Cullen Roche at Pragmatic Capitalism does an exceptional job of pointing out the obviously obvious. The USA is not Greece. The future here is so bright we just gotta wear shades. I’ve looked at the map and stuff and the smart guy has a point. He throws in some other nice details as well.
The USA has an institutional arrangement in which it is a contingent currency issuer. That is, while the US Treasury is an operational currency user (meaning it must always have funds in its account at the Fed before it can spend those funds) it has the extraordinary power to tax all US output and issue reserve currency backed risk-free bonds that the public will always desire to hold so long as inflation is not extraordinarily high. Additionally, in a worst case scenario, the US Treasury can always rely on the Federal Reserve to supply the funds necessary to fund its spending. Imagine having your own bank that would always lend to you. This makes the government quite different from a household. The key here is that there’s no solvency constraint as in, “running out of money”.
He makes it sound like a wonderland. As long as there’s photosynthesis, we’ve got a Money Tree right out yonder in the backyard. You can even vote for THE BERN and get away with it! Except that you really can’t, and like Mr. Roche’s fantasy; other statistics that currently suggest that you should or that you can are fundamentally disingenuous. The current 5.3% U3 Unemployment Rate is a whopper for the ages.
The 157,037,000 who participated in the labor force equaled only 62.6 percent of the 250,663,000 civilian non-institutional population, the lowest labor force participation rate seen in 38 years. It hasn’t been this low since October 1977 when the participation rate was 62.4 percent. Another 93,626,000 did not participate in the labor force. These Americans did not have a job and were not actively trying to find one.
You’ll notice the paragraph I cited above totally doesn’t match the 5.3% BLS print. The BLS print also fails to match anything that we should ever confuse with reality. You see, the unemployment statistic that we read in the newspaper reminds me of the Catcher’s Indifference category in Major League Baseball. The runner is on 2nd-Base, and the team that let him get there doesn’t even have it counted against them as a Stolen Base. In fact, the U-3 Unemployment Stat goes one step further. They pretend the runner who made it to 2nd-Base isn’t even really in scoring position. It totally ignores a vast swath of human capital that isn’t being leveraged for much of anything.
5.3% U3 leaves an observer with the impression that there are 19 guys rowing for every person on the barge just taking a ride. That wouldn’t too bad. You could seriously see 5.3% of your working cohort having legitimate reasons to be out of the workforce and we should all just go back to Donald Trump’s latest foolish outrage. But this statistic does not shed any useful light upon the fulsome, scurvy truth.
Reality tells us something far different. If on the order of 250K Americans should theoretically be eligible to have a job and if our U3 was an accurate representation then about 14M to 15M would be sitting at home. We’d be a really busy place. The U3 is even more inaccurate because it represents a subset of a subset that doesn’t get even remotely close to covering the entire legitimate set of interest. It represents the proportion of the eligible workers that actively try to participate in working who seek employment and fail to find it. That number equals 8,299,000.
But instead, the real number of non-working barge-riders who theoretically could stick an oar into life’s river and row is 93,626,000. That’s 5 guys rowing for every 3 riding the barge. That’s the lowest participation rate in 38 years. If that’s not the Syriza political platform; then it probably represents a good, snappy paraphrase. And that doesn’t actually calculate the current burden.
I’ve seen the total US Population pegged at 312,000,000. It may not be perfect, but I’ll call it good enough for Blogistan. So we get 148,739 workers out of 312,000,000. That’s roughly 47%* doing the grunt-work. That’s roughly 47% hearing all about how THE BERN or !Hillary! will raise their taxes and how [mc_name name=’Sen. Ted Cruz (R-TX)’ chamber=’senate’ mcid=’C001098′ ], Jeb Bush, and [mc_name name=’Sen. Marco Rubio (R-FL)’ chamber=’senate’ mcid=’R000595′ ] believe they just don’t get it and will be happy to bring over lots and lots of people on work visas to replace them as soon as it is feasible. That’s 47% watching a large swath of people eat as a result of the sweat upon their brows and then get told they are racist, sexist and homophobic if they don’t shut the yap, COEXIST and do more, more, more!
That’s 47% that are at different stages along a continuum between still caring a lot and frankly no longer giving a toilet full of used food anymore. That’s an America that will not work over a long continuum of years. So I’ll agree with bright and ever-chipper Cullen Roche. America is not Greece. I’d like to see the typical BLS statistician last 5 minutes attempting to defend that 5.3% US Rate in a room with the Poltergeists of Euclid, Plato, and Socrates.
*-Mitt Romney was unavailable for comment when I hit up his cell phone (joking)