Unemployment Continues to Grow

Despite an end to the recession, at least in a technical sense, unemployment increased by 12,000 in the September quarter, with total unemployment hitting 150,000 or 6.5%.

It has been reported in the U.S that the unemployment rate is under-reported due to the particular rate they choose to report, this is the U3 number. This makes the comparison to the unemployment rate of the Great Depression useless, as back then they used the U6 number.

New Zealand too must report an unemployment number that is comparable internationally, however unfortunately, the Statistics department does not report a number or rate similar to the U6 number.

However, below we have come up with the rate of ‘the jobless’, which are people who are available for work but are not working and those searching for work but are unavailable. Not surprisingly, this rate is far greater than the official unemployment rate.



Worse still is the number of people who are working part-time and who would like more hours, or are searching for full-time work. This group is the so called underemployed. Adding these groups in produces a number similar to the U6, and it is not good reading.



Currently unemployment is rising (53.9%) and employment is falling (1.8%) , but these measures does not paint a complete picture. People generally dislike being unemployed, so many people will move into study, or continue studying, or just remove themselves from the labour force for whatever reason. This fact is shown by the decrease in the labour force participation rate (-0.6%) and the increase in the number of people not in the labour force (-3.3%).

If the citizenry are going to take the employment situation seriously, then one must reject the belief of a ‘jobless’ recovery, reject the ridiculous and unhelpful unemployment figures and investigate the true cause of unemployment. Unemployment like many things, is caused exclusively by the government. Henry Hazlitt mentions this in his 1946 book Economics in One Lesson,

"The government spenders create the very problem of unemployment that they profess to solve"

Minimum wage, public holidays, overtime rates, 20 days annual leave, maternity leave and other government regulations are the real causes of unemployment because they force businesses to pay employees for being non-productive. Until employees are only paid for being productive, unemployment will exist.

More to come...

themarketanarchist

Addendum

Government not only destroys jobs by creating regulations that makes hiring working less advantageous, it also destroys jobs (or potential jobs) with government spending. The creation of government jobs merely just transfers labour and capital from the private (productive) sector to the public (non-productive) sector. This action is called 'crowding out'. This limits the available capital businesses and entrepreneurs would otherwise use to start or expand their business and employ more workers.

Here is a good run-down of government spending and job creation.

Govt Boasts About Q3 Inflation Numbers

Most people seem to view inflation as an unavoidable phenomenon of living in a modern society. This is true to the extent that said modern society contains a central bank that has monopolistic power over the creation and supply of the nation’s money.

The September quarter figures show that the CPI increased 1.7% from the September 2008 quarter. The government statisticians boast that this was the smallest increase since March 2004. How one can be proud for being able to cause inflation during a deflationary recession is beyond us.

Furthermore, not only did the Government manage to rob its citizens of purchasing power, they fully admit that it was there doing. In the September quarter the groups that had the largest increases in prices were transport (via vehicle licensing fees up 16.2%), health, alcohol and tobacco, local authority rates and payments (5.6%). Amazing, these categories all include either direct or indirect taxes.

The annual inflation picture reads worse for our leaders. Food (5.4%) and Housing and Household utilities (2.1%) ranked the highest. Looking at individual prices, second-hand cars were up 12.9% (import restriction laws), electricity was up 4.5% (Government is a huge stakeholder in power producers), and local authority rates and payments were up 6.6%. Again the Government leads the way with price inflation. The last example should be particularly embarrassing for the MP in charge of local government who prides himself on being conservative /libertarian.

But the best evidence is from the Governments own charts. They show that since the GFC began the tradables sector reacted with deflation as one would expect. But since the Government cares not about what market forces are telling them, they rolled on, continuing to increases prices just as they had previously, the trend is very linear.

It appears that although central banks are doomed to destroy their own currency’s that they profess to protect the value of. In the short-run the central government will step up and provide short term inflation whenever a disastrous asset devaluing event rears its ugly head (read: a painful but necessary correction in over bought markets). You can read their CPI document here. There is also a good article on inflation over at the Daily Reckoning here, and Peter Schiff’s video on interest rates (and inflation connection) below is also worth watching.

More to come…

themarketanarchist