Free Markets, Free People

Dale Franks


Podcast for 21 Feb 10

In this podcast, Bruce, Michael and Dale discuss the economy in the US and Europe, as well as gun rights.  The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


Podcast for 14 Feb 09

In this podcast, Bruce, Michael  and Dale discuss the Republican desire not to be seen as the “Party of No”; China, the Euro, and the Dollar; and what seems to be a fundamental shift in the assertions of the AGW crowd.  The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


Counting Unemployment

The most recent release of unemployment data has raised some questions, namely, how can we lose 20,000 jobs in the same month that the unemployment rate declined to 9.7%.  The answer is simple: The unemployment rate is essentially a made-up figure.  And I can give you a much more accurate way to measure the unemployment rate.

First, let’s take a brief look at how the monthly Employment Situation figures are compiled by the Bureau of Labor Statistics.  The BLS combines two surveys to compile the Employment Situation.  The first survey is the Establishment Survey.  That’s a pretty accurate survey, because it consists of asking businesses to provide hard payroll data on the number of existing jobs.   The second is the Household Survey, which is where the train runs off the rails.

For the Household survey, they ask if you are employed.  If the answer is “No”, they then ask if you if you’re actively looking for a job. If the answer is no, then they just simply take you out of the labor force.  They don’t care whether you aren’t looking for work because you know there are no jobs available, or whether you’ve retired and are planning to sail a sloop across the Pacific.  If you aren’t actively looking for work, you aren’t part of the labor force.  So, the official unemployment rate generally understates–sometimes substantially–the real level of unemployment.

Fortunately, there is a better way to calculate the rate of real unemployment, and the BLS web site conveniently provides you with all the data you need to do it.  From here, we only need three items: The Civilian Noninstitutional Population, the Participation Rate, and the number of Employed.

The first thing we need to do is figure out the Labor Force Participation Rate during the most recent period of full employment.  If you take the average monthly labor force participation rate from the 70 months between Jan 04 and Oct 08, you get a participation rate in the labor for of 66% of the Civilian Noninstitutional Population.

Next, you multiply the Civilian Noninstitutional Population by 0.66.  That gives you the size of the normal labor force at full employment.

Next, you take the number of Employed, and calculate the actual rate of unermployment using the following equation:

1-(Employed/Normal Labor Force)=Unemployment Rate.

So, with this method, we can compare the unemployment level of Oct 08, right before the economy cratered, to last month.  When we do so, we get the following results:

OCT 08:
Civilian Noninstitutinal Population:
234,612,000
Participation Rate: 66%
Labor Force:
154,843,920
Employed: 145,543,000
Unemployment Rate: 6.0%

Jan 10:
Civilian Noninstitutinal Population:
236,832,000
Participation Rate: 66%
Labor Force:
156,309,120
Employed: 136,809,000
Unemployment Rate: 12.5%

Note that this calculation for Oct 08 is very close to the official unemployment rate of 6.1%.  But as the economy gets worse the official employment rates show greater and greater variance.  In other words, the official unemployment rate becomes progressively less accurate as the Employment Situation worsens, substantially understating the actual rate of unemployment.  This is, by the way a feature of the BLS’s method, not a bug.  It is no coincidence, as our Soviet friends used to say, that discouraged workers fall out of the labor force calculations.

Now, this measure I’ve explained doesn’t tell us anything about people who are working only part-time, when they’d prefer a full time job, so it doesn’t tell us much about underemployment.  But it does tell us, based on the recent historical labor force participation rate, what the size of the labor force should be.  Once we know that, it becomes very easy to see what the actual rate of unemployment is in real terms, rather than the notional terms provided by the Household Survey.

According the BLS, however, the Civilian noninstitutional population has increased by 2,220,000 people  from 234,612,000 to 236,932,000, while, at the same time, the civilian labor force has shrunk by 2,055,000 people  from 155,012,000 to 153,455,000.  Using the BLS numbers, then, the labor force participation rate is 64.6%.  That kind of demographic change might be expected in a couple of years when the baby Boomers begin retiring in large numbers, but for right now, it seems…counter-intuitive.

In any event, 12.5% unemployment is a far more realistic number than the BLS estimate of 9.7%.

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Podcast for 07 Feb 09

In this podcast, Bruce, Michael  and Dale discuss the unemployment numbers and Sarah Palin.  The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


All you need to know about Canada’s health care system…

…is encapsulated in this short CBC story.

Newfoundland and Labrador Premier Danny Williams is set to undergo heart surgery this week in the United States.

CBC News confirmed Monday that Williams, 59, left the province earlier in the day and will have surgery later in the week.

The premier’s office provided few details, beyond confirming that he would have heart surgery and saying that it was not necessarily a routine procedure.

So, nobody can do it in St. Johns or Mt. Pearl?  OK, maybe not.  I mean, it’s Newfoundland, for Cripes sake!  But, still, no room at a Halifax or or Moncton hospital, eh?  Nobody qualified to perform the procedure in Quebec, Montreal, Ottowa or Toronto?

How is it that the Canadian health care system is just fine for all the little people, but when a provincial premier hears the thump of mortality in his chest, it’s off to Cedars-Sinai,  Sloan-Kettering, or Mayo?

‘S’funny how that works, huh?

But don’t worry.  When we get our free health care down here in the US, everything will be tiddly.


Podcast for 24 Jan 10

In this podcast, Bruce, Michael  and Dale discuss the special election in Massachussetts, the dangers of hyperinflation, and Haiti.  The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


Hail Mary

How scared are Senate Democrats that Martha Coakley will lose the special Senate seat election in Massachussetts tomorrow?  This scared.

The White House and Democratic Congressional leaders, scrambling for a backup plan to rescue their health care legislation if Republicans win the special election in Massachusetts on Tuesday, have begun laying the groundwork to ask House Democrats to approve the Senate version of the bill and send it directly to President Obama for his signature.

Well, I’m sure if that’s gonna fly.

When the idea was suggested at a Democratic caucus meeting last week, Mr. [Bart] Stupak [D-MI] said, “It went over like a lead balloon.”

But, that was then.  This is now.


All your retirement money are belong to us

How’s that 401(k) working out for you?  Well, if the Obama administration has its way, you won’t have to worry about that any more.

Apparently, you’re too stupid and lazy to be trusted with your own retirement planning. So, what you need is for the government to “urge” you to convert your 402(k) plan to a government annuity.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

TaxProf has a roundup of some useful links concerning this, but here’s the key takeaway:

There literally isn’t enough money in the world to float the T-notes the Treasury must issue in order to prop up our unsustainable spending path.  There are, however, about $3.6 trillion in funds just sitting in 401(k) accounts.  If the government can urge–or force–you to convert your 401(k) into T-note funded annuities, the Treasury can continue to issue those notes to float the government’s deficit.  Essentially, you’ll be converting your retirement funds into an IOU from the government…just like your social security account has already done.

This will allow the Treasury to keep borrowing money–from your retirement–in order to keep issuing more debt that they may or may not be able to pay back to you

funds intu The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.