Dr. Joe’s Latest Favorite Things: Broken Windows, Stuffed Mattresses, Clocks, and Kings
By WhatTheyThink Staff
Published: April 14, 2016
Someone broke into the Bureau of Labor Statistics. Isn’t it easier to just visit their website and download the data? I’m not sure what the burglar’s intent was, but I was reminded that aside from military secrets, the BLS’ employment report is one of the most closely guarded secrets in Washington. The only people who have access just prior to publication, I’m told, is a secret briefing to White House economic staff and above the evening before, and I assume some Congressional personnel, though I am not sure of that. This is one reason why Wall Street analysts scrutinize who is booked on cable business channels the morning of the data release. Usually, the higher level the person has in an administration, the more likely it is good news. Beware they time when you hear that the White House sous chef will be on CNBC. That won’t be a good sign.
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Negative Interest Rates Increase “Mattress Stuffing”
In Japan, negative interest rates are compelling people to hold onto cash rather than deposit it in banks. So, like good bankers, Finance Ministry is increasing the number of ¥10,000 bills in circulation, printing over 1.2 billion of them. That’s about 200 million more of them than their usual printing as they replace bills in circulation with new ones. ¥10,000 is about $92, so this is essentially the functional equivalent of the US $100 bill.
There’s another factor: Japan has introduced a new system for tracking wealth similar to the ways that the US Social Security number is used on bank and financial accounts. This is considered a potential invasion of privacy by many, hence the holding of cash.
In my mind, the close tracking of financial assets today is one of the reasons why economic growth has become slower over the years. It is difficult to pay for almost anything in cash, and it is impossible to make investments anonymously in cash (like one used to do with bearer bonds). This limits the free flow of money, and some would consider it a restraint on individual freedom. I look at it as just making more transactions more complicated, another subtle inroad of government compliance costs.
Perhaps Japan’s Finance Ministry is not aware of a research project at New York University, “The Dirty Money Project,” which found that a banknote is a medium of exchange for hundreds of different kinds of bacteria as banknotes pass from hand to hand, carrying about 3,000 types of bacteria on its surface and DNA from drug-resistant microbes. Maybe Howard Hughes wasn’t so crazy after all.
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Beware Unintended Consequences
The Labor Department is working to implement new rules that will require overtime pay for workers earning between $23,660 and $50,400 who are currently salaried workers. This can have far reaching effects in the printing industry for many workers who are managed with the guidance of “just as long as the work gets done” allowing workers flexibility to manage family and other contingencies as they arise. These workers will end up becoming “time clock” workers requiring extra supervisory time where required to track and predict hours worked. The micromanagement of hours does not create informal goodwill relationships that make salaried work desirable for its predictability and consistency and promote a proactive corporate culture. There are concerns that telecommuting opportunities, of interest to a great many workers for increasing job satisfaction and time flexibility, may be affected and will not offered to as many workers in the future. But there are other factors involved in a grander view. The Labor Department's efforts are “rear view mirror” actions. Technology and other benefits of a flexible workforce might make the Labor Department rulings ineffective as the “gig” economy spreads beyond services like Uber, and may thwart their regulatory intentions in the long run.
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Gee… I Thought Content was King
MediaLife is running an interesting series, “Reinventing the American Newspaper.” One of the series reported research about how newspaper websites are not keeping up with their declining print circulation. The research report they cite has some devastating comments in its conclusions after their study of 51 top newspapers. The authors from the University of Texas at Austin say
“...newspapers are stuck between a shrinking market for print and an unsuccessful experiment online.”
“...twenty years into the experiment, the supposedly dying print product still reaches far more readers than the supposedly promising digital product in these newspapers’ local market...”
“Print readership is aging and declining, yet the lack of online readership growth indicates that newspaper readers did not drop print in favor of the same newspaper’s online edition.”
The report is great reading – but unless you’re used to academic reports, jump to page 10 where the discussion begins. Perhaps the authors will replace me when it’s time as the new Drs. Doom.