The first virtue of all really great men is that they are sincere.
They eradicate hypocrisy from their hearts.
Anotole France
Today's Unemployment Numbers: My Take
There's no way to put lipstick on this pig: 69,000 new jobs and unemployment is up to 8.2%. I have not listened to how the Obama Administration is trying to spin this, but their typical approach has been to focus on patterns and relevant qualitative characteristics. For example, this month continues a lengthy string of job gains (even if it was less than half of the consensus number).
Let's first look at the political take on all this. I am not going to root for bad economic statistics because almost surely they will result in turnover in the White House and Senate, long overdue. In the spring of 2009 I was vehemently writing against Obama's talking down the economy which I thought was extremely unproductive. In hindsight it was clear why Obama went around Bush bashing; in a commentary earlier this week (i.e., on an IDB editorial) I discussed how Obama was able to take advantage of federal budget eccentricities (in particular, the accounting for TARP) and what I would call the equivalent of a "free play" (defensive offsides in football) by trying to make George Bush responsible for all the FY2009 budget, even though the Democrats did not pass the Bush budget and used continuing resolutions to leapfrog the lame duck President's remaining time in office, and Bush spent less than 4 months as President during FY2009.
Romney has rightly gone on the attack, but I would like to see a more general critique. Notice, for example, that the Democrats routinely spin an issue in such a way as to play the game on their side of the court. Just to give a generic example, and I'll restate it in a more authentic way, "Okay, Mitt: you tell me your neo-Keynesian ultra-expensive government make work scheme if you don't like the ones we've come up with." This is freaking crazy. It's begging the question from the get-go. It presupposes the legitimacy and effectiveness of economic fascism (government-dominated economies).
If I'm Mitt Romney, I'm responding something like this: "Talking jobs before profits is putting the cart ahead of the horse. Government is cost, not profit; there are diminishing returns to government spending. When government takes taxes, it takes from companies and individuals: money they can't spend and invest elsewhere. In other words, there are opportunity costs associated with taxes and government spending. Take, as an example, war spending during WWII. The idea that "government knows best" would suggest that the same money "wisely invested" in weapons, bullets, bombs, tanks, planes, etc. (which were used to destroy factories, bridges, etc.) is more beneficial than the same money spent in the private sector. War is yet an extension of the broken window fallacy. For example, how many American goods and services would European consumers have been able to purchase if they didn't have to spend millions on rebuilding infrastructure? Government operations, supposedly more noble because of government's non-profit nature, are intrinsically noncompetitive because government is monopoly and operates by force (unlike the private sector). Government also regulates; there are diminishing returns but costs (deadweight losses) imposed on individuals and businesses that are otherwise unavailable to spend or invest.
"I submit that the post-WWII boom reflects the superiority of a more free market approach over a government-dominated one.What we need is less government cost and burden on business and individuals. In short, we need more economic liberty. We don't create jobs if we have policies that make it difficult for businesses to create products and services or sell them. We don't create jobs if government competes with the private sector for resources (e.g., personnel or investment) which, say, enable geographic expansion. We don't create jobs if we have government intruding on hiring decisions arbitrarily constrained by wage floors or ceilings or impose barriers to entry or exit (e.g., mandated benefits). We don't create jobs when government reneges on its commitments or approvals (e.g., Gulf drilling permits) or enacts complicated pushing-on-a-string, expensive regulations in health care or financial services.
"This administration has been one of the most incompetent and anti-business in American history. They have spent nearly one-fourth of our GDP, unprecedented except during the Great Depression. They have massively added to the complexity and costs of government while failing to address the biggest cost drivers of an unsustainable string of budget deficits (unfunded entitlement liabilities), and doubling the publicly-held national debt.
"What is my plan to revive the government? Reduce the government burden (eliminate waste and redundant operations, rollback nonessential mandates and regulations, freeze or cut hiring budgets across the board); privatize and/or delegate to the states various government operations; put entitlement commitments on a sustainable path; sell or lease federal properties, expand extraction of national natural resources."
Now for those who want a more positive spin on today's job numbers, Mark J. Perry's post today on the Carpe Diem blog is relevant: upbeat manufacturing jobs; improving unemployment rate for college graduates; temporary jobs up.
However, here are some anecdotal observations in the Oracle DBA market, which I've first-hand knowledge of, having worked for Oracle Consulting as a senior principal and IBM: shrinking salaries for the few permanent positions available; rates more than 40% less than I earned 13 years ago (with much less experience); contracts for hire without established funding for a permanent position (that happened to me recently); subcontracts where clients pay the equivalent of salary with no benefits under at will terms, any out-of-town interview or relocation costs are transferred entirely to the applicant (my favorite story was the California recruiter whom contacted me in Chicago and thought it was reasonable for me to pick up $1500 in airfare for an interview in a job pool with nearly 20 other local candidates); phantom positions (e.g., they're trying to staff for a project bid but don't tell you that (a clear breach of professional ethics--this was done to me several weeks back by a very well-known defense contractor), and if there's a waiting period, say for a government clearance to be processed, you are uncompensated during that period); certain features (e.g., RAC or EBS version R12) are used chicken-or-the-egg to arbitrarily filter out experienced DBA's; extended decision cycles (in one case I recall, I did an in-person interview for an escalated approval position in October and I got contacted in February (I withdrew in December) that they had finally made a candidate selection); overqualified for a position; any gap between gigs is used as a disqualifier, regardless of the nature and extent of experience; etc. I know this in some cases from my own experiences but also the experiences of others. Since I've been doing this professionally since 1993, I've seen hiring during expansions and recessions, and the kinds of things I've just described do not happen in a healthy economy. Keep in mind we're in the third year of an expansion.
Just a personal aside on the above: scrimping on a DBA is insane. Two real-life examples: First, I once worked at a Chicago-based bakeware products company where the other DBA unintentionally told a Unix administrator to reboot an ERP server; it corrupted our disk mirroring process. It took Veritas software 3.5 hours to reestablish its mirrors and 75 database users were unable to do their jobs in the interim. Second, at a more recent engagement, I had been brought in to do a database security audit (and I was also advising on other issues). The Russian-born Oracle developer/"DBA" (who worked for about half market salary: for some context, this is a Russian-American female-owned business which holds contracts with HHS CMS; the CIO and at least one key developer are Russian immigrants or descent) had failed to control for a storage problem (against my prescient specific advice and solution to management: I had tested and delivered a script on my own initiative months earlier that needed to be run on a periodic basis to free up database resources) and the company, which had dozens of clerical people dependent on that database server being up, experienced a 2 or 3-day outage. (The IT manager contacted me after the crisis to see if I was available.) A great DBA like me is really hard to find. How many do you know have 3 advanced degrees (including two in business), extraordinary communication skills, and have worked for first tier companies?
Finally, Nin-Hai Tseng of Fortune has written a related good article, and I wanted to highlight a few salient takeaway points:
- "[Today's job number news] confirms what some experts suspected all along – that the pace of economic growth never really justified the drop we saw in unemployment earlier this year. The number of jobs created [in "good" April numbers"] was barely enough to keep up with new workers entering the labor market."
- "Recently, the Fed attributed the nearly 1 percentage point fall in the unemployment rate since August 2011 with the decline in labor force participation. "
- "In a way, the economy hasn't really changed that much since the Great Recession ended in June 2009. Many of the factors that weighed down the economy three years ago continue to constrain growth today: Europe's debt crisis, housing market troubles,
government jobs cuts, and a hangover from the financial crisis." [I agree that there has been a very modest net drop off in state/local jobs, but less than 1 in 5 work for the government--trivial compared to the private sector losses over the past dozen years, but Ms. Tseng seems to be engaging in the broken window fallacy: tax money spent on expensive surplus government employees are otherwise made available to the more productive, efficient real economy.]
The irony here is that we have a hypocritical President whom prescribes activist federal intervention in the economy as the cure-all and then bitches that it's just too damn hard and tries to blame his inability to prescribe an effective activist agenda and deliver results on other people (insert-Republican-here). Oh, yes: those magical things that the GOP opposed were just the ticket for an activist agenda to work.... What Romney needs to point out is that activist agendas are the WORST THING you can do under these circumstances. It is just mind-boggling that Obama is trying to blame the economic tsunami on laissez-faire policies. Blaming the BANKS? Really? What laissez-faire politician came up with the idea of federal guarantees of bank deposits, which encourages more risky lending (because depositors will be made whole)? When the Fed is a creature of crony capitalism? What is the Democratic response to the economic tsunami, two (or 3, if you could credit) asset bubbles bursting directly related to Fed easy money policies? Dodd N. Frankenstein actually gives the Fed MORE POWER AND AUTHORITY. You can't make this stuff up.
And let's see: we have over $20T in unfunded health entitlement liabilities: after the 2008 Presidential Super Bowl, Obama is asked, "What are you going to do now?" "ObamaCare...." You cannot make this stuff up. I mean, how does anyone explain the so-called "intelligence" of Barack Obama in saying "gee, we are doing SO WELL with the problematic government health care programs already on our plate that aren't working, why don't we just start a whole new health care entitlement?"
Musical Interlude: My Favorite Groups
The Kinks, "You Really Got Me"
