The "Gambling Governor"
...unlike the other areas of New Jersey's "non-essential" workforce, the lottery and casinos bring in big money for the state.
Around the rest of the U.S., many of you hadn't heard much about New Jersey Gov. Jon Corzine, and that was probably a good thing.
The New Jersey governor was famous for supposedly buying his way into the U.S. Senate, by spending a record $62.8 million on his campaign -- $35 million of which was spent on the primary election alone! One had to wonder what there was in Mr. Corzine's makeup that necessitated such an extravagant expenditure, and many of us likened it to killing a fly with a skyscraper.
Another reason I questioned Mr. Corzine's sanity was that he was already a member of one of the most exclusive clubs (at least in my world) -- he was a partner in Goldman Sachs (GS)! And not just a partner in a firm that runs the Street, but he was also chairman and CEO of Goldman Sachs and successfully converted it from a private partnership into the most envied and reviled global investment bank in the world. Obviously, that enriched him to the point where he could afford excesses such as his "Senate seat purchase," but it could be that this event was just our first look at the emperor's new clothes.
Now, the world knows of Jon Corzine neither for his academic excellence nor his military service as a U.S. Marine, but rather as the governor who shut down the New Jersey government in an effort to ram his sales tax initiative down the throat of the state legislature.
Great, Doc, we get it, Gov. Corzine is playing hardball with the other elected officials of his state, right?
Well, yes and no.
Corzine's Big Gamble
The governor used his office to shutter the road construction, motor vehicle offices, vehicle inspection stations and courts, but it's two forms of legal gambling -- the state lottery and Atlantic City casinos -- that will tell the tale of just how stupid a bet the governor had made.
This is because unlike the other areas of New Jersey's "non-essential" workforce, the lottery and casinos bring in big money for the state. It's estimated that lost lottery ticket sales cost N.J. $2.2 million per day and another $1.3 million from the state's take of the casino booty. Clearly the governor had other options, but he painted himself into a corner and, frankly, looked like an idiot.
You might not be able to tell, but I supported Gov. Corzine in his battle to turn New Jersey around and balance the budget, but I also think that the strong-arm tactics he employed would have been more effective had he kept the cash register ringing. At the height of the strike, there were 54,000 state employees without a paycheck and another 15,000 workers who staffed the 12 casinos and hotels in Atlantic City. The loss of revenue from those casinos, the state lottery and the taxes from these workers dug New Jersey deeper into a hole. Corzine got what he wanted, but like any smart shopper might ask, couldn't he have gotten it cheaper?
Betting the Farm on Payroll Data
Speaking of payrolls, ADP Employer Services, part of Automatic Data Processing, teamed up with Macroeconomic Advisers three months ago to create what they said would be a far more accurate prediction of monthly non-farm payroll numbers. The partners base their predictions on a sampling of payroll data covering about 225,000 companies and some 14 million employees.
On paper, this looked like it might indeed be the best insight into what to expect from the monthly jobs report -- but then again, Tony Mandarich and Ryan Leaf also looked great on paper, but couldn't play pro football to save their souls! After all, the Green Bay Packers could have used that pick to instead take Hall-of-Famer Barry Sanders, and Leaf was called "the biggest bust in the history of professional sports" by ESPN.
In case you think I'm being a little harsh on the ADP/Macroeconomic Advisers' payroll predictions, here are their two previous looks into their crystal ball:
- For April, ADP predicted 178,000 new jobs, but the report came in at 131,000 -- a miss of 35%.
- The May prediction by ADP was for 122,000 new jobs, but instead the Bureau of Labor Statistics said 74,000 jobs were created. This was a miss of another 40%.
We all know how famously ADP and Macroeconomic Advisers missed on their June prediction, their worst effort to date. After all, a monkey with a Ouija board could do better than ADP's 368,000 prediction versus the government's report of just 121,000 new jobs. But I guess there are some things a monkey will just not do! But have no fear, I suspect they will adjust their calculators, maybe buy a new battery or two and have another stunner ready for us on August 2nd. I, for one, can't wait!
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