swear to tell the truth AND the whole truth in court.   

Ditto for President Obama at the national level, by the way – the April job numbers came out today, and he is getting pilloried for a paltry 115,000 net job growth, less than the rate of population increase.  But that is the seasonally adjusted CES number.  According to the non-adjusted population (CPS) survey, there are 169,000 more people who say they are working.          

So all you guys who say that I am too hard on President Obama, call him and tell him I said to use the CPS data from now on – no hard feelings.  It’s bad enough that three years into his recovery plan we are still treading water despite claims to the contrary; there is no reason to pile on him with adjusted numbers that make it even worse.  

No statistical analysis - adjusted or non-adjusted - is going to change the obvious: Wisconsin is stuck, the nation is stuck, and the world is stuck. The debt bomb that went off in 2008 is still raining shrapnel on us and neither party has a plan that will make it stop.  

It won’t stop until government spending is brought to heel and we quit running deficits that have choked the economy into a coma that seasonal adjustments don't cure.       



“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment and order Tim’s new book, “BRING IT!

The "I-Word"

Iraq is over and so is Libya, for now.  That leaves Afghanistan, Pakistan, Yemen, drugs, women, the working class, the middle class, gays, gangs, poverty, Hispanics, culture, the Church, capitalism, the family, illiteracy, the planet, bullying, choice, obesity, terror, values, and seniors. I’m sure that I missed some; I don’t watch much television. 

Except for the countries we have invaded or are bombing now from flying robots, that is the list of things that somebody in government has declared “war” on, according to one Party or the other in their more hysterical moments, which pretty much occur every Monday through Friday, 8-5 then from 7-10 on Fox and MSNBC and then on weekends at rallies…oh, yeah, and on the Sunday morning talk shows.     

Like most Americans, and even a majority of veterans, I have never seen combat.  I don’t pretend to know war, even though my work brings me close to it and I have spoken with many men who have lived it at its most brutal.  Listening is not feeling, but respect is.  Veterans, you have mine.

These people volunteered to risk their lives so that we could live free.  That is more than any politician, pundit, blogger, activist, spokesperson, celebriturd, or rabble-rouser will ever put on the line in the service our nation - ever. 

Many of them left pieces of their bodies and minds in places the rest of us will never visit; some of them took their last earthly breath over there as their souls departed for the place of everlasting peace. It is an act of desecration to dilute the sacrifice they made for freedom by calling every petty partisan dispute under the sun a “war”.     

Moveon.org has started a campaign to ban the use of the word “illegal” to describe the kind of immigrants that are in this country…um...illegally.  They have decided for us that the “I-word” is racist or hateful, and I think dehumanizing (I was laughing pretty hard and couldn’t make it out), and we are wrong to use the law to define what is legal and what is not.  Or something. 

“It’s a war on immigrants” their bobble-head was word-mouthing as I flipped past her with the remote on the way to the NBA playoffs.  Heard enough.  

This “I-word” ban is the sort of idea we used to dial up the “R-word” to describe; actually, we would have put the “F-word” in front of the “R-word” for something this stupid.  Not that I would endorse the use of either word, but honest to God, things were better in this country when it was ok be an “A-word” for about 5 seconds in order to put down some dopey PC hallucination before liberals discovered it and we have to go off and get trained.

Nowadays we all have to spend our days walking around on eggshells pretending we give an “S-word” about what some imaginary person might think if they heard us talk like a real person.  I feel fortunate to have grown up in an earlier time, when people who cared about me (or cared about the precious few minutes we all are given to spend on this earth) told me one of my ideas was stupid right away instead of indulging my stupidity to make me feel better about it.  It’s called social callous. 

Substituting initials for words doesn’t make us better people; it makes us neurotic and self-medicating fakes.  It’s probably why otherwise civilized people use anonymous handles and spew profanity on blog comments - coexisting cube-nurturer by day, “dirtjerker69” chugging a tumbler of Jack & Monster and F-bombing with reckless abandon by night.  

Give me Bob Beckel any day – at least I know who he is and I know where he stands.  He might have lost his way, but not his marbles.  And to even out the playing field, I'll take Ted Nugent any time;  he be a raving right-wing fanatic, but the boy doesn't rave in codes.     

If simply not saying the word for something could make it go away, I would never use the word “incumbent” again.  And pass the bacon, too, because you can’t call me the “O-word” no matter how fat I get, according to the porkers over at yougonnaeathat.org.   That's how bad it is; many of you thought that was for real.             

I have a better idea than banning the “I-word”; if we are really running that low on words to ban, why don’t we all agree to all quit using the word “war” to describe making speeches, holding signs, tweaking laws, and holding a different point of view. 

Let’s show a little respect for the men and women of this country who have actually fought in one so that we could all express our different viewpoints without recrimination.  As one who has gone over the top in the past, let me be the first to admit my mistake, apologize to our combat veterans, and take the pledge to never call anything but war a war from now on - that is the least that I can do.

And while we are at it, let’s tell Congress it’s ok to use the “D-word” and make them declare the next real war before we ask another young person to go fight and die in it.  That is the least they can do. 
 

“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment and order Tim’s new book, “BRING IT!