#RealEcon – Broken Yardsticks, and Why Unemployment Numbers Don’t Matter

Congratulations, America! I have solved our job problems, guaranteeing near zero percent unemployment today! How, you might ask? What incredible economic principle have I uncovered that would precipitate such an amazing increase in American prosperity? Turns out, the answer was there all along:

Make minimum wage $1.00 an hour. Problem solved. Boom. The economy is now magnificent. For some, anyway.

Broken Yardsticks — Tools that Don’t Matter

It’s somewhat baffling to me why people like Trump brag about the “lowest African American unemployment figures ever.” First, because as we’ll get into momentarily, unemployment is a useless metric for measuring public prosperity. But mostly because history suggests African-American unemployment was somewhat lower prior to 1865 or so. Actually, a lot lower. Specifically, around the American South.

Turns out, people can be pretty productive when the only alternative is torture and death. And industries can turn out staggering production figures when they don’t have to pay employees a living wage.

Employment numbers have never has been anything but a metric based on Supply-Side Economics, designed to benefit the wealthy. Just consider the presupposition here: If the ideal is zero percent une

Which is almost literally the case if you get your medical insurance through an employer. If you’ve got diabetes, a heart condition or some other chronic illness, it really is “work or die.” And, think about your kids. Coercion couldn’t get any more blatant if they were literally holding a gun to your head.  

Of course, they don’t really need to go that far if the psychological game is on point. If, for instance, one were to spread a philosophy that the point of life was to work. Just convince the masses that hard work is an end unto itself, and personal profit is a gauche secondary consideration.

The notion of the “work ethic,” work for its own sake, has always seemed to me an insidiously convenient belief system. At least, it is if you’re one of the people who gets by on benefiting from other people’s labor.

How quickly we forget the words in that wrought iron gate over Auschwitz:


Arbeit Macht Frei. Work Sets You Free.

Basically, half the lyrics to every country song ever written.

So, the notion of economists using employment figures as a metric for success carries more than a few sinister undertones. Especially when tied (as it often is) to the DOW Jones, GDP and GNP. By and large, these are measures of corporate profits. Not American profits. Corporations are fictitious constructs; citizens of the world, not America. Billionaires may be among us, but they aren’t of us. They might as well live on a space station circling overhead. Yet, we continue to combine these metrics, and pretend like it’s relevant to 99 percent of us. This gives us yardsticks reporting success only in terms of the rich getting richer, and the poor getting poorer. And that’s not a bug. It’s the feature.

Small wonder then that, while so many Americans languish in poverty and desperation, while so many of us work ourselves to death, falling further and further behind every year…economists tell us everything is great. Booming. Swimming along, and working magnificently. All the tools say so.

Because the tools they use are broken. The tools they use assume a direct correlation, in the grand tradition of Supply-Side Economics, between the profits of the wealthy and those of the poor. Not only is this correlation false; it is, if anything, completely inverted from reality. Employers and the wealthy benefit from high labor utilization at low cost, and employees exactly the opposite. Without getting too tankie, this is the heart of the class struggle between workers and property or business owners. They will forever be at odds, and those odds always favor the guys with the money and power.

Which is a problem not just morally or in terms of economic justice…it’s actually a problem for the economy itself. Or more specifically, consumerist economies like our own. In a consumerist economy, profits are driven by (surprise) consumers. Not suppliers. Suppliers may manipulate consumers in any number of ways including advertising and de facto market controls; but at the end of the day, consumers rule this market. Not Suppliers. Which makes the entire notion of supply side (Trickle Down) economics, to put it mildly, bullshit.

The fact that we continue to use Unemployment, GDP, GNP and the Stock Market as economic indicators shows how entrenched Trickle-Down is into the mindset of economists. You can’t expect to build a level playing field with biased tools. Which is, of course, the point of using them.

Want to “fix” unemployment tomorrow? Kill the minimum wage.

Want to fix the economy? Throw away the broken tools we use to measure it.

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