Lies, Damned lies, and Statistics–Update!
Good news! Since I wrote about this subject last week, the November numbers have been released by the government, and they indicate we only lost 11,000 jobs in November, while the unemployment rate dropped from 10.2% to 10.0%. I also read that the folks in Congress and the Administration loudly cheered the good news all around.
WAIT JUST A MINUTE—if we increased the number of unemployed by 11,000, how could the unemployment rate go DOWN?
Very simple—statistical manipulation. The unemployment rate fell because of the way the government conducts surveys of households to determine who was looking for work during the 4 weeks prior to the survey. From their surveys, it was determined that the “labor force” fell by 100,000 jobs for the third straight month, and the “participation rate” (the portion of the population that is employed, or looking for work) fell to the lowest level since the recession began.
Consequently, we did not bring the unemployment rate down by having fewer people unemployed…we did it by having fewer people looking for work during the survey’s prior 4-week period. In other words, When fewer people look for work, that is fewer people counted as unemployed…so naturally the unemployment rate would drop.
This is one of the problems with using statistics instead of real numbers to present absolute conclusions. Statisticians try to make us think whatever they want us to think—it’s called: “Spin.” You get the picture.
All things considered, I will stand by the numbers I presented in my last post, and say that I believe the real rate of unemployment is very close to 30% when including the “involuntary part-time” unemployed.
Yup—lies, damned lies, and statistics.
Lies, Damned Lies, and Statistics
Mark Twain popularized the old saying “There are three kinds of lies: lies, damned lies, and statistics.” When Twain wrote these words in his autobiographical book, he must have had the government in mind, because the government is, by far, the master of statistical manipulation.
Everyone knows that the “official” unemployment rate is now at 10.2% of the work force, or about 15.7 million workers. But, what we are not being told is how many people are actually unemployed but not being counted as unemployed because of some strange government arbitrary reason. Let’s look at the government’s own survey numbers:
- Government reported unemployed persons—15.7 Million.
- Persons marginally attached to the labor force and who wanted to work, were available to work, and had looked for work during the prior 12 months—but had not looked for work in the 4 weeks preceding the government survey, and therefore not counted—2.4 Million.
- Persons marginally attached to the labor force, but had not looked for work during the 4 weeks preceding the government survey for personal reasons (family responsibilities, school, etc.) and therefore not counted—1.6 Million.
- Discouraged workers who are no longer looking for work, and therefore not counted, because they believe there are no jobs available for them—808,000.
- In addition, there are those termed “involuntary part-time workers,” which means that these people have been laid off and are unemployed, but take a menial temporary part-time job just to feed their families, and therefore are not counted—9.3 Million.
Since these are government numbers, they are suspect, but they are all we have, so let’s look at some totals. If we only add up all the unemployed numbers above, we find 20.5 Million people unemployed—not 15.7 Million. Then when we add in the “involuntary part timers,” we get 29.8 Million people basically “unemployed.” This is nearly double the “official” number published by the government. There are likely many more that have dropped so far below the government’s radar they no longer get surveyed.
Government press releases and media pundits tell us the recession is over and recovery is in progress—so, where are the jobs? Small business has always pulled our fat out of the fire in past recessions, but they cannot do it this time, because of restrictive lending practices by banks, repressive government regulations, and the threat of government imposed higher operating costs, e.g., healthcare and higher taxes.
If you’re a small-business owner, you just might want to jot a note to your Congressional delegation and tell them that.
Yup—lies, damned lies, and statistics!
Representatives of the People?
Obtaining high political office today is quite a challenge—a challenge to raise enough money to buy the position, that is. The days of a common person from small-town-America rising through political chairs just on the basis of their honesty and ethical behavior are long gone. Today it takes excessive amounts of one major ingredient to win high political office—MONEY!
Most of us are still reeling from the report that Michael Bloomberg spent over $87 Million on his resent mayoral campaign, which is $157.45 per vote. That got me thinking about the impact of money on political office, and while researching, I ran into some interesting numbers in the latest issue of Newsweek magazine.
Newsweek published the public numbers for campaign costs for Barack Obama, Michael Bloomberg, and 35 Senate campaigns run in 2008. You might find the following interesting:
|
NAME |
POSITION |
AMOUNT SPENT |
COST PER VOTE |
| Barack Obama |
President |
$760,369,688 |
11.37 |
| Michael Bloomberg |
N.Y.C. Mayor |
87,710,101 |
157.45 |
| SENATORS: |
|
|
|
| Mitch McConnell |
R-KY. |
21,306,296 |
22.54 |
| Al Franken |
D-MINN |
21,066,834 |
17.37 |
| John Cornyn |
R-TEXAS |
16,454,518 |
3.80 |
| Saxby Chambliss |
R-GA. |
15,692,294 |
12.85 |
| Mark Udall |
D-COLO. |
12,987,562 |
11.14 |
| Mark Warner |
D-VA. |
12,515,479 |
5.29 |
| John Kerry |
D-MASS. |
12,279,425 |
6.27 |
| Mary Landrieu |
D-LA. |
10,146,669 |
10.29 |
| Kay Hagan |
D-N.C. |
8,953,274 |
4.02 |
| Jeanne Shaheen |
D-N.H. |
8,208,542 |
22.87 |
| Max Baucus |
D-MONT. |
8,164,703 |
23.60 |
| Frank Lautenberg |
D-N.J. |
8,135,752 |
4.44 |
| Richard Durbin |
D-ILL. |
8,016,455 |
2.28 |
| Tom Udall |
D-N.M. |
7,841,889 |
15.77 |
| Susan Collins |
R-MAINE |
7,765,295 |
17.47 |
| Jeff Merkley |
D-ORE. |
6,501,315 |
7.96 |
| Pat Roberts |
R-KAN. |
6,297,288 |
8.84 |
| Roger Wicker |
R-MISS. |
6,160,116 |
9.49 |
| Carl Levin |
D-MICH. |
5,784,520 |
1.91 |
| James Inhofe |
R-OKLA. |
5,477,730 |
7.18 |
| Tom Harkin |
D-IOWA |
5,022,490 |
5.40 |
| Joe Biden |
D-DELA. |
4,907,245 |
19.06 |
| John D. Rockefeller IV |
D-W.VA. |
4,820,379 |
10.85 |
| Lamar Alexander |
R-TENN |
4,571,728 |
2.91 |
| Tim Johnson |
D-S.D. |
4,550,590 |
19.13 |
| Lindsey Graham |
R-S.C. |
4,463,619 |
4.21 |
| Mark Begich |
D-ALASKA |
4,443,284 |
29.48 |
| Mike Johanns |
R-NEB. |
3,781,316 |
8.45 |
| Jim Risch |
R-IDAHO |
3,573,256 |
9.66 |
| Mark Pryor |
D-ARK. |
3,284,632 |
4.12 |
| Jeff Sessions |
R-ALA |
3,240,151 |
2.49 |
| Jack Reed |
D-R.I. |
2,258,706 |
7.44 |
| Thad Cochran |
R-MISS. |
2,063,627 |
2.85 |
| John Barrasso |
R-WYO. |
1,981,441 |
11.11 |
| Michael Enzi |
R-WYO. |
1,247,841 |
6.77 |
|
|
____________ |
|
|
|
TOTAL |
$1,112,046,050 |
|
(Newsweek© research by Ian Yarett)
And the above total is just for the winners. Can you imagine what the actual amount spent would be if we added in McCain’s, Clinton’s, and all the other opponents of the above politicians? This is also just a sample of 35 offices out of many hundreds, especially if you include high state and big city positions. Obviously, several billions of dollars are spent annually (not only in election years) just to get into political office.
So, where does that money come from? Well, a small amount comes from American citizens. Another dab comes from small businesses, and this usually goes directly to the politician. But, the bulk of the money comes from big business, and winds its way through various political action committees and other means of circumventing campaign contribution laws.
The point here is that these enormous sums of campaign money can only come from wealthy people and big business. These are the same people who hire their minions on K Street to make sure the newly “supported” politicians act accordingly.
Is it any wonder that small business gets short shrift from their representatives? Small business cannot begin to compete with the mountains of money dished out by big business.
Sadly, this is not likely to change until we eliminate the “club” atmosphere in Washington—by instituting term limits, and passing actual campaign finance reform laws. Will that happen? Not likely, because those in the “club” like it the way it is…it will take a near revolution to bring this kind of change to pass.
But, maybe small business owners should keep this in mind the next time they get trampled on by legislation that favors only big business.
Small Business Needs Leadership in Washington
In my last post, I presented the fact that American banks were actually cutting back even more on loans to small business. Then today I read a post by Arianna Huffington, on the Huffington Post, where she discusses this same issue, plus, the lack of leadership in Washington to resolve this problem. I have included some excerpts from Arianna’s post below, but I would encourage all small business owners to read her post in its entirety.
—The president, in a recent radio address, said he would take appropriate steps to “encourage” banks to meet their responsibilities. Encourage them? Pundits encourage while presidents execute…that’s their job!
—The president’s plan of action for getting small business back on track financially is to convene a conference in the coming weeks. Instead of taking decisive action, the most powerful person on earth is going to “convene a conference.” Here is what Arianna had to say:
Of course, we all know that in Washington-speak ‘I’m going to convene a conference’ is somewhere up there with ‘I’m going to establish a blue-ribbon commission’ in terms of kicking an issue down the road.
But, is there anything the president can really do, other than use moral suasion, to sway the behavior of our financial system? Of course there is! How about this:
—Open up the Fed to full transparency. This should have been a condition for the president appointing Bernanke to a second term. Instead, the Fed is now fighting an audit proposed by Congress—and the White House is silent.
—The president also appoints the heads of the Office of the Comptroller of the Currency (supervises commercial banks); the Federal Deposit Insurance Corporation; the head of the Office of Thrift Supervision (regulates savings and loans); the head of the Securities and Exchange Commission; and the head of the Commodity Futures Trading Commission (oversees derivatives). If these powerful people cannot move the banks to support small business…it is time for the president to make some re-appointments. That’s what would happen in any successful American business.
—More importantly, the president picks the person who runs the Treasury Department. Here is what Adrianna said about this appointment:
…the Treasury Department…is not legally mandated to be overseen and staffed by former Goldman Sachs executives and their friends. And there is nothing in the Constitution that says the Treasury Secretary has to be in near-constant contact with the heads of Goldman, Citigroup, and J.P. Morgan, often taking their calls late at night.
Perhaps this is an appointment that needs to be reconsidered now.
—The president also has the power to regulate. Instead, he has chosen to allow the proposals for financial regulatory reform that are working their way through Congress to be riddled with loopholes and exemptions favorable to Wall Street.
Here is Arianna’s closing statement:
…if only Barack Obama would stop acting like a pundit, egging on change from the sidelines, and start acting like the president, dictating the game from the middle of the field.
Every small business in America has a congressional representative and two Senators, who have been elected to serve and represent those who put them in Washington. Now is the time to tell these representatives, as well as the president, that it is not Wall Street, nor K street who deserves their allegiance—it is the people who elected them, and we demand to be represented. It is up to us to demand leadership. It is also up to us to reappoint our representatives at the ballot box, it they don’t do their job.
Read Arianna’s entire post here.
NOTE: This Friday, Arianna, along with Howard Dean, will take part in a debate on C-Span with Dick Armey, and John Kasich on the question “America’s Future: Can Capitalism Survive? This is something that should interest every small business owner in America.
New FTC Guidelines
The FTC released new guidelines for bloggers and Internet marketers a short time ago, which are causing a bit of a furor. For in-depth information on the potential effect of these guidelines on book or product reviewers, read this post by Edward Champion outlining his interview with Richard Cleland of the Bureau of Consumer Protection. Quite enlightening!
Also, if you use, or are considering using, testimonials, you should first read this post by Frank Kern, who summarizes his attorney’s advice regarding the use of testimonials when advertising anything you sell, or may sell, online.
It appears that the FTC thinks some of the claims we all see on many web sites and blogs are a bit over the top. Unfortunately, when the government gets involved they typically exhibit a poor understanding of the problem, and they approach the solution much like hunting mice with a cannon. Collateral damage usually outweighs any benefits that might occur.
Paying for New Healthcare Plan
I see that Senator Baucus is about to solve the issue of paying for healthcare reform—he wants to tax the insurance companies! Perhaps he is following the lead of Oregon Governor Kulongoski, who recently signed into law a new tax on health insurance companies operating in Oregon…in order to help pay for the “Oregon Plan.”
Needless to say, the Oregon health insurance companies immediately passed every penny of the new tax onto their insured through increases in premiums. What are these politicians thinking? Don’t they understand that taxing the insurance companies is simply taxing the insured through increased premiums?
This type of thinking is what is driving the small business person crazy—they don’t know what to think, or do, but many of those who have health insurance programs in place for their employees are certain that they will likely be dropping, or reducing, those plans. So, what is the government gaining if they price insurance premiums out of reach of small business?
Hopefully, there are enough people in Washington, who have some sense of reality, to overcome those who are totally out of touch. I know that is a lot to hope for, but maybe I’m just an optimist.
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