The “New Economy” Is The No Jobs Economy

by Paul Craig Roberts

One of my most popular columns was about escaping from the Matrix existence in which Americans live. It is a world of disinformation and misinformation in which facts are fiction, and abstract theories are substituted for empirical reality.

Official government statistics are make-believe. The government makes inflation and unemployment disappear by how it defines inflation and unemployment, and it makes the economy grow by how it defines Gross Domestic Product. The definitional basis determines the statistical result.

For example, in his report on the official GDP revisions released July 31, John Williams (shadowstats.com) writes that “academic theories, often with strong political biases, have been used to alter the GDP model over the years, resulting in “Pollyanna Creep,” where changes made to the series invariably have had the effect of upping near-term economic growth.” In other words, definitional changes produce economic growth whether or not the economy produces economic growth.

Inflation is made to disappear by substituting lower priced items for higher priced items and by defining price rises as quality improvements. Thus, the higher prices don’t count as inflation.

Unemployment disappears by defining discouraged workers who cannot find employment as people who are no longer in the work force. 

They simply are disappeared out of the ranks of the unemployed. It reminds me of Punjab’s magic blanket in the old cartoon strip, “Little Orphan Annie.” Punjab disposed of problem people by covering them with his blanket, or perhaps it was a rug, and they disappeared.

Despite the absurdity of the government’s data, Wall Street awaits with baited breath each new release to decide whether markets should go up or down or stay the same. In other words, the financial markets themselves take guidance from make believe numbers. In short, capitalism is rudderless. It has no reliable indicators. Everything is rigged to support the Matrix which keeps the population in a stupor.

Certainly the monthly payroll jobs number is misconstrued and has undeserved influence. If the economy is down, a jobs number significantly higher than the approximately 130,000 new jobs required to stay even with population growth is seen as a beacon of recovery. But the number is so distorted, as John Williams explains, by shifting and unstable seasonal adjustments and an average monthly add-on of 52,000 jobs from the “birth-death” model that no one really knows what the number is. Only a statistician like John Williams who is very familiar with the government’s data procedures can make much sense from the official statistics.

I take a simpler approach. I look at where the reported jobs are alleged to be. In the 21st century, the jobs created by “the world’s largest economy” have been lowly-paid, non-tradable, domestic service third world jobs. Manufacturing and tradable professional service jobs such as software engineering have been moved offshore to low-wage, low-salary locations. The savings in labor costs have enriched corporate executives, Wall Street, and shareholders.

I have made this point monthly for many years, and it has had no effect on economists, policymakers, money managers, or financial markets, all of which continue in their make-believe world of make-believe reality.

Here we go, one more time. Of the 161,000 reported private sector jobs gained in July, 157,000 or 97.5 percent, are in non-tradable domestic services. A non-tradable service is a job that produces services that cannot be exported, such as waitresses, bartenders, hospital orderlies, retail clerks, warehousemen. Thus, no matter how large the number might be, it cannot reduce the huge US trade deficit. Most of these jobs are part-time jobs without health or pension benefits. People in these jobs tend to live hand-to-mouth. These jobs do not produce sufficient income to drive a consumer economy.

Of these 157,000 reported jobs, 63,000 or 40 percent are reported to be in trade, transportation, and utilities. Of these 63,000 jobs, 60,500 of them or 96 percent are in wholesale and retail trade.

Before we go to the next category, ask yourself if you believe that in an economy that has had no recovery, in which there are no new manufacturing or construction jobs, in which the labor force participation rate is down, in which shopping center parking lots are far from full, stores with such a poor sales outlook would hire so many people in July?

Financial activities account for 15,000 of the reported new jobs. The Federal Reserve accounted for 80 percent of these jobs and bill collectors for the rest.

Professional and business services accounted for 36,000 of the new reported jobs. About half of these jobs were temporary help services and services to buildings and dwellings.

Health care and social assistance accounted for 8,300 jobs of which ambulatory health care services comprised 80 percent.

Waitresses and bartenders contributed 38,400 jobs. I have previously noted the anomaly of a population without good employment prospects or rising incomes going out to eat and to drink more and more often, so often that waitresses and bartenders comprise each and every month a significant percentage of the new employees.

In her commissioner’s statement accompanying the jobs report, Erica Groshen acknowledges that 8,200,000 or 6 percent of the currently employed are “involuntary part-time workers” who cannot find full-time employment.

The July 2013 payroll employment level of 136,038,000 stands 2,018,000 below the employment level in January 2008, which was 5 years and 7 months ago. If it requires 130,000 new jobs each month to keep employment equal with population growth, the US economy is behind by 10,728,000 jobs. These missing jobs show up in the declining labor force participation rate and the large number of discouraged workers who are no longer counted as unemployed.

Obviously, there is no economic recovery, despite the reporting of such by the presstitute financial press. Most likely the US economy is sinking further into a depression. The numerous indicators of economic collapse are ignored by economists and financial media busy at work weaving the Matrix to support The Lie.

As former executives of the “banks too big to fail” and their proteges run the US Treasury, the financial regulatory agencies, and the Federal Reserve, US economic policy has been focused on bailing out the excessively large banks created by mindless deregulation. The purpose of US economic policy is to save the large banks from their bad bets on poorly understood new financial instruments in the gambling casino created by deregulation.

The architects of financial deregulation, such as former Senator Phil Gramm and President Bill Clinton were rewarded for their service with fortunes of their own. The free market dupes, who aided and abetted Bill and Phil and misrepresented the repeal of financial stability as a new beginning for laissez faire capitalism, still pretend that the crisis resulted from Congress requiring banks to make mortgage loans to poor black people who could not pay.

The lack of reality in America is extreme. I do not believe anything like it has ever existed in the modern world. Essentially, no one in government or out understands anything.

The combination of the power of vested interests with ideological thinking remote from empirical reality is destroying the US economy and the economic prospects of the American people. The employment profile of the US economy is increasingly that of a third world country. Economic security, except for the rich, has disappeared. A large and growing percentage of the population experiences the insecurity of poverty or near-poverty, while the waiting lists for $50 million yachts expands. The distribution of income is so skewed upward that people of enormous wealth bid up the prices of used Ferraris from the 1950s and 1960s to $12,000,000 and $35,000,000. I can remember when a used Ferrari was something that a person with a moderate income could afford to purchase. I have a friend who bought and sold for $9,000 in the 1960s the Ferrari that last sold for $35 million.

Detroit, once the fourth largest American city and the manufacturing powerhouse of the world, is bankrupt. The populations of the cities that once were America’s thriving manufacturing base are declining. Cleveland has boarded up homes. St. Louis has 20 percent of its homes vacant. Welfare is under attack by the Republicans and even some Democrats as the plight of the population worsens and despair rises.

Washington only responds to the half dozen powerful, rich private interest groups that fund election campaigns. The American people have no one to represent them. The American people have been placed outside the system of “democratic capitalism” which is only for the one percent.

As Jeffrey St. Clair has made clear, America no longer has a left-wing. America is a right-wing world in which people, including “progressives” have been brainwashed into perceiving reality in racial contrast: the whites are well off and the blacks are poor and destitute.

This is the false reality of the Matrix. As whites are a larger percentage of the population than blacks, there are more poor whites than poor blacks. Moreover, the percentage of poor whites is growing. The way the jobs-offshoring, bail out the rich, US economy operates today makes every one poor, including the remnants of America’s once flourishing middle class. It is not a racial issue. It is a class issue. A few people have the power, and they are driving everyone else into the ground. The US government is their agent.

So go wave the flag, support the troops, believe the government’s and media’s lies, but unless you are the well-connected one percent, don’t expect any future for your children. You have been sold out by “your” government. Obama is making pretty speeches, but only the stupid will be fooled.

Disinformation On Every Front

Disinformation On Every Front

By: Paul Craig Roberts| May 4, 2012 |

Some readers have come to the erroneous conclusion that the Matrix consists of Republican Party disinformation as if there is no disinformation from the left. Others think that propaganda is the business of Obama and the Democrats. In fact, propaganda from the right, the left and the middle are all part of the disinformation fed to Americans.

If I may give some examples: The other day Chuck Colson, one of the Nixon officials imprisoned for Watergate crimes, died. This gave NPR the opportunity to relive the Nixon horror.

What precisely was the Nixon horror? Essentially, there was no such thing. Watergate was about President Nixon lying about when he learned about the Watergate burglary.

When Nixon learned about the burglary, he did not act on it prior to his reelection, because he reasoned, rightly, that the Washington Post would blame him for the burglary, although he had nothing to do with it, in the hopes of preventing his reelection.

By going along with a cover-up, Nixon enabled the Washington Post to make an issue of the precise date on which Nixon learned of the burglary. White House tapes indicated that Nixon had learned of the burglary before he said he learned of it. So Nixon had permitted a cover-up and had to go, but what was the real reason?

What was the Watergate burglary? We don’t really know. A group of men including former CIA operatives were hired by the Committee to Re-elect the President to break into a Democratic campaign office in the Watergate complex. We don’t know the purpose of the burglary. Some claim it was to wire-tap the telephones in the belief that the Democratic Party was getting re-election money from communists in Cuba or elsewhere. Others claim that the burglars were looking for a list of call girls, that compromised a White House official, as his fiancee was allegedly one of the call girls.

Looking back from our time during which Bush and Obama have deep-sixed the US Constitution, violated numerous US and international laws, and behaved as if they were caesars unconstrained by any law or any morality, Nixon’s “crimes” appear so trivial as to be unremarkable. Yet, Nixon was driven from office and is regarded as a criminal.

What was Watergate really about?

I doubt we will ever know. But I can offer one possible explanation. Nixon, like John F. Kennedy before him, alarmed the military/security complex with his plans to withdraw US troops from Vietnam (Vietnamization) and his determination to open communication with communist China and improve relations.

As President Eisenhower warned in his last address to the American people, conflict brings power and profit to interest groups that benefit from conflict. Nixon, like Kennedy before him, was perceived as a threat by these powerful interests, because he was working to reduce conflict.

James W. Douglass in his documented book, JFK and the Unspeakable, attributes the assassination of President John F. Kennedy to the CIA, Joint Chiefs of Staff, and Secret Service. Douglas reports that these powerful government institutions were concerned by Kennedy’s refusal to approve Operation Northwoods, to back the CIA’s invasion of Cuba, and to confront the Soviets militarily over the Cuban missile crisis and by Kennedy’s plans to end US military intervention in Vietnam. JFK also told his brother Robert that after his re-election he was going to break the CIA into a thousand pieces.

The right-wing view that Kennedy was too soft to stand up to communism was intensified when it was learned that Kennedy was working with Nikita Khrushchev through back channels to defuse the Cold War. In his “A Strategy of Peace” speech (June 1963), Kennedy announced the Nuclear Test Ban Treaty and the suspension of atmospheric nuclear testing.

“What kind of a peace do we seek?,” Kennedy asked. “Not a Pax Americana enforced on the world by American weapons of war.” With his words and deeds, President Kennedy made himself into a threat against the interests of the military/security complex.

There was enough suspicion of JFK’s assassination that yet another president assassinated by another “unhinged lone gunman” might raise more eyebrows. Nixon was disliked by the media, which made him a good candidate for political assassination. The Watergate burglary provided the opportunity. The Washington Post did the job with reports of “Deep Throat” meeting with reporters in spooky underground parking lots after midnight. Little, if any, information of consequence was contained in these reports. Instead, the newspaper’s reporting transferred the spooky danger of the deserted parking garages to Nixon and an aura of evil was attached to Nixon that eroded his support.

It is interesting that it is only presidents who work to reduce conflict who become targets for assassination. Reagan’s anti-Soviet rhetoric was strong enough to fool the left-wing, but the military-security complex knew of Reagan’s intention to end the Cold War. The CIA, formerly headed by Reagan’s vice president, opposed Reagan’s plan to put the pressure of an arms race on the creaking Soviet economy. The CIA argued that the centrally planned Soviet economy allowed the Kremlin to control investment and that the Communist Party could allocate whatever percentage of Soviet GDP to the military as was needed to win the arms race. In other words, the CIA argued that the US would lose the arms race if Reagan raised the stakes as a means of bringing the Soviets to negotiate the end of the Cold War. Did the CIA really believe this, or was the military/security complex trying to keep the profitable Cold War stalemate going?

Washington cannot exist without conflict. Now that the “Muslim threat” is wearing thin, Washington is stirring up a conflict with China. Washington is sticking its nose into every dispute China has with its neighbors and building up its military presence in the Asian-Pacific. As I wrote in my previous column, a China threat is being created as a long-term threat to take the place of the former Soviet threat.

Moving on to another topic, Americans are told that education is the answer to unemployment. Get that university degree and live happily every after.

As RT recently reported, the truth is that more than half of recent US university graduates are unemployed or very underemployed. So much for the mantra that “education is the answer.”

“Education is the answer” serves the colleges and universities who want the tuition payments. It serves the companies who make student loans. It helps the offshoring corporations disguise that they are the main cause of unemployment.

Education is not the answer when high value-added, high wage manufacturing and professional service jobs, such as software engineering, are moved offshore in order to enhance short-term profits for shareholders and multi-million dollar bonuses for CEOs, while domestic employment and purchasing power are destroyed. Unless American university graduates can emigrate to China and India, there is no one to employ them. Yet, we still hear the call to run up student loan debts beyond the ability of salaries to repay the loans.

Professional tradable service employment in the US is so scarce that the University of Florida has abolished its computer science department. As few of the graduates can find employment, the university has reallocated the department’s budget to football, a paying sport.

Americans plugged into the Matrix are programmed to believe that they have correct information provided by a varied and “independent media.” In fact the media is owned by 5 or 6 mega-media companies run by corporate advertising executives and Washington.

Recently, Bloomberg gave us the report that “Japan, Denmark and Switzerland are among the countries to rally this week to [IMF chief] Lagarde’s call for a bigger lending capacity beyond the current $380 billion to shield the world economy against any deepening of Europe’s debt turmoil.”

This Bloomberg report is nonsensical. The loans are not shielding the world economy. The loans are shielding the private banks from their own mistakes at the expense of the world economy. The Bloomberg report shows how completely the Western media is involved in forcing ordinary peoples to subsidize private bankers. It could not be more clear; yet, there is no embarrassment at Bloomberg for serving as the bankers’ propagandist.

Indeed, there is only honor. Serving the Matrix is where lie the rewards. Those who oppose the Matrix are the outcasts whose efforts might, as in the film, save the race of humans from the domination of evil, or else, if they lose, confine the outcasts to prosecution and death.

Across every front Americans are fed lies. The official media line is that the Japanese Fukushima nuclear threat from the earthquake and aftermath is well contained and over. However, the fact of the matter appears to be that an amazing radioactive inventory of both spent and unused fuel rods is in damaged cooling pools that could suffer collapse at any time (especially if there is another earthquake), thus releasing enormous radioactivity (reference link). This possibility presents a greater threat than the initial molten cores of the reactors themselves. Michael Chossudovsky points out that the media is yet to acknowledge the widespread contamination resulting from the Fukushima disaster, and there may be worse to come.

But who cares? Back to the Matrix and the “reality show.”