Daily Archives: 28 February 2014

Misallocation of Resources

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…driven by Big Government.

JP Morgan Chase & Co said Tuesday it will cut more jobs at bank branches and its mortgage unit this year than previously planned, as the largest US lender adjusts to slowing home-loan demand and customers’ growing preference to bank online.

That’s one aspect of the restructuring.  JPM says they’ll lose some 8,000 employees from its branches and its mortgage unit.  However, they’re looking to increase their “controls staff” by some 3,000.  A company’s controls staff are the folks dedicated to ensuring company compliance with government laws and regulations, as well as with its own internal rules.

Are the two related?  Not directly, although burgeoning Federal rules are hampering the housing industry and mortgage lending, generally.  Yet the fact remains,

The new figures show…a continued buildup in the bank’s staffing levels dedicated to dealing with regulators and legal issues.

An increase of 3,000 for its controls staff out of a total company employment of some 260,000 (net of those cuts) might not seem like much, but its Controls section is much smaller, and this is a significant (re)allocation of its employment emphasis.

The problem is, compliance isn’t productivity.  Compliance employees don’t increase the amount of product—or improve competition for product sales—in an economy.  All they can do is cost money to appease government.

Annals of Obamacare Lies

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Health and Human Services Secretary Kathleen Sebelius is spouting more of them.  And with a straight face, too; it’s like she actually believes what she’s saying.  Which would be even worse.

There is absolutely no evidence and every economist will tell you this, that there is any job loss related to the Affordable Care Act.

Leaving aside the well-documented instances of reduced hours, delayed (or canceled) hiring, canceled plant expansions, and so on that are occurring as a direct result of Obamacare, Sebelius is having a negative impact on jobs with her own Departmental edicts.  She’s already ordered, for instance, the Obamacare-maximum allowed cuts to funding for home health care services.

The cuts were deep enough that officials offered a damaging prediction of the impact saying, it was estimated that approximately 40% of providers would have negative margins.

In fact, those cuts put in jeopardy 498,000 jobs of home health care workers who work just for that 40% of firms that will be forced into the red—the kind of home health workers who allow Yvonne Wightman, 98, to avoid expensive hospital or nursing home stays by getting care at home.

But it’s all good: now Ms Wightman has that lowered-cost Obamacare Plan to cover those stays.  Oh, wait….