Brazil: How to Reduce Unemployment

    To improve the unemployment rate in Brazil overnight, the
    Brazilian government should adopt
    the same system of
    counting the unemployed being used by the United States
    government. It is a simple method that uses several
    techniques including lies, deception and misinformation.

    by:

    Ricardo C. Amaral

     

    Here is an easy strategy for the Brazilian government to adopt immediately, and reduce the Brazilian unemployment
    rate overnight from 13 percent to a more reasonable rate of 5 percent.

    On September 25, 2003 Bloomberg News published an article by Guillermo Parra-Bernal saying: "Unemployment
    rate in Brazil hits 13 percent." The article also said: "Analysts say the rising number puts pressure on President Luiz Inácio
    Lula da Silva to boost spending and create more jobs. Brazil’s jobless rate rose in August, adding to evidence that South
    America’s largest economy is failing to revive after four months of interest rate cuts.

    …President Luiz Inácio Lula da Silva, who won election last year on promises to create jobs and spur economic
    growth, appealed to Brazilians to have patience. `’We need to keep calm,” Lula said at a press conference in New York. "The
    economy will grow.”

    …The jobless figures mean `’that the president will be under pressure to deliver on his campaign platform faster
    than expected,” said Vitali Meschoulam, Latin America director for political risk advisors Eurasia Group in New York.

    …August’s unemployment rate matches June’s rate, which was the highest since the government began keeping
    records of its new index in October 2001. Other evidence also points to a weakening economy: Industrial production fell for a
    fourth month in July and retail sales fell for a fifth month in August."

    The Easy Fix

    To improve the unemployment rate in Brazil overnight, the Brazilian government should adopt the same system of
    counting the unemployed as the system being used by the United States government today. It is a simple method of counting
    the unemployed, massaging the figures and various modern techniques, such as: "Lying, Deception, and Misinformation."

    Today, if the Brazilian government started using the same method of counting the unemployed as the method being
    used by the US Labor Department, the Brazilian rate of unemployment would go overnight from its current 13 percent rate to
    a more acceptable rate of 5 percent. And the country can even be losing and exporting millions of jobs to Asia as in the
    case of the US economy.

    The financial markets in Brazil should accept the new rate with open arms, as Wall Street accepts the unemployment
    rate of 6.1 percent as reported by the US Labor Department.

    I know there is an 8 percent difference between the two rates (from 13 percent to 5 percent), but that is easy to fix,
    the Brazilian government doesn’t need to lie; they just need to add a footnote to the report; saying that 8 percent of the
    population is not counted as unemployed because they are discouraged and have abandoned their job searches. (This type of
    misinformation works in the US, and should work in Brazil as well.)

    If the people in the labor department in Brazil need an actual example of what I am saying, then they should check
    the US government’s unemployment report for July 2003. They just made a footnote to its unemployment report in July
    2003 saying that the report did not include 556,000 unemployed people, because the government claims that these people left
    the labor force. They want people to believe that a large number of job seekers are discouraged and abandoned their searches.

    Data from the US Labor Department shows that the current unemployment rate in the US is 6.1 percent. Wall
    Street commemorates the data by sending the stock market up, up and away. But if you make some rational adjustments to
    the unemployment rate as reported by the US Labor Department, you get a different picture.

    It is estimated that at least 3 million people are hiding in the disability figures. They had an explosion in the number
    of people on disability in the last 2 and half years. Another 4 million are not counted because they left the labor force and
    are considered discouraged workers who abandoned their job searches. If we adjust the unemployment rate for these items,
    then the US unemployment rate jumps to over 12 percent.

    If we make further adjustments for the over 2 million people in the prison system in the US, and for the over 6
    million people who are underemployed or decided to further their education because they could not find a job, then a more
    realistic picture appears of the unemployment rate in the United States, with the actual unemployment rate increasing to over 18 percent.

    There is something here for Brazilians to learn from the Americans, and the Brazilian Labor Department can use the
    same type of misinformation as the one being used in the US. The Brazilians can reduce the official unemployment rate in
    Brazil to 5 percent, or they can be even bolder and reduce to 3 percent; the financial markets will not know the difference. If
    they get away with that type of garbage in the US, the Brazilian government should be able to get away with it as well.

    That type of misinformation also works for the local numbers as well. For example: the city of São Paulo should not
    make public that they have an unemployment rate of over 20 percent. They should use a number in the range of 7 to 8 percent.
    That type of lie works for New York City; I would not be surprised if the real rate of unemployment in New York City is
    closer or higher than 15 percent.

    If you are an ethical person you might be thinking that I am a complete idiot for suggesting such a thing. But that is
    how things work in the United States today, and as a major economic power, the US sets an example for the other countries
    of the world. The US government fudges their statistics, and they make footnotes to let everybody know that the figures
    published are not worth much.

    But people still use the data anyway, as if the data had any value. We have one fraud after another in Wall Street
    where trillions of dollars in investors’ money have been lost in the last few years, and trillions more will be lost in the future.
    Wall Street has become a fools’ paradise, and they have the record to back that up.

    The US government has lost most of its credibility around the world since the Bush administration took office. It is
    not a secret that the current administration doesn’t make much distinction from good information and garbage; if it is
    useful information to further their agenda they’ll use it.

    The United States Labor Department

    It is depressing to think of how far the United States declined in the last three years, it has been a steep decline for
    such a short time. Contrast the high quality of the people in Bill Clinton’s administration, with the pathetic group of people in
    George W. Bush’s administration.

    President Bill Clinton, one of the best Presidents the United States had in the last hundred years, had a number of
    high caliber people in his administration including the outstanding members to his economic team such as Treasury Secretary
    Robert E. Rubin, and his Labor Secretary Robert B. Reich.

    During the eight years of the Clinton administration the US economy created 23 million new jobs. Labor Secretary
    Robert B. Reich was one of the stars of that administration and it was hard to miss him, because he was in the news all the time.
    The economy was growing, creating new jobs and Americans knew who the Labor Secretary of the United States was.

    Jeremy Rifkin wrote in one of his published articles: "Former Secretary of Labor Robert Reich, for example, talks
    incessantly of the need for more highly skilled technicians, computer programmers, engineers, and professional workers.
    While Secretary, he barn stormed the country urging workers to retrain, retool, and reinvent themselves in time to gain a
    coveted place on the high-tech express."

    Even though the United States economy has been going through a severe economic decline and has lost over 3.5
    million jobs since George W. Bush became President, I had no idea who the Labor Secretary was in this administration. The
    current Labor Secretary, must be hiding somewhere in Washington D.C.

    I asked a number of people who was the Labor Secretary of the current Bush administration, and not a single person
    knew his name. I do read various newspapers every day including
    The New York Times, and The Financial Times of
    London, and I had no idea who was the Labor Secretary in the United States.

    I had to go to the US Labor Department website to find out who was the invisible Labor Secretary of the Bush
    administration. I was surprised to find out that the current Labor Secretary was a Chinese-woman named Elaine L. Chao. Now,
    I am beginning to understand why so many jobs in the United States are being outsourced to Asia. (Maybe there is a
    connection here.)

    To be continued

     

    Ricardo C. Amaral was born in the city of São Paulo, Brazil. He attended Fairleigh Dickinson University in
    Teaneck, New Jersey, USA, where he received a B.A. degree in Economics and later an MBA degree in Finance. He
    continued his Academic studies towards a PhD. degree in Economics at Fordham University, but then elected to immerse
    himself totally into a professional corporate career. Mr. Amaral has an extensive investment and international
    business background. Mr. Amaral is among a very few remaining living descendants of both José Bonifácio de Andrada e
    Silva (The Patriarch of Brazilian Independence) and his brother Martim Francisco Ribeiro de Andrada – the founding
    fathers of Brazil.

    The author welcomes comments at
    amaral@alumni.fdu.edu

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