Unemployment in October Frightfully Scary

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By Douglas V. Gibbs

Unemployment is a constant. There are always those that have left a job, or lost a job, and are unemployed for a time period before finding another job. This is the natural tendency of society, and economic systems. Unemployment rates rise and drop naturally.

Unemployment rates are supposed to be measured by the simple percentage of the work force who is currently without a job. Typically, rates higher than six percent are considered higher than normal. Unemployment rates normally rise above six percent during times of economic difficulties because employers either lay-off workers to remain within their budget, or do not hire new workers because it is not in their affordability to do so while consumerism is low. However, higher unemployment rates alone do not signal an economic slowdown. Such periods of economic difficulties are also accompanied by a slowdown in the Gross Domestic Product (GDP), and either inflationary or deflationary conditions.

Unemployment rates, however, are manipulated by politicians to make the financial system look like it is doing better, or worse, for whatever political reason they have. However, when a recovery from an economic recession is in play, a decrease in the unemployment rate normally ensues.

Today's unemployment rate has been hovering just under 10%, or so the government tells us. The problem is, their numbers are only based on the number of unemployment claims that are active. Based on other factors, including what is called U-6 (which includes out-of-business business owners, people who have dropped off the unemployment roles because their claims expired, and those that are unemployed and have not filed claims), the unemployment rate is actually above 18%, and is rapidly approaching 20%. So, the question is, are we truly in a recovery, or is the recession turning into a full blown depression?

Another factor we must consider is underemployment. Underemployment occurs when a person either does not work full-time when they can, or does not use all of his or her skills. Some people take whatever part-time jobs they can, just to bring in something, so they are not technically unemployed, so they don't qualify for unemployment benefits, but what they are making is still such a small amount that they are often unable to meet their financial obligations. Sometimes, the underemployed can be worse off than the unemployed.

With a high unemployment rate, it means that less people are making money, less goods are being produced, and less consumerism is taking place. High unemployment rates, then, do not help economic downturns, and in reality, hurts any hope for a recovery. People reason that high unemployment rates have this kind of effect, so the government only tells you the percentage based on unemployment benefits filed for, hoping to avoid a drop in confidence.

Though we have not experienced inflation, some economists are actually calling for a need for inflation, fearing a deflationary depression. Problem is, if inflation sets in, and it always does when the government pumps more money into the system without accompanying value, the prices of goods and services will begin to rise. When this happens, the currency becomes worth less, and during a time of economic recession where a dollar is hard to come by, an increase in prices can be detrimental to any possibility of a recovery.

In most cases, salaries have not increased, and in fact many people are experiencing a drop in income. With buying power going down, people become poorer, and must be more careful on how they spend their money. This is when credit becomes dangerous, and loan obligations begin to go into default.

Government, in an attempt to resolve the economic turbulence, has decided to pump money into the system, while increasing regulations against some industries, including the financial sector. The government officials believe that this will "prime the pump," and kick start consumerism. However, what has been the result is higher unemployment, a shrinking private sector (a small increase in GDP has only been because the government has expanded), and a rapid decrease in the value of the dollar. In short, the government is making a bad situation worse.

The best way to resolve economic turbulence is for government to get out of the way. The free market adjusts naturally when faced with rises and falls. However, high spending by the government artificially delays the rises and drops, which in the long run worsens them. To stave off the inevitable, government will sometimes continue to spend money hoping to stimulate the economy. The artificial stimulus, however, is only temporary, and eventually, the system must be allowed to correct itself.

Government interference is the cause of the continuance of this downturn, and the inability for the unemployment rate to drop.

The question then becomes, do these liberal Democrats truly not understand economics? Or does the liberal left have something else planned? After all, whether the economy is strong, or weak, the liberal philosophy of equalizing outcomes and wealth does not change. Their welfare policies removes the incentives for people to become upwardly mobile, and by pumping large amounts of money into the system, especially into the lower economic class, government is literally sending the message that sitting back and not being a producer or achiever pays.

Economies depend on a vibrant workforce that is not hindered by excessive regulations, or members of the workforce being paid to stay in poverty. Businesses sit on their savings when they are unsure of the future due to government interference, workers stay at home when they are paid to not work, and economies do not grow when government interferes by introducing fiat money into the system. If the government continues on this course, unemployment rates will rise, and even their attempt to hide the true numbers will cease to work.

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