Jack Welch And The Upcoming Election

Most columnists are reporting that after the Presidential debate of October 3rd, there is now a race. Even the Democrats are saying that Romney won, while Republicans are elated that their candidate has come alive. The Economist stated, “Whatever happens on November 6th, America will emerge from this election an extremely divided country.” This is an understatement, and a recognition of the problem. Civility and dialogue have all but died. A respect for differences have disappeared within a facade of tolerance. It is really an interesting phenomenon. Instead of dialogue and debate we accuse each other of lying, which is a great way of creating democratic synthesis. I hope you know I am being sarcastic.

When one makes a debatable comment on the public stage, we attack them personally rather than debate the merits of their comment. Such was the case of Jack Welch last week. He made a comment on twitter about the jobs report that of itself was a personal attack on the current administration.  Welch tweeted, “Unbelievable jobs numbers…these Chicago guys will do anything…can’t debate so they change the numbers.” Welch came back and stated that he probably should have said it differently, but so goes the travail of modern Twitter dialogue.

Regardless of how this event unfolded the dialogue concerning what a 7.8% unemployment rate means is still valid. Welch makes a good point, “The economy would need to be growing at breakneck speed for unemployment to drop to 7.8% from 8.3% in the course of two months.” Therefore, what does the 7.8% reflect?

First we need to define some terms. The unemployment rate is a ratio between those who are unemployed and those who are a part of the labor force. The 7.8% reflects a fact the 8 of 100 people who are part of the labor force are unemployed. However, the number 100 does not really capture all of the people that should be a part of the labor force. The phrase labor force represents all those who are either employed or working. It does not capture those who have become discouraged. In other words they have been out of work so long that they have quit looking for a job. These people have used up all of their unemployment benefits, and have fallen off the books. They are still unemployed, but they are no longer counted.

Where we see an indication of the problem with discouraged workers is in the number reflecting labor participation rate. From the early 90’s through 2008 the participation rate has been above 66%. This means that 66% of the population 16 and older was working or unemployed. In other words they were counted. Welch argues that the current number of 63.5% represents a larger number of people who have fallen off the books, which is the reason for the lower unemployment rate. This gives a false sense of improvement. The work situation is not getting better, just more people not being counted. Thus the comment about cooking the books by Chicago politicians.

Welch does make a good point when he states, “And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery.” I was around and aware during the Reagan years, and today does not feel the same. Of those 873,000 jobs, 602,000 were government jobs added at the local, state, and Federal levels. Therefore, revenue generating growth created in the private sector is not happening, but the growth in jobs is occurring due to government expenditures leading to bigger government. Hmm, I see this as problematic.

Welch makes a poignant comment, “These three statistics – the labor force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months – have to raise some eyebrows.” I think this needs to be placed in the public square for proper debate. I think Welch has a point.

Even though Welch claims no connection with Romney, he states that at the beginning of his article in the WSJ, I think we can assume he has a particular agenda. But this is what public dialogue is all about. We develop our arguments take them to Mars Hill, and then de discuss.

As a civilized democracy we do not attack personally (at least we shouldn’t), but we attack the strength and weaknesses of the argument. When this ceases to occur we will be become a totalitarian society governed not by freedom of expression, but by despotic elite. We all need to pay attention rather than drinking the kool-aide. Therefore, question the number, no matter which side is producing them.

And that is my thought for the day!

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