They Still Don’t Get It!

Jobs, Jobs, and Jobs

by Ed Mattson


Robert Samuelson, a noted columnist for the Albuquerque Journal hit it out of the park in a column he wrote on Friday regarding Former Treasury Secretary under President Bill Clinton, Larry Summers. According to Mr. Samuelson, Mr. Summers was quoted as saying “the chances are unrealistic of shrinking government”, and goes on, almost unchallenged, claiming specific financial pressures will make it continue to grow. As it already devours about 21% of the economy, continued growth is totally unacceptable.

Anytime the government threaten us with “loss of services” when we talk about reigning them in we should find a tree and a rope!

Mr. Samuelson agrees government growth appears to be inevitable given Mr. Summer’s argument about the growth in federal spending by about 5.6% for Social Security and Medicare, higher interest spending on the federal debt, and the “complexity” of many services government buys (health care, research and development) which will raise their costs much faster than the rise in inflation, but voiced concern no solutions were forthcoming. This has been the same song and dance we have heard about government spending since the first politician opened his mouth…growth, growth, and more growth!

Let’s look at this under a microscope…

Mr. Summers is straight out of Academia, Harvard to be exact. He comes from the same crowd to the Administration, without having any experience in what we red-blooded Americans call, a real-life job. Nope…all these so-called gurus on government policy have no practical experience…ZERO, ZIP, NADA! It is all right out of a text book. Had anyone in DC ever had to make a payroll, deal with government regulation, pay business taxes, deal with employees, face union demands, stayed up with changing paradigms in the marketplace, or deal with the public, things might have taken a different turn when President Obama hit town.

ANY BUSINESS, in the financial shape of our US Government would be ashamed to show its face in public and by now would have burned rubber all the way down to bankruptcy court. If said company were still hanging on by its teeth, it would have layoffs, cutbacks in expenditures, and possibly have heads rolling all over the place. Hey…that sounds exactly what our government needs!

There is something about those who have no experience in the private sector and turn out to govern those of us who just don’t know any better. An old saying going back to long before I became a twinkle in my mother’s eye, is…”Those who can DO; those who CAN’T teach”. Such is the case for everyone who has graced Washington and the current Administration. They have shown us Keynesian economics and they have failed to make a dent in the unemployment the GDP, the housing market, or anything that would lead us out the hole being dug in Washington. All they have given us is more debt. As a famous saying goes…”when you are in a hole stop digging”. So what do all failed academics do when things don’t turn out they way they told us, they slink back to the ivory halls from where they came and continue to teach those same old worn out theories to the next generation of Kool Aid drinkers.

The whole problem with Keynesian economics is that it is based on a circular economic base wherein people spend money, creating jobs when they purchase goods and services, and the people hired do the same thing. When people have no job, or when they decide to save their money and the economy slows, it’s up to the government to step in and pump money into the system, even if it means printing more money without the collateral backing of gold, silver, or anything of value except “the full faith and credit” of the government. Try spending full faith and credit down at the supermarket.

According to Wise Geek, a contributory board of researchers with their ears on the railroad tracks, “Therefore Keynesian economics warns against the practice of too much saving and not enough consumption, or spending, in an economy. It also supports considerable redistribution of wealth, when needed. Keynesian economics further concludes that there is a pragmatic reason for the massive redistribution of wealth: if the poorer segments of society are given sums of money, they will likely spend it, rather than save it, thus promoting economic growth. Another central idea of Keynesian economics is that trends in the macroeconomic level can disproportionately influence consumer behavior at the micro-level.

Government has no money. That’s right, government has no money. The only way government obtains money is by taking it away, in the form of taxation, from those who earn it. When the government gives out goodies to those who don’t EARN IT, they have to first take it from those who have earned it.

So getting back to Mr. Summers as he rides off into the sunset, what did he think the country should do to face the coming Tsunami? Well, I guess this is where kicking the can down the road again comes into play. His epithet on the political “boneyard” mess in Washington is, “How government can best prepare for the pressures that loom, and how greater revenue can be mobilized without damaging the economy, are the great economic questions for the next generation.”  WRONG. The problems must be address now, today, not the next decade or beyond. We are already on the road to insolvency, possible hyperinflation, and economic collapse.

No government in history has barrowed its way out of debt, and no government in history has been able to print enough money to get out of the hole. The only remedy is to grow the economy enough to buy our way out of insolvency. These are not mere words of an ideolog who believes we need change, real change, in Washington DC. Let me give you an example of what’s needed and then we’ll talk a few specifics on how to go about taking the medicine the country needs to survive.

At this point the government says we have unemployment at 8.3 or 8.4 %, which we all should know by now is the government’s rendition of the old shell game. The real numbers for anyone looking under the covers and not reading the headlines in the mainstream press goes something like this…

The latest unemployment report release – Unemployment 9.1% for July 2011 – 117,000 new jobs. All the while pundits and press quote various unemployment rates ranging from 9.1% to 22.7%. How can this be…these drastically different numbers? First, the unemployment rate is well defined, and been figured the same way since 1994, and rigged to make it always look better than it really is. The official unemployment rate was 9.1% according to the government in the above example of a year ago. There were 13,931,000 unemployed people in July 2011. But that doesn’t give the full picture either. “The Labor Department reported Thursday that seasonally-adjusted initial claims rose 4,000 to 372,000″. That means we lost 255,000 more jobs than we gained, but you didn’t hear about that. Folks, we are going backward.

The Bureau of Labor Statistics gives an additional number, those who are not part of the labor force who want a job, currently 6.57 million people. This 6 million plus group isn’t part of the official unemployment rate, nor are those who really want and need full time jobs but can only get part time ones. These people number 8,396,000. So by a broader definition, we’ll use the figure of 16.1%. Call it twice the official number for simplicity. This of course doesn’t count the non-institutional civilian population of those persons 16 years and over, not in the military, locked up somewhere, hospitalized or in nursing homes. So while the news media hypes the 117,000 new jobs little is mentioned about how bleak the situation real is.

Now to our lesson on how to get the US out of the hole…Okay, I got my calculator out so we can crunch some numbers. According to numerous sources, every dollar spent on anything we purchase has a multiplier effect. Yes, even money spent on government programs like food stamps, unemployment and other programs, though the benefit thereof are done at the expense of the national debt rising at $4 billion a day. Money spent on goods and services by those with a real job bump the economy anywhere from $5-$14 depending on what source one wishes to quote. For the sake of our example we’ll use $5. For every dollar spent the economy grows by $5.

Looking at the total unemployment and underemployed figure of 28,891,000 as pointed out in the above numbers, if we could put America back to work to full employment we would boost the income generating population by

Total workforce                                          28,891,000
Less chronic unemployed                         1,450,000 (about 5%)
Current workers                                         13,931,000
New folks added to the workforce      13,515,000

If the salaries of those newly hired were to average just $65,000 per year, we would see a rise in consumer spending of more than $4.39 Trillion (13,515,000 x $65,000 = $4.39 Trillion). Folks, this is in consumer spending only, not industrial spending, foreign trade, or government spending. This is the ticket out of the mess we are in. This is private sector growth and the path to our national posterity. In short the solution is jobs, jobs, jobs.

I don’t profess to be an economic maven. I am just a citizen with one of the best tools we have to weigh the validity of these insane government programs…a calculator. I am sure there are those amongst us who will say 5% unemployment is unattainable. NOT TRUE. There are those that will say “going back to the programs that got the US into deep financial troubles are not the answer”. NOT TRUE.  And there are those that like it just the way it is with America spinning out of control on a downward spiral, because they have a hidden agenda.

Most have forgotten how good we have had it here in America. In 1999 every state in the union had unemployment in the 5% range or less with the exception of West Virginia . A large portion of the country had far less than 5%. So don’t tell me we cannot achieve that once again if we let the market do it’s magic.

As an aside: Liberals love to hammer Presidential candidate Mitt Romney about job growth in Massachusetts when he was governor because they just haven’t done their homework. When he was governor the unemployment rate was 4.5%. Full employment is measured by a 5% unemployment figure. In short, they just drink the Kool Aid and quote figures they were told, and nobody has the heuvos to challenge the numbers.

As to the programs that we are told that got us into the great financial collapse four years ago, look no further than to Washington. Too little regulation? Hardly!  Greedy Wall Streeters? Probably? Complacent legislative oversight? Most definitely! Denial of reality when the emanate collapse was pointed out to Congress long before it happened? Absolutely!

Government deficit spending is at the rate of $4 BILLION per day and they tell us they want to spend more. We should be ashamed of what we are doing to the futures of our children.

And on the other side of the coin, can anybody tell me in all seriousness that the government doesn’t have a surplus of manpower? You’ve got to be kidding! Government is BLOATED; Paperwork pushers and little fiefdoms permeate every department in government. It is government by committee, decisions by consensus, and waste out the wazoo with padded expense accounts and unlimited “important meetings” at exotic resorts. A gorilla with a single digit IQ could figure this out (no disrespect for our animal friends).  Solution…cut government workers by 5%, and freeze hiring for 5 years (attrition will reduce the number of bureaucrats to a reasonable number) and then only allow new hires to keep up with the rate of growth based on sound economic numbers.

So much ignorance was displayed from 2005 up until the Great Collapse; we allowed the government to completely entrap our country in a financial calamity that has given rise to authoritarian rule never before envisioned by the majority of the American people. The government for all its impotence and malfeasance, needed to blame someone else for their lack of enforcement and oversight which enabled the collapse in the first place. Wall Street and the Bush Administration were sitting ducks.

Today’s blind sheep are being lead to slaughter and buy into the notion that everything that made America the greatest economic powerhouse ever to populate the earth is bad and that only government, with the same policies that have crippled much of Europe and the rest of the world, are the only things that can save us from ourselves. Nothing could be further from the truth. Haven’t the policies of the Obama Administration proven that?

Do not fear Capitalism for it is the only proven system to create wealth. Fear Crony Capitalism instead, as it truly corrupts our politicians, our economy, and every value we hold dear. Solyndra and 11 other government infused programs that have failed bear witness to this.


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Following his service in the Marine Corps Ed Mattson built a diverse career in business in both sales/marketing and management. He is a medical research specialist and published author. His latest book is Down on Main Street: Searching for American Exceptionalism Ed is currently Development Director of the National Guard Bureau of International Affairs-State Partnership Program, Fundraising Coordinator for the Warrior2Citizen Project, and Managing Partner of Center-Point Consultants in North Carolina. Mr. Mattson is a noted speaker and has addressed more than 3000 audiences in 42 states and 5 foreign countries. He has been awarded the Order of the Sword by American Cancer Society, is a Rotarian Paul Harris Fellow and appeared on more than 15 radio and television talk-shows.