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.

Serious News: In Low Supply From Mainstream Media

Saturday, February 2, 2013 by Common Dreams
by Ralph Nader

On January 30, 2013, an unusual front-page story appeared prominently in The Washington Post about a small D.C. charity called Martha’s Table that serves meals to 1,100 people a day, has early-childhood and after-school programs, and provides other community-enriching programs. Among its distinctions is a giant volunteer corps of, according to the Post, “10,000 school kids, poor people and the occasional president who chops vegetables and builds sandwiches.” Fascinating!

The only reason for the Post writing and front-paging the article is that the new, full-time, volunteer president is Patty Stonesifer, ex-Microsoft megamillionaire, ex-chief executive of the Bill and Melinda Gates Foundation, and ex-chairperson of the Smithsonian Institution’s Board of Regents. Amazing!

The Post’s million readers also got to see Ms. Stonesifer say, “I was amazed at how there is a city within a city here….This idea that the District [of Columbia] has so much child hunger, it’s mind-boggling.”

The Post, the local television stations and cable shows often do not showcase the District’s big dirty secret. That, among its glittering affluent class (mostly shorn of noblesse oblige), half-dozen major universities and governmental departments, there is widespread, deep poverty, unhealthy and afflicted children, and higher rates of cancer and diabetes, for example, than most states.

What is important to the Post and other local media are local professional sports, local entertainment, visiting celebrities, and endless gossip or other permutations of such page- and time-fillers. The Post obviously believes that the injured knee of rookie sensation, Robert Griffin III and its impact on the Redskins’ organization are too big for its sport pages, and required multiple front-page stories since RGIII injured himself during playoffs in January.

The Post has been cutting back – ending its separate daily business section and its separate Sunday Book Review section. But its (spectator) sports section remains large with numerous reporters, columnists, feature writers, editors and gossip-mongers frantically scurrying around.

The Post’s front page features an article by sports columnist Sally Jenkins, but not one by their recently retired, superb business columnist Steve Pearlstein, who tells readers how and why their living standards are being mauled by big business. I doubt that readers would be upset were Ms. Jenkins to have written that column back in the sports pages instead.

When one of America’s leading newspapers decides to lighten up or stupefy – take your pick – its content at a time of grave developments and degradations in our society – local, regional, national and international, “We the People” need to be part of the conversation. It is not sufficient to be told vaguely about the illusive “surveys” of reader opinion that do not convey the availability of real choices.

Space and time for serious matters are also increasingly limited in other news outlets. Over 90 percent of commercial radio is music and advertisements. Commercial TV entertainment and ads are not far behind. There are fewer examples of serious, compelling programming by the national afternoon entertainment shows than there were in the Phil Donahue, Mike Douglas and Merv Griffin shows. These shows found some time to inform readers about auto safety, unsafe medicines and other consumer and environmental subjects. Now, it is nonstop sadomasochism, reality show family drama or other similar kinds of cheating and betrayals in relationships. Forget about local television shows – most are long gone, having been displaced by these syndicated shows.

Bear in mind, much of this modern Sodom and Gomorrah is conducted on our public airwaves used by broadcasters for free. When I called Rush Limbaugh and Sean Hannity, the leading bloviated soliloquists on radio, “corporate welfare kings,” they were nonplussed as if profitably using our public airwaves without payment is their birthright.

This week, the media buildup is for the Superbowl. Endless articles, features and gossip, with huge photographs, swarm superficially over the pages and airwaves and cable networks. There is simply no such restraint. Enough is enough! Soon, the buildup will be for Hollywood’s Oscars on February 24, and all the “players” will be profiled and psycho-analyzed.

In the meantime, valiant Americans are striving to reduce or prevent the pain, anguish and costs of preventable tragedies – poverty, repression, marginalization, exclusion and the chronic indifference to posterity in favor of vested pressures for instant gratification. The press releases, reports, accomplishments and testimonies of those striving for justice receive very little coverage from the mass media.

Groups with compelling causes come from around the country to the National Press building for well-prepared news conferences only to find no one there from the press, except an occasional indie reporter. NPR and PBS do not come close to wanting to fill some of this void.

Without media coverage, the civic community cannot, even if it demonstrates in the streets and squares, expand its audience of concern. Citizen morale struggles to persist in the face of powerful opposition. Gone is the wisdom of famed newspaper publisher, Joseph Pulitzer who advised his reporters “to comfort the afflicted and afflict the comfortable.”

People in the colony of the District of Columbia march, protest, and host important news conferences to press for statehood so that they can have a voting representative and senator(s) in Congress. They regularly get shut out of the local media. After all, it’s only electoral democracy they’re working to install.

Maybe a blend is necessary. How about Robert Griffin III becoming the full-time chair of the D.C. statehood association, in the off-season? Or would that give the editors of the Post too much cognitive dissonance?

Researchers discover a surprising threat to democracy: our brains

How facts backfire
By Joe Keohane | July 11, 2010

It’s one of the great assumptions underlying modern democracy that an informed citizenry is preferable to an uninformed one. “Whenever the people are well-informed, they can be trusted with their own government,” Thomas Jefferson wrote in 1789. This notion, carried down through the years, underlies everything from humble political pamphlets to presidential debates to the very notion of a free press. Mankind may be crooked timber, as Kant put it, uniquely susceptible to ignorance and misinformation, but it’s an article of faith that knowledge is the best remedy. If people are furnished with the facts, they will be clearer thinkers and better citizens. If they are ignorant, facts will enlighten them. If they are mistaken, facts will set them straight.

In the end, truth will out. Won’t it?

Maybe not. Recently, a few political scientists have begun to discover a human tendency deeply discouraging to anyone with faith in the power of information. It’s this: Facts don’t necessarily have the power to change our minds. In fact, quite the opposite. In a series of studies in 2005 and 2006, researchers at the University of Michigan found that when misinformed people, particularly political partisans, were exposed to corrected facts in news stories, they rarely changed their minds. In fact, they often became even more strongly set in their beliefs. Facts, they found, were not curing misinformation. Like an underpowered antibiotic, facts could actually make misinformation even stronger.

This bodes ill for a democracy, because most voters — the people making decisions about how the country runs — aren’t blank slates. They already have beliefs, and a set of facts lodged in their minds. The problem is that sometimes the things they think they know are objectively, provably false. And in the presence of the correct information, such people react very, very differently than the merely uninformed. Instead of changing their minds to reflect the correct information, they can entrench themselves even deeper.

“The general idea is that it’s absolutely threatening to admit you’re wrong,” says political scientist Brendan Nyhan, the lead researcher on the Michigan study. The phenomenon — known as “backfire” — is “a natural defense mechanism to avoid that cognitive dissonance.”

These findings open a long-running argument about the political ignorance of American citizens to broader questions about the interplay between the nature of human intelligence and our democratic ideals. Most of us like to believe that our opinions have been formed over time by careful, rational consideration of facts and ideas, and that the decisions based on those opinions, therefore, have the ring of soundness and intelligence. In reality, we often base our opinions on our beliefs, which can have an uneasy relationship with facts. And rather than facts driving beliefs, our beliefs can dictate the facts we chose to accept. They can cause us to twist facts so they fit better with our preconceived notions. Worst of all, they can lead us to uncritically accept bad information just because it reinforces our beliefs. This reinforcement makes us more confident we’re right, and even less likely to listen to any new information. And then we vote.

This effect is only heightened by the information glut, which offers — alongside an unprecedented amount of good information — endless rumors, misinformation, and questionable variations on the truth. In other words, it’s never been easier for people to be wrong, and at the same time feel more certain that they’re right.

“Area Man Passionate Defender Of What He Imagines Constitution To Be,” read a recent Onion headline. Like the best satire, this nasty little gem elicits a laugh, which is then promptly muffled by the queasy feeling of recognition. The last five decades of political science have definitively established that most modern-day Americans lack even a basic understanding of how their country works. In 1996, Princeton University’s Larry M. Bartels argued, “the political ignorance of the American voter is one of the best documented data in political science.”

On its own, this might not be a problem: People ignorant of the facts could simply choose not to vote. But instead, it appears that misinformed people often have some of the strongest political opinions. A striking recent example was a study done in the year 2000, led by James Kuklinski of the University of Illinois at Urbana-Champaign. He led an influential experiment in which more than 1,000 Illinois residents were asked questions about welfare — the percentage of the federal budget spent on welfare, the number of people enrolled in the program, the percentage of enrollees who are black, and the average payout. More than half indicated that they were confident that their answers were correct — but in fact only 3 percent of the people got more than half of the questions right. Perhaps more disturbingly, the ones who were the most confident they were right were by and large the ones who knew the least about the topic. (Most of these participants expressed views that suggested a strong antiwelfare bias.)

Studies by other researchers have observed similar phenomena when addressing education, health care reform, immigration, affirmative action, gun control, and other issues that tend to attract strong partisan opinion. Kuklinski calls this sort of response the “I know I’m right” syndrome, and considers it a “potentially formidable problem” in a democratic system. “It implies not only that most people will resist correcting their factual beliefs,” he wrote, “but also that the very people who most need to correct them will be least likely to do so.”

What’s going on? How can we have things so wrong, and be so sure that we’re right? Part of the answer lies in the way our brains are wired. Generally, people tend to seek consistency. There is a substantial body of psychological research showing that people tend to interpret information with an eye toward reinforcing their preexisting views. If we believe something about the world, we are more likely to passively accept as truth any information that confirms our beliefs, and actively dismiss information that doesn’t. This is known as “motivated reasoning.” Whether or not the consistent information is accurate, we might accept it as fact, as confirmation of our beliefs. This makes us more confident in said beliefs, and even less likely to entertain facts that contradict them.

New research, published in the journal Political Behavior last month, suggests that once those facts — or “facts” — are internalized, they are very difficult to budge. In 2005, amid the strident calls for better media fact-checking in the wake of the Iraq war, Michigan’s Nyhan and a colleague devised an experiment in which participants were given mock news stories, each of which contained a provably false, though nonetheless widespread, claim made by a political figure: that there were WMDs found in Iraq (there weren’t), that the Bush tax cuts increased government revenues (revenues actually fell), and that the Bush administration imposed a total ban on stem cell research (only certain federal funding was restricted). Nyhan inserted a clear, direct correction after each piece of misinformation, and then measured the study participants to see if the correction took.

For the most part, it didn’t. The participants who self-identified as conservative believed the misinformation on WMD and taxes even more strongly after being given the correction. With those two issues, the more strongly the participant cared about the topic — a factor known as salience — the stronger the backfire. The effect was slightly different on self-identified liberals: When they read corrected stories about stem cells, the corrections didn’t backfire, but the readers did still ignore the inconvenient fact that the Bush administration’s restrictions weren’t total.

It’s unclear what is driving the behavior — it could range from simple defensiveness, to people working harder to defend their initial beliefs — but as Nyhan dryly put it, “It’s hard to be optimistic about the effectiveness of fact-checking.”

It would be reassuring to think that political scientists and psychologists have come up with a way to counter this problem, but that would be getting ahead of ourselves. The persistence of political misperceptions remains a young field of inquiry. “It’s very much up in the air,” says Nyhan.

But researchers are working on it. One avenue may involve self-esteem. Nyhan worked on one study in which he showed that people who were given a self-affirmation exercise were more likely to consider new information than people who had not. In other words, if you feel good about yourself, you’ll listen — and if you feel insecure or threatened, you won’t. This would also explain why demagogues benefit from keeping people agitated. The more threatened people feel, the less likely they are to listen to dissenting opinions, and the more easily controlled they are.

There are also some cases where directness works. Kuklinski’s welfare study suggested that people will actually update their beliefs if you hit them “between the eyes” with bluntly presented, objective facts that contradict their preconceived ideas. He asked one group of participants what percentage of its budget they believed the federal government spent on welfare, and what percentage they believed the government should spend. Another group was given the same questions, but the second group was immediately told the correct percentage the government spends on welfare (1 percent). They were then asked, with that in mind, what the government should spend. Regardless of how wrong they had been before receiving the information, the second group indeed adjusted their answer to reflect the correct fact.

Kuklinski’s study, however, involved people getting information directly from researchers in a highly interactive way. When Nyhan attempted to deliver the correction in a more real-world fashion, via a news article, it backfired. Even if people do accept the new information, it might not stick over the long term, or it may just have no effect on their opinions. In 2007 John Sides of George Washington University and Jack Citrin of the University of California at Berkeley studied whether providing misled people with correct information about the proportion of immigrants in the US population would affect their views on immigration. It did not.

And if you harbor the notion — popular on both sides of the aisle — that the solution is more education and a higher level of political sophistication in voters overall, well, that’s a start, but not the solution. A 2006 study by Charles Taber and Milton Lodge at Stony Brook University showed that politically sophisticated thinkers were even less open to new information than less sophisticated types. These people may be factually right about 90 percent of things, but their confidence makes it nearly impossible to correct the 10 percent on which they’re totally wrong. Taber and Lodge found this alarming, because engaged, sophisticated thinkers are “the very folks on whom democratic theory relies most heavily.”

In an ideal world, citizens would be able to maintain constant vigilance, monitoring both the information they receive and the way their brains are processing it. But keeping atop the news takes time and effort. And relentless self-questioning, as centuries of philosophers have shown, can be exhausting. Our brains are designed to create cognitive shortcuts — inference, intuition, and so forth — to avoid precisely that sort of discomfort while coping with the rush of information we receive on a daily basis. Without those shortcuts, few things would ever get done. Unfortunately, with them, we’re easily suckered by political falsehoods.

Nyhan ultimately recommends a supply-side approach. Instead of focusing on citizens and consumers of misinformation, he suggests looking at the sources. If you increase the “reputational costs” of peddling bad info, he suggests, you might discourage people from doing it so often. “So if you go on ‘Meet the Press’ and you get hammered for saying something misleading,” he says, “you’d think twice before you go and do it again.”

Unfortunately, this shame-based solution may be as implausible as it is sensible. Fast-talking political pundits have ascended to the realm of highly lucrative popular entertainment, while professional fact-checking operations languish in the dungeons of wonkery. Getting a politician or pundit to argue straight-faced that George W. Bush ordered 9/11, or that Barack Obama is the culmination of a five-decade plot by the government of Kenya to destroy the United States — that’s easy. Getting him to register shame? That isn’t.

The Media Does Not Want You Informed

Not like it's breaking news, but it certainly confirms the attempt corporate media makes to misinform, distract, and deceptively convince people to embrace a cause (like say, the war).