Gallup purports that the global unemployment rate is really 32 percent, and not the often reported five percent. Janet Yellen would be gone as Chair of the Federal Reserve if Marco Rubio is elected United States president. Facebook head Mark Zuckerberg, the world’s most loved entrepreneur, is going on paternity leave, and this is causing tidal waves in the business world. The New York Fed Bank President says ISIS won’t destabilize the global economy. And former Fed Chair Ben Bernanke provided his thoughts on peer-to-peer decentralized digital currency bitcoin.
These are the five global business headlines from last week.
1. Is the Global Jobless Rate Really 32 percent?
The global economy is yet to fully recover from the Great Recession. Central banks and governments around the world have attempted to stimulate their respective economies by printing money, suppressing interest rates and putting forth stimulus measures. Despite the "extraordinary measures," unemployment worldwide is still high. How high? Well, it isn’t in the single digits, says Gallup.
A new poll from the survey institution suggests that the global unemployment rate is 32 percent. This is much higher than the 5.6 percent suggested by the International Labor Organization (ILO), which is a figure often cited by policymakers.
The number is so high because many of the unemployed people of the world describe themselves as self-employed. Moreover, three billion people who want a good job do not have one. This has led the polling agency to ponder how global organizations can really define "work" and "self-employed." For instance, are vendors in India or Africa the same as small business owners in North America?
John Clifton, head of Gallup, writes that the primary problem with the reported jobless rate is in the way governments and think-tanks define and measure a so-called good job. Clifton believes unemployment is a word that is both "misleading" and "grossly underestimates" the matters with the global jobs situation.
Gallup purports that the only way to identify a good or real job is if it meets the following criteria:
- it provides at least 30 hours per week
- it offers consistent work for its employees
- it hands out a steady paycheck from an employer
According to the polling group, if this is the true definition then 1.3 billion out of roughly five billion adults have a good job. Here is what Gallup concludes in its report:
“So who are the other 3.7 billion? About 1 billion people are self-employed; about 400 million work part time and do not want full-time work; about 300 million work part time but want full-time work; 250 million are unemployed; and the rest are out of the workforce. Not all of the self-employed are hopelessly unemployed, but we can conservatively estimate that at least half of them are.”
2. No More Janet Yellen in a Marco Rubio Administration
Any political observer will present the case that the Federal Reserve hasn’t been a major focal point of the 2016 presidential race. During the 2008 and 2012 Republican primary debates, it was usually only the then-Texas Congressman Ron Paul who would bring up the U.S. central bank regularly. Today, it’s mentioned sporadically but that’s about it.
So it may have come as a surprise to some pundits when Florida GOP Senator Marco Rubio announced that he would get rid of Fed Chair Janet Yellen if he is elected president in 2016.
Speaking to reporters at a news conference, Rubio explained that the country has become too "Fed-obsessed." This means stock markets and the overall economy has honed in too much on any announcement or update made by the Fed.
“The Fed is no substitute for tax policies, regulatory policies, fiscal economic policies that create an environment that’s conducive to economic growth. In fact the Fed oftentimes, by trying to compensate for bad fiscal policy, ends up making policies that dramatically alter the economy in very negative ways.”
Rubio did not say who he would replace Yellen with or where he stands on Fed policy. The Florida Senator, who has been gaining some momentum in recent weeks, is a co-sponsor of Kentucky Senator Rand Paul’s "Audit the Fed" bill.
Though not exactly an authority on monetary policy, Rubio has previously opined on the Fed. In 2012, Rubio wrote that the Fed’s only mandate should be focusing on inflation and nothing else.
“Sound monetary policy would also encourage middle class job creation. The arbitrary way in which interest rates and our currency are treated is yet another cause of unpredictability injected into our economy. The Federal Reserve Board should publish and follow a clear monetary rule — to provide greater stability about prices and what the value of a dollar will be over time.”
Rubio currently trails GOP frontrunner Donald Trump by 15 percent.
3. Mark Zuckerberg Going on Paternity Leave
Facebook CEO Mark Zuckerberg announced he is taking a two-month paternity leave to look after his baby daughter. It may not seem like a major news story, but experts note that as one of the most powerful, richest and busiest men in Silicon Valley, it stresses the importance of family time.
Zuckerberg confirmed the move in a statement, which had an accompanied photo of himself, a yellow baby stroller and his dog. In July, he confirmed that his wife, Priscilla Chan, was having a baby.
“This is a very personal decision. Studies show that when working parents take time to be with their newborns, outcomes are better for the children and families.”
It is currently unknown as to who will look after things once Zuckerberg is gone for 60 days. Some speculate that Sheryl Sandberg, chief operating officer, and Chris Cox, chief product officer, will share responsibilities and help look after things.
Currently, Facebook permits its U.S. employees to take up to four months of paid maternity or paternity leave. This can be used all at once or during various times throughout the child’s first year of life.
On the surface, it wouldn’t seem like much of a story. However, the Washington Post analyzes the story by noting that Zuckerberg is leading by example. In other words, his paternity leave may encourage other male leaders to follow suit and take paternity leave, while at the same time help female executives feel they can do the same.
Prominent economics blogger, Robert Wenzel, takes issue with Zuckerberg’s paternity leave. He asks: "What exactly does a guy do, all day, with a baby infant around the house?" Wenzel also referred to it as "goo goo ga ga time" for fathers.
4. ISIS Won't Destabilize Global Economy: NY Fed Chief
Despite the number of threats that have been reported around the world, head of the New York Fed Bank doesn’t think the terrorist organization, ISIS, or any other terrorist group will pose any risk or destabilize the global economy.
William Dudley, in reference to the Paris terrorist attacks earlier this month, called the present danger a "very serious situation." When looking at the international economy, Dudley doesn’t think it will have much of an effect on the global economy, no matter how fragile it seems right now.
"The Middle East is a wild card in terms of what are the implications ... for terrorism around the world and our ability to combat terrorism around the world and that is very difficult to forecast and to build into your economic forecasts."
Dudley also said that the U.S. central bank could very well raise interest rates at its next Federal Open Market Committee (FOMC) meeting. Most economists and financial experts project the Fed to raise rates, likely by a minute 25 basis points.
With that being said, Dudley did caution by noting that it all depends on the data. "We have a month until the next FOMC meeting so my view is let’s see what the data is over the next four weeks."
5. Ben Bernanke Gives His Thoughts on Bitcoin
Peer-to-peer decentralized virtual currency bitcoin has fallen from prominence over the past two years. After hovering around the $1,200 mark, the cryptocurrency has collapsed to roughly $250, though it did have a strong one-week resurgence.
During an interview with Quartz, former Fed Chair Ben Bernanke aired his thoughts on the digital currency. He called it "interesting" from the point of view of technology, while adding that bitcoin is helping contribute to the evolving world of payments systems and managing transactions.
With that being said, Bernanke believes bitcoin has several serious problems that it will have to solve if it wants to remain a legitimate virtual currency. One of those is its lack of being a stable store of value, alluding to the fact that its price is volatile, and thus has been unable to establish itself as a mainstream accepted medium.
Anonymity is another important issue bitcoin has to tackle. He describes the anonymity factor as both a "feature" and a "bug," which is then utilized for making illicit transactions, terrorist financing and drug selling.
"And you know, governments are not happy to let that activity happen, so I suspect that there will be oversight of transactions done in bitcoin or similar currencies and that will reduce the appeal."
This interview was part of Bernanke’s continued media tour of his latest book called "Courage to Act."
The entire planet’s jobless rate is at 32 percent because governments do not define the term unemployment correctly. A Marco Rubio White House would not nominate Janet Yellen for a second term as head of the most powerful organization in the world: the Federal Reserve. Facebook chief Mark Zuckerberg is taking some time off to help look after his daughter, which is being both celebrated and chastized. A top Fed official doesn’t think ISIS or any other terrorist group will destabilize the global economy. And former Fed Chair Ben Bernanke says anonymity is a major curse to the potential growth of bitcoin.
What do you think were the biggest global business headlines this past week? Let us know in the comments section below.