Wednesday, September 5, 2012

75 Days, 75 Solid Reasons for Anyone Left of Center Not to Vote for Obama #61: Depression-Level Unemployment

Former US Treasury Department official Paul Craig Roberts has in recent years been cranking out columns telling people the truth about the American economy.  Here are some stats from one of them, from July 2012.
"According to the US Bureau of Labor Statistics, employment in 2011 was only 1 million more than in 2002. As it takes about 150,000 new jobs each month to stay even with population growth, that leaves a decade long job deficit of 15 million jobs.
The US unemployment and inflation rates are far higher than reported. In previous columns I have explained, based on statistician John Williams’ work (, the reasons that the government’s headline numbers are serious understatements. The headline (U3) unemployment rate of 8.2% counts no discouraged workers who have given up on finding a job. The government has a second unemployment rate (U6), seldom reported, which includes short-term discouraged workers. That rate is 15%. When the long-term discouraged workers are added in, the current US unemployment rate is 22%, a number closer to the unemployment rate of the Great Depression than to the unemployment rates of postwar recessions.

Changes in the way inflation is measured have destroyed the Consumer Price Index (CPI) as a measure of the cost of living. The new methodology is substitution based. If the price of an item in the index rises, a lower priced alternative takes its place. In addition, some price rises are labeled quality improvements whether they are or not and thus do not show up in the CPI. People still have to pay the higher price, but it is not counted as inflation.
Currently, the substitution-based rate of inflation is about 2%. However, when inflation is measured as the actual cost of living, the rate of inflation is 5%.

The Misery Index is the sum of the inflation and unemployment rates. The level of the current Misery Index depends on whether the new rigged measures are used, which understate the misery, or the former methodology that accurately measures it. Prior to the November 1980 election, the Misery Index hit 22%, which was one reason for Reagan’s victory over President Carter. Today if we use previous methodology, the Misery Index stands at 27%. But if we use the new rigged methodology, the Misery Index is 10%.

The understatement of inflation serves to boost Gross Domestic Product (GDP). GDP is calculated in current dollars. To be able to determine whether GDP rose because of price rises or because of increases in real output, GDP is deflated by the CPI. The higher the inflation rate, the less the growth in real output and vice versa. When the substitution based methodology is used to measure inflation, the US economy experienced real growth in the 21st century except for the sharp dip during 2008-2010.

However, if the cost-of-living based methodology is used, except for a short period during 2004, the US economy has experienced no real growth since 2000. The lack of employment and real GDP growth go together with the decline in real household median income. The growth in consumer debt substituted for the lack of income growth and kept the economy going until consumers exhausted their ability to take on more debt. With the consumer dead in the water, the outlook for economic recovery is poor."

 ... and what has Obama done to address this?

"Congressman Jerrold Nadler, a Democrat who represents Manhattan's West Side and parts of Brooklyn, was a panelist along with me this morning at a post-election breakfast in New York sponsored by Government Affairs Professionals and Winning Strategies Washington.
Mr. Nadler delivered what struck me as a surprisingly harsh assessment of President Obama, saying a reasonable jury would probably find him "guilty of political malpractice in the first degree," both for allowing himself to be negotiated into a stimulus that was "far too small" and too tilted toward unstimulative tax cuts, and also for his "extended use of Hooverite rhetoric to assure people that the economy is improving when it obviously isn't improving."
Mr. Nadler said that if unemployment stays high — as he predicted it will, given that the additional stimulus he said was needed to reduce it is now "politically impossible" — the consequence will be a Republican Senate and a Republican president in 2012, to be followed by a Democratic takeover of Congress in 2014.
Mr. Nadler said that given that "the gambling casino on Wall Street wrecked the economy," the financial regulation bill passed by Congress was "exceedingly mild" and probably not adequate to prevent the next crisis."

 It's bad when an elected Democratic congressman is comparing a sitting Democratic president to Herbert Hoover.

Now, those are the people without jobs.  What about underemployment?

July Jobs Report: Underemployment Rate Rises to 15%, Full-time Jobs Drop By 228k

And the food banks?  One of many, many representative articles any idiot could find easily:

"“The emptying of food banks is another indicator of the depth of the recession and its long term impacts,” said Jerry McElroy, economics professor with Saint Mary’s College in Notre Dame, Ind., who has been watching the food bank crisis and blames a big part of it on long-term unemployment. “I was astounded looking at the food bank situation. It’s a national phenomenon across almost every state in the union.”
Is it customary to re-elect a president in these conditions?  Is this a president that deserves the support of the Left?


  1. I like the Nadler talk and the use of "Hooverite." But fuck am I sick of hearing the whole thing being hung on Wall Street. Wall Street is merely a part of corporate capitalism, and its "gambling" function is 100 percent logical, if you understand the system in any degree. Meanwhile, corporate capitalism would be killing these jobs, even if Wall Street were working like it did in 1949. And, given the system, that liberal pipedream is precisely that: a huge and diversionary pipedream. Capitalism is the problem.

    1. I agree with your assessment. I was mainly including the Nadler quote - including the Wall St. bit - to illustrate non-rightist criticism of the Obama approaches to the subsequent capitalist problems being too little, too late and/or just not addressing the issue(s) at all. Just trying to zero in on that here, not always easy to ind compact quotations.

      I did a little reading on Nadler and he seems not too bad, although I don't much about him. A commenter on one site noted he voted against the Bush-era Iraq War.

      Glad to see you still following the blog!

  2. Read it often. Not bagging on you about Wall Street. Just venting.