Friends:

I wrote the enclosed explanation to a friend in the context of an exchange about economic statistics in the news. You may find it helpful in explaining our situation to other people you know.

Whenever you listen to the news, you need to analyze what it does and doesn't mean. For example, when they say "unemployment is down," they mean either that the number of first-time filers is lower than during some reference period, or that the number of people receiving unemployment compensation has dropped since some reference point in time.

Consider a hypothetical situation of first-time filers over a three-week period. In the first week, you have 100 people working; in the second week, you have 80 people working, and in the third week, you have 61 people working.

Week: 1 2 3
# Working 100 80 61
# Laid off - 20 19
% Laid Off
- Of previous week - 20% 23.75%
- Of week 1 - 20% 19%
Obviously the number of people working in week three is substantially fewer than in week two or in week one. Yet the number of people laid off in week three is fewer than in week two. Thus without lying, a newscaster can say that unemployment figures are down. Yet the implication that the economy is improving is false. The economy is getting worse, much worse. The fact that it is getting worse is not the result of someone in the audience noticing that the way the statistics are being used is misleading. Objective reality is not a function of subjective attitude.

It shouldn't be necessary to draw up a scenario about people whose unemployment has run out and who still haven't found suitable work to
recognize that a reduction in the number of people on unemployment is not necessarily a sign of economic improvement.

An increase in the dollar value of inventory doesn't necessarily mean what the newscasters suggest either. Let's say that the last time
companies took inventory was a year ago, that they have just taken inventory again, and that they estimate the value of their inventory in
terms of what it would cost to replace it. Let us suppose that the quantity of goods in inventory has remained unchanged since last year,
and further that the value of the dollar has dropped 30% in relation to that of foreign currencies. Suppose further - and this should not be difficult to imagine, because it is, for the most part, true - that the vast majority of goods in inventory are manufactured overseas.

If the value of the dollar has dropped by 30%, then the replacement value of goods in inventory has increased by 42.9% Thus without lying, a
newscaster can say that inventories have risen, meaning that the aggregate value of goods in inventory has increased. What does that say
about conditions in the economy? Not a thing. If the goods in inventory haven't moved at all, then the economy is no better now than it was the last time inventory was taken, and if the economy is static for an entire year, then it's probably far worse than just holding steady.

Newscasters are very good at stating economic statistics with an authoritative air, as if the numbers really mean what they are
represented to mean. The effect is deceptive. The whole thing is not reducible to consumer confidence level either. While it may be true that
consumer confidence is a necessary condition for a healthy economy, it is hardly a sufficient condition. A far more potent factor than consumer
confidence is our free-trade foreign policy. The effect that soft-pedaling free trade and hyping up consumer confidence has is to lull
consumers into a false sense of security, into an attitude of complacency toward those already suffering, as free trade continues to swallow them whole.

Increasing numbers of our fellow Americans are in desperate straits. We can no longer afford to be apathetic.

Regards,
Joe Spitzig

A car company can move its factories to Mexico and claim it's a free market.

A toy company can out-source to a Chinese sub-contractor and claim it's a free market.

A major bank can incorporate in Bermuda to avoid taxes and claim it's a free market.

BUT, heaven help the elderly who dare to buy their prescription drugs from a Canadian pharmacy. That's just so un-American!