It’s a little known fact that the US population is growing at twice the rate of China’s: that is to say 0.91% to 0.47%. That made it doubly surprising to learn that the US work force has shrunk by over a million workers. Investor’s Business Daily writes:
In the 30 months since the recession officially ended, nearly 1 million people have dropped out of the labor force — they aren’t working, and they aren’t looking — according to data from Labor’s Bureau of Labor Statistics. In the past two months, the labor force shrank by 170,000.
This is virtually unprecedented in past economic recoveries, at least since the BLS has kept detailed records. In the past nine recoveries, the labor force had climbed an average 3.5 million by this point, according to an IBD analysis of the BLS data.
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In December of 2011 Reuters wrote that the much-touted decline in the unemployment figures had a dark aspect to it. “The fall in the unemployment rate was aided by 315,000 people leaving the workforce.”
That pushed the participation rate, a ratio of the amount of the population in the labor force, down to 64.0 percent. Those who exited the workforce, many of whom gave up on looking for work, outnumbered the 278,000 people who found jobs, according the Labor Department’s household survey, which is separate from payrolls data.
At this rate things will get better each year until things finally collapse.
So maybe times are really hard. But what the solution to the problem should may depend on who you ask. For example, Occupy Wall Street believes in fighting poverty in its own way.
“Poverty, an issue to which King showed increased focus in the years just before his death, finds its way into the darkest chapters in American History. Dr. King sought to shine a light of justice against those dark chapters of war, repression and racism, our candles symbolize that light,” says Abigail Keegan of Occupy Wall Street …
At 6:30 p.m. hundreds of Occupy Wall Street activists will assemble on the steps of the Cathedral Church of Saint John the Divine (1047 Amsterdam Avenue) and at 7:00 p.m. begin a massive candlelight march to nearby Riverside Church (490 Riverside Drive). The group will join additional feeder marches and members of the community at Riverside Church for a candlelight vigil and celebration renewing King’s message of peace, justice, and equality for all, regardless of race or economic class. The action will culminate in an assembly featuring performances and speak-outs from artists, celebrities, religious leaders, and activists. Performances by Patti Smith, Steve Earle, Stephan Said, and Kozza Olantunji, as well as many more, will complement the inspirational words of Dr. Benjamin Chavis, Yoko Ono, Russell Simmons, Reverend Stephen H. Phelps, Daisey Kahn, Norman Siegel, Sumumba Sobukwe and Malik Rhasaan of Occupy The Hood.
And they are sure to urge that jobs are preserved, by which they mean government jobs. In Pennsylvania, Change.org is protesting closures in the Chester School District which is laying off teachers because the state government is running out of money. They are demanding that the Governor find the money — from somewhere.
“Our kids and their futures are in jeopardy,” said Jennings, who launched the campaign on Change.org. “They deserve to have teachers who actually get paychecks for their work and a school district that will be reliably open for the full school year. We have to get our schools on the right track so kids like mine don’t suffer for the mistakes of this school district.”
“During his election campaign, Governor Corbett promised that ‘every child in Pennsylvania, regardless of their zip code or economic status should have access to the best education possible,’” Jennings added. “Chester Upland needs rescuing right now, and if the Governor can’t find the money to deal with this emergency, he’s failing voters and our state’s children.”
The state assembly passed a budget last summer that included massive education cuts and forced Chester Upland to lower its operating budget by about $18 million, furlough more than 100 teachers and merge two high schools, among other cost-cutting measures.
The governor can either find more money from taxes or debt. But if one leaves aside debt, taxes must surely come from a shrinking workforce. How do you tax workers who aren’t there? Well you tax the rich, right? That’s why Occupy Wall Street is in Wall Street. They want the stash.
Ultimately Change.org’s Jennings is right: “our kids and their futures are in jeopardy”. But exactly why they are in danger is the question that divides the country.
One approach is fix the problem by making things “fair” — to reduce everything to a common economic temperature so that we all get more or less the same thing — from our net wages if we work or from the government if we don’t. From private jobs, which everybody knows are created by government incentives, or government jobs, which everybody knows are funded by taxing the private jobs.
The other approach is to allow a differential so that market forces are driven by forces that are trying to equalize, but never quite succeed. The first approach promises a kind of social tranquility at the cost of heat death. The second opens the path to creative destruction; to a world of striving, envy and ambition. Each approach has its own problems. The problem in the first case will be how to put the food on the table. The problem in the second case will widespread discontent because many people have nowhere near as nice a wide screen TV as their neighbors.
Which view you adopt partly answers the question of why have more than a million workers stopped looking for jobs. It describes the signals being sent out to the workforce and who from. What do you say to those people out in the dark? Is there a future for you? Or is there nothing for it but to look back in wonder?
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But if one leaves aside debt…
There’s the rub, though. We both know that if these poor oppressed masses can’t finance their rightful happiness with the confiscated riches of the oligarchy they’ll just print more pretend money and we’ll merrily continue until we’re all equally broke – eventually, fiat money will no longer have any meaning or any level of acceptance.
We’ll be equal then, and things will be fair. Except for those terrible hoarders, that is. And the hoarders will all have those nasty guns. The kind that kill kids. Got to get rid of those. For the children.
- “The governor can either find more money from taxes or debt.”
One is tempted to suggest that by increasing classroom size, more students will be taught by the few great teachers in the schools. Then reality overcomes hope; the schools will most likely terminate the young enthusiastic teachers in favor of the burned out unionistas.
In the 30 months since the recession officially ended, nearly 1 million people have dropped out of the labor force — they aren’t working, and they aren’t looking — according to data from Labor’s Bureau of Labor Statistics. In the past two months, the labor force shrank by 170,000. … This is virtually unprecedented in past economic recoveries, at least since the BLS has kept detailed records.
But the question is, can it possibly be true?
Let’s speculate wildly.
Could that be entirely legal and illegal aliens who decided to go home, offsetting even secular population increases and continued incoming immigration?
Could retirements be offsetting children aging into the workforce? I don’t think so.
Most likely such people continue to work in the shadow economy, which can be perfectly legal and taxpaying unincorporated businesses and contract work, I’ve probably been in those categories more in the last thirty years than in anything the government usually counts. And some reports I’ve seen say that small construction contractors and the like have suffered more income drops in the past five years than any other group. They just don’t show on most government stats.
The only things that are keeping our economy alive are fraud, inertia, money printing and MSM lies. The fraud comes from bogus employment, GDP and economic statistics. The inertia comes from a $14.58 trillion economy supporting a population of 307,006,550 people. Money printing is what drove the quantitative easing for the bond market along with the stock market manipulation by the PPT and the Fed. Of course, the MSM would not know the truth even if it formally introduced itself (the Truth is not “entertaining” and actually down right unpleasant).
The problems of excessive debt that caused the stock market crash in September 2008 remain. The insolvent banks and financial institutions that caused the financial collapse should have been hauled before a bankruptcy judge. Their unserviceable debt should have been discharged though public auction for fair value. The executive officers and politicians responsible for the market crash should have been subjected to legal prosecution and sent to prison if found guilty of criminality. Instead, the crooked banks and financial institutions have been propped up with greenbacks printed by the Federal Reserve. Instead of going to jail, the thieves running the banks and institutions have given themselves fat bonuses courtesy of Uncle Sam. Superficially, the stock market (DJIA) is now back to where it was in late 2008. This was achieved almost entirely with printed money. The situation is now worse than it was in September 2008 because much of the financial institutions insolvency has been transferred to the US taxpayer.
Ironically, as bad as our situation is, the situation in Europe is worse, refer to:
http://www.cnbc.com/id/45985456
http://www.zerohedge.com/news/here-are-first-official-responses-french-politicians-sp-downgrade
There has been much bitching in Europe about the high handedness of the financial rating agencies. The European governments are even more dishonest than the American one. The only honesty left in the system ARE the financial rating agencies. Consequently the European governments are most displeased because it reveals the insolvency of their economic system.
OK, here’s a not entirely thought out hypothesis based on my observations of the people around me. Time was when most labor was performed at home, entirely off anybody’s books. Call it pre-1900 for a very vague number. Most people farmed, and those who didn’t mostly worked in single earner households. There were no income taxes, and very little governmental oversight of people’s working habits. Then, more and more people moved off the farm and took jobs in town, accelerating after WWII. Still, much production, in the form of various kinds of housework, cooking, food preservation, clothing manufacture, child care, was still done in the home. Call it half at a first approximation.
Then, during the war, more women began to move into the workplace and many families became two-earner households with one of those a military pay check. True, after the war many women went back to working at home, but as the economy boomed and more and more goods became available for purchase, two pay-check families became more and more common. It was more cost effective (or at least it appeared to be so absent health and social costs etc.) to work a job and eat at McDonald’s than to stay home and cook.
This trend continued right through the 1980s and perhaps the 90s as women became more career focussed and two pay-check families became the norm. Then, we had an economic down turn in the early twenty-century. Cost began to rise, jobs became scarce, relatively high paying manufacturing jobs dried up, the value of a college education plummeted while the costs soared. Also, work became increasingly sedentary and requiring of patience, people skills, and dexterity. Compare heavy manufacturing to customer service, or welding boilers to computer programming…
With the kinds of job available to men declining in availability, prestige, and compensation, and costs of goods (and total tax burden) rapidly increasing, many men have found it more cost effective to stay home, pick up the occasional temporary or contract job, or work in the “grey” economy. Why work a low-prestige, patience bending job for $8 when your wife can make a lot more and you can stay home and make dinner for 4 for a whole lot less than it would cost to buy it? The single earner household is re-born, but now the ubiquitous eye of the state can see it.
That’s my guess, for what it’s worth.
Eggplant…
That’s a reach.
The trio is FOLLOWING the CDS market.
They are a very lagging indicator.
Say goodbye to Sears and Petroplus.
The same people who bleat about “our children’s future” also promote ways of limiting the number of kids who will be born, and by various means.
What are they going to hide behind when therer are no more kids?
blert @ 6 said:
“That’s a reach. The trio is FOLLOWING the CDS market. They are a very lagging indicator.”
I stand corrected. Perhaps I should have said
“The only financial institutions left with a lingering trace of honesty are the rating agencies.”
Blert also said:
“Say goodbye to Sears and Petroplus.”
It’s disturbing that many of the companies that were strong during my childhood are either bankrupt or effectively bankrupt, e.g.
Pan Am
TWA
General Motors
Bethlehem Steel
Kodak
Chrysler
Polaroid
Montgomery Ward
Sears
Bank of America
Wells Fargo
–many others–
These companies were once the bedrock of the American economy but now are gone or almost gone. Perhaps the death of these companies was a necessary part of capitalism, i.e. creative destruction. However I suspect that part of the blame resides with our government. Our government was so focused on extending the benefits of a socialist economy upon its citizens that it neglected to notice that the economic engine was rotting away.
I just had an “amusing thought”. Most of the hand tools that I own are Sears Craftsman. Sears Craftsman’s big claim to fame was its unconditional life warranty. If Sears goes down the toilet, then so does the Craftsman warranty.
So now ignorant lefties are lighting candles to create wealth. Proof that economics, wealth creation and job creation have become so mysterious that magic spells are thought to be just as effective as knowledge and common sense.
Certainly the Bernank believes in sympathetic magic. Print millions of little green images that people associate in their minds with wealth, and hey presto! wealth will be magically created. Democratic socialism is also based on a theory of magic. President Obama’s economic carnage is based on the same theory of magic as Europe.
We’ve been through this already – aeons ago – magic doesn’t work. Tragically, the “Great Bamdini” isn’t listening.
Chester schools? That was an oxymoron 50 years ago. And schools are the least of the problems people face in Chester.
Eggplant says:
“The only financial institutions left with a lingering trace of honesty are the rating agencies.”
Still wrong. Don’t forget these are the same agencies that watched as Goldman (and all the rest) took the dregs of CDOs (rated junk), combined and repackaged these junk securities, and then rated them AAA.
Seriously. They really did that. No kidding.
Hate to burst your bubble, but the rating agencies are full of it, too.
Eggplant,
Creative destruction has been going on for a long time. Of the original group of 12 stocks chosen to form the Dow Jones Industrial Average only General Electric currently remains part of that index. The other 11 were:
American Cotton Oil Company, a predecessor company to Bestfoods, now part of Unilever.
American Sugar Company, became Domino Sugar in 1900, now Domino Foods, Inc.
American Tobacco Company, broken up in a 1911 antitrust action.
Chicago Gas Company, bought by Peoples Gas Light in 1897, now an operating subsidiary of Integrys Energy Group.
Distilling & Cattle Feeding Company, now Millennium Chemicals, formerly a division of LyondellBasell, the latter of which is now in Chapter 11 bankruptcy.
Laclede Gas Company, still in operation as the Laclede Group, Inc., removed from the Dow Jones Industrial Average in 1899.
National Lead Company, now NL Industries, removed from the Dow Jones Industrial Average in 1916.
North American Company, an electric utility holding company, broken up by the U.S. Securities and Exchange Commission (SEC) in 1946.
Tennessee Coal, Iron and Railroad Company in Birmingham, Alabama, bought by U.S. Steel in 1907; U.S. Steel was removed from the Dow Jones Industrial Average in 1991.
U.S. Leather Company, dissolved in 1952.
United States Rubber Company, changed its name to Uniroyal in 1961, merged with private B.F. Goodrich in 1986, bought by Michelin in 1990.
courtesy Wikipedia
Full employment arrives when labor force participation falls to approx 58.5%. Then, no more problem – definitely nothing to worry about. All will be fine. Back to regular programming.
Mrs. Davis @ 12,
Your point is well made. It is interesting that large corporations seem to have a relatively short life expectancy.
One of my hobbies is repairing old pocket watches. The American Waltham Watch Company was founded in 1850 and effectively invented mass produced pocket watches based upon interchangeable parts. In the late 1890s, Waltham Watch arguably produced the world’s best watches and had a solid lock on the high end pocket watch industry. They occupied the same economic niched that Ford Motor Co. held in the 1930s, Boeing held in the 1960s, IBM held in the 1970s and Intel held in the 1990s. However by 1957, the Waltham Watch Co. went broke. Important point: the company went broke before the quartz crystal watch technology became widely available. It was rank mismanagement that killed Waltham Watch.
Why was it inevitable that a company degenerate from being the world’s best into insolvent ruin?
How dare you wingbats criticize our “Fourth Greatest President” and his bureaucracy!
Don’t you know not only is Buraq Insane a multi-dimensional chess player, he is a master magician as well.
Where over six million new people should have entered the workforce since he took office, he has made them all disappear plus another million. This is a masterful bit of wizardry. We should all bow down to his greatness.
And for those of you who dare to criticize further, the Federal Reserve has plans for you with their new scheme to completely socialize the country unveiled last monday.
Ayup, grey market jobs, black market jobs, fled overseas as some medical people have done, some people have given up US Citizenship because they work overseas and the US tax regs and bite got to be too much. Number of workers is dropping and tax revenue is dropping faster. Try to increase taxation and even less revenue intake. A number of the left think they can acquire power in a chaotic situation. They underestimate the “bitter clingers with bibles and guns” and gold and trade goods. “Come and take them.”
I just read that Apple’s big wad of cash is “trapped” overseas. If they bring it back to the states for investment they have to pay a 35% tax on it.
My brother was laid off from a marketing job at a top international computer maker. His severance ran out before he had a job with benefits so he decided to hedge his bets and try independent consulting. He started an LLC and applied for unemployment benefits. Unemployment benefits were denied because he was trying to consult. It didn’t matter that he had no business yet.
Mercifully he is now back on top but he says he knows a lot of men that still are unemployed or underemployed.
Ringo #5:
Without commenting on each part of your analysis, I will point out there has been a book out for at a decade or so, The Descent of Males, that presents the case that the workforce advances for women have been at the cost of a corresponding reduction in opportunities for males.
I can think of specific cases I know of personally or have heard of where this certainly is true, but I do not know if any statistics exist that show this to be the case. Just about anyone would be afraid to even try to gather the data. Remember Larry Summers at Harvard, who was run off as a result of simply wondering aloud about an undeniable fact.
The real question is whether these ascending woman are doing a poorer job than the males they supplanted would have. I can think of some cases where that certainly is the case, not because they were women but because they were not as good at the job as were the males that were the alternative. Is it true generally? I do not know, but if sex is sometimes a more important parameter in employee selection and advancement opportunities than are ability and attitude, then that must be the case in those instances.
As for the reduced opportunities in areas such as manufacturing, I can think of a number of factors. One is unionization and the incessant demands that seems to produce. Another is government interference in the workplace. And although I have degree in “management” I suspect that the mere rise of that “field” has an impact as well. If “managers” are not engineers or other technical specialists, it surely must sound better for them to hand off the problem of getting the job done to another country and then just become warehousemen and salesmen.
Capital Hawk #11:
The rating agencies were lied to. The book “The Big Short” explains how that was done. I will admit that I know nothing of the rating agencies’ investigative capabilities but I think its is safe to assert that they are analysts rather than detectives.
Unsk #15:
That’s President Buraq Insane Obumble, to you, sir.
Don’t worry everyone, Yahoo! Finance says a 21 hour work week with the subsequent reduction by half in pay is the new normal. Getting a better perspective on work/life balance or just putting a positive spin on economic collapse? You decide.
http://finance.yahoo.com/news/the-case-for-a-21-hour-work-week.html
I’ve also noticed more adverts on buses saying ‘you don’t earn interest putting it under a mattress’. I never saw banks with such ads pre-krizis, only ads that expected Americans to jump for joy with a 1% return on their money in online savings accounts. Is this a subtle message by the banksters to the sheeple to submit more calmly to expropriation via inflation? Or does The Man actually fear that Americans are going to revert to the habits of their grandfathers and grandmothers who stashed cash under mattresses and behind walls during the Great Depression?
Like I asked Spengler, I see the destruction, but where’s the creativity? He says American entrepreneurship has been snuffed out. Can we be 100% sure that wasn’t by design?
As I earlier mentioned, the DJIA dropped 158 points on the catastrophic news that France and Austria had their credit ratings downgraded. Then something “wonderful” happened and the markets went up 109 points. Are markets so broken that catastrophic news only causes a 158 point drop while the PPT pumps it back up 109 points and there isn’t a murmur in the MSM?
Stock market valuations are total fiction.
Different topic, refer to the following:
http://www.weeklystandard.com/blogs/allen-west-marines-incident-shut-your-mouth-war-hell_616699.html
I completely agree with Rep. Allen West.
Give the guilty Marines a stern talking-to about allowing videos to reach the MSM, require them to sing the US Marine Corps Hymn and force them to drink a 6-pack of their favorite beer. That’s adequate punishment.
If the situation had been reversed, the peed-on Taliban would have happily tortured the Marines to death, mutilated their bodies and put their severed heads on pikes. The Taliban don’t fool around and we shouldn’t either.
And Wretchard, just a word of thanks for wisely staying out of the general PJM Ron Paul hatefest or (quietly) banning pro-Paul commenters as Bryan Preston apparently has done.
I haven’t read the other comments yet so am not sure if this was discussed but the first thing that camme to mind with the drop in the workforce numbers published by the BLS led me to think the administration is trying to make the employment numbers look good. The best way to make these statistics work with a static jobs environment is to deflate the workforce. In short, I would bet that we are witnessing workforce numbers deflation as part of the sleight of hand statistics so the administration can feed positive data to the MSM. The MSM is trying to cover thier backside because they have lied to the American people so they will no “uncover” the information.
“As I earlier mentioned, the DJIA dropped 158 points on the catastrophic news that France and Austria had their credit ratings downgraded.” Austria should be upgraded on the strength of record U.S. Glock sales.
EOT for me.
eggplant #14
To answer your question, management excellence, so far, has been unable to transfer itself from one generation to the next.
Entrepreneurship has indeed taken a body blow, and it was probably designed – changes in the rules for IPOs have put a damper on startups in the tech field, for one.
I think the reason corporations have a short shelf life is the sheer parasite load they’re exposed to. Once a corporation becomes big, the politicals – whereby I mean a class greater than merely politicians, which includes all those who make their living by their influence such as union leaders, activists, reporters, lawyers, and a certain breed of executive – size up the prey and fall on it. A company can’t *not* get cozy with politicians, or they will die a death by a thousand cuts as ticky-tack regulations, lawfare, and other nuisances slowly build up. Activists and the like know they can shake down corporations, and the media will write the story in a way that supports them, regardless of the merits of the case, because that’s how the script for such stories runs. And, even if a company deftly handles those obstacles, or is lucky and simply doesn’t encounter them, you always have the problem of the leader positions being filled by people who are good at positioning, not leadership. Niven’s Iron Law of Bureaucracy has its corollary in the private sector, unfortunately.
25. Locarno
Add to the list of corporate woes the corporate “foundation.” This is a PR outreach gimmick where a corporation takes on a pet “cause” of leftist activism, after being coerced into it, and the foundation is staffed by people with activist backgrounds. This is how the kind of parasites you see in the #OWS camps (not the homeless or the criminals, but the students and idealists) move up financially and professionally in the world over time. It is why they are willing to take shit jobs at places like ACORN (or whatever it’s called now), and then move up the labyrinthine NGO/foundations ladder.
21. Viktor (not that Victor)
No hate fest here. Just pity for what is obviously a man in decline. Hate is more then just a lack of Love. If the Paulbots would leave off their worship for a while, they might see some of his obvious flaws.
Paulbots can wear you out. Life isn’t non-stop politics. It can’t be. There are other dimensions to it else one might lose their mind.
When I come across a man at the bus stop who is arguing with themself. I do not join the argument.
Now we know why Obama’s hair has turned grey and why he looks so haggard.
He had to decide that 1,000,000 people would never work again so that unemployment could be kept under 9%. A soul wrenching decision made for the Greater Good.
He is the Good Sheppard and Americans are his sheep.
5. Ringo – With the kinds of job available to men declining in availability, prestige, and compensation, and costs of goods (and total tax burden) rapidly increasing, many men have found it more cost effective to stay home, pick up the occasional temporary or contract job, or work in the “grey” economy. Why work a low-prestige, patience bending job for $8 when your wife can make a lot more and you can stay home and make dinner for 4 for a whole lot less than it would cost to buy it? The single earner household is re-born, but now the ubiquitous eye of the state can see it.
We did that for a few years. Husband worked for home builders and earned more than I did until the market crashed. My job provided a lesser but steady income, while he was the at-home parent and found his own jobs here and there. Worth noting here that we were both divorced and between us we have five kids – his, mine, and ours. Four are in school. I stayed home for eight weeks with the newborn and then Himself officially took over.
I was working in R&D in a male-dominated manufacturing company in a male-dominated industry, and loving the job nonetheless, but the problem was that money obviously became tight in the workplace. Some were laid off, others left and weren’t replaced; work was piled onto those remaining, and I started taking work home with me. Once set up to do things at home, at my own expense, I could work for others, too. So eventually I left the company on good terms to do just that – for less money and no benefits. The baby is now 3, her Dad did a fantastic job and he’s back to work now – for less money and no benefits. But it’s a living. I’m just glad to have my turn at home with the three-year-old, because next week I’ll look up and she’ll be in high school.
My Dad, at age 62, is one who just “exited the workforce.” There wasn’t much choice.
I personally know about a half dozen guys in their middle-late fifties who no longer have a “full time job”, of whom several are fortunate that their wives are well employed.
One guy is in IT (no big surprise to many here) and became a manager some years ago, and frankly fell behind in the technical end of the business, then got laid off his job and has been struggling with odd jobs ever since (going on 5 years now).
I think what has happened in many cases is that two-wage earner families have lost one of the big wage earners and are somehow still getting by. Barely.
And a lot of people in their early sixties just got fed up and retired. I know a pretty well-to-do guy that did just that with his construction company.
Funemployement. It’s coming soon to everybody.
d @ 31: I think what has happened in many cases is that two-wage earner families have lost one of the big wage earners and are somehow still getting by. Barely. And a lot of people in their early sixties just got fed up and retired. I know a pretty well-to-do guy that did just that with his construction company.
Yes, we have also heard about a surge in disability payments, which might even be legitimate and yet in better labor markets people might work through it rather than file for the meager benefits. And no doubt there is more fraud, too.
I agree with your causes, just hadn’t quite put it together in my head that these *could* have such an effect on the total labor pool. But that means the government numbers could be “valid”, within their scope. I am mildly reassured, I suppose, that it looks less like blatant fraud.
(heck, I’m in that bubble group myself on early semi-retirement, not to go into too many details, but in my case it’s a bit of John Galt, too)
Still, you have to figure that with a Republican president the MSM would be much more perceptive about such things and would be all over the issue bemoaning the results.
Should show up dramatically in household income results, right, and also in tax revenues. Sounds like someone could put together quite a package along these lines. Except all the trends would be plunging, and we can’t have that in the hopey changey Obamanation … where it’s getting just a leetle bit hard to keep blaming it all on Boosh.
Still, that’s the outline of how The White Knight Mittrick Bain Oromney can paste things back onto Champion of the Middle Class, Green Elf, the hardest working man in show business, and hereditary King of the MauMau Barack W. Obushna.
#14 Eggplant: Agreed about poor management. Two good examples are Xerox, and Hewlett-Packard (after the founders’ final retirement of course).
If people give up on looking for work then they no longer count as unemployed. Few people know that if people stop filing weekly reports with their state unemployment office the system will report that they are no longer looking for work. After some period of time, usually one year but YMMV, the state stops paying unemployment. Sometimes they make people reapply but the payment is based on the reported income in three of the last four quarters. If you were unemployed and they make you reapply then your payment goes down to where it may not be worth while making the bureaucrat happy by filling out forms and attending meetings. If the hoops become complex enough and the payment decreases so that people stop filing claims or if people stop filing weekly claims after their request for benefits is denied then they are no longer counted as unemployed.
The Democrats want to discourage as many as possible, except for core voters, from filing the weekly unemployment claims. This is the same party that wants to increase reported health by killing off the sick and elderly. In the Navy I once met a sailor who got tired of tracking all the confusing contacts on their radar repeater. So they changed the setting for range displayed from 12,000 yards to 2,000 yards. That certainly cut down on the work load. If you stop looking for trouble you will see less of it. Of course when it shows up it will be real big and close.
@27. stoicheion
Just pity for what is obviously a man in decline. Hate is more then just a lack of Love. If the Paulbots would leave off their worship for a while, they might see some of his obvious flaws.
Well stoiceion, instead of parroting Institutional talking point like a typical foxbot, why don’t you put some meat on your accusations. What exactly are his “obvious” flaws? And please don’t come up with the same old racist, antisemite, homophobe drivel.
@28. Annoy Mouse
Paulbots can wear you out. Life isn’t non-stop politics. It can’t be. There are other dimensions to it else one might lose their mind.
So when Paulbot’s wear you out, you put on your M-1 helmet and start reminiscing about bloody battles like a typical warbot.
One of the things I notice when observing America from a distance and over the years is how jingoistic it has become. When I left in 1987 people were far more circumspect in their militarism. It probably has to do with 911 and the never-ending “war on terror”, but I suspect that the media is also very much to blame, and most likely it is deliberate. Even football seems to have picked up a kind of crusades atmosphere with Tebow. And you can see it in the Republican reaction to Ron Paul, where he is treated with the utmost scorn and disdain (see this blog) for merely having isolationist tendencies that were a core component of Republican party for over a century until 911 and the complete take over by the MIC.
“If people give up on looking for work then they no longer count as unemployed.”
Do these people and their families just fade away?
@36. davod
“Do these people and their families just fade away?”
A lot of them join the underground economy or even the barter economy. I was in southern spain over the break and my outward appearances the costa del sol is doing fine. Freeways full, parking lots full, sidewalk cafe tables full, sales on flat screen TVs and other appliances, lots of shoppers buying gifts. Yet youth unemployment is approaching 50% and over all employment approaching 25%.
The underground economy is growing in Spain like it is all over the Med. Meanwhile Papademo and Monti are imposing cash and capital controls in order to snuff it out. What idiots, do they want a revolution? Or are they deliberately trying to foment one like in MENA?
As far as the birth rate discriptancy, I got that figured out;
http://www.youtube.com/watch?v=kNWUnjl8afc&feature=related
Johnny Reb, Paul prattles on about the Constitution, yet he seems to be quite selective in his reading of it. This URL is from Wiki, so line up your salt grains;
http://en.wikipedia.org/wiki/General_Welfare_clause
pinched
{In 1824 Chief Justice John Marshall described in obiter dictum a further limit on the General Welfare Clause in Gibbons v. Ogden: “Congress is authorized to lay and collect taxes, &c. to pay the debts and provide for the common defence and general welfare of the United States. … Congress is not empowered to tax for those purposes which are within the exclusive province of the States.”}
Note the phrase “common defence and general welfare”. It appears in the Preamble also, and in that order. Order is important in that it assigns precedence. Common defence comes before general welfare. So your Dr. Paul needs to see to the Military BEFORE anything else. I agree with him on just about everything else. I agree that the MIC is out of control. That doesn’t mean killing them, it means getting them back under control. Lets start by nationalising Lockeed.
I might vote for him anyway, since by the time China ships enough weapons to Mexico to actually invade the USA Paul’s term will be up. Or he will drop dead, leaving the VP in charge.
Now if Dr. Paul would develop a rational foreign policy, he well could be the next POTUS.
And if pigs could fly, they would do Gieco commercials, instead of that stoooooopid Geckko.
CH My point flies over your head apparently and reinforces it. Nobody likes a proselytizing scold. You can ask John about that. There is something subtly uncivil about pissing in the community stew. Anti-productive maybe? The boulder that you endeavor to roll up the mountain will not be dissuaded or detour unless of its own accord. A nudge in the right direction is more effective than a smattering of insults. You’re making Romney look a more bearable alternative, no small task.
Eggplant laments the death of Polaroid and Kodak, who made cameras which used film. Today you can go on facebook and upload seventy shots in the same time it would take you to run your roll of film to Safeway to be developed. The death of buggy whip makers is a similar tragedy.
#4 Eggplant
Zerohedge is relying on marginal french politician opinion, that don’t reflect the whole country’s ! though a BS that is exploited by the Brit medias !
Interesting post and good commentary overall. As noted above, the labor force expanded greatly after the 70s due to migration of women into the workplace. It appears that some, perhaps largely men, are leaving the labor force. What’s not really known is what is the “right” labor force percentage at any particular time. There’s nothing especially sacred about 64%.
The stimulus policies of Obama/Bernanke are expanding labor markets-in other countries with lower wages. This should have been predictable in a world economy where money travels instantly and components for goods come from many places. We’ve been pumping air into a leaky tire. Instead of inflating the tire, we’re air conditioning the garage.
I have a problem with the Either-Or economic outline offered in this article.
It’s Either an economy focused around a reduction to the LCD, lowest common denominator OR an economy focused around ‘creative destructive’ whose causality is simply: striving, envy, ambition’.
I disagree with this simplistic reductionist description of socialism vs capitalism.
Furthermore, it ignores that all economies operate within a triadic process, requiring long term INVESTMENT, medium term PRODUCTION and current time CONSUMPTION (of goods and services).
The problem with socialism is that its reduction of the economic RESULTS to the LCD freezes the economy. IF everyone has the same income to use for CONSUMPTION, THEN, there is no surplus to INVEST in infrastructure or production costs. The economy is forced to print money, borrow money, take-from-the future. We see the results in the implosions in the Soviet Union and Europe where there are no funds for investment or production.
To describe capitalism within psychological terms: striving, envy, ambition is, I suggest, an error. The error is to assume that such emotions exist only within a capitalist economy. They exist within a socialist economy.
Therefore, we require a more accurate description of capitalism. I suggest that it means that private individuals or sets of private individuals focus on Investment and Production costs; they invest in long term infrastructure and production costs to produce goods and services for consumption.
They MUST return a surplus to the Investors. This Investment is then moved back into the economy for more long term investment and production. This enlarges and expands the economy – while the socialist process, which ignores Investment and Production – entropically deflates and reduces the economic capacity for expansion.
If the govt takes too much, via taxes, from the private sector, then, this reduces the economic process for continuity and expansion. Remember, only the private sector has the capacity to ‘make money’. Real money not printed or inflated money. The public sector ‘consumes’ money.
For the private sector to be robust and healthy, it MUST produce goods and services that are consumed, i.e., desired, by the purchasers. Therefore, ‘extinctions’ are natural and to be expected as technology advances and as new investors/producers enter the economy. To insist that no company goes extinct/bankrupt is to misunderstand the complex process that is the economy.
Again, socialism is not an economic process, for it has no capacity to invest or produce goods/services. All it is, is a leveling process to lower the capacity to consume to one mode. And the problem with this mode is that such a consumption type cannot produce surplus and thus, deprives the economy of any capacity to invest and produce.
Socialism, as such, is actually a means for a government to control a population by depriving them of participation in an economy and reducing them all to dependents of the Rulers.
My old man was fond of observing that the US used to rule:
1. Maritime Shipping
2. Consumer electronics
3. The Automotive Industry
4. The Oil Industry
5. Commercial Aviation
Before he died in twenty years ago he claimed that we’d given up #1 and #2 and half given up the latter three. Since then we’ve basically given up #3 as well. Yet other countries still make lots of money in those industries. Why then, did we abandon them? I think the reason for that is they were developed technologies and America doesn’t “do” established technology–we do NEW technologies.
My question is a bit more Alvin Toffler oriented. America seems to have given up on Second Wave and seems to be relinquishing Third Wave production to the Second World countries. What “Fourth Wave” technology and products can America embrace to get back to doing what it does best, which IMHO is “those things that have not been done before”?
A high standard of living comes from conflicting differences, unlike temperature differences.
Namely X is worth more to me than to you, and Y is worth more to you than to me.
We trade and we both profit.
That means that both our standards of living have risen.
That’s only possible where there’s disagreement over value.
The road to wealth is trade; its opposite is self-sufficiency, which leads to poverty.
Specialize and trade. When you specialize, your product is worth more to others than to you, and conversely when they specialize.
Mutually profitable trades are voluntary. Forced trades are not mutually profitable, say those that are mandated by government; and those trades reduce the standard of living of the nation.
The easiest way to make trades unprofitable is to tax them or regulate them. Then the disagreements fall apart because there’s no margin of mutual profit, and we no longer trade. We make our own food, clothes and shelter all day, and live in huts.
That’s the equivalent of heat death: no trade.
Then also there’s nothing to tax.
If you want to kill off a job recovery, make trades unprofitable. That’s in fact what’s happened.
Most businesses are barely profitable. Regulating and taxing drives them into unprofitablilty, and those jobs won’t come back.
Eggplant @ 8 and Mrs Davis @ 12 have interesting comments on the companies that have died in the last decades or century. Of course, we could also think about all the nations & governments that have died over the same period.
In the last 100 years, Britain lost a good chunk of its land area when Ireland split, and then lost the Empire on Which the Sun Never Set following WWII. The Russian Empire fell, to be replaced by the Soviet Union, which fell in its turn. Finland lost a big chunk of territory to the aforesaid USSR. Austro-Hungarian Empire went. Germany got ripped apart. Korea was divided. Yugoslavia went. Let’s not even mention Africa.
It seems that all human organizations are always in flux, whether it is a business, a nation-state, or the local volunteer fire department. The only constant is change. The biggest (& unpredictable) variable is the rate of change.
t @ 40: Eggplant laments the death of Polaroid and Kodak, who made cameras which used film. Today you can go on facebook and upload seventy shots in the same time it would take you to run your roll of film to Safeway to be developed. The death of buggy whip makers is a similar tragedy.
FILM became obsolete, and even prints lost their importance to both online display and to low-quality ink-jet hardcopy, but PHOTOGRAPHY actually became far more popular. Camera companies have flourished, and Polaroid was in that market, Kodak was only marginally. Actually Kodak has kept their hand in state of the art CCD sensors. IOW they were well positioned, made the right moves, but not nearly aggressively enough. The required “culture” changed, and of course “change” itself was the first requirement. One should note that Microsoft actually did make a transition, they survived the onset of the Internet. Apple did even better! So some companies manage to make at least a transition or two. It’s not like these life-cycle issues are unknown in business school, but they remain difficult.
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rhh @ 45: A high standard of living comes from conflicting differences, unlike temperature differences.
An interesting point. Actually, all the interesting processes in the universe seem to involve temperature differences! Look up Ilya Prigogine and “dissipative systems”, he got the Nobel Prize in chemistry in 1977 for his related work, and it has tremendous relevance to all sorts of studies of chaotic systems.
You offer an interesting list of points about trade. I might quibble with some details, but the lesson is that there are some mathematical relationships that must hold, or trade collapses because there are no longer benefits. One of the lessons from dissipative systems is that they only work in a fairly narrow range of conditions. Life on Earth would fail if the average temperature rose or fell by 100 degrees, or about 30% of the Kelvin temperature. Your own body would fail if its temperature rose or fell by 10 degrees, a 3% difference. A poker game ends when one side wins all the money, there is no restart. These are not political opinions. The fun is in the process, but the process has certain assumptions, requirements.
I think another issue may be scale. If the players are big enough that they can supply all needed goods internally, and even support multiple suppliers for goods internally so there is internal competition, then the role of external competition and specialization has to be far less valuable. Also, the transition from external to internal has to cross a “cost of entry” barrier, that can allow an external player to become a rent seeker, just below the cost of entry. Lots of games one can play, but the facts are obvious, at least to me, that the current game we are currently in leads to a busted player – us.
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The local Fox News affiliate is running a series now, “saving the California dream”, and presented a factoid last night: the state of California, population 37,000,000 or so, roughly 15% of the entire United States, now ranks LAST among 50 states in new businesses formed.
Googling …
Aha! What they did not mention is that the *net* number is actually NEGATIVE!
http://www.economicmodeling.com/2011/08/20/data-spotlight-net-business-creation-by-state/
(ok so this chart shows Michigan is last, California only next to last)
@45 Watch out rhhardin, you sound like Walter Williams, making sense and all. Next thing you know you will be a hate figure on the Left.
@44 lescoulee. Some of us were very lucky to have the dads we had. We were indeed at the top of those industries for a long time. I once heard that a captured Nazi general supposedly said something along the lines of, “we knew we could never beat the American generals…General Motors, General Electric, General Foods…”. Then we won WW2 and had no competition for a long time. Lack of competition makes politicians comfortable, entrepreneurs bored, management lazy and labor entrenched. The 50′s made Detroit and Pittsburgh sclerotic rust buckets that could not get out of their own way when confronted with hungry, smart, resourceful furriners.
@38. stoicheion
In the village I live in we have a shooting range. The farm boys, starting at about 15 years old, from miles around, ride in on their bicycles on Friday afternoons with their daddies STG-90′s strapped on their backs to target shoot. That is defense, not only of the country but of the canton and the gemeinde. Even those youth that don’t serve in the “well regulated militia” have to do civil service.
This is “defense” spending.
In America you have a highly armored professional army and even a praetorian guard that is now authorized to arrest civilians without charge, even to murder them and their sons and their cousins without trial. That is not defense, that is oppression.
In America you have an executive branch that wages secret and undeclared wars, orders assassination by drone, that lies so habitually that it no longer knows the truth.
In America you have the military bribing and subsuming local police and sheriff departments with donations of assault weapons in order to intimidate and corral the local population.
In America you are fighting wars halfway around the world that the citizens do not know about, neither do the grunts risking their lives. Never ending wars against tactics like “terror” that can never be one because that is what the government needs to keep the plebians scared and compliant.
This is not defense.
@39. Annoy Mouse. I guess I did not catch your drift, and I apologize for being a “proselytizing scold”, but as far as “pissing in the community stew” goes the real problem is that you have pissed all over the ingredients I thought the stew required before I could even explain them. I think you can agree with me that this is a very critical election and the next few weeks are even more critical. Once the media have successfully ignored Ron Paul and gets another institutional nominated I will most likely retreat back to the shadows.
@45rhh – I don’t see that self-sufficiency, or an isolated system, leads to poverty; the standard of living, akin to its entropy CAN decrease, or, it can remain constant. I repeat – remain constant. The energy-supply or standard of living capacity, can’t increase. Many hunting/gathering societies functioned this way, as isolated and self-sufficient.
I think that economies are very similar to energy-producing/using systems and therefore, temperature differences or energy-supplies – must be unequally distributed. If they are equally distributed, the goal of a socialist system, then, the result is the LCD or ‘heat death’ entropy.
@47 josh- yes, I agree with your comparison of the economic system to Prigogine’s dissipative ‘far-from-equilibrium’ systems. If we consider the economic system as a CAS, complex adaptive system, then, temperature or wealth differences are absolutely vital. The economy is not a mechanical system and can’t be simplified into linear causality; what a govt has to do is to enable its triadic processes (investment, production, consumption) to operate as freely as pososible. If a govt steps in and attempts to control, for example, consumption – as a socialist agenda – then, this will implode the other two processes which will lack the energy-content to invest and produce.
votc @ 48: The 50′s made Detroit and Pittsburgh sclerotic rust buckets that could not get out of their own way when confronted with hungry, smart, resourceful furriners.
Well, just to quibble, Detroit did its worst work IMHO in the 1970s and 1980s, products of both poor and no better quality than 20 years earlier, fighting with new federal mandates on safety and pollution (not yet mileage), while the Japanese second generation cars arrived, the BMW 1600 and 2002 zipped around. There was, basically, no excuse. There was some cost advantage to Japanese labor back then, but they had to invest and amortize huge new investments. The problem was political and economic sclerosis, a system built around the union, corporate, federal tax troika, “planned obsolescence”, putrid designs, all the establishments felt they had a consensus right to rent-seeking – though that STILL does not explain the ugliness of the designs of the period, the age of the vinyl landau roof, I mean, come on, at least tail fins kept the vehicle stable at 400mph! The GM X-cars with 70% of the weight on the front wheels so if you hit the brakes hard (and before antilock systems), you lost control.
The big failures are the ones where there is simply, in retrospect, with all the charity in the world, NO EXCUSE. Compared to Detroit’s crap-headed behavior for decade after decade, it is hard to chose a runner-up … well, that is, it was hard until February 2008, when Wall Street laid a bigger egg than ever before seen in the capitalist world (that was the famous Variety headline in 1929: “Wall Street Lays An Egg!”), though of course by 2008 that egg had been building for a decade … and of course the yolk is still on us, and I’m not sure when we will see the end of the yolk.
45. rhhardin
I’m with you on the notion that “trade makes the ship to go”. What is more effective than trade in creating economic growth? I haven’t heard of anything. Maybe ETAB has something?
Sadly, I have to tell you I don’t like those skinny crazy-looking Dobermans. Haven’t since the day one lock-jawed on the loose throat fur of my Chesapeake Bay/German Shepherd cross. The Doberman just wouldn’t let go despite being whacked over the head. Eventually it obeyed the command of its owner and relaxed its jaw. Scared me and confused the heck out of my dog.
@38. stoicheion
Really it comes down to this: why does the federal government have a monopoly on “defense”. It wasn’t always that way. Why can’t communities and states decide how they want to defend themselves? A reasonable defense strategy would allocate 33% of defense to militias at community level and 33% at state. Lincoln put an end to all that sort of “nonsense”.
ETAB 23
Some of your comments come close to describing another possible answer to the question. I’ve seen references in various blogs about “going Galt” for the past few years, but recently came across another term. The French have a phrase, “l’economie de la débrouillardise.” American writers also call it System D, seeming to think this is new. But it’s been around forever: the black market, the underground economy.
The Foreign Policy web site has an article on the subject:
http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy
Ayn Rand’s ideas weren’t a product of imagination alone. She lived in the Soviet Union until she escaped to the U. S. Survival in a pure socialist economy requires either a government/party job or a black market business. Many Americans already foresee what’s in store for the future, and have already set up for it. They either have saved their own startup capital, or have borrowed from relatives (who many be more than willing, given the current interest rates paid).
Josh #51:
A professor that taught me a couple of my matser’s cpruse had considerable experience in analyzing the US auto industry.
One thing he said really made and impression on me:
“People in the auto industry wil KILL to save a nickle in production costs. Five cents each for each car over their entire production run is a very big deal.”
When I drive or work on a Toyota I do not get the feeling that saving 5 cents was vitally important to them. I recall crawling under the dash of my 1978 Celica to wire in a cassette player and noting that for certain wiring harness connections they had wrapped them in foam rubber sleeves so that they did not make noise banging into things when they moved.
Now as to why that 5 cents was important to Detroit, I guess you can claim it was all Corporate Greed, but based on what we have found out about the UAW demands it appears that labor costs were an even bigger issue.
In the space launch business reliability issues drive the culture and the results are obvious. And I can imagine what a culture of “5 cents is a very big deal” did to the car companies.
RWE @ 55 quoted:
“People in the auto industry will KILL to save a nickel in production costs. Five cents each for each car over their entire production run is a very big deal.”
This aspect has always impressed me about automotive engineering, i.e. saving 5 cents per part is a big deal. The math is easy: If a production run is 100,000 cars then
100000 * 0.05 = $5000
Five thousand dollars is significant money.
Why aren’t all cars complete crap where every penny has been squeezed out of the design? Obviously it’s because no one would buy them. How does the automotive engineer know where to cut pennies out of his design such that he is reducing marginal cost but not making the finished product look like cheap junk? I have no idea but I’m very impressed.
I’m an aeronautical engineer. Compared to an automotive engineer, my job is almost trivial. I only need to design a product that actually functions safely. The automotive engineer needs to design something that functions, costs as little as possible but appears well made and does not kill or injure its driver such that the manufacturer is subject to law suits. This is really hard to do!
Different topic: People are starting to wise up that Romney might not beat Obama in the general election:
http://spectator.org/blog/2012/01/13/why-romney-is-weak-vs-obama
I know that the MSM has no ethics and will say any lie imaginable to get Obama reelected. I have to assume that anything I read from the MSM is some sort of cunning ploy to get the weakest candidate possible nominated by the Republicans such that Obama is assured of easy victory in the general election.
Has the MSM worked its propaganda magic to get Romney nominated?
@54 Straight Arrow – the emergence of a massive black market economy within nations that are heavily socialist is ‘the norm’.
In East Europe, heavily socialized under the Soviet Union, the black market and corruption became the norm. In Western Europe, as it has become infected, via the Euro, with the socialist agendas of the southern nations (Greece, Italy, Spain) – the black market is a basic economic way of life. Other countries in Western Europe, have become socialist because of their inability to deal with mass immigration from the Middle East and Africa; their inability to integrate these people led to ghettoes of welfare dependent populations…and the black market is a basic mode of life in these places.
The black market takes a large portion of the economy out of the control of govt for even basic services – witness the billions sent back to Mexico by illegals in the USA – and yet, the US taxpayer must pay to educate, host and maintain the health of these illegals.
What seems to happen is that when socialism moves in and takes control of an economy and thus reduces the ability of people to ‘make wealth’, with its insistence on a homogeneity of outcome…what happens is that the economy splits into two parts: legitimate and illegitimate. The legitimate economy shrinks, the govt tries to deal with the loss of revenue by borrowing and borrowing..and increasing taxes. This further harms and legitimate economy..and it implodes..as we’ve seen happening in the US and Europe, with their reduction in ratings.
@56 eggplant – I have my doubts about the validity of that linked article opining that Romney can’t beat Obama in the election.
To state that Romney ‘flip-flops’ ignores that Obama has the same history; Obama’s changes-of-tune from his pre-senate, senate and presidential tenures are even more than those of Romney.
To state that Romney has ‘corporate interests’ is a non-sequitur. Why shouldn’t he have such? And Obama’s key contributors have been, not simply the Unions, but Wall St corporations.
Laying off workers? What the heck is the issue? THINK. A responsible businessman does NOT force private investors in a company to keep putting their money into funding a company whose products DO NOT SELL. If the consumer does not purchase the goods/services of a company, then, that company must not demand more money from the Investors to prevent ‘laying off workers’.
Government bureaucracies – ah, that’s a different story. There, you have jobs-for-life. And no accountability. You can be as incompetent as you are, and you can’t lose your job. But why? Because the funders of these workers are the taxpayers. Who have no choice but to ‘hire’ these incompetents.
Private business is the ONLY method of producing wealth. How? By taking a risk, investing money/capital into a new industry, producing a product and hoping it will sell. If the consumer doesn’t want it..for whatever reasons..from solar panels to electric cars to ingesting tapeworms to reduce weight (yes, that was a product sold about a generation ago)…then, that business must fail.
To have the govt step in and take taxapayer money to pay those workers..when the product doesn’t sell..is an abuse of the taxpayer.
Don’t offer a charismatic ‘leader’ as the GOP alternative to Obama. The election shouldn’t be diverted to ‘who is the most charistmatic’ for that diverts attention from the real issues: the economy, jobs, the excessive regulations, the movt to socialism, the reduction in economic and political power of the middle class. Focus on these issues – and Obama is a failure in all of them.
What happens under socialism is the same in all countries, but how each deals with it varies. Zimbabwe suffers from hyperinflation; the government imposed price controls to counteract its effects. Many citizens have fled the country. Those who remain, do their trading with foreign currency, especially US dollars.
Adaptations for trading under such conditions are of special interest to me, because runaway dollar inflation may be around the corner. The Federal government has an interest as well, but a different perspective. Remember the raid on the NORFED?
http://www.fff.org/comment/com0711j.asp
The Bureau of Labor Statistics probably do not collect useful data regarding System D enterprise/labor, and because of its nature (payments in cash, no taxes reported) it will continue to go unreported and unnoticed until it becomes quite large. When the Federal government finally deals with it, you may expect felony laws and jail sentences rather than a proper response.
The article in Foreign Policy claims that right now the underground economy has a global value of $10 trillion. It also says this:
“It used to be that System D was small — a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too. Today, System D is the economy of aspiration. It is where the jobs are.”
A point being missed here is that the world’s main currencies, not just the dollar, are collapsing. Hyper-inflation will follow, like Zimbabwe. System D may be able to bypass regulation, but can it function with worthless money?
Rand had Midas Mulligan provide the answer: Galt’s Gulch had its own mint.
ETAB @ 58,
It is agreed that Obama is a failure as President. It’s arguable that Obama is giving James Buchanan competition for the distinction of being America’s worst president in history. Also, if the economy collapses prior to November (which is likely) then literally anyone will be able to beat Obama in the general election. However for purposes of discussion, let us assume the economy has not fully collapsed and Romney wins the nomination. Can Romney beat Obama in the general election?
First, Obama has a big stinking albatross hanging from his neck, namely Obamacare. Normally, Obamacare would give the Republican nominee one free hit against Obama. Unfortunately, Romney has Romneycare hanging from his neck. The MSM can correctly claim that Romneycare was the prototype for Obamacare. Consequently, Romney will go into the general election without this significant free hit against Obama and have to skirt around the important issue of socialized medicine.
Also, with Romney, there is the unavoidable issue of his religion. Agreed, that Obama’s religion is nothing to write home about given his earlier relationship with Rev.Jeremiah Wright (which the MSM does its best to ignore). However Mormonism is arguably the world’s second most ridiculous mainstream religion (Scientology takes the prize for being the most ridiculous). A compelling argument can be made that Mormonism is an embarrassment to all religions. One might retort: Who cares what the President’s religion is? Normally, I would agree that the President’s religion should not be a consideration. However there is a high probability that in the next 8 years, western civilization will be in a knock down, drag out war against the Islamic world with nukes, mega-casualties, the whole nightmare. The US President will be the standard bearer in this future war against Islam. Do we really want this standard bearer to be a member of a religion as ridiculous as the Mormon church? If we are going to be in a religious war, it would be best that the President’s religion not be a disadvantage by being some ordinary religion like Methodism, Catholicism or Judaism.
The two factors of Romneycare and Romney’s religion causes me to suspect that the MSM is setting Romney up as Obama’s opponent for the general election.
#17. Al Miller
When a college educated “professional” with a career in the services industry is fired or laid off, he becomes a “consultant” for purposes of resume continuity (at the last), and hopefully, side income. I’m in IT, and half my career has been spent as a “consultant”, a.k.a. independent incorporated contractor, and mostly by choice. Since I left a perfectly good six-figure job (perfect in appearances, at least) in 2008, I am probably counted as one of those who left the workforce.
Opps, no, not true. My wholly owned corporation pays me via W2, and in two states at that. Heck, I’m probably double counted as “two new jobs”.
LOL .. Statistics. The only stats that count are when they show up as $cash in your pocket, and these days, silver or gold would be better.
Aside: The state of California enacted a 3% tax on all sales of real estate, so those of us attempting to leave this slug of state will now have to pony up just to leave. The state just destroyed everything I worked for over 12 months – all the profit of my new company – with one stroke of Jerry Brown’s pen. Hell, I can’t get out of the state fast enough before they confiscate every damn nickel I’ve made in 42 years of work living in this state.
The idea that this shrinking of the labor force is without precedent in earlier recoveries assumes this is a recovery. It isn’t, we’re just bouncing along at the bottom, held in stasis between furious money creation trying to reflate the bubble, and real world forces trying to deleverage the insane levels of debt we still have.
As for why the labor force is shrinking: some illegals went back home. Some people in their 60s were laid off, gave up looking after a while and just retired. Some people gave up looking because they found there’s nothing there; they may be back but their skills are degrading. Some unemployed limited their search to the area where they live because their undewater mortgages make it impossible to relocate to a place where there may be better opportunities. All of those.
Ignore the unemployemnt rate, the denominator is too soft and easy to manipulate. Ignore monthly data, it’s too volatile. Look at the 3-month moving average for total non-farm private sector employment, and the assiciated hours worked and average compensation. Those are the real jobs that among other things pay for the govt jobs. When those numbers all rise together for 3 straight months maybe we are starting a recovery.
Great discussion.
I’ll make two small points:
An old Jewish fella with whom I made friends back when I was first working told me that a two-income family could not really make any more money than a single-earner family, because the market forces would just up the price of everything to take advantage of the fact that now both adults in a family was working.
He told me that Jews were far smarter. He used the example of copper tubing. Jews would organize so that one of them would buy a warehouse full of copper tubing. Because they bought so much at one time, they bought it cheaper than anyone else could. They then could sell this tubing to other Jews at a discount, because they had so much of it in stock. When he was growing up in New York, (and he was old thirty years ago) this was how they did it. Such a system allowed its managers to look after each other yet make a profit. I don’t remotely know if American Jews today, on average, have enough of a sense of family or clannishness with other Jews to do this, but whatever about that, it sounds like an intelligent way to survive. Would that the Irish could have been as smart!
The other point I’ll make, as I’m living in Europe now, is that a great many Europeans see ratings agencies like S&P to be merely part of the American imperial state, not independent companies. They think the American government has got it on for the EU and want to bring it down, because it is a competitor (sort of like the British are alleged to have gotten Paraguay involved in its own self-destruction back in the 1850s and after because it was becoming a rival in some economic way to them–I think it was cotton, w/o looking it up).
So therefore, these sorts of Europeans are refusing to believe the handwriting on the wall and think it is all a U.S. government plot to undermine them.
They’re about to go down with the Titanic while claiming the whole “get to the lifeboats now!” line is just a ploy to roust them out in the middle of the night while the steward burgle their staterooms.
An Préachán
Sorry guys, the labor force is not shrinking. It is only through manipulation of what is deemed in the workforce by our betters that the ‘workforce” has shrunk. Plain and simple. The guvmint now lies to us on a regular basis and only a fool cannot see that.
A friend at the Commerce department told me ages ago that they don’t do statistics, they “follow the law” – no adaptation to change, no science, permitted. So any central planning activity is starting with bogus numbers (just like the old Soviet Politburo lying to itself).
And since the press isn’t doing its job (and Wal-Mart really doesn’t like the publicity of having a thousand candidates standing in line – so they seldom do open calls like they used to) there’s no way of judging other than to ask the unemployed if they saw a “jobs available” sign would they visit and make an application. Most I ask say “yes, absolutely.” But there are no help wanted signs in view in most of the country (greater D.C. as the exception).
Can Google or Bing or other web-visible data be used to develop a better statistic and histogram that isn’t just a regurgitation of the government’s numbers? Craig’s list? Perhaps help wanted counts across 10 major metropolitan areas each quarter for the last decade? Harvested from the Internet Archive?
If we don’t develop a metric ourselves, we’re guaranteed the government and its press will continue to parrot “all’s well and getting better, trust us.”
(I keep a picture of that shameful applicant line in front of Wal-Mart on the homescreen of my phone as a motivator, it makes me angry, and is a constant reminder of why we must return the country to the people and their enterprise, main-street over wall-street)