Mish's Global Economic Trend Analysis |
- Reader Reflections on Socialism Theory vs. Practice
- Record Number of French Corporate Bankruptcies; Socialist Theory vs. Practice; What Went Wrong?
- Jobs vs. Employment Analysis Suggests Huge Obamacare Impact (And Way Less Job Growth than Anyone Thinks)
| Reader Reflections on Socialism Theory vs. Practice Posted: 26 Nov 2013 07:50 PM PST In response to Record Number of French Corporate Bankruptcies; Socialist Theory vs. Practice; What Went Wrong? I received a number of noteworthy comments via email and as direct comment to my blog. Reader Jay commented ... The first thing all you capitalism bashers need to understand is that capitalism is not what we have in this country. We have crony capitalism/socialism/fascism at work right now. We have never had real capitalism. Jay replied to the ridiculous comment by "ClimbingSand " The rich have socialism, the poor have dog eat dog Capitalism. Acting Man Commented ... Via email, Pater Tenebrarum at the Acting Man Blog hit the nail precisely on the head. Here is his comment: I would point out that socialism works neither in practice nor in theory. It is already the theory that is wrong, as the concept must fail due to the calculation problem. Economic calculation is literally impossible under socialism, and so no rational socialistic economy is possible. If the whole world were to adopt socialism, we would soon live from hand to mouth, as the division of labor would completely collapse within a few short years. Thanks Pater! I take this opportunity to point out that his blog is still having "technical difficulties", related to his current host. Pater is looking for an new host site, and hopefully his blog will be back up, and running soon. Pater has taught me a lot over the years. He is the person who introduced me to Austrian economics. I highly recommend bookmarking his site. It will be back up soon. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Record Number of French Corporate Bankruptcies; Socialist Theory vs. Practice; What Went Wrong? Posted: 26 Nov 2013 12:16 PM PST The number of French business bankruptcies hit a record in the third quarter of 2013 and the yearly total is on a pace that will come close to the total reached in the dark days of the great financial collapse in 2009. Via translation here are a few articles from Le Monde. Corporate Liquidations Reaching New Heights in France The newspaper L'Autre Journal has filed for bankruptcy.Mory Ducros, Largest Bankruptcy in France for a Year With 5,200 jobs at stake, the bankruptcy of transport company Mory Ducros is in social terms the heaviest recorded bankruptcy this year. The previous failure of this magnitude was Neo Security, the second largest French security firm, which was declared insolvent in April 2012. At the time, it employed him as more than 5,000 people.Ayrault Wants to "Save as Many Transport Jobs" as Possible Transport company Mory Ducros, which employs 5,200 people in France, announced during a special Works Council (EWC) on Friday its request for receivership with the Commercial Court of Pontoise and the appointment of a temporary administrator.The prime minister, the minister of industrial renewal, and the minister of state transport are all mobilized. How comforting. Understanding Montebourg To understand Montebourg, take a look at some "Made in France" images.  Montebourg "advertises Made in France" while holding Moulinex blenders and wearing classical "marinière" shirts. He is literally the object of tons of sarcastic comments and gags. When telecom operator Free was awarded the fourth mobile license in France and launched its very low cost service, Montebourg said that Free had done more for purchasing power of French people than all the actions of then president Nicolas Sarkozy. But when Montebourg became Minister he started a very aggressive campaign against Free and its pricing, accusing them of destroying French jobs. The above Montebourg clip courtesy of reader "AC" who lives in France (see Made in France: Montebourg Ridiculed in Text and Pictures; France Goes After "Red Bull" Energy Drinks to Finance Social Security). Hopefully "AC" will not be arrested for "insulting the president". That's not precisely a joke. (See Founder of French Website "Hollande Resignation" Arrested, Car Impounded for "Insulting the President") More on Montebourg If you are interested in other absurdities by the Minister of Industrial Renewal, simply search my blog for Arnaud Montebourg. What Went Wrong? The answer to this question should be obvious: The socialist policies of president Francois Hollande went deeply wrong. In particular, I would like to point out my June 8, 2012 post Hollande About to Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It". Hollande's layoff clampdown solution according to Labour Minister Michel Sapin is to "make layoffs so expensive for companies that it's not worth it." .... To which I commented: Ongoing, if it's difficult to fire people, companies will not hire them in the first place. Couple that preposterous idea with a set of tax hikes so huge that even the socialists complained: See Hollande's Tax Everything Plan Blows Sky High With Riots by Farmers Socialist Theory vs. Practice In theory, Hollande proposed "Make Layoffs So Expensive For Companies That It's Not Worth It". In practice, his policies harmed many companies so badly they could not possibly stay in business! Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 26 Nov 2013 03:12 AM PST Every month (on average), for about a year, there has been a startling discrepancy between employment as measured by the household survey and jobs as reported by the establishment survey. I believe the discrepancy is yet another Obamacare artifact. Jobs vs. Employment Discussion Before diving into the details, it is important to understand limits on data, and how the BLS measures jobs in the establishment survey vs. employment in the household survey. Establishment Survey: If you work one hour that counts as a job. There is no difference between one hour and 50 hours. Establishment Survey: If you work multiple jobs you are counted twice. The BLS does not weed out duplicate social security numbers. Household Survey: If you work one hour or 80 you are employed. Household Survey: If you work a total of 35 hours you are considered a full time employee. If you work 25 hours at one job and 10 hours at another, you are a fulltime employee. Recall that the definition of fulltime under Obamacare is 30 hours, but fulltime to the BLS is 35 hours. Next, consider what happens under Obamacare if someone working 34 hours is cut back to 25 hours, then picks up another parttime job. Obamacare Effect Prior to Obamacare 34 hours worked = 1 parttime job household survey 34 hours worked = 1 job establishment survey Enter obamacare Person cut back to 25 hours and takes a second job for 10 hours Here is the new math 25 + 10 = 1 fulltime job on the household survey. 25 + 10 = 2 jobs on the establishment survey. In my example, the household survey totals up all the hours and says, voilla! (35 hours = full time). So a few extra hours that people pick up working 2 part time jobs now throws someone into full time status – thus no surge in part-time employment, but there is a surge in jobs. I am quite sure this is what is happening, but I cannot prove it. Household Survey Normalized The BLS has a chart (shown below) that normalizes the household survey to the establishment survey, but that just transfers establishment survey double-counting to the household survey!  I contacted the BLS and asked if they could please weed out duplicate social security numbers. They can't because they do not capture social security numbers. This is not a fault of the BLS. They wish they had more data but they don't. Does Any Available Data Lend Credence to My Theory? Yes, and overwhelmingly so. An unusual discrepancy between the household and establishment surveys is the key to the puzzle. Household survey: http://research.stlouisfed.org/fred2/series/CE16OV Establishment Survey: http://research.stlouisfed.org/fred2/series/PAYEMS Numbers are in thousands. October Employment and Jobs vs. October in Prior Years
Year-Over-Year Gains or Losses vs. Prior Years
Fore the year ending October 2009, 2010, 2011, and 2012, the household survey and the establishment survey were very well aligned. However, something happened between October 2012 and October 2013. In the last year, the household survey says employment rose by 20,000 a month while jobs rose by 194,000 per month! Let's drill down by month and take a look. Month-over-Month Gains or losses vs. Prior Month
Because of the government shutdown, some will object (and rightfully so) about October. So let's throw that month away. 12-Month Results Excluding October 2013
Even after eliminating the government shutdown effect, the difference between the two surveys is still huge. From October 2012 through September 2013, the household survey suggests employment rose by an average of 111,000 per month. The establishment survey suggests 207,000 jobs per month on average. Which is correct? Actually because of what they measure, both might be. Thus my blog subtitle "And Way Less Job Growth than Anyone Thinks" is not technically accurate. Practically speaking however, job growth has been nowhere near as good as it looks. People picking up a second parttime job following cutbacks in hours does not do a thing for the economy except perhaps waste gasoline. However, in spite of strong evidence, this is still a theory. To prove it, we need to weed out duplicate social security numbers. The BLS can't, but ADP can. I contacted them twice but to no avail. I would like ADP to crunch the data and determine how many duplicate social security numbers show up vs. the same months in prior years. If I am wrong it won't be the first time. But let's have a look at the numbers and see what they say. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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