“New Economy” Is The No Jobs Economy
By Paul Craig Roberts
Clearing House -
my most popular columns
was about escaping from the Matrix existence in which Americans
live. It is a world of disinformation and misinformation in
which facts are fiction, and abstract theories are substituted
for empirical reality.
Official government statistics are make-believe. The government
makes inflation and unemployment disappear by how it defines
inflation and unemployment, and it makes the economy grow by how
it defines Gross Domestic Product. The definitional basis
determines the statistical result.
For example, in his report on the official GDP revisions
released July 31, John Williams (shadowstats.com) writes that
“academic theories, often with strong political biases, have
been used to alter the GDP model over the years, resulting in
“Pollyanna Creep,” where changes made to the series invariably
have had the effect of upping near-term economic growth.” In
other words, definitional changes produce economic growth
whether or not the economy produces economic growth.
Inflation is made to disappear by substituting lower priced
items for higher priced items and by defining price rises as
quality improvements. Thus, the higher prices don’t count as
Unemployment disappears by defining discouraged workers who
cannot find employment as people who are no longer in the work
force. They simply are disappeared out of the ranks of the
unemployed. It reminds me of Punjab’s magic blanket in the old
cartoon strip, “Little Orphan Annie.” Punjab disposed of problem
people by covering them with his blanket, or perhaps it was a
rug, and they disappeared.
Despite the absurdity of the government’s data, Wall Street
awaits with baited breath each new release to decide whether
markets should go up or down or stay the same. In other words,
the financial markets themselves take guidance from make believe
numbers. In short, capitalism is rudderless. It has no reliable
indicators. Everything is rigged to support the Matrix which
keeps the population in a stupor.
Certainly the monthly payroll jobs number is misconstrued and
has undeserved influence. If the economy is down, a jobs number
significantly higher than the approximately 130,000 new jobs
required to stay even with population growth is seen as a beacon
of recovery. But the number is so distorted, as John Williams
explains, by shifting and unstable seasonal adjustments and an
average monthly add-on of 52,000 jobs from the “birth-death”
model that no one really knows what the number is. Only a
statistician like John Williams who is very familiar with the
government’s data procedures can make much sense from the
I take a simpler approach. I look at where the reported jobs are
alleged to be. In the 21st century, the jobs created by “the
world’s largest economy” have been lowly-paid, non-tradable,
domestic service third world jobs. Manufacturing and tradable
professional service jobs such as software engineering have been
moved offshore to low-wage, low-salary locations. The savings in
labor costs have enriched corporate executives, Wall Street, and
I have made this point monthly for many years, and it has had no
effect on economists, policymakers, money managers, or financial
markets, all of which continue in their make-believe world of
Here we go, one more time. Of the 161,000 reported private
sector jobs gained in July, 157,000 or 97.5 percent, are in
non-tradable domestic services. A non-tradable service is a job
that produces services that cannot be exported, such as
waitresses, bartenders, hospital orderlies, retail clerks,
warehousemen. Thus, no matter how large the number might be, it
cannot reduce the huge US trade deficit. Most of these jobs are
part-time jobs without health or pension benefits. People in
these jobs tend to live hand-to-mouth. These jobs do not produce
sufficient income to drive a consumer economy.
Of these 157,000 reported jobs, 63,000 or 40 percent are
reported to be in trade, transportation, and utilities. Of these
63,000 jobs, 60,500 of them or 96 percent are in wholesale and
Before we go to the next category, ask yourself if you believe
that in an economy that has had no recovery, in which there are
no new manufacturing or construction jobs, in which the labor
force participation rate is down, in which shopping center
parking lots are far from full, stores with such a poor sales
outlook would hire so many people in July?
Financial activities account for 15,000 of the reported new
jobs. The Federal Reserve accounted for 80 percent of these jobs
and bill collectors for the rest.
Professional and business services accounted for 36,000 of the
new reported jobs. About half of these jobs were temporary help
services and services to buildings and dwellings.
Health care and social assistance accounted for 8,300 jobs of
which ambulatory health care services comprised 80 percent.
Waitresses and bartenders contributed 38,400 jobs. I have
previously noted the anomaly of a population without good
employment prospects or rising incomes going out to eat and to
drink more and more often, so often that waitresses and
bartenders comprise each and every month a significant
percentage of the new employees.
In her commissioner’s statement accompanying the jobs report,
Erica Groshen acknowledges that 8,200,000 or 6 percent of the
currently employed are “involuntary part-time workers” who
cannot find full-time employment.
The July 2013 payroll employment level of 136,038,000 stands
2,018,000 below the employment level in January 2008, which was
5 years and 7 months ago. If it requires 130,000 new jobs each
month to keep employment equal with population growth, the US
economy is behind by 10,728,000 jobs. These missing jobs show up
in the declining labor force participation rate and the large
number of discouraged workers who are no longer counted as
Obviously, there is no economic recovery, despite the reporting
of such by the presstitute financial press. Most likely the US
economy is sinking further into a depression. The numerous
indicators of economic collapse are ignored by economists and
financial media busy at work weaving the Matrix to support The
As former executives of the “banks too big to fail” and their
proteges run the US Treasury, the financial regulatory agencies,
and the Federal Reserve, US economic policy has been focused on
bailing out the excessively large banks created by mindless
deregulation. The purpose of US economic policy is to save the
large banks from their bad bets on poorly understood new
financial instruments in the gambling casino created by
The architects of financial deregulation, such as former Senator
Phil Graham and President Bill Clinton were rewarded for their
service with fortunes of their own. The free market dupes, who
aided and abetted Bill and Phil and misrepresented the repeal of
financial stability as a new beginning for laissez faire
capitalism, still pretend that the crisis resulted from Congress
requiring banks to make mortgage loans to poor black people who
could not pay.
The lack of reality in America is extreme. I do not believe
anything like it has ever existed in the modern world.
Essentially, no one in government or out understands anything.
The combination of the power of vested interests with
ideological thinking remote from empirical reality is destroying
the US economy and the economic prospects of the American
people. The employment profile of the US economy is increasingly
that of a third world country. Economic security, except for the
rich, has disappeared. A large and growing percentage of the
population experiences the insecurity of poverty or
near-poverty, while the waiting lists for $50 million yachts
expands. The distribution of income is so skewed upward that
people of enormous wealth bid up the prices of used Ferraris
from the 1950s and 1960s to $12,000,000 and $35,000,000. I can
remember when a used Ferrari was something that a person with a
moderate income could afford to purchase. I have a friend who
bought and sold for $9,000 in the 1960s the Ferrari that last
sold for $35 million.
Detroit, once the fourth largest American city and the
manufacturing powerhouse of the world, is bankrupt. The
populations of the cities that once were America’s thriving
manufacturing base are declining. Cleveland has boarded up
homes. St. Louis has 20 percent of its homes vacant. Welfare is
under attack by the Republicans and even some Democrats as the
plight of the population worsens and despair rises.
Washington only responds to the half dozen powerful, rich
private interest groups that fund election campaigns. The
American people have no one to represent them. The American
people have been placed outside the system of “democratic
capitalism” which is only for the one percent.
As Jeffrey St. Clair has made clear, America no longer has a
left-wing. America is a right-wing world in which people,
including “progressives” have been brainwashed into perceiving
reality in racial contrast: the whites are well off and the
blacks are poor and destitute.
This is the false reality of the Matrix. As whites are a larger
percentage of the population than blacks, there are more poor
whites than poor blacks. Moreover, the percentage of poor whites
is growing. The way the jobs-offshoring, bail out the rich, US
economy operates today makes every one poor, including the
remnants of America’s once flourishing middle class. It is not a
racial issue. It is a class issue. A few people have the power,
and they are driving everyone else into the ground. The US
government is their agent.
So go wave the flag, support the troops, believe the
government’s and media’s lies, but unless you are the
well-connected one percent, don’t expect any future for your
children. You have been sold out by “your” government. Obama is
making pretty speeches, but only the stupid will be fooled.
Craig Roberts was Assistant Secretary of the Treasury for
Economic Policy and associate editor of the Wall Street Journal.
He was columnist for Business Week, Scripps Howard News Service,
and Creators Syndicate. He has had many university appointments.
His internet columns have attracted a worldwide following. His
The Failure of Laissez Faire Capitalism and Economic Dissolution
of the West is now available.
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