Confidence

The word indicates an inner feeling, but sometimes it is best to parse it. It comes from “trust,” combined with “with,” thus trusting with or trusting X. It seems to me that the X is here the issue. We use the word in relationship to the inanimate ranges of reality of well. We’ll test a knot and say that we are confident that it will hold. But when it comes to complex situations that we cannot actually test, like we can test a knot or a beam, the presence of confidence or lack of it has everything to do with people, with agents. Public confidence in the economy—therefore motivating us to spend or to invest—is not produced by careful observation of a mechanical arrangement but comes from a general “feel,” as it were. And much of that feel comes from the news, the media—alongside talking to other people and observing what they do.

The New York Times and the Wall Street Journal both feature stories this morning that certainly shape public confidence. The NYT headline: HOUSE G.O.P. SETS A NEW OFFENSIVE ON OBAMA GOALS. The Journal’s: RANCOR IN WASHINGTON FANS PUBLIC DISAPPROVAL.

It’s really the same story, although the Times’ focus is on actual planned cuts in budget whereas the Journal concentrates on a Wall Street Journal/NBC News poll showing public disapproval of Congress—which has reached an all time high of 83 percent.  Obama’s approval rating was low too, 45 percent. The Founding Fathers would here have talked about the evils of faction. That last word comes from the Latin for “a making or doing” used ever since to mean a political party or a class of persons.

Uncertainty breeds lack of confidence and conflict breeds uncertainty. No. We cannot neatly isolate the political from the economic, the personal from the public. Nor can such things as attitude be put in place by Constitutional language. Yet the performance of a democracy absolutely demands that once an administration has been elected by the public, the political conflict that resulted in that outcome must be brought to a halt; unified action must follow. We now have a situation that, were it manifesting in a person, would make that person highly unreliable. He would no sooner start something than try to destroy it, say something then try to unsay it, promise something and then do the opposite. With such a “person” in charge of our country, can we be confident? Civil war comes in many different forms—acute and violent, insidious and undermining. We have the latter, Syria the former. In a forced choice, I’d rather have ours—but in a free choice I don’t want civil war at all.

The Spreadsheet Never Frowns

My subject is feedback. Or management. Or the nature of too-highly-layered hierarchies. Consider an efficient hierarchy. It will be three-layered at most—and each layer will communicate with the one next to it face to face. In such a situation, people will be talking to each other—and what with frequent contact, will become familiar with each other at the personal level. Our current institutions are vastly more complicated—at least twelve levels in most cases. Furthermore, the chain of command will be further confused by the intrusions of committees. Very often the feedback from customers or clients will come to the top in the completely faded form of pure numbers on a spreadsheet—whereas, when the scale is human, the bad or good news will take the form of a person making a report, one human to another. The problem of size, simply, is that a spreadsheet never frowns—but people do. And when the next layer down arrives at the office with a dark face, one must be prepared to do something about it.

Supposing you were a high-flying trader who sold toxic real estate bonds directly to “widows and orphans”—as Fabrice Tourre, formerly of Goldman Sachs, told his girlfriend that he had done. And suppose the uncles, brothers, or cousins or other muscular relations of those widows and orphans had gotten a hold of Fabrice Tourre and applied to him the “feedback” of beating him to within an inch of his life? He would have learned a whole lot earlier that he was breaking the rules of morality. But twelve-layered hierarchies protected him until now. And he may still get away with it shielded by hosts of high-priced lawyers.

Employment Update: June 2013

The new employment numbers for June arrived this year on the fifth of July (see BLS release). Decent results, actually. Job gains in June were 195,000. April and May results were also updated, for a combined additional gain in those months of 120,000 jobs. This caused April results to come in at 199,000, May results at 195,000. The resulting monthly chart follows.

If we look at these results on an annualized basis, thus January-June results extended to the rest of the year, the economy continues to perform better than it did in 2010, 2011, and 2012. The graphic showing that comes next.

If we look at this on a monthly basis, we get the following. In 2010 we gained on average 85,200 jobs a month, in 2011 175,300, in 2012 182,800, and in 2013, to date, an average of 201,800.

During the Great Recession we lost 8.578 million jobs; in the three-and-a-half years since then we gained back 6.506 million. This means that we’ve now recovered in that much longer period 75.8 percent of job. Its going slowly, but we are gaining.

Recovering jobs lost in the Great Recession is not the same as adding jobs to accommodate the growth in our workforce. An earlier posting (here), shows that we need to add 87,300 jobs to the workforce every month just to accommodate our growing population. So long as we are just recovering lost jobs, we are not creating jobs for the young. Since the Great Recession ended, we have therefore accumulated a demand for 3.7 million new jobs (42 months times 87,300). It’s only after we have regained all losses that job gains will count against that growing deficit. 

Looking at sectors, some sectors were still posting losses. In June these were Manufacturing (down 3,000), Transportation and Warehousing (down 5,100), Information (down 5,000), Miscellaneous Services (down 4,000), and Government (down 7,000). The continuing loss in government employment is a marvel—what with our legislators all clamoring about creating jobs.