Saturday, October 6, 2012

Jack Welch and Unemployment

Jack Welch, retired CEO of General Electric, has made big waves since he suggested that the recent unemployment print was manipulated for Obama’s political benefit.  I haven’t seen much reaction from the media, but what I have seen is enough – all some version of “do you really believe the employees of government would do such a thing?” 

A senior Treasury Department official said Friday that any suggestion the figures had been manipulated for political gain is “simply absurd.”

Welch suggests he is just using facts to come up with his assertion – the numbers don’t add up:

Here are Mr. Welch’s facts. To hold the unemployment rate even as the population grows, he said, the economy needs to add between 150,000 and 200,000 jobs a month.

I have heard similar numbers from many others, so I expect Welch is not far off on this view.

“We haven’t reached those numbers at all,” Mr. Welch said. Employers added a seasonally adjusted 114,000 jobs in September, down from a revised 142,000 jobs in August. The economy, however, has added 143,000 jobs a month after revisions this year.

Welch has a point.  But wait, the macro-economists are quick to impress with their magic:

Still, several economists have pointed out exactly how the unemployment rate can diverge on a month-to-month basis from nonfarm payroll growth.

Figures don’t lie, but manipulators figure.   This statistic is regularly pushed and pulled in dozens of ways before it is published. 

Much of the data used by macro-economists is useless, certainly the unemployment data falls into this category.  It isn’t just that the numbers are manipulated – it is that they are meaningless on their face.  What does the number of jobs say about the quality of the jobs?  How many of these jobs are truly a result of transactions freely arrived at – the only method by which wealth can be created? 

The only objection one might make about Welch’s comment is the timing.  This figure is manipulated in every which way on a regular basis.  Why raise the objection now?  Of course, his timing was political.

But perhaps the real reason all actors are lining up in attack mode is the thought underlying Welch’s critique - Welch crossed a line when he suggested that civil servants might be acting in a manner other than for truth and accuracy.  This truth flies in the face of the myth that people enter low-paid civil service jobs purely for the altruistic reason of wanting to help their fellow citizens and their country.  They have no personal agenda in anything they do.  They do not succumb to political pressure by their superiors – many of whom are political appointees or elected officials.

One of many myths of state.

(h/t EPJ)

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