The Law of Benevolent Behavior

Am Op-ed in the Associated Press this morning had a fascinating premise: Unemployment will continue to decrease because fewer and fewer people are looking for work. The commentator wrote that most people just give up, and therefore are not counted in the unemployment statistics. The way to become “employed” statistically speaking is to stop looking for work.

As I have mentioned many times in this blog, and on my radio program, what the headlines giveth, the fine print taketh away. For example, the headline “ Unemployment decreased during February” is trumped by the fine print which explains that fewer people are looking for work, hence an artificial drop in unemployment statistics.

The AP opinion piece highlighted the same position I have been asserting for the last 12 months or longer. That is of course why I like it. But there is a new piece of information that I am adding which is unequivocally good news. It starts with he indisputable fact that most people, except for my readers, only read the headlines. And what is is more, most people make decisions on the headlines and that is the crux of the secret logic I am about to reveal now.

The old law of conspicuous consumption is being replaced by the new law of benevolent behavior. People act positively on what they believe to be true. And good things happen when there is a positive behavior change. A decrease in reported unemployment is a positive which creates optimism, which creates an increase in the equity markets. The Dow Jones increases to be specific. When that happens, companies and people act more positively.

And what is more, with the increase in the equities market, people make more money. Further, companies have access to more capital. Follow that with spending increases, company expansion, hiring increases and - “walla” -the unemployment does in fact decrease. So more power to the inaccuracies of the government unemployment statistics because it seems according the law of benevolent behavior, the more the statistics are wrong the more they turn out to be right.

Amen.