Cutting the fat:

Dr Rod MacQueen, an addiction medicine physician at Orange, NSW, writes: Re. “A tough time to be a public servant’: the 38k forgotten jobless” (yesterday, item 1). Most Australians want to maintain good fitness and health. At any moment, many are trying to lose weight and reduce both fat intake and total body fat. Fatblaster supplements and other products making claims about rapid weight loss are sold by the tonne, so why do health professional, doctors, nutritionists and others, caution against rapid weight loss and advise a more cautious approach?

I was thinking about this as I read Crikey, and read about the thousands of public service jobs being scrapped. The talk is of “cutting the fat”, creating a lean mean public service, so a rational, health promotional analogy is not I hope too far-fetched.

When people engage in dramatic dieting, involving restricted calorie intake and the use of vitamins, or juices, or special herbs and spices, then their weight will drop, but here’s the problem. Unless they exercise pretty hard, and are very cautious and well informed with their diet and supplements, then they will lose not only fat, but also muscle and bone mass. Then, when they return to their normal diet and lifestyle, the same one that lead to them being overweight in the first place, it is quite likely that they will preferentially store fat, but may not replace the missing bone and muscle mass unless they work hard at it.

After a few cycles of this dieting, their body composition is quite unhealthy, with more fat and less lean mass, even if they have achieved a goal weight. Hence our more cautious recommendations about more walking, some vigorous exercise, and a good balanced diet with a small calorie reduction – not magic, but more effective and health promoting long term.

So, what happens when our governments go for “cutting the fat”?

There is much shedding of weight, of people, no doubt, but in the process the public service is as likely to lose good efficient workers who carry the culture of the organisation as it is to lose unnecessary time servers. Maybe there is nobody left who knows a good worker from a poor one, they went in the last pogrom, and in any case the purpose is to save money and appear decisive, not to make the system more efficient.

I am all in favour of an efficient public service, of getting maximum bang for our taxpayers buck — but as time goes by, we may find that the same processes that put the fat there in the first place will … put the fat there again, but now the more functional components, the backbone and the muscles of the organisation, have left or gone elsewhere. Repeat this a few times and one gets a maximally fat but rather inefficient public service.

This is OK for the politicians, who look decisive and come in under budget (i.e., they pass employment cost, or unemployment benefits, onto someone else’s bottom line). But it does not make for a good effective and efficient public service.

Maybe Australians want a smaller public service with more of their traditional jobs done by NGOs or the private sector. I do not know, but the main point of the original article, that we have never debated this rather seismic shift in philosophy, is well made. We need to discuss this more.

US employment:

Marcus L’Estrange writes: Re. “Morning Market Report” (Monday, item 20). Marcus Padley claims that the US unemployment rate came in at 8.2 %, unchanged for the past three months. However Marcus doesn’t explain which unemployment rate he is using: the official monthly unemployment rate, the full employment rate or the work force participation rate. The true unemployment picture is hidden by essentially splitting jobless Americans up and putting them inside one of the three different “boxes” or rates.

Since 2009, 9 million unemployed Americans have been removed from the labour force simply by the government defining them as not being in the labour force anymore. When we piece through this statistical smoke and mirrors trick caused by the definition of unemployment being based on a political definition of unemployment rather than not an actuarial one, then the true unemployment rate in the US is 20% and rising.

In an extraordinary cynical act, the US government is effectively saying that because the job situation has been so bad for many millions of unemployed people they can no longer be considered to be potential participants in the workforce at all. Because there is no hope for them they no longer need to be counted. The decline in any participation rate is a key figure in determining the so called “official” monthly unemployment rate. When you include the long term unemployed and discouraged unemployed the real unemployment figure rockets up.

For investment advisers such as Marcus the above is of crucial importance. In the US we have a real economy that isn’t experiencing healthy growth but is instead staggering with imploding employment levels. Much of the stock market is based on expectations of future growth. Remove the growth and most of the current value of the markets goes with it, for when jobs implode so do stock markets but is Marcus aware all this?

Jason Clare:

Peter Goon writes: Re. “Scam reports skimp on a big business fraud scoop” (yesterday, item 1). Great piece by Glenn Dyer in yesterday’s Crikey. What is interesting is that while the Hon Jason Clare has had his focus brought to bear on, as Glenn rightly reveals, a scam of a report, the Minister’s other area of responsibility, namely the Defence Materiel Organisation, continues to relegate hundreds if not thousands of millions of dollars every year to the audit category of “Fraud, Waste and Abuse of Commonwealth resources”.