February Employment Report: “Real” or “Fake?”

March 15, 2017

The employment report for the month of February (the first full month of the Trump administration) was released on Friday and the numbers looked pretty good.  The economy added 235,000 jobs and the unemployment rate fell one tenth to 4.7%.  President Trump hailed the news and declared that, though the employment reports during the Obama administration were fake, that the February numbers were very real.

Let’s examine that claim.  First of all, take a look at this chart:  Labor Backlog.  Some explanation is in order.  “Actual labor force growth” is the growth in the labor force if it had grown at the same rate as the overall population as it does in reality.  The “BLS reported labor force growth” is the growth in the labor force that the Bureau of Labor Statistics uses to calculate the unemployment rate.  The “change in employment level” is a figure taken directly from the BLS monthly data.  It’s the growth in the number of people who report being employed in the household survey.  The “labor force backlog” is the difference between the growth in employment level and the “actual labor force growth.”  If the employment level grows faster, then unemployment should decline along with the “labor force backlog.”

Note that during the Obama years, the BLS consistently reported less growth in the labor force than what the growth in the population would suggest.  Only in 2012 and 2015 did the BLS report labor force growth that was slightly above actual growth.  The result is that the “labor force backlog” grew steadily during the Obama administration until it peaked at the end of 2014 at 6,359,000 workers who were unemployed.  By the end of 2016, that backlog had fallen only slightly to 5,994,000 workers.  In spite of that, according to the BLS, the unemployment rate plummeted from 9.9% in 2008 to 4.7% in 2016.  That’s impossible and the only way that the BLS was able to make it appear that the unemployment rate was dropping was by claiming that workers were dropping out of the labor force or by not growing the labor force as the population grew, or through some combination of those factors.  Thus, when Trump claimed that the employment data was “fake” during the Obama administration, he was exactly right.  If you’ve been a follower of this blog, you know that it’s something that I maintained all along throughout the Obama administration.

OK, so how about Trump’s claim that the numbers now are “real?”  So far, in January and February, the BLS has reported growth in the labor force of 416,000 workers.  The actual growth in the labor force – if it grows in proportion to the population – is only 89,000 workers.  In other words, so far in 2017, the BLS now claims that 327,000 “missing” workers have reappeared in the work force.  That supports Trump’s claim that his numbers are real.  But time will tell.  Two months’ of data isn’t nearly enough to judge how honest the Trump administration is being when it comes to the employment reports.  It’s something I’ll watch just as closely as the Obama numbers.


Closing the Book on Obama’s Trade Policy

March 8, 2017

The U.S. trade deficit for the month of January was posted yesterday by the Bureau of Economic Analysis.  It was horrible.  President Trump took office on January 20th, but he can hardly be held responsible for any of the January results.  This is all on former President Obama.

How bad was it?  The overall trade deficit rose to its worst level in nearly five years – $48.5 billion.  At $62.1 billion, the deficit in manufactured goods just missed its all-time worst reading of $62.5 billion set in March of 2015.  As you can see from this chart, if the trend in manufactured goods continues, we’ll have a new record very soon and, without the change in trade policy promised by President Trump, it will likely get worse from there:  Manf’d Goods Balance of Trade.

Then there’s the export numbers.  In January of 2010, lacking the courage to take on the problem with imports, President Obama vowed to double exports in five years in an effort to turn the U.S. into more of an export-driven, Germany-like economy.  It never happened and never even came close.  In January of 2017 – seven years after Obama made that promise – total exports, at $192 billion – remained below the October, 2013 level.  Worse yet, exports of manufactured goods were below the level reached in September, 2011 – up only 26% from when Obama made that promise.  And that increase was due entirely to global economic recovery from the 2009 recession and had nothing to do with any real improvement in America’s export position.

So that closes the book on Obama’s trade policy, which was a total failure.  Actually, if President Trump follows through on his promise of tariffs (or border tax, or whatever you want to call it), this closes the book on a seven-decade-long experiment with free trade and globalization, begun in 1947 with the signing of the Global Agreement on Tariffs and Trade that, by any measure of its effect on the American economy, has been a complete disaster.

  • America’s trade surplus dwindled until we ran our last trade surplus in 1976.
  • 41 consecutive years of trade deficits has yielded a cumulative deficit of $14.4 trillion.  During that time, the national debt, which is closely linked to the trade deficit, grew by $19.4 trillion.  In 1976, the national debt was only $0.5 trillion.  Virtually all of our national debt is due to the cumulative trade deficit since 1976.
  • During this period, family incomes and net worth have declined, our infrastructure has crumbled, and our nation has been bankrupted.  The manufacturing sector of the economy has been gutted.  More than ten million manufacturing jobs have been lost.  The United States, once the world’s preeminent industrial power, has been reduced to a skid-row bum, begging the rest of the world to loan us money to keep us afloat.

This is all on you now, President Trump.  You own it.  You’ve promised to straighten out this mess.  America is watching and waiting.


Bill Clinton on Illegal Immigration

February 14, 2017

Immigration is a subject that I’ve mostly neglected, while I’ve devoted most of my time to railing against idiotic U.S. trade policy.  In the wake of the first weeks of the Trump administration, however, the time seems right to interject a little perspective into the debate.

Over the past half century or so corporations, and their deep pockets used to fund political campaigns, have turned the subject of immigration into a growth industry.  They have used a tidal wave of immigrants to bolster their balance sheets by providing a surge in consumer demand for products and a surge in labor supply that has suppressed wages.  Legal immigration has exploded and illegal immigration has gone from a criminal activity to practically being a human right.  Americans were once almost unanimously opposed to illegal immigration and both parties opposed it, the right more than the left.

Today, it’s completely different.  The political left advocates “open borders,” and the right is almost at that point as well, barely distinguishing itself from the left with a thin veneer of support for some kind of legal process.  Against that backdrop, Trump looks downright radical now and the political left’s reaction to his early attempts to reign in illegal immigration have bordered on hysteria.

So it’s worthwhile to take a look back at Bill Clinton’s State of the Union address in 1995.  In this excerpt from his 1995 State of Union address, Clinton calls for exactly the kind of crack-down on illegal immigration that Trump has now begun to execute.

Too bad that Trump didn’t use this clip in a campaign commercial.  Nothing further needed to be said, other than “I’m Donald Trump and I approve this message.”

More perspective on immigration will soon follow.


The New Civil Rights Movement

January 15, 2017

On Friday, Democratic Representative John Lewis, a pioneer of the civil rights movement, announced that he would not attend Donald Trump’s inauguration, denouncing Trump as “not a legitimate president.”  Mr. Lewis should rightly be proud of the major role he played in the civil rights movement of the ’60s, winning equal rights not just for blacks but for all minorities, and the nation owes him a great deal of respect and a debt of gratitude.

However, while Mr. Lewis and Dr. King and others were fighting for the right of minorities to be equal members of society, a new kind of civil rights abuse – one more subtle, arguably just as insidious and even more pervasive – was in the making.  The right of all Americans to make a decent living by putting their God-given talents to work as important cogs in their own economy, was already being usurped by global organizations bent on fleecing the American economy.  Americans – all Americans – black, white, Hispanic and all the rest – have become the new slaves to a new Confederacy of plantation owners:  the New World Order and its global corporations.

The American economy has been drained of trillions and trillions of dollars.  Americans’ savings have been depleted.  Wages are down.  Pensions are gone.  Health care is unaffordable.  Our infrastructure is crumbling.  Our youth are drowning in student loan debt.  No one today feels the lash of a whip, but the threat of being cast out into an economy practically devoid of opportunity might now be just as fearsome for American workers.

Mr. Lewis and others fought the good fight and won the battle.  Though prejudice will always be with us, equal rights for all are now codified into the law of the land.  So successful has that battle been that Barack Obama was embraced by the nation, including whites, as our 44th president, not once but twice.  But it was actually the dawn of this new fight for civil rights – Americans’ economic civil rights – that swept Obama into power.  Once the economy completely collapsed in 2008, American slaves to the New World Order would stand no more.  Obama’s promise of hope and change, his promise to fix our trade problems, and his “yes we can” mantra rang true to the majority of Americans who perceived the country to be “headed in the wrong direction.”

But Obama, along with both political parties, underestimated the depth of the bitterness Americans felt for their economic plight.  They propped up the bankrupt financial and auto industries, implemented some stimulus spending and, beyond that, simply set about restoring the status quo.  The G20, the World Economic Forum, the World Bank and the World Trade Organization, just to name a few, happily returned to the task of sustaining the host-parasite relationship between America and the rest of the world.  Democrats and Republicans alike shamefully became willing accomplices, grovelling at the feet of the globalists to fund their campaigns.

In the 1960s, Bob Dylan sang:

“Come senators, congressmen, please heed the call.

Don’t stand in the doorways, don’t block up the hall,

for he that gets hurt will be he who has stalled.

The battle outside ragin’

will soon shake your windows and rattle your walls,

for the times, they are a-changin.”

Now, the times are changing again. Indeed, the windows and walls of Washington have been shaken and rattled to their very foundation.  Donald Trump has been swept into power by the same forces that caused Americans to put their faith in a black, freshman senator eight years ago.  This time, however, Trump has gone further, promising to break our enslavement by these global organizations.  The new civil rights movement is on.  The fight for all Americans of all colors to make a decent living and provide opportunity for their children, whether they live in the inner cities, in the suburbs or in rural America, has begun.  As Dylan said further on in his song:

“…get out anyone if you can’t lend a hand,

for the times, they are a-changin’.”

Be proud of what you’ve accomplished, Mr. Lewis, but either get involved in helping this fledgling new civil rights movement or “get out” and make way for others who will.


On Tariffs, Indications are Trump Means Business!

December 22, 2016

http://www.reuters.com/article/us-usa-trump-navarro-idUSKBN14A27N

http://www.cnn.com/2016/12/21/politics/donald-trump-tariffs/?iid=ob_homepage_deskrecommended_pool

I’ve provided links above to two articles reporting on some very important developments in the Trump transition that have taken place over the last two days.  First of all, Trump has chosen a real trade hard-liner, Peter Navarro, University of California economics professor and author of Death by China: How America Lost its Manufacturing Base, as head of a newly formed White House National Trade Council.  The second article reports that the Trump team is planning to slap up to 10% tariffs not just on imports from China, but across the board on all imports.

These developments are an indication that, instead of merely pandering to populist sentiments during the election, Donald Trump was deadly serious when he made trade the centerpiece of his plan to “make America great again.”  Never mind threatening to label China a currency manipulator, complaints about unfair trade practices, enforcement actions taken up with the World Trade Organization, or any of the other mamby-pamby “actions” taken by previous administrations.  It now appears likely that Trump will go right for the jugular.  A 10% across-the-board tariff on all imports would be a death blow to globalization.

To put such a tariff in perspective, in 2015 the U.S. imported $2.76 trillion worth of goods and services.  A 10% tariff would raise $276 billion per year in federal revenue.  Opponents say that this is actually a huge tax on American consumers.  They’re lying.  Tariffs are paid by the companies who ship the products to the U.S.  Those companies then have a choice.  They can try to maintain their profit margin and pass it along to consumers, but that opens the door to domestic manufacturers who could undercut them on price.  Or they can “eat” the tariff and not raise prices, maintaining their market share but eroding their profits.  Either way, there’s a huge incentive to shift manufacturing to the U.S.

Consider another benefit.  That increase in federal revenue can be used to fund an equally large cut in income taxes for American taxpayers.  So, even if the importing companies pass along the cost of the tariff, you’ll have that much more money in your pocket to cover the higher cost.  Essentially, the tariff takes the money right out of the pockets of the global corporations and puts it into the pockets of walk-around Americans.  For all of you who have railed against the worsening income disparity between the top 1% and the rest of us, this is exactly the right way to go about addressing that problem.

For those who doubt the effectiveness of tariffs in boosting domestic manufacturing, consider this:  in spite of the fact that U.S. automakers lost half of the domestic market to imports, nearly every truck on American roads is still built in the U.S. Why?  Because trucks are one category of product on which the U.S. still maintains a 25% tariff.   Without that tariff, it’s likely that most trucks would now be imports and the “Big Three” automakers may not have survived.

Brace yourself, folks.  All hell is going to break loose on January 20th!  It’s been a long time coming and it’s going to be fun to watch.  I can’t wait.


Obama and Democrats are Utterly Clueless

December 19, 2016

http://www.cnn.com/2016/12/19/politics/president-obama-npr-interview/index.html

Almost as amazing as Trump’s victory in the election is the inability of the entire Democratic Party, from the very bottom to the very top – President Obama himself – to grasp the reasons behind their loss.  In a recent interview, detailed in the above-linked CNN article, President Obama blamed the Democrats’ stunning loss on their failure to “show up” in the states that swung from Democrat in the previous two elections to Trump in this election.  The problem, claims the president, is not the message but the messenger.  Hillary should have campaigned harder in the midsection of the country.

Seemingly lost on the President is that West Virginia – a state where Hillary did campaign more than once – made the biggest swing  from Democrat to Republican of any state in history, losing by 69% for Trump vs. 27% for Clinton.

Why did she lose so badly there?  She came right out and said that she was going to put the miners there out of work.  In a subsequent attempt at damage control, she promised “retraining” for laid off mine workers.  Retraining to do what?  She had nothing.

The message she gave West Virginians, though more pointed and targeted to that particular demographic, was consistent with the globalist message that both the Democrats and Republicans have been selling for decades – that your manufacturing jobs are never coming back, that this is somehow in your best interest and if you’re just patient enough you’ll come to understand, and that we’ll retrain you to do some other job – a job that doesn’t exist.

The problem for Democrats is that nobody believes it any more.  Their message has been proven to be a load of crap.  Along comes Donald Trump and, in spite of his many flaws, immediately seizes the spotlight with a new and very simple message:  I’ll slap tariffs on those imports.  Your jobs are coming home. We’ll make America great again!  (Not to mention his message about putting a halt to the illegal immigration that both parties embraced in an effort to pander to the Hispanic vote.)

Republicans shouldn’t be smug.  They too fought Trump tooth and nail every step of the way, clinging to the same globalist message.  Only because Trump chose to identify himself in this race as a Republican do they now find themselves in control of so much of the political landscape.

The Democratic Party used to be the party of working-class Americans, but has morphed into a money-grubbing carnival barker for the New World Order.  But they don’t see it.  They still want to believe that if they had just polished that turd a little brighter and sold it a little harder they’d have won the election.


How the Global Elite Sewed the Seeds of Trump’s Victory and Their Own Demise

November 23, 2016

With each passing day since the election I am more amazed than the day before at what I see happening as the Trump administration begins to take shape and at the reaction from world leaders, the business world and political pundits.  I have a lot of thoughts I want to share about what this all means but, before getting into all that, I thought I’d share another take on just what happened with this election – a “take” that I haven’t heard from anyone else yet.

As global corporations began the process of implementing the New World Order that had its genesis in the signing of the Global Agreement on Tariffs and Trade in 1947 – especially as the process accelerated first with the signing of the North American Free Trade Agreement, followed closely by the admission of China to the World Trade Organization, both events occurring during the Clinton administration – the painful process of passing out pink slips to American manufacturing workers got underway in earnest.

With nothing more than a small severance check and, perhaps, some “job re-training” (to do exactly what was never clear), millions of people were suddenly faced with the question, “now what do I do?”  They began with the obvious – look for another job.  When that didn’t work, more and more people tried their hands at starting their own businesses. It stimulated an interest in entrepreneurism like we hadn’t seen before.  People sought out the advice of successful entrepreneurs and began to revere the most successful among them.

The appetite for entrepreneurial advice didn’t escape television executives.  Never one to miss an opportunity, enter Donald Trump and his reality show “The Apprentice,”  which first aired in January of 2004 and has run continuously since then in various formats.  Viewers were awed by his business instincts, his ability to see through phoniness and identify those with real ambition, and his ability to win at business.  For people who had been exposed to the lies and BS that were standard fare used by corporations to justify the sacrifice of their jobs on the altar of globalism, this was refreshing.  This was someone they could admire.

What the global elite didn’t anticipate was that they were making a hero of a fabulously successful entrepreneur who didn’t need their money, one with political ambitions and one who, for whatever reason, seemed to have an affinity for the working class.  I’m reminded of the natural world where imbalances have a way of correcting themselves.  If a population of some species grows out-of-control, other forces have a way of reining it in.  In the same way, when the global elite concocted a system that helped some at the expense of others, they unwittingly sewed the seeds of that system’s own demise.