Suppressing Unemployment To Win The Election

In Presidential politics, when you get beyond the culture wars, wedge issues, religious right, taxing the rich, pro-choice, nuking the gays, the Tea Party Movement, and NIMBY, one election truth holds clear:  A sitting President running for a second term has never lost an election when unemployment was low and the economy was good.  On the other hand, he’s never won an election when unemployment was high or the economy was ravaged by inflation.  This means the unemployment rate can be used as political psychological warfare on the electorate.  If the unemployment rate is pushed down, the consensus is that there must be jobs and the President can’t be blamed for the failure to find work.  Therefore, to win this election, the current administration has found ways to make people vanish from the labor force to keep the unemployment rate lower than it really is.   Let me explain how they have done this. 

If the labor force participation rate had not been reduced 4 percent over the past four years, the unemployment rate would be more like 11.5 percent today, not the reported 8.5 percent.   

Push those nearing retirement into filing for Social Security Disability (“SSI” Benefits):  Firms specializing in coaching people on how to be accepted by SSI are now available to anyone over 50 with debilitating aches and pains from serious medical conditions such as a bad back, diabetes, failing joints, arthritis, high blood pressure, failing heart, etc.  Plus, anyone over 50 can claim chronic clinical depression if they’re unemployed and without hope, so eligibility for SSI is legitimate.  Even if you have to apply more than once, eventually you will get into this program, which has been transformed into a long-term unemployment program with 8,551,000 recipients. (See Table 2:  I think we can expect the Obama Administration to turn a blind eye to eligibility and ramp it up in 2012. Do we hear 9.5 million plus on SSI by Election Day? 

Get people to start collecting Social Security early at age 62:  As of November 2011, a staggering 60,671,000 are collecting social security and/or SSI disability benefits, and the number keeps rising.  If you’re collecting, you’re out of the labor force. 

Give out generous government loans and send people back to school:  If you’re a young high school grad without any job prospects and not especially gung ho about going to Afghanistan to look for roadside bombs by stepping on them, what can you do?  Well, borrowing from Uncle Sam to go to a four-year college, two-year community college or trade school, looks pretty darn good.  Indeed, a life of books, late night parties, and cute co-eds, is a pretty nice way to live, and many adults remember it as the best time in their life!  Also, for college grads with no decent job prospects going to grad school is a pretty simple decision.  Staying in school is a life they already know and love, and, who knows, you might even learn something!  For laid-off Wall Street executives, business school or law school looks great.  Why not learn some skills and come back when the job market is stronger and the pay is higher.  

This back-to-school trend has surprisingly picked up for those in their 30’s and 40’s ” if you are too young for disability, and still young enough to hope, going back to school is the new rage. Most importantly, it keeps you out of the labor force!  My favorite tee shirt for the other 99 appropriately says “I’m not unemployed, I’m in college”.   Since America decided to destroy our factories and move millions of jobs to Asia, good jobs are so scarce that the labor force has turned into “the labor farce“. There are four job seekers for every job opening.  And, to make matters worse, over 11 million people can’t move to where the jobs are because they’re trapped in an underwater house.   

Today, 20.5 million people are in college either full or part-time, but sending them to school isn’t cheap!  Full time college programs for state schools can easily cost $30,000 a year, and full-time programs at private institutions run well over $50,000 a year.   

It’s also common to see college grads with $50,000 – $150,000 in debt when they finally enter the labor force.  Student debt today at one trillion dollars is greater than all consumer debt.  A trillion bucks is a lot of spending on economic activity but with ten percent of student debt in total default, in a few short years it will be triple what it is today and cost the American taxpayer three to four hundred billion in bad debt that can never be repaid. 

The reason the debt can’t be repaid is that many students simply do not acquire skills that allow them to make a material increase in their earnings. Not everyone is cut out to be a computer engineer or brain surgeon, and the other skills that remain in demand. The latest statistics show a vast swarm or newly minted law degrees, and virtually no need for new corporate counsels or ambulance chasers. Many English majors can’t even write a coherent article because they only know how to write with their thumbs in cell phone shorthand. Many of today’s students will simply never earn enough to support themselves and pay back their student loans.  However, they will be aces at computer games!  

At least big student loans help to keep the cost of college soaring! Why?  Because no matter how high the cost of education goes, kids can borrow the cost from the government.  This Federal largesse helps keep today’s economic spending up while keeping the salaries of professors almost as high as their inflated egos.

(It should be noted that many early Americans came from debtor prisons in England or came over as indentured servants before the American Revolution. After 1776 Australia got settled when England had to find a new place to dump their prisoners. However, life in the modern world in Australia and New Zealand is reported to be like Southern California, but with lots of jobs. So, in a few years, there may be a wave of ex-American students skipping out on crushing debts by emigrating to warm sunny climes “down under” for a fresh start.)     

Keep inmates in jail.   America has 2.3 million people in jail.  You may be surprised to learn that while the US has 5 percent of the world’s population, it has 25 percent of the world’s prison population!  The annual cost to keep one inmate in jail can easily exceed $30,000 year.  Much of the cost is used to pay for the legions of prison guards, and create valuable jobs like the TSA airport body searchers.   In other words, a police-state economy lowers unemployment as it creates jobs for the INS, DEA, TSA and Wall Street snitches.  In China, even though they have four times the population of the United States, they have a million less people incarcerated.  There, they shoot criminals or put them to work rather than pay for them to be locked up

Needless to say, these labor force suppression programs cost a bundle but they do put money in people’s pockets and can generate votes on Election Day.  However, for those 60 million plus on SS or SSI, their life is as good as it will get because in reality they’re marginalized, and ignored by the economically active.  For the inmates in jail, they tend to learn skills from other criminals on how to be a better criminal. For those hiding out in school, it will be a while before they realize they have tons of debt and because federal law prevents them from going bankrupt on the debt, today’s students will become tomorrow’s debt slaves many months after the election.   

So, at the end of the day, the real joke is on the American taxpayer who thinks the election is bought by big political donors giving hundreds of millions of dollars for advertising on social issues.  In reality, though, the PACs, and Super PACs are spending peanuts compared to the cost of labor force suppression. Who says the Presidency can’t be bought!