Assuming you have now recovered from the oh-my-God-why-does-this-have-to-be-so-dull, blog-induced coma I put you in last week, then it’s time to continue. Note: not move on, continue. As you recall – as if from a dream – there are a lot of numbers out there and so many make so little sense that we poor humans can’t really conceptualize them. And therein lies the rub, as someone possibly once said. Because from the size of the number you can figure out the producer of the number is trying to make you think.
That sounds pretty cynical.
You have no idea.
As I have related before, I grew up in a household wherein the primary breadwinner was involved in advertising. From his daily exploits in the land of Mad Men – which were nothing like the show – I would learn how the pros would use little tricks to control your impressions, emotions, and responses to put their product in a more favorable light. This is why I would much prefer to fast-forward the TIVO through the programs and concentrate on the commercials; something I am prohibited from doing by not being allowed access to the remote.
From this formative-years introduction to the fine art of psychological manipulation I developed a healthy sense of mistrust for anything other than one-on-one communication. The end result being that whenever I read, see, or hear anything, I try to figure out what the angle is because, I know they’re lying to me.
This extends to the numbers foisted upon us every day.
Here’s how it works. If the number is very big – like the national debt or the number of years between asteroid strikes, that sort of thing – the goal is to get you to ignore the thing the huge number represents in the hopes that they’ll stop talking about it. If the number is small – a fraction or percentage less than one, like the unemployment rate or the rate of inflation – their goal is to get you to think: “What a tiny number. How bad can it be?” And lastly, if the number is in between those two extremes? Then they’re just trying to sell you something.
But in all these cases, the way to proceed – regardless of the mind-control goals they have – is to put that number in terms that make sense to you.
Let’s start at the top with a really big number, like the national debt.
Imagine a dollar bill: green, thin, kind of flat unless it just came out of the laundry, right? Now imagine a stack of ten (you’re imagining too thick a stack but that’s okay) or 100. How about 1,000? Or a million? What’s a trillion look like? Once you got past 100, you’re not even close. One bill is 0.0043 inches thick, a stack of ten just under 1/20th of an inch. A billion is sixty-seven miles high. A trillion would reach a quarter of the way to the moon.
I’m sure you can picture that.
Once you start packing on the zeros even the similes get beyond comprehension.
But the national debt itself – $16.8 trillion and counting – is a column well over a million miles high.
To reduce this number to something manageable, we could mint up trillion dollar coins to aid in the visualization but that doesn’t get around the problem of all those zeros. Instead let’s reduce the size of the stack – and increase your understanding of the impact – by looking only at the important part: your share.
Which right now is $137,834.84; a stack of dollar bills only forty-nine and a half feet tall with some change on top to keep it from blowing over in the breeze.
See why they don’t want you to get a feel for the size of the debt?
In the realm of small numbers the one getting a lot of press lately is the unemployment rate. It officially stands at 7.5% of the labor force; which sounds like an improvement when compared to the high of 10% back in October, 2009. This is where I say:
“Because that’s what they want you to think.”
In the halcyon days of April 2007 the unemployment level was hovering in the mid-4% area, middle class wealth was skyrocketing, and the idiots on Wall Street were just waking up to the catastrophe they created. Now, six years later (April being the latest month for which data is available) Unemployment is stagnant at 7% – 8%, house prices are down in the dumps, and the idiots on Wall Street are making money hand-over-fist thanks to the US Federal Reserve. But things are better? Right?
Here’s how it breaks down. “Unemployed” as defined by the Department of Labor as people who “do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.” In 2007 the number of unemployed – not the percentage – was 6.85 million people. At its worst in October, 2009, the number was 15.4 million and currently stands at 11.7 million.
Then there are the unemployed who have given up hope of ever finding a job. April 2007: 1.4 million, October, 2009: 2.4 million, and April, 2013: 2.3 million.
Finally, there are the desperate few who, rather than go hungry or join the moocher class, are willing to forget they hold a PhD in Romance Poetry and flip burgers down at McDonalds. There were about 4.3 million people interested in whether you wanted fries in April 2007. This number shot up to 9.0 million in October, 2009 and from there plummeted to its present level of 7.9 million.
“Hey,” you think. “Wait just a doggone minute.”
Exactly. The unemployment rate shouldn’t have dropped to 7.5%. If you look at what the basis for the unemployment rate is, namely the civilian workforce, you’ll see that during the largest economic collapse since the Great Depression, the workforce has increased continually. In fact, the “increase” determined by the Department of Labor was just enough to prevent the unemployment rate from exceeding the magic 10% number in October, 2009 and then allowed to keep growing so the unemployment rate has dropped ever since.
When you look at actual unemployment using the DoL’s workforce numbers you’ll see that in 2007 the total un-and-under employed was 12.55 million or 8% of the workforce, in October, 2009 the numbers were 26.8 million and 17.3%. And now the tally is 21.9 million and 14.1%.
That’s all well and good, but at the same time that things have been getting better, an additional fourteen million people have joined the population as estimated by the Census Department. Now, unless something funny’s going on, those fourteen million should be represented in the Department of Labor statistics – according to their own workforce participation rate – to the tune of 9.1 million workers. But the DoL shows a workforce growth of only about 3 million. Which means 1) either the other six mega-peeps joined the Army or 2) something funny’s going on.
So let’s throw out all the estimates and extrapolations and seasonal adjustments and reduce it to what we really know: 1) how many people are there, and 2) how many people aren’t working. In 2007 those numbers were 299.7 (adjusting for armed forces personnel) and 154.1 million people (the number of people minus the number of jobs). In October, 2009 they were 305.3 and 166.9 and, currently, they are 314.2 and 170.6 million.
All of which gives a percentage of people not working – AKA: the unemployment rate – for 2007: 51.4%, 2009: 54.6%, and 2012: 54.3% An improvement not of 2.5% as reported, but of 0.3%.
See how much better it’s getting?
If you stop a hundred people on the street and ask them to explain the theory of relativity and how the Dow Jones Industrial Average is calculated, more people would get the theory of relativity right. The Dow Jones, the S&P 500, the NASDAQ, the Russell 2000? All of these stock indexes (indices?) are privately owned and calculated with a proprietary formula. There are many more of these – eighty five in the US alone – all of them produced by companies which 1) make money on the financial transactions their indexes encourage or 2) make money on rating the creditworthiness of the companies within their indexes, or 3) both.
Since the formulas are secret, if the number’s owner wants the number to go up or down, or stay the same, they just change the way it’s calculated, which they do regularly. Dow Jones calls this fudge-factor an adjustment “to smooth out the effects of stock splits and other composition changes.”
And so everything we’re told shows the economy’s getting better. The stack of national debt is being reduced by miles. Unemployment is in a steady decline, and the stock market is booming.
Happy days are here again!
You can see it in the numbers.