It's Time to Abolish the BLS, and Its Worthless Unemployment Report
Back when Hong Kong was a largely autonomous colony of Great Britain, its leaders made a point to not calculate the city-state’s economic statistics. With good reason. The feeling was that if government were in the business of divining unemployment, GDP, and other supposed measures of economic activity, that those same measures would be used by politicians as an excuse for politicians to ‘do something.’
Of course, when it comes to economic growth and progress, there’s no need for politicians to do anything other than ensure individual freedom to succeed, fail, import, export, and to generally produce in order to get. Free of all the meddling that generally defines the doings of the political class, Hong Kong quickly soared from impoverishment to prosperity. When individuals are free, their natural state is growth.
Which brings us to the United States and its founding document. What’s crucial about the Constitution is that economic growth is never mentioned. The Founders well understood that free people would prosper, which meant the Constitution was written not to limit the rights of the citizenry, or to guarantee prosperity; rather it was written to codify freedom from an excessive federal government. Americans would be free to live as they wanted, and then their choice of state would amount to their choice of how much or how little government they wanted. U.S. states would essentially compete for citizens.
Which now brings us to the Bureau of Labor Statistics’ (BLS) monthly calculation of the rate of U.S. unemployment. Strategas Research Partners founder & CEO Jason Trennert pointed out in a recent report that the BLS currently has 2,500 employees, and an annual operating budget of $640 million. This needs to be fixed. More specifically, the BLS should be abolished. Not only does the Constitution not empower the federal government to calculate unemployment statistics, the number is also not necessary. As Trennert happily reminds us, private businesses can – and already do – calculate U.S. unemployment for free.
Indeed, as Trennert notes, private companies ADP and Intuit presently produce monthly stats on U.S. unemployment, and they do so without cost to the U.S. taxpayer. Perhaps more appealing to those convinced that the U.S. would revert to the dark ages absent a federal employment calculation, Trennert points out that ADP’s employment measure has correlated with the BLS’s “91% since it was introduced in 2001.” ADP is once again producing a stat that mimics (or arguably improves on) that of the BLS, only it doesn’t cost taxpayers $640 million annually.
All of this is a reminder that whatever the federal government can do with the money of others, private businesses can do it better; all without burdening taxpayers who would go on living perfectly productive and happy lives sans the federal government’s economic data. Better yet, unemployment is but one number that private sources could produce. Capitalism is all about fulfilling unmet needs, so if there’s a market need for GDP, trade, investment and other calculations, capable market actors will fill the void. It’s not there’s no need for economic statistics much as there’s no need for government to calculate them.
Figure that equity and bond markets, by virtue of them being equity and bond markets, are information machines pricing in all manner of production and employment information minute by minute, day after day. In that case, the economic statistics produced by the federal government are logically priced to varying degrees long before they’re actually made public. Furthermore, as the ADP correlation with the BLS jobless stat once again reminds us, private entities are producing voluminous information already, and at no cost to the taxpayer.
But the main reason the BLS should be abolished has nothing to do with its needless $640 million annual cost. We should abolish it simply because governmental attempts to draw pictures of the underlying economic reality inspire politicians to ‘do something.’ Except we don’t need them to do anything. History is very clear from the U.S., to Hong Kong, to Singapore, that economically free people prosper. Governmental reactions make us less free precisely because they invariably lead to needless intervention by politicians in the free marketplace.
The above helps explain why investors focus a little or a lot on the federal government’s economic data. They don’t because the data are illuminating (see ADP once again), but because they read the statistics as a way of best informing themselves of what the feds will do to distort economic activity next. In short, the government’s data are a full employment act for politicians and bureaucrats eager to distort the natural workings of the economy. Absent government economic figures, they’d have fewer excuses to act and the economy would be bigger.
That ADP can do for free what the federal government does for $640 million is a perfect reason to abolish the BLS, but it’s not the most important. The principal reason to abolish federal measurement of the economy is that these extra-constitutional encroachments cost Americans exponentially more than $640 million given the basic truth that government intervention never helps, but often really hurts at a staggering cost to everyone.