Tuesday, May 5, 2015


Any time someone gives you a rate for anything, it’s been jiggered.  The unemployment rate is a well-known example. In 2012 the reported unemployment rate was around 8%. If I take the total reported employment of around 134,000,000 then apply it to the total population between 20 and 64 of about 162,000,000 I get around 17%. That seems a little high for 2012 but it gives you an idea of the variance. At this point economists start throwing smoke.  Most economics seems to be disputes about rates.  Disability, yadda yadda, looking for work, employability, underemployment, I’ve known a lot of deranged people who have jobs.  A good rule of thumb seems to be double the reported rate. Google real unemployment and double the rate seems the general conclusion.

Given the tremendous amount of data available and studied we should have immediate, accurate and complete information segmented across any desired index of our unemployment.  Given that we don’t it is obvious that we don’t want this information. We have national job search sites, Monster, LinkedIn, Dice, which should be able to show employment rates and active job searchers by profession. Why aren't these numbers publicly available?

Earnings are another notorious quagmire. Security Analysis, the legendary book by Graham and Dodd, is essentially a diatribe on the difficulty of reading company reports. Investors want to see a smooth earnings curve, so management spends most of its time trying to fit its real revenue into that form.  Inevitably there is a disaster, the company takes a bath, reveals all its bad news and then goes back to building its earnings curve.  Knowing this, are you more likely to trust a company reporting gyrating earnings-or would you regard it as management not being smart enough to play the game?

Inflation is also difficult. Adam Smith proposed animal feed as the benchmark for determining the value of your paycheck. Nowadays this would correspond to gasoline. Recently, the price of gas dropped but the value of the dollar as measured against gold has not yet responded.  This is probably because we have hollowed out so much of our industry. Galbraith argued that inflation was the consequence of business requiring a rate of return for investment.  I think we all intuitively recognize that there is always a real, constant and underlying rate of inflation despite particular market events. Underneath all the various currency gyrations and trade imbalances currency value has an intrinsic depreciation.

What got me started on this article were college acceptance rates.  I was startled at how selective colleges had become. Then it was explained that students are sending out far more applications than they had in the past.  What the schools are not reporting is student acceptance rates, how many students turn down the school after they have been accepted.

Everyone recognizes a drop in crime statistics. Credit has been taken by the police. Contraception and abortion have been recognized.  Cell phones help with reporting and solving crimes. The prevalence of video cameras is significant. 1984 is real. Videophilia, the prevalence of video games, is linked with drops in pregnancy, recreational activity and crime. Improvements in medical care reduce the number of successful homicides. Some of the decrease is municipalities’ jiggering the reporting. These causes explain the drop in reported crime. But the nature of criminal activity has changed. Banks and businesses have supplanted organized crime.

In the past murder rates were in inverse ratio to construction. As Sam Destafano said:
-You will never catch me; you’ll never dig up the Dan Ryan.

I have noticed a number of articles mentioning bodies found in dumpsters.  At first this method of disposal seemed foolish to me. The bodies were being discovered.  Then it occurred to me that maybe a lot of other bodies were not being discovered.  The garbage disposal process is so automated. Now that it is easy to dispose of bodies, the true murder rate is hiding in missing persons.  How can anyone stay missing nowadays? It is more difficult to hide your identity than it is to dispose of a body.

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