Wednesday, February 22, 2012

If the Economy is Improving - Why is Dependency Growing?

According to the Obama Administration, the national unemployment rate in January 2012 dropped to 8.3% - still above the Administration's promises of a maximum post stimulus unemployment rate of 8% but well below the high water unemployment mark we experienced in the wake of the 2008-9 recession.

This is being touted by the Administration and their supporters in the mainstream media as proof that the economy is now in recovery from the recession.  But if we are in an economic recovery, there are a number of facts that question the strength and robustness of this recovery.

One of these is related to the questions around the validity of the unemployment numbers as released by the Administration..

49 months after the start of the 2008-9 recession, employment levels today lag significantly from previous economic recoveries - including the just as deep 1981-82 recession.

The participation rate of working Americans in the workforce is also declining significantly...

...which has the effect of reducing the number of Americans that are part of the calculations made to define the unemployment rate.  Fewer workers counted in the pool - and the lower the unemployment rate.  Some of this is reflected in the 'U6' employment number which includes those who are underemployed - but it's still skewed...

By these measures around unemployment, it's challenging for most Americans to believe that we are really in an economic recovery.

There is also another factor that brings into question the premise that we are in an economic recovery as we move towards a major election in November 2012.  That is the question - Why is dependency on the Government increasing if we are in an economic recovery?
The government is at full throttle to present the economy as improving especially in light of the upcoming election. At the same time, there has been a stunning rise in dependency as most recently presented by the Heritage Foundation.

Heritage defines dependency as significantly depending on the government for help in two of the following basic expense items: housing, food, shelter, income security or higher education.

At the end of 2007, Heritage conservatively estimates there were 59.4 million Americans significantly dependent on the government.

By the end of 2010, this number had risen to 67.3 million, an increase of nearly 8 million. It is likely that another two or three million were added in 2011, for a net increase of 10 million to 11 million over the past four years.

On top of this massive increase in dependency on government programs by more and more Americans, we have the impact of this increase in usage on the budget challenges we face.  More than 70% of Federal spending goes to dependence programs - and this is on a trajectory of increasing significantly.

As dependency increases, we're also on a trajectory where only half of America are paying taxes into the government to fund these dependence programs.  

These might reflect the 'fundamental change' promised by President Obama in 2008, but they do not set the stage for an economic recovery or fiscal responsibility...

The link from Investor's Business Daily above that is the source of this question provides a loosely translated joke from the era of the USSR that is described as the 'Seven Wonders of Communism'...
1. Everyone had a job.
2. In spite of the fact that everyone had a job, no one worked.
3. In spite of the fact that no one worked, the production plan was always 100% completed.
4. In spite of the fact that the production plan was 100% successful, the stores shelves were always empty.
5. In spite of the fact that the store shelves were always empty, everyone had everything.
6. In spite of the fact that everybody had everything, everyone stole.
7. In spite of the fact that everyone stole, there was enough for everyone.
The Administration and its 'Ministry of Truth' sychopants in the mainstream media are going to work overtime this campaign season to convince us that the economy is recovering, that the Administration is 'fixing' the problems of the country in the name of 'fairness' and 'social justice', and that statism is the answer to the problems of capitalism.

Facts will be seen as inconvenient.  Traditional values and truths will be airbrushed out.  History reflecting the ethical, moral, and economic bankruptcy of statism will fixed by the new Ministry of Truth.  For us, the focus on our two minutes of hate will not be on the fictional Goldstein, but on 'conservativism, and on the barn walls will be a new set of commandments...

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