By Jim Quinn, who writes at The Burning Platform
As I listen to pundits, politicians and populists expound on the jobs situation in our country day after day, as if they knew what they were talking about, I’m reminded of the Seinfeld episode where George quits his job as a real estate agent. He sits in Jerry’s apartment and ponders whether he could become the general manager of the Yankees, a sportscaster, getting paid to watch movies, or a talk show host. After the discussion with Jerry, he realizes that he has absolutely no skills that are transferable to another career. Everyone in America would like to be the General Manager of the Yankees or get paid for watching movies, but that isn’t how it works in the real world.
A little reality about the job situation in this country is in order. The unemployment rate reported by the Bureau of Labor Statistics and parroted by the mainstream media is currently 9.6%. Once you stop counting people who have given up looking for jobs and “left the workforce”, discouraged workers, marginally attached workers and workers forced to work part-time, you magically get a 9.6% rate. Using the method of measuring unemployment used during the Great Depression and reproduced by www.shadowstats.com, the real unemployment rate is a depression-like 22.5%. The peak unemployment rate during the Great Depression was 25%. There is no doubt that we are in the midst of 2nd Great Depression, but where are the bread lines and the lines of unemployed winding around the corner? No need. This is the electronic Great Depression – iDepression 2.0. Your 99 weeks of unemployment and food stamps are direct deposited into your bank account so that you don’t have to leave the comfort of your McMansion that you haven’t made a mortgage payment on in the last 14 months. There were no credit cards in 1933. Without a job or a house, you needed to move to where there might be a job. Hence the mass migration from the Midwest to California – ala The Grapes of Wrath. Today, a neighbor in a matching McMansion down the street, with the perfectly manicured lawn, could be unemployed for three years and no one would ever know. They could sustain themselves on unemployment payments, food stamps, and credit cards. Welcome to the iDepression 2.0.
Dude, Where’s My Job?
Every politician in the U.S. is running for election on a platform of “creating” new good paying jobs for Americans. Only one problem. Politicians don’t create jobs. Businesses create jobs. When politicians and the Federal Reserve get involved in the job market, bad things happen. The excessively low interest rates put in place by the Federal Reserve created a housing bubble that led to the “creation” of 1 million new construction jobs between 2002 and 2006. Of course, the bubble burst has led to the loss of 2 million construction jobs since 2007. What the myopic pundits on CNBC don’t realize, because they aren’t programmed to think, is that the Greenspan Housing Bubble “created” millions of other jobs that had no chance of being sustained. The number of realtors grew from 750,000 in 2000 to 1.3 million in 2006. We needed hundreds of thousands of new mortgage brokers and appraisers to falsify documents and not conduct proper due diligence. Wall Street needed to hire thousands of new MBA shysters to create fraudulent packages of toxic mortgages and the rating agencies needed to hire thousands of Burger King level thinkers to stamp AAA on the packages of toxic mortgages. These were just the direct jobs created by Easy Al. Home Depot, Lowes and a myriad of other home retailers built thousands of stores to service the needs of all these new “homeowners” and hired hundreds of thousands of clerks, installers, and cashiers. Once the delusion really got going, the “equity” from the homes generated jobs at car dealers, restaurants, cosmetic surgery centers, cruise lines, and yacht retailers.
Barry Ritholtz described how the Federal Reserve provoked housing bubble further warped an already unbalanced American job market:
Job creation has taken place across a wide swath of industries – much more than just residential construction. Sure, developers, builders, and subcontractors saw job growth explode. But it was far more than that. From real estate agents to mortgage brokers, from designers to contractors, plus the many employees of stores like Home Depot (HD) and Lowes (LOW), the Real Estate industrial complex was responsible for a disproportionate percentage of new job creation. From 2001, to the housing peak in 2005, the total number of Realtors, as a percentage of the Total Labor Force, gained nearly 50%.
The reality is that Greenspan, Bernanke, and the rest of the Federal Reserve Governors “created” millions of jobs that were not sustainable. Their policies distorted an already tenuous economic model, dependent upon consumer spending, no savings, and delusions of home wealth. The chart below paints the picture of sorrow. The key points are:
* The number of employed Americans has declined by 7.4 million since 2007.
* Goods producing jobs have declined by 19% since 2007, while service jobs have only declined by 2.8%.
* Luckily, Government jobs have actually increased since 2007.
* The population of the US has increased by 10.8 million since 2007.
* The working age population has increased by 6.5 million since 2007, while the work force has only increased by 1 million.
* Only 58.5% of the working age population in the U.S. is currently employed versus 64.4% in 2000, a lower level than in 1978.
When I hear Obama and his minions blather on about the jobs we have added in the last six months, I want to break something. The truth is that the country should still have 64.4% of the working age population employed today as we did 10 years ago. That means we should have 153.5 million employed Americans today. Instead, we have 130.2 million employed Americans. That is a 23.3 million job deficit and the Obama administration crows when we add 50,000 new jobs in a month. Welcome to iDepression 2.0.
No Way Out
The United States of America is a hollowed out shell of the great industrial machine that dominated the world after World War II. The BLS data unequivocally proves this is so. The chart below compares American jobs in 1970 versus today. The storyline about good paying manufacturing jobs being shipped overseas is absolutely true. The population of the United States in 1970 was 203 million. Today, the population of 310 million is 53% higher. During this same time frame manufacturing jobs have declined from 17.8 million to 11.7 million, a 34% decrease. The corporate oligarchs that run this country will tell you this is due to efficiency. The truth is that these jobs were shipped to China in order to enrich the oligarch CEOs and their MBA efficiency “experts”. The key disturbing facts from this data are as follows:
* Goods producing jobs as a percentage of all jobs have declined from 31.2% in 1970 to 13.8% today.
* Lawyers, accountants, financial advisors and other paper pushing professions made up 12.4% of jobs in 1970 versus 18.7% of all jobs today.
* Obese Americans love to go out to restaurants and be served. Hospitality employees now make up 10.1% of the workforce versus 6.7% in 1970.
* Obese, vain, stupid Americans have also benefitted the Health Services and Education industries as the number of nurses, proctologists, teachers, school administrators and Beverly Hills TV surgeons has surged from 6.4% of the workforce to 15.1%. You’d think we would be healthier and smarter with these figures. We’re not.The politicians attempting to buy your vote today are promising new good jobs. One side is going to impose 100% tariffs on all Chinese crap coming into the country. This will revive domestic manufacturing. Another side is going to create millions of “green” jobs. Imagine all the solar panel jobs coming our way. Someone else is going to rebuild the infrastructure of the country, generating millions of made in America jobs. Too bad there are only 7 million people in the whole country that have a construction background. The Federal Reserve is going to print our way to millions of new jobs by reducing the value of the dollar, again reviving our dormant manufacturing sector. I can see Bethlehem, PA firing up the steel mills that have been dead for 20 years and closing down their casinos. Maybe if we hire some more government bureaucrats to administer the implementation of Obamacare and the financial regulations that are eliminating free checking accounts, the economy will miraculously revive. Paper pushers don’t morph into construction workers. Criminal Wall Street MBAs don’t become petroleum engineers. Unemployed waitresses in Riverside, California aren’t moving to Washington DC to get a great job at Ruby Tuesdays.
The delusions continue. Unless American union workers are willing to work for $7 per hour with no benefits, the manufacturing jobs are not coming back from China. The corporate oligarchs and their bought off cronies in Congress sold the country down the river over the last 40 years. Mega-Corporation profits are at record levels as goods are produced by slave labor in the Far East at 80% lower costs than they could be produced in the U.S. With 86% of the U.S. workforce in the service industry, introducing tariffs on imported goods and devaluing the dollar will further put the squeeze on the American middle class who already have been systematically screwed by the ruling elite over the last 40 years. Our society took 40 years to dig this hole. It is now so deep, there is no way out. But, look at the bright side. At least we don’t have to watch bread lines stretching down the block when we are watching our 52 inch HDTV, holed up in our 5,000 sq ft McMansions, ignoring the monthly mortgage payment bill, and waiting for our unemployment funds to be direct deposited into our bank accounts. I get all teary thinking about it. This is the iDepression 2.0.
The real people of this country who have worked and saved and done the right things have been beaten down. It is time to stand up to those in power and take this country back. We need the moral backbone of Ma Joad at the end of The Grapes of Wrath:
I ain’t never gonna be scared no more. I was, though. For a while it looked as though we was beat. Good and beat. Looked like we didn’t have nobody in the whole wide world but enemies. Like nobody was friendly no more. Made me feel kinda bad and scared too, like we was lost and nobody cared…. Rich fellas come up and they die, and their kids ain’t no good and they die out, but we keep on coming. We’re the people that live. They can’t wipe us out, they can’t lick us. We’ll go on forever, Pa, cos we’re the people.
143 comments
Comments are closed.
“Unless American union workers are willing to work for $7 per hour with no benefits, the manufacturing jobs are not coming back from China.”
Not sure I agree with this part. How do you explain Germany’s manufacturing strength then?
I know you’re trying to make a strong point by keeping it simple, but you’re oversimplifying too much here and creating a misleading conclusion. Wage levels are not the only factor in being competitive in manufacturing.
Given the set of rules that dictate the valuation of public companies and, therefore, how they’re managed, Jim’s observation about the wage levels required to bring manufacturing back to the U.S. is 100% correct. That doesn’t mean he is advocating such wage cuts, though.
If we want to bring manufacturing back to the U.S. at decent wage levels, we are going to have to change the rules to provide incentives to make that kind of investment.
If you want to compare the US to Germany and explain the differences in industrial jobs, wages, etc., I suspect you have to compare the tax systems, the rate of unionization, worker participation in company management, health care systems and the cost of education paid by families.
If we bring back the Eisenhower era progressive tax rates and focus on universal health care and free education and you will be well on our way to get out of the hole.
What we can’t afford is having a parasitic class sucking all the wealth and power.
Yep.
That wage depression is happening right now. GM is working on a plant in Michigan for the small car – the union agreed that about half the workers would work for 1/2 pay, a move GM said was necessary for a profitable line.
Now they want them ALL to work for half pay. And they are likely to get it.
http://content.usatoday.com/communities/driveon/post/2010/10/gm-general-motors-uaw-chevrolet-cruze/1
germany relied on an underclass of Turkish immigrants
who were banned from doing all sorts of things in the civil society.
on the other hand, at least they let them in legally.
That is not true. Germany also imported lots of guest workers from what was once Yugoslavia, Poland, etc..
I think it is right on. Maybe the $7.00 an hour is a little off but it is the priciple. The market should dictate wages as a starting point, after that merit and worth. If you can find a staff that can be legally employed willing to work for 3 bucks an hour then that’s what you should be allowed to pay. Obviously if the wage you offer is not attracting qualified workers then you have to up the ante. It’s simple economics, there is an equalibrium point at which employers are able to afford to pay and workers are willing to work. Having these numbers falsely minipulated by union heads is what killed the steel manufacturing industry in this country and it killed the automobile industry until the federal government stepped in and put it on a bail out life support machine. About 10 years ago the Delphi Packard plant in lordstown Ohio closed down. At that time the entry level job there paid $34.00 an hour. It was a UAW shop. at the same time I was working down the street for $12 an hour. Depending on where you live, 34 bucks may not sound like much, but in this area it is very, very good. I would bet anything that the entire plant could have been staffed for $12 an hour, maybe less for some people. The union would not take concessions, so they closed. Instead of having a job making what was a better than average wage, the entire plant lost their jobs because of union thuggery. There is a reason that Honda, Toyota, and multiple other Japanese manufactures can produce cars at a profit in this country while the big 3 do not. The reason is unsastainable wage and benefit packages. The japanese companies open a factory, tell you what they are willing to pay. The choice is yours whether you want to take the job or not.
Brian Cooper says: “If you can find a staff that can be legally employed willing to work for 3 bucks an hour then that’s what you should be allowed to pay.”
If you do that then you will have shifted part of your costs onto the community at large.
We are already allowing too much of that sort of cost shifting with the current minimum wage.
We have allowed too many corporations to set rivers on fire and avoid societal costs of labor, while benefiting from our stable society and it’s laws.
We should be exporting corporations who believe that they can find greener pastures elsewhere.
Nice article. And yes, we have problems. However,they are reversible in time. Almost certainly if we had practised genuine capitalism in the US then we would not be in this mess. I don’t call a system that relies on money from a government backed fractional reserve banking cartel in a government enforced monopoly money supply “genuine capitalism”. Does anyone?
So. We should bailout the victims of the current system (nearly everyone) and implement genuine reform. Remember, China and India have at best merely copied our pseudo-capitalistic model. They are due for disaster too eventually. If Americans can’t make fascism work, then who can?
When we start practising genuine capitalism in the US, then we can expect real capital, most importantly talented people, to start moving back here.
I don’t call a system that relies on money from a government backed fractional reserve banking cartel in a government enforced monopoly money supply “genuine capitalism”. Does anyone?
BAM! That’s the money quote. There can be no recovery, no solutions offered, if we don’t first address the fundamental flaws of the money system. Fractional reserve, interest-bearing, debt money systems are doomed to fail – from the start. Mathematically. No really. Full.Stop.
We don’t have capitalism. We don’t have ‘democracy’. It’s a government, corporate kleptocracy…
In other words, fascism…
Part of the explanation for Germany is co-management, but we can’t do that here because, well, it’s like communism!
Well thaid, putty tat!
hum… this is for my neighbors in Massachusetts… the Governor to be!!! IF DEVAL PATRICK WORK FOR THE PREDATORY MORTGAGE COMPANY “AMERIQUEST” HE CANT NOT BE GOVERNOR… HE IS AN SOB CROOKED POLITICIAN!!!
“It’s time we start thinking about saving as much as we can of our democracy and social contract.” Sorry, but that time has come and gone. I think 2000 was about the last chance to change things. Now you have a President claiming definitionaly tyranical powers (the right to kill Americans with no judicial oversight or control), affirming that goverment officials are in fact above the law by refusing to prosecute anyone from the Bush administration, and the Supreme Court has ruled that corporations, even foreign ones, can spend unlimited amounts on American elections. Candidates who openly call for an end to Social Security, Medicare, Medicaid, unemployment benefits, the minimum wage, and the Department of Education are tied or leading in the polls around the country. Y’all are cooked, done, in a toilet that has just been flushed.
I moved to Canada because I could, because they have stable banks and universal health care, and because America is in a certified death spiral if ever there was one. Other less-fortunate Americans have moved to Mexico and other third-world countries to have better health care and futures…
Nice column. I’d go a step further. I have come to the conclusion that the idea that capitalism and democracy are somehow mutually reinforcing is a crock. They are not causally linked. It is possible — indeed, preferable — to have both at the same time, but it also is possible to have one without the other.
Case in point: We are told that the past 40 years marked a period of “de-industrialization.” Nonsense. That is only true if you look at North America or Western Europe. Globally, the world’s industrial workforce massively expanded in the past 40 years, perhaps doubled. What corporations succeeded in doing was to shift the workforce behind an authoritarian veil, where labor has few rights and certainly doesn’t have the right to bargain collectively. It’s not that U.S. workers are lazy and uncompetitive; it’s that they have democratic rights other people don’t, and that makes them less exploitable.
Europeans have long understood that it’s not possible to maximize growth, democracy, and social stability at the same time. Sometimes, you have to give up some of one to have more of another. The U.S. has tended to choose to maximize growth on the mythological belief that the other two would trail along. Now we know that much of that “growth” was fake, and waiting for more growth increasingly looks like waiting for Godot. It’s time we start thinking about saving as much as we can of our democracy and social contract.
Great post, thank you!
The vast numbers of ‘jobs’ in real estate and construction were never sustainable; however, the real estate and construction complex had a stranglehold on the electeds (at least, in my area), as well as many executive functions of government, including agencies. That real estate and construction complex was built on the EMH and neoclassical economic ideology.
Because they were making good money, I’m not sure that it troubled them to hear that the manufacturing base of the US was eroding; I donn’t think they understood the implications for their own lives.
Arguably, the housing bubble diverted attention from the underlying, structural economic problems — including corporate CEO looting of businesses, and predatory takeover strategies that made short term profits but de-stabilised the larger economic system.
Shit, meet fan.
This disaster, and the unemployment resulting from layoffs when the housing bubble burst, should not have surprised anyone who was paying attention. Those jobs were never sustainable long term, nor was the paper pushing system they enabled.
Personally, I find it a relief to read anyone with enough guts to point out the obvious: an economic system that bases itself on home construction, mortgages, home maintenance projects, and debt servicing is not a stable system.
Why Bother ?
Our great institutions, hopefully with the exception of the military, have decayed to a point of non-performance. The press is silent — owned by a few large corporations.
The American work ethic died when people realized that they could have the trappings and trimmings without working for it.
People became desensitized and sense of community and individual rights was lost in a sea of I-Pods and I-Pads — The New Me Generation — no different then other societies that ultimately collapse from within – indifference, highly educated, ignorant human beings with no sense of the past. There are no demonstrations or peaceful protests — no popular anger directed to improve and build.
We are told we are supposed to be all globalists, members of a global community — But I am an American — I care about other human beings, I just care more about my family first and my country above all else.
For a nation of laws and respect for individual rights and freedoms,
the laws and contracts seem to be enforced for the average person– the Fine print does not apply for those connected or the politicians.
Katrina proved the ability to produce great words, but little in results.
Our elected leaders and appointed beaurocrats don’t trust the American public to tell the complete truth — better to pretend — I doubt it but perhaps the American public doesn’t want the complete truth anyway.
I am a self-reliant individual and I never come begging with my outstretched hands.
When was the last time anyone who reads this has read the Constitution of the United States ? The Bill of Rights ?
I am not disgusted because it serves no purpose – Just disillusioned and dismayed.
When push comes to shove, I got your back covered — But who covers mine?
“When was the last time anyone who reads this has read the Constitution of the United States ? The Bill of Rights ?”
Believe it or not, I did, 2 days ago, when my 13 year old son came home with a copy of them both from his civics class from school, asking for some help with his homework.
As I was helping him read it he said “Dad, why does everyone argue about this stuff?” (i’m sure that had to do something in least in part for all the heated debate in my home as of late)
I said, “Because in this country, you can”.
I guess that’s why
Read ’em all end-to-end yesterday. Do so at least once a month.
Currently, the Bush and Obama administrations are flagrantly violating the 4th, 5th, 6th, 7th, and 8th amendments, but that has nothing to do with the financial crisis…. the “War on Terror” rather.
Lastly, don’t blame the politicians — They are merely a reflection of us.
Our indifference to our own situation has produced a feckless government.
More than art reflects reality, our reality reflects our (mis)perceptions of ourselves.
I don’t know of any human being who puts their trousers on one leg at a time.
If you have the courage and where with all, look in the mirror.
What will be your excuse to yourselves, or to you children ?
Give them an extra kiss tonight and keep thinking somehow it will all work out — and remember, reassure yourself, over and over, there are no things that go bump in the night — that’s only for children.
Can someone explain the second chart–“Employment in Housing Sector Industries?” Do the 2 amounts represent rate of increase? Did the % of workers in the total housing sector plumment in the final 12 months of the 4 years represented?
Well, I’ll give it a shot, but take this with a grain of salt; we’ll let the poster or Yves advise as to whether I’m correct.
Just before the graph, the text is:
So in a period of four short years, the ‘Total Labor Force’ percentage of realtors doubled. In four years. This would not be possible for doctors (because med schools can’t turn out enough docs within 4 years to comprise half the *Total* Labor Force). Ditto engineers, ditto any number of other professional fields. How do you increase the numbers of people in those fields that much, in a mere four years? Tisn’t possible.
However, real estate has low barriers to entry.
(I’m told by several realtors that I know that 20-30% of all realtors move 70 – 80% of home sales, so the fact that someone is a realtor is a superficial indicator.)
The box on the left, that 43.15% of all **private** sector jobs, is listed as ‘housing related’: realtors, builders, contractors, Lowe’s, Home Depot, interior designers, etc, etc.
So no cops, no teachers, no military, no state, city, or local government employees are counted in that number. Only **private sector** payrolls – and nearly half of it was in housing-related payouts?
Can you say ‘bubble’?
The smaller box to the right has an odd label, IMVHO.
It’s basically a subset of the box on the left; the box on the left covers a period of four years, whereas the box on the right is a subset of that timeframe (the last 10 months, it appears).
Looks like someone used Excel; maybe they’ll revise that graph.
I kind of skipped over it, until I spotted your excellent query.
If my interpretation is incorrect, there are plenty of smart people who read and comment here who will, I hope, enlighten both of us by providing a more detailed explanation.
I don’t mean to draw this out, nor do I mean to quibble.
From time to time, I’ve been called upon to edit research proposals and other related documents, so I’ve had to deal with graph and chart issues.
Ideally, this would have been a pie chart.
Why?
Because what needs to be represented is ‘parts of a WHOLE’.
The fastest way to see ‘a whole’ is to put a circle, then shade off the section that you want to highlight so that the relationships are clear.
So, in your mind’s eye, think about a circle in which 43.15% is ‘shaded’; that’s the portion of **private** sector payroll that was housing related, including realtors, and presumably mortgage related activities.
Obviously, that leaves only 57% for combined manufacturing, R&D, restaurants, CPAs, other kinds of non-housing jobs.
In other words: bubble economy.
Sorry to be so lengthy; hope this enlightens.
Thanks to both of you! (-;
I think your article and theme are jumbled and unclear. The notion that jobs create more jobs, etc., etc. is, after all, the foundation of modern economies. All of them. You might argue that we created too many or went too far on a bubble, as we surely did, but your criticisms seem to blur between condemning excess and condemning the basics.
You say politicians can’t create jobs and yet you say, “Take the country back”. In what sense do you mean that if not political? And then what would be the point if you you cannot then create jobs?
You need to think through what you mean and then organize your theme more cohesively.
The “hourglass economy” is another result of fiat currency. Bankers and financiers create money out of thin air in order to pay for things with money that does not exist. In this way they can get huge bonuses by selling more money to corporations, businesses, institutions, etc. And large financiers, large businesses, and big governments have access to an ever increasing flow of “new money” that can create business and political opportunities, finance political ambitions, make huge economies of scale, partner with government, etc all in an effort to put small business, including “mom & pop” business, out of business. This is called crony capitalism. Because of this, smaller businesses are forced to compete on lower economies of scale, workers wages are forced lower in an effort to contain cost, less qualified and cheaper goods are produce in a vain effort to save money, burdensome regulation increases, taxes rise, favors and subsidies for the elite few arise, people are forced to “finance” there way to prosperity, and the manufacturing base leaves to the country that can manipulate their fiat currency the most, while the existing economy turns to a service economy for the well educated and well off. Throw in a financial bubble which destroys wealth from time to time, include the consumer debt consumers need in order to afford inflation, and the result is that the masses get poorer over time, while the few get richer and richer. Thus, the hourglass effect is created
Did you know that gold is effectively fiat currency controlled by gold mining companies? It is, and there’s plenty of economic evidence that it behaves *exactly the same way*.
Plenty of economic evidence not presented by good ole Nathaniel. Prove it hotshot. Are you capable of any form of analysis?
The US has not had real prosperity since before world war two, when we went off the gold standard. There has only been the illusion of prosperity, brought to you by money created out of thin air and money that does not exist. While tax cuts do stimulate the economy, the illusion is often brought on by loosening loan standards, so that a lot of new money, created out of thin air, is brought into the economy. And through inflation, many people falsely believe that their work has brought them wealth and prosperity. Over time, entire industries, economies, and personal dynasties have been created that would not otherwise exist. And, there has not yet been a real “Correction” bringing money back to historical natural levels. There has just been an ever increasing supply of phantom money, created out of thin air, introduced into the economy in order to stave it off.
More fantasy. My grandmothers grew up in the 1910s and 1920s respectively. The 1920s economy was a fake bubble economy full of grinding poverty, just like the 1980s economy. True prosperity arrived after WWII.
Big N
We need a good war to get the economy going. Right?
Krugman recommended a good housing bubble in 2002 to revive the economy. Well done.
I’m waiting for his war is good op-ed. I’m sure you’ll support another lame brained idea. That is what lame brains do.
I have mixed feelings about this article. On the one hand, like the commercial real estate articles, it raises some serious issues and systemic problems with our way of thinking.
The problem with your theme is you are trying to hit a home run with a complicated issue: Depression or Not? You use BLS data to make a point and then decry the same data as faulty or misleading elsewhere.
To me, there is one crucial issue that poisons EVERYTHING. Americans are in full denial about how failure is a part of life. They do not call it the “great experiment” for nothing.
Growth via debt and financial engineering has its merits, but only if it is tied to something real and sustainable. The jobs that were created during the housing bubble may have been sustainable (see exploding population growth), but our Kleptocracy permits outright theft of companies without failure.
Financial engineers use words like “levering” and “hedging” and debate issues like “should we enforce the gate provision or not” and never seem to be held accountable for failure.
Bankers want all the reward with none of the risk. People are rewarded for using the riskiest devices to make the most money and then pawn the risk or failure on someone else. That is not capitalism. That is cheating.
We need to teach our children not only is it okay to fail, but it is the essence of Capitalism and America. Once we embrace that reality, we can move forward.
Why bother making a post about why bothering? You pompous pricks have nothing better to do. Propose your own damn solutions. If you want solutions read this:
http://theburningplatform.com/blog/2010/10/10/my-tea-party-platform/
I don’t think you were referring to me, but in case the “pricks” does include me, I have read your proposals.
Some are good (campaign finance especially) and some are not (Government run insurance is an experiment we should keep trying to improve)
If you want people to engage in more discourse, don’t insult them. People won’t follow those who talk down to them. Just my opinion
Well, re your term limits proposal:
(a) It would require a Constitutional Amendment.
(b) Frankly, it’s a stupid idea. All the evidence from the states that have done this is that the institutional knowledge moves from the legislators to the lobbyist. Really really dumb, simple-minded idea.
“•The 16th Amendment would be repealed and the income tax would be scraped. It would be replaced with a national consumption tax. The more you consume the more taxes you pay. Saving and investment would be untaxed.”
More stupidity. Taxing consumption is just a way to tax the poor, working, and middle classes. There’s nothing particularly just or efficient about it either.
Taxing economic rent, on the other hand, is both just (because rent is fundamentally unearned) and efficient (no deadweight loss).
“A downsizing of the US Military from $900 billion to $500 billion would be initiated through the withdrawal of troops from Afghanistan, Iraq, Germany, Japan and hundreds of other bases throughout the world.”
Very good, though not extreme enough.
“The two most worthless departments in the government (Dept of Energy and Dept of Education) would be eliminated.”
This kind of thing makes me suspect you’re simply completely ignorant and not to be trusted. More than half of the Dept of Energy budget isn’t devoted to pinko/commie/liberal/environmentalist things like energy conservation, but rather to nuclear weapons and their infrastructure. While I think it’d be a good idea to cut the number of nukes we have, you can’t do that and just discard the infrastructure—you can’t just dump the nukes in a landfill.
If you want respect, you might start with some humility and acknowledgement of your own astounding ignorance instead of labeling us “pricks.”
Liberal
With a handle like liberal, you should know a lot about STUPIDITY. Liberals are excellent at tearing down. You know what’s best for everyone. Don’t you liberal?
You think your messiah Krugman’s idea to have $10 trillion of QE will fix everything. Don’t ya liberal?
Your liberal ideas have put the US $100 trillion in hock. But you don’t care about future generations. Do you liberal?
Keep the hate coming liberal. It is what liberals do best. Right liberal?
O.K. That was plain stupid. Krugman’s point was that for radically unconventional monetary policy measures, “QE”, to fully work in accordance with its theory, something like $8-10 trillion would need to be applied,- (and I’ve seen far higher estimates),- which is something the Fed wouldn’t dare attempt. He’s precisely not advocating such an attempt, but pointing out its practical impossibility. I’d disagree with Krugman that, faux de mieux, a much lesser amount of QE should be applied, since I think that it would not only be ineffective, but have deleterious “side effects”. But Krugman clearly prefers other more fiscally oriented measures, as do I or anyone else reasonably sane and informed.
Quinn seems a bit disconnected today, must’ve skipped his meds.
Krugman is an intellectually dishonest left wing idealogue who is the liberal version of Rush Limbaugh. He’d make a fantastic Treasury Secretary once Timmy resigns.
“Bush’s deficit spending has mortgaged the future of our children and ruined the United States. He should be lined up against the wall and shot… after being tortured,but not by waterboarding!” -Paul Krugman
“But the (even larger) deficits that Obama will create are an investment in our future, and are a good thing for this country.
“I know that I have told everyone how much they should be worried about deficit spending. But now people need to realize that deficits are not the thing to worry about, that in fact deficits can be good.
“Most people won’t understand this because they are not economists, and most economists won’t understand this because they are not Nobel Prize winning economists! But it is really very simple. A Bush deficit is different from an Obama deficit. What’s the difference? One is by Bush, the other is by Obama. That’s the difference. They are both deficits, but it’s the motivation that counts.”
Jim, The only source I could find for your absurd Krugman quotes is “Bongo News: Satire. Parody. Jokes. More people get their satire news from Bongo News than from any other sauce!”
http://www.bongonews.com/layout5.php?event=3261
Do you have a legitimate source for your quotes? I expect not, since you quoted their entire bit of satire verbatim wihout attribution. That’s like quoting The Onion, and passing it off as genuine news. It’s a low blow and it discredits whatever else you have to say.
Read em an weep Dougy
Deficits and interest rates
Deficits and interest rates – New York Times, Aug 14, 2009
It turns out that there’s a strong correlation between budget deficits and interest rates – namely, when deficits are high, interest rates are low … On reflection, it’s obvious why…
A fiscal train wreck – New York Times, Mar 11, 2003
But we’re looking at a fiscal crisis that will drive interest rates sky-high. A leading economist recently summed up one reason why: ”When the government reduces saving by running a budget deficit, the interest rate rises.”
National debt
Quote Without Comment – Lakeland Register, Oct 18, 1985
It’s a very good deal for those close to retirement who will never see the taxes that will have to be levied to pay it (the national debt), but it’s a very bad deal for people early in their careers. A 30-year old, if she understood it, should be pretty upset, because when she hits peak earnings at age 50, she will be paying for spending now through higher taxes then.” — Paul Krugman, an economist at the Massachusetts Institute of Technology, commenting on the national debt climbing to the $2 trillion mark.
In 2003, Krugman held the same view that debts would affect future generations when he wrote in his article titled Passing it Along in New York Times on Jul 18, 2003:
And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush will pass along to other Congresses, other presidents and other generations.
The burden of debt – New York Times, Aug 28, 2009
How, then, did America pay down its debt? Actually, it didn’t… But the economy grew, so the ratio of debt to GDP fell, and everything worked out fiscally… Which brings me to a question a number of people have raised: maybe we can pay the interest, but what about repaying the principal? …But why would we have to do that? Again, the lesson of the 1950s – or, if you like, the lesson of Belgium and Italy, which brought their debt-GDP ratios down from early 90s levels – is that you need to stabilize debt, not pay it off; economic growth will do the rest.
I rest my case: your quotes are bogus, passed off as research. Nice try at deflection though; you really should run for office.
Dougy
How very sad. You are left to deny the words of your very own Savior. You are are regular St. Paul. Here are the links to the exact words of your intellectually dishonest savior. Why is it that idealogues love to spin yarns but never back up their crap with facts? I guess the truth is too inconvenient as good old Al once said.
http://krugman.blogs.nytimes.com/2009/08/14/deficits-and-interest-rates/
http://www.nytimes.com/2003/03/11/opinion/a-fiscal-train-wreck.html?pagewanted=1
http://www.nytimes.com/2003/07/18/opinion/passing-it-along.html?pagewanted=1
http://krugman.blogs.nytimes.com/2009/08/28/the-burden-of-debt/
For the complete list of links Paulie Krugman’s words of deceit, click here.
http://www.americanthinker.com/2010/06/paul_krugman_the_selfcontradic.html
Did I fake the links Dougy? Don’t you hate it when someone can prove you are a liar, idealogue, and liberal shill?
Jim, I think it’s sad that you’re too ignorant to realize that sometimes government deficits are good and sometimes government deficits are bad. This is just basic countercyclical theory dating back to Keynes, has been proven right a dozen times, but you persist in imagining that it’s somehow “dishonest” of Krugman to say the bloody obvious.
Sad and pathetic. I really hope your ignorance doesn’t spread, and I suggest you get some education.
Nathaniel
You should actually try thinking rather than believing. You clearly do not understand even the basics of economics. You sound like a Keynesian autobot repeating over and over what you have been programmed to say.
Use those brain cells and try to understand how assanine your arguments are. I fear you are hopeless. Let’s hope you don’t reproduce and spawn more like yourself.
Jim, a bit of advice: when you find yourself in a hole, stop digging. Your petty ego is not serving you well here at all.
You write, “Krugman is an intellectually dishonest left wing idealogue [sic] who is the liberal version of Rush Limbaugh.”
Then you publicly slandered Paul Krugman (who FYI is not a hero of mine) with false quotes cribbed from a satire site, Bongo News, easily verified. But instead of saying “oops, sorry, my bad”, your outsized ego forces you to make an complete ass of yourself publicly. None of your links has anything to do with the quotes you posted here, also easily verified.
Drop the shovel, Jim.
Dougy
You aren’t capable of clicking the links provided? The truth really hurts. Doesn’t it?
If you don’t have facts, just attack the messenger. That is the tried and true liberal method.
Jim, you really can’t let go of the shovel, can you?
Avoiding the schoolyard nicknames you dish out to others, I am specifically correcting your message—the demonstrably false quotes you attributed to Krugman. I’ve checked each of your links, as can anyone else, and verified that NONE of them support your quotes. You’re entitled to your own opinions, Jim, but not your own facts.
this back and forth made me laugh.
Jim,
Why so anti-liberal? True educated liberals have been proposing MANY of your solutions for years.
You are politicking. And it accomplishes nothing.
Libertarians have a lot of great ideas and like liberals are vehemently anti-corporatist. In my opinion, tea party supporters seem to forget that libertarians support tax payer money to fight BOTH force and fraud.
Fraud is tough to fight, and the fight often involves an insane amount of government waste.
But to not recognize that government is absolutely necessary to fight it and preserve the rule of law in this country is dangerous and myopic in my opinion.
Doug
For someone so sure of himself, you keep coming back for my responses. Why don’t you ignore me? I’m just a libertarian nutjob, right?
For anyone interested, those links lead directly to those quotes. Don’t let Doug do your research for you. Think for yourself. Anyone with an ounce of intelligence can clearly see that Krugman is an intellectually dishonest liberal idealogue.
That is a fact.
Why do you bother with this if there’s “no way out” and the best conclusion you can provide is quoting a dead and largely defunct novelist? This is just ranting.
Hit the wrong reply button.
Why bother making a post about why bothering? You pompous pricks have nothing better to do. Propose your own damn solutions. If you want solutions read this:
http://theburningplatform.com/blog/2010/10/10/my-tea-party-platform/
“Pompous pricks”. How endearing. While there’s some sniping, commenters here are actually pretty insightful, thoughtful, and creative with exceptional ideas. JTM has a point: your no-way-out post tends to inspire fear, loathing and despair; “Depression 2.0” is an apt title.
Your main point is indisputable: good jobs are the way out of this as they were in version 1.0, but you just leave us in Purgatory. I would argue that it was in fact good activist government, visionary leaders, and public servants, not consumed by greed, that got us out. Ma Joad said, “I ain’t never gonna be scared no more” only when they finally arrived bouncing and clanking into a USDA work camp—as in a US government camp. It’s a key point that debunks the neoliberal gospel that greed is good and government bad.
You say “Politicians don’t create jobs. Businesses create jobs.” But it’s confusing (not hard to do with me) when you equate the Fed with the government and say it is directly involved in the job market. As I understand it, the Fed is really a private cartel (with ‘theoretical’ public constraints) that prints money for banks, who are then ‘expected’ to ‘efficiently’ allocate that into productive endeavors, i.e. private business who create jobs and wealth. So it is clearly this private, greed-driven oligarchy that is irrevocably broken, that has utterly failed us, betrayed us, captured our government, killed democracy and sold us out for short-term profit.
We really haven’t tried a New Deal 2.0, just token stimulus, which did stanch the bleeding some but was poorly planned and loaded with provincial pork—designed to fail like everything else Obama has engineered for his Neocon masters. But we can demand good government (without naked bribery), and it can be run as well or better than any mega transnational for the good of its _citizen_ shareholders. We don’t have to be blinded by voodoo reaganomics or Koch brothers’ tea party that says all government is bad. We can have a national, integrated industrial-trade policy; we can engineer great high-speed rail systems; a great space program; new urbanism; effective, sustainable renewable energy and environmental protection; new bridges, smart utility grids, universal healthcare, etc. We can stop insane, unwinnable wars and start taxing idle wealth, speculation, and aristocratic fortunes to pay for it. There are a lot of good ideas, but we need to harness our collective imagination and throw off the chains of the oligarchs who want to dispossess and disempower us.
Jim,
Calm down, the “Free Shit Army” that has you so upset was intentionally created to piss you, “the backbone of the country”, off. And it has worked!
You, “the backbone of the country” middle class, were used in the past by the wealthy global elite as an overseer class to exploit the global third world. In the process they created a situation of unsustainability — the whole world can not consume like the Cleavers — so now they throttle the global economy down and are in the process of herd thinning. A big part of that effort is to pit the masses, one against the other, in a perpetual conflict so as to create a two tier, ruler and ruled world. You have fallen for it, hook, line and sinker! The austerity that has Europe in a riotous condition right now did not happen by accident. It was planned by the global wealthy ruling elite and it is soon coming to scamerica. Mish is now calling for it!
Forget the Tea party left right bullshit and focus on the very real top and bottom structure that exists. This is a battle of rich against poor (and soon to be poorer if you don’t wake the fuck up), have against have not. If you want a plan to set things right you have to give up the ‘you are going to be a billionaire some day’ fantasy and work for a realistic system of Fairism.
Limit wealth earned spreads, and asset owned spreads, to a reasonable 10 to 1, and take back Mr. Global Propaganda from the global wealthy elite that has made you what you are and use that power of equal communication and equal power of voice to shape a better more fair world. One with a banking system owned by the people.
No balls! No brains! No freedom!
Deception is the strongest political force on the planet.
Amen to this one. Wing-nut libertarianism is the problem not the solution. Posturing individualism just opens the door to corporate takeover of the economy and the government, which is the source of the middle-class put-down. We must use our government to curb the new Robber Barons. And it is our government if we will wake up and take it back, from the “professional right”. That is our only route to “Fairism”, which indeed is what we need.
You make a good point. The idea that there is always a direct correlation between reducing government and increasing freedom is weirdly beguiling and seemingly self-evident, in much the same way that it seems inconceivable that the sun doesn’t actually revolve around the earth.
Well, as most of us eventually learn, the earth revolves around the sun, something counterintuitive to almost everyone. Sadly, as many can never accept, one’s freedom is constrained by many things other than government intervention such as individual violence, group violence, and the leverage that comes with widely disparate wealth.
I am hugely, hugely sympathetic to the idea of increasing freedom. Unfortunately, the simple libertarian position is just daft; there is no kinder way of saying it.
Yes. Government will solve your problems. We need MORE government. You know what’s best don’t you. I’m sure glad government had nothing to do with the situation we are in. It was those right wingers.
The idealogues are always the most angry. I wonder why?
Jim Quinn said, snarkily:
“I’m sure glad government had nothing to do with the situation we are in. It was those right wingers.”
Yes, the government had something to do with it, as did neoliberals on both sides of the political spectrum. The question is: who was the master, and who was the servant? I say the government was the servant of private banking interests, the same interests that push the ideas of the Chicago and Austrian schools of economics. Modern libertarianism is a sham designed by these same interests to dupe passionate intellectuals into supporting neofeudal policies that will guarantee that all roads lead to serfdom. The Chicago School of ponzinomics was intended to strip mine the real economy just as it has done, and the Austrian School of rentiernomics is intended to maintain the power of the FIRE sector over the economy once it is “proven” that government intervention never works and only makes things worse. If you frequent mises.org and agree with what’s being peddled there, you are a dupe.
“The idealogues are always the most angry. I wonder why?”
You seem to be the angriest person here. What’s the answer?
“Your comment is reflective of the 40 year downward spiral of your beloved American Empire.”
That downward spiral was brought on by neoliberals like Paul Volker and Milton Friedman, who advocated going off the gold standard and then instituted their vision of ponzinomics to strip mine the country of its future wealth to the benefit of rentiers like the Koch brothers, who advocate Austrian economics because they know that embracing Austrian economics will secure their ill-gotten gains. (FYI — Nixon did not actually say “We’re all Keynesians now” about going off the gold standard. That was libertarian Friedmanism.) Talk about a free lunch, that’s how rentiers live, and my guess is that you believe in the rentiernomics of the Austrian School.
FYI — I actually liked your post, and I’ve been reading your blog for a couple of weeks now, but to borrow a line from a Bill Murray movie, “lighten up, Francis.”
Tao, yours is a critical point that has completely muddled the old left/right debate: that government has become the bankster’s handmaiden, yielding fascism instead of PP’s “fairism”. The star chamber of commerce mission is thus accomplished: “less government in business; more business in government.” Quinn, blinded by ‘roid rage, seems rather confused about this.
Merciful heavens. When you were invited to post here I doubt anyone realized you would turn into a massive troll in the comments (assuming this is the same Jim Quinn and not an impostor). You are doing yourself and your ideas a massive disservice. I don’t read Yves’ site for knee-jerk invective and grade school name-calling. Go troll on your own website.
Not sure what Yves was about in posting this. Maybe to see if were paying attention!
The sub-thread has run out so I can’t reply to Doug Terpstra. But I really like “less government in business; more business in government”. Pretty much sums it up.
Ayup. Very good description. What was government as handmaiden to business called again? I think Mussolini had a name for it.
Anyway, Calvin Coolidge did the same thing — “Business of America is Business” — back in the 20s with the result of…. the Great Depression.
Aha! So, we’ve got a relatively high amount of structural unemployment after all.. but it was government created through the Federal Reserve’s bubble-blowing activities because we didn’t want to directly address the trade deficit-abetted by neo-liberal “one-worlder” economists… awesome. The fix-balanced capital and trade flows-with a guaranteed job program doing low-skilled infrastructure work while production/manufacturing jobs are created to replace imports.
What is “failure” supposed to mean? A corporation decides not to hire you, or they decide to lay you off, or just fire you – therefore you starve, your home is taken away, you have no easy access to health care, getting food on the table is difficult. Most safety nets, long since weakened, determine whether any of your troubles are “your own fault.”
If they are, your on your own. Even one of Yves links today seemed to imply that every class is trying to “get away with something” Nearly reads as poorly as Reagan’s accusation of the fabled welfare queen and how seh should be cut off, so that General Dynamics can trade gold for wrenches. Bullshit! The wealthy are able to literally float away from the daily toils, adversities, and challanges of folks that are up against it. The wealthy typically never need to even look for work! Shouldn’t we hold that against them?
Workers rights have been eviscerated in this country, you do what you’re told or you starve. Which is how it shouldn’t be, but is today. I think it’s worth fighting for – they are rioting in France, but apparently it’s ok to work for 9/hr in a US city, with no health care, no rights, nothing but a tiny paycheck and barely affordable rent.
How about the affect of automation on all those manufacturing jobs? Didn’t that have some impact on employment in the goods industries? And what about the market value of the goods we are producing? Didn’t agriculture go through a similar “hollowing out” and yet we are awash in food and we continued to grow and expand.
Transitions are brutal and disruptive, and we are going through a huge one right now. Trying to reverse time (another Seinfeld discussion by the way) to the good old days isn’t going to work.
Yves, why is the purpose of publishing a rant like this?
How dare Yves post such an article. How many pompous know it alls are there out there like you?
Yes, we are going to generate derivatives on Wall Street leading us to prosperity.
Are you telling me that we don’t have a 23 million job deficit? Make a point worth responding to.
Yves – How do you allow such rants from commentors? LOL
Sir, I really enjoyed your article. However, your commentary is so ill-advised that it makes what you have to say less palatable and reduced the impact of your points.
If you always walk away the better man, you’ll never go wrong.
Seriously, is this really Jim Quinn? Step outside yourself for a second. If you cannot see how much you discredit yourself with indiscriminate (and seemingly totally unwarranted) accusations of pomposity, which have nothing at all to do with the point at hand and are merely embarrassingly ineffectual attempts at a misguided strategy known as ad hominen attacks, you cannot have much of anything to offer anyone.
Not that it’s relevant to your main article, but what’s so crazy about your testy comments is that they make *you* appear to be pompous and a know-it-all. People will disagree with you. Get over it. You don’t have all the solutions. I’ve been around long enough to be fairly certain that no one does. I’m sorry; I know this is a personal attack, but I’m only responding to your personal attacks on the others here; you seem unhinged.
“Seriously, is this really Jim Quinn? Step outside yourself for a second.”
It could be him. He did state that we’re fat and stupid right up front:
“Obese, vain, stupid Americans have also benefitted the Health Services and Education industries as the number of nurses, proctologists, teachers, school administrators and Beverly Hills TV surgeons has surged from 6.4% of the workforce to 15.1%. You’d think we would be healthier and smarter with these figures. We’re not.”
Seriously? Proctologists? Tells me all I need to know.
Yves, why is the purpose of publishing a rant like this?
I will address commenters the way they address me. Calling my article a rant and appealing to Yves is about as childish as it gets.
I responded in kind. I really don’t care what you think. If you would like to debate something in my article, do so. Stop being so thin skinned and above it all.
I read your modest proposal Jim, while I agree with some of the things as a civil libertarian and as an advocate of decriminalization, prison reform, scaling back on the military, and campaign finance / lobbying reform I think that some of it borders upon Jonathan Swifts absurdism in his own modest proposal.
1) Nuclear has never been a competitive energy source it has been a functionary of the energy-military industrial complex. It would not exist without generous subsidies. It is not the energy department that has been stopping it, but rather localities. They have no idea what to do with all that nuclear waste right now and it is a crisis waiting to happen, which is a huge cost that has not been calculated into the cost of the facilities.
2) Education – local level, vouchers, give me a break 60% of Americans think that the world is 6,000 years old. Teaching your children that bullshit is tantamount to child abuse, we need to invest in our teachers and communities in a means tested manner, with accurate education about the world. Vouchers are totally regressive and will destroy education prospects in poor communities. Good students would not necessarily end up at the best institions as they jockeyed for money from wealthy parents.
3) A consumption tax is totally regressive as a function of income. You are just beating upon the middle class and poor here because they spend a larger percentage of their income on goods.
4) Destroying social security, taking welfare, unemployment, and medicare apart – what do you really want to turn us into Brazil or South Africa? Good luck keeping your ears when criminals start kidnapping your foolish blogging ass and ransoming you. The fact that people are not on the streets starving, and your grandparents aren’t eating catfood, demonstrates the robustness of these programs, despite the fact that they need reform. Their real problem is that politicians decided to use them as a piggy bank. If lobbyists hadn’t gotten their way medicare would be buying pharmecueticals in bulk like the VA does and every other developed country in the world does and get a 35%-50% cost savings.
5) I call complete BS on the notion that businesses do things more efficiently. Its called government contracting, it is wasteful, misconceived, and modestly stupid. We don’t live in Adam Smiths world, never have, never will. If government wasn’t in place most of the midwest would still not have any electricity, running water, and they would still be crapping in outhouses, because no private enterprise was going to develop that infrastructure. This bubble that occurred is a complete demonstration of how irrational individuals and businesses are. The government had a role in stoking the flame but it is outright ridiculous to put it soley in the hands of Greenspan, who the business world though was a damn genius.
6) You want problems good luck dealing with millions of unemployed former military, with PTSD and a license to carry. Maybe our corporations can try to recruit them for a coup de etat like has happened many times in the past (Roosevelt).
7) Foreign aid is a toss up, some good some bad.
8) Drill baby drill, really man? ANWR represents a drop in the bucket, it wouldn’t even make up for increase in demand. Coal is an environmental disaster. We need a comprehensive energy plan that includes a carbon tax, and rapid investment and development of renewable energy. Recycle the tax into a low interest loan program for renewable energy project development and one day our children won’t have to be supporting a military industrial apparatus which secures cheap energy in foreign countries.
9) Big surprise that Pickens plan supports all of the industries that he already has investments in… Don’t be his lackey. Frack drilling is a damn mess, the water coming out of those operations cannot be remediated in a cost effective manner. It is basically brine with tons of heavy metals.
10) We need a public option (buy in to medicare).
11) Increasing SS age is also regressive, poor people don’t live as long.
Bottom line is you try to talk about the middle class and how you want to help them but most of the things that you suggest as solutions are highly regressive and would affect them in a negative way disproporationately. Your solutions would lead us further into the predatory state and not away from it. You are throwing people to the wolves.
You can respond point by point or, run away and call me a liberal elitist like you have been doing in most of your comments.
I will not refute your points. I will await your ideas. Do you believe our current path is sustainable? Do we just need a few tweaks here and there? Do you think a National Debt of $20 trillion by 2015 is OK? Do you think we can make some slight adjustments to take care of our $100 trillion unfunded liabilities?
I’d love to hear your ideas since you took the time to refute mine.
I would point you to Franklin Delano Roosevelt for “our ideas”, sir. Clement Atlee might have a few things to say too. If those aren’t radical enough for you, try Bakunin.
Nathanial enters the conversation.
I await your ideas. You mean you don’t have any? You want to reach back 70 years and use ideas that didn’t work then and aren’t working now.
If $5 trillion of stimulus didn’t work, it is because it wasn’t enough. Krugmanites can never be wrong because when their solutions fail, they respond that they would have worked if we had just done more of them.
You people are laughable.
Doug Casey with some wisdom for liberals:
“People who vote for free lunches – knowing full well that someone needs to pay for them, and they are fine with that as long as the someone is someone besides themselves – deserve to become tax slaves for those who view them as milk cows. If economically ignorant, greedy, and shortsighted people vote for bad government, they should start by looking in the mirror when they wonder what went wrong. But few people are that introspective. Further, most people apparently lack a real center, an ego in the good sense. That’s why they create these false gods to worship; by becoming part of a group, they think they gain worth. Pity the poor fools…
There’s no doubt in my mind that the U.S. has devolved to that level. Something like 43 million people get their food from the government, about half of workers pay no income taxes (although I wish no one did, of course), about half are significant net recipients of government funds… and many millions more are employed directly by the state. It’s why I no longer refer to “America” when discussing the U.S. – America was a wonderful idea, which unfortunately no longer exists.
A bad leader can bring out the worst in people, making them think the government is a cornucopia; and then the people demand more of the same from future leaders. It’s a downward spiral – never, for some reason, an upward spiral. It’s why, after Augustus, Rome never returned to being a republic, even though they pretended – just like the U.S. does today. My conclusion is that people basically get the kind of government they deserve. Which is a sad testimony to the degraded state of the average person today.”
Just as I expected. Stelios is great at heaping scorn upon other’s ideas. But, when asked for his own proposals?
THE SOUND OF CRICKETS
Practicing intellectual masturbation must make you feel good and is the standard operating procedure for liberals.
Why would you expect anyone to respond to your moronicity? You were thoroughly debunked, and your reaction was “it’s not my job to have intelligent ideas, what are yours?”
Another angry Krugmanite enters the fray late. He he gives morons a bad name.
Well lets see: We fired millions of living wage earning Americans and took those jobs to a communist country for profit that gets invested outside the USA, We imported 20 plus million illegals to the USA to replace American workers and to push down wages in America, We borrowed 14 trillion dollars from foreign entities leaving the debt for furture generations, we have dismantled our manufacturing infurstucture, we are in the process of dismantling or educational system because it teaches evolution and liberal thought, we attack anyone who pushes a dialogue of conservation of our resources or enviroment, we have allowed for profit enterprises to control our military, congress, white house and supreme court, we use our military for profit, corporate welfare and to help the Jewish state steal the Palestinian lands and persecute the Palestinian people, we also are using our military as Christian crusaders against Muslims (The precieved enemies of Christianity), we are building a huge private military that does not cost less then our regular military, we have abandonded our health care industry to for profit enterprises that do not have the best interests of our citizens at heart, we are fed a non-stop diet of lies from our news organizations and those in positions of authority. The point is we have a lot more problems then just jobs and I do not see anyone applying the brakes to our downword spiral.
Charlie
Mike Snow is outraged by your factual rant. He will demand that Yves censor you.
“We imported 20 plus million illegals to the USA to replace American workers and to push down wages in America”
That was done with keeping in mind 77 million baby boomers that are about to retire. In the next 10 years you will see that immigrants are the least of your problem.
“Take our country back!”
Seeing or hearing that for the umpteenth zillion time, it’s difficult to stifle a cavernous yawn.
Take it back from whom or what and then do what?
You can hear crickets chirp and paint dry waiting for a coherent answer to that one.
Fact is, friends & neighbors, there’s a solid ineducable immovable bloc of people in this nation who will never,evercomprehend the world in which they live. They will always display an unerring instinct for grasping at the wrong straws and getting angry at the wrong persons, places, and things.
So maybe it’s time we broke up. Over the past couple of decades, I’ve had a growing suspicion that America was really staying together just for the sake of the Cold War. When the USSR fell apart, there went the last convincing rationale for this country to remain in one piece as well.
While I cannot help but appreciate (and agree) with your yawning reaction regarding the whole “Take back our country” comment ( I could not agree more), I hope we are not to a point of having to split up our nation. I am a proud American (and that includes all of America), I’m just not proud of the few intent on creating a plutocracy out of our democracy.
Could we just spin off those parasitic few who have sucked our nation dry? I’m all for that. There must be an island somewhere that we could send them to feed off one another.
Yes. You’ve been yawning for 40 years. Well done. Keep yawning. Sleep your life away. Don’t worry about the bill you’re passing to unborn generations.
Your comment is reflective of the 40 year downward spiral of your beloved American Empire.
The geography would be challenging! A bit like the old Pakistan, East Coast and West Coast. I sympathize, but I think we have to stick it out.
In capital intensive industries such as auto or steel, wages represent only ten percent of the product’s cost, so the narrative that these industries were sunk because of their highly-paid, unionized workers is false.
What is true, however, is that the drive for hyper-profits and absolute property rights, coupled with management’s default position of total control of the labor process – even an outsourced one – has led to the de-industrialized, hollowed-out society that Quinn writes about.
Unions raise the living standards for all workers, even the unorganized. The attack on labor over the past 35 years is textbook class warfare, as even Warren Buffett was indiscrete enough to attest to.
Let workers organize, and wages and benefits for the working and middle classes will rise, increasing purchasing power not dependent on debt. Bring income tax rates close to what they were under that Old Socialist, Dwight D. Eisenhower, invest in this country (real investment, that is, not the financial circle jerk we’ve been subjected to in recent decades) and you’ll see the economy respond.
And not before.
I don’t see how organizing in one country is going to solve anything. If you organize in the US they will just move to India or China, it seems that to truly be ‘organized’ the unions must meet the international corporations at their own game, and link up people in India and China.
The French seem to remember how to organize, but I don’t know how willing they would be to hook up with us ‘fat Americans’
A large factor in our current dilemma is that economics theories are outmoded. We need to rethink old
concepts of the value of labor. The general theory of labor/production/consumption that economists still
embrace goes as far back as Marx. Many policies and strategies are still being formed in an industrialist
mindset. The industrial age is over and the inability of societies to recognize this contributes as much to failure
as any political idea.
Advances in science and engineering, material and intelligence technologies have enormously increased
efficiency in production. We are on the threshold of an age in which unskilled labor becomes completely obsolete. Any human being who’s labor is used to create ‘stuff’ to sell and profit from is being exploited. No matter how much he is paid. This idea is most likely frightening to many people and difficult to accept. How then are all these people to survive? What is the new paradigm of human contribution to the preservation of life and society? These are very important questions that need answers so that new theories of economics can be posited that will provide a successful foundation for formulating viable policies.
As we approach exhaustion of natural resources, destruction and pollution of our host, the earth, industrialism is rapidly generating costs that are currently being ignored. Considering items produced solely for the purpose of consumption as an asset, or of positive value, is as dillusional as the belief in perpetual financial growth.
When labor results ultimately in destruction it no longer has a net positive value and cannot continue to draw
monetarily from the economy. It is far better that the labor is not used at all.
This certainly does not exonerate greed. But politics hold no solution and never have. When real problems need to be solved we need pragmatic thought, not blame and rationalization. No politician will ever solve real problems.
Count me in your ‘amen’ choir.
“We are on the threshold of an age in which unskilled labor becomes completely obsolete.”
Baloney. YOu think they’re going to build robots to collect your trash?
Trash collection could be automated by designing cities and houses to render trash collection obsolete. Recycling waste would be built in as a part of the city-house infrastructure.
When a task is automated, the objective is not to build machines to replicate exactly what a human would do, but to rethink how to accomplish the task in as efficient a way as possible. Trash collection is moving things from a to b, nothing more. That’s quite easy to automate.
Repetitive manual tasks that I imagine are far trickier are things like hair-dressing, beauty-parlour work, physiotherapy and the like. Here though attitude changes and prevention could reduce the need for earning a living from such trades, should that become necessary.
Well, you’re right in the long run of course. Though I doubt we’ve hit the “automation utopia” level, and I think there’s still a LOT of unskilled work to be done.
But if we do hit that level, the result could be this:
(1) Figure out what jobs actually need to be done for society. (Food growing, etc.)
(2) Pay them very, very well.
(3) Give everyone else — the unavoidable mass-unemployed-due-to-automation — a subsistence income plus a little for luxuries, as long as they’re not disruptively criminal.
(4) Supply contraception and sex ed to prevent the population from growing to the point where the unemployed are too great a burden on the rest of society.
(5) Supply free education so that everyone has the opportunity to become the next genius who will further improve society’s quality of life.
There is such a thing as a free lunch — in economics it’s called a “positive sum” result — and I don’t trust the sanity or competence of anyone who doesn’t admit it.
Once you have a globalized economy with free markets, free trade, and free capital flow, it was immediately obvious what was going to happen when labor is fungible and labor arbitrage is available. Nominal wages in the developed world are in a race to the bottom, while real wages are increasing in the emerging world and still at the bottom in the underdeveloped world. Until the underdeveloped world enters the emerging world, wages levels will be driven down because there will always be less expensive labor coming on line. The great leveling is taking place.
i would debate that… the mass migration of chinese peasants to the cities gives them more ‘wages’ but it takes away their land and their freedom and their social organization and often their health. not only that, the land is systematically destroyed through the complete lack of pollution laws.
a guy doing 80 hours a week in iPod city might be making more money, but he lives in a prison like atmosphere where guards beat and torture people.
the real arbitrage is in democracy and human rights not simply in ‘labor cost’.
It has been shown time and time again that men will give up just about anything for money. You will always find a few takers who value freedom and land over material wants, but your average human being will trade his freedom for a more comfortable lifestyle just about every time.
Jim,
Not that I want to feed the beast, but here is some more fuel for the fire:
http://www.doctorhousingbubble.com/removing-a-generation-of-college-educated-graduates-from-purchasing-homes-student-loan-and-mortgage-bubbles-collide/
I share the writer’s anger but am not sure exactly where he is coming from, which is important because it might indicate what direction he would like to go.
Here are some scatter shot observations.
I agree that not enough attention has been paid to the loss in quality in American jobs. I began to write about the precipitous loss in manufacturing jobs, which is a good barometer of this, 3 or 4 years ago.
Bush was lousy at job creation despite the housing bubble. The economy created only 5.6 million jobs to December 2007 when the recession began. I would have to revisit the numbers, but he needed to create about 10 million jobs during that period just to keep up with population growth and maybe some very, very modest improvement over and above that. So while there were probably many bubble dependent jobs, it is not like the Clinton bubble boom years when there really were large numbers of jobs created. We are talking about dislocations and distortions within a much smaller base. (Clinton created about 4 times as many jobs as Bush did before the recession. If we take all 8 years of the two Presidencies the difference is even more striking: 22.7 million to 2.1 million.)
I have been critical of that shadowstats graph before. It basically shifts the U-6 which is a measure of un- and under employment, not unemployment, upwards 5 percentage points.
The 130.2 million number for current employed needs to be explained. The BLS uses two surveys for its jobs data, a household and an establishment/company survey. The two are not exactly the same and as their names imply are based on different populations. The 130.2 million number comes from the establishment data and refers to jobs. The number from the household data is 139.391 million for September and refers to people employed. The 64.4% employment-population ratio cited comes from the household data. So the employment figure which should be used is the 139 million one. The number of 153 million though for the estimated number of people who would be employed at a 64.4% rate is correct.
It’s important to realize that the U-6 is a measure of unemployment and underemployment so a sizeable chunk of it is still counted as employed.
In my own estimates of BLS undercounts, those the BLS misses or fall off its radar screen. I use the workforce participation rate (the ratio of sum of the employed and unemployed to the over 16 population) and I apply a 67% rate from the Clinton years to that population. Then I take the difference between the current size of the workforce and this estimated workforce to get an estimate of the BLS undercount. For September this was 5.4 million for a total count for un- and under employment of 31.1 million.
The article deals with only one half of the perfect storm that’s hit Western capitalism. He discusses the loss of high-paying American manufacturing jobs, all right — but the second half of the collapse proves even worse. The geniuses who oversaw the export of American manufacturing jobs oversees figured the U.S. economy would do just fine because Americans would move on to knowledge work. Yes, indeedy, American factory workers would all become knowledge workers and we’d get paid even more money to produce those wonderful high-value knowledge-intensive goods like computer operating systems and relational database software and digital music on CD and digitally recorded movies on DVD!
Except…the internet came along and recordable DVD-Rs and high-density hard drives, and now everyone in the world can download all those high-value operating systems and database software and digital music and digitally recorded movies for free.
Even worse, the free open-source distributed peer production has geared up and now cranks out free products like Linux and MySQL and free creative commons music and free creative commons movies on YouTube…and capitalism is eating itself.
As Bruce Sterling puts it, we’re rapidly headed toward a world where everything is sort of free and no one has a job. Everyone’s job is getting destroyed. It’s not just factory workers. Lawyers? Paralegals in Mumbai get paid to do legal research, pushing Americans out of jobs in the legal profession. Robotic surgery and trained radiologists in Karachi and New Delhi are reading digitally-transmitted X-ray scans are wiping out American medical jobs. Third world programmers and engineers and roboticists and materials scientists are replacing American and European engineers and materials scientists for 1/10 the pay, working remotely via the internet.
David Ricardo’s factor equalization theory of free trade only worked as long as the essential factors in production were immobile. Today, all factors in production are highly mobile except land…and that doesn’t matter except in a few peculiar cases like wine production (wineries will be last man standing in a globalized economy, everyone else will be out of work).
Global wage arbitrage is reducing the wages of first world workers to the wage of your average worker in New Delhi. That means that in order to compete in the global market, American workers are going to make New Delhi wages — and they’re going to have to live like workers in New Delhi, in huts with dirt floors and no running water and no electricity and no sewage facilities.
If anyone thinks that’s sustainable, good luck to you. Capitalism is permanently broken. Capitalism was a phase we went through, like feudalism or hunter-gathered societies. Now capitalism is going away, and something else will have to take its place. What that ‘something else’ will look like, nobody knows: probably something like wikipedia or the linux open source community. But one thing we can say for certain — capitalism as it currently exists is unsustainable and will soon end.
Good post mclaren.
If you’re interested in alternatives to capitalism–which I agree is dead in the water, though most just can’t bring themselves to admit it–check out post-scarcity economics and the very fleshed-out resource-based economics posited by Jaque Fresco (in case you haven’t already). While it’s true we can’t predict the future, we can at least try, culturally, to ‘visualise’ how we might want society to operate, discuss our wishes, and work towards them as best we can. People like Jacque Fresco, and monetary reformers too (to stay a little in the current paradigm), offer good discussion points and oodles of food for thought!
Second that.
Whilst we build an even more magnificent pyramid on Wall ST (angle was to acute on the last one) so we can all bask in its greatness, a world moans.
Yes, operating systems are free :
http://www.ubuntu.com/
or this
http://www.linuxmint.com/
I don’t see your point – music an film industry are actually thriving, despite recession and piracy. 2009 was box office breaking year for movies…
Explain this to me how come Red Hat (pure open source company) is making money from “free” ?? What’s more they are pushing hard for their first billion??
Facebook?? Google ?? Orcale ?? IBM – to name few – making money from free software?
From free system ?? But that’s impossible …
I’ll take a stab at that.
Just because some sectors of the economy are doing well, does not mean that the entire economy is doing well. The unemployment figures are testimony to that. And while the knowledge economy is earning money for Red Hat and others offering their services in the OSS domain, that does not preclude or in any way disprove the assertion that we need less and less human labour to supply the planet’s population with what they need to live healthily.
So, to my mind, the challenge is to look at the larger picture. Clement weather in Silicon Valley does not clement weather for the world make, to misquote the and abuse the 1-swallow-not-summer truism. We are in the midst of a planetary crisis, a sixth mass extinction event, a collapse of the monetary system, the rumblings of war, growing food and water shortages, rampant fraud, etc.
Why?
I think the causes are deeply systemic, which means the system itself must be changed if we are to pull bank from the brink of self-annihilation, and find a new way forwards. Open source, ‘free’ software, post-scarcity economics, monetary reform, abundance, humane automation, a deeper and more effective democracy made possible by the Internet, plus many other things, suggest the outlines of a new system, which only a mighty effort to bring into focus can ever bring to life.
Hope that helps…
Speaking as one of the 7 million in the US who work in construction, I can say that the demise of Home Depot et al cannot happen fast enough. For quite some time I have noticed a depressive effect on the relationship between customers and construction management, which I somewhat facetiously blame on the ubiquitous presence of Home Depot. Specifically, I think the existence of the home improvement, DIY market has led the average customer (even commercial customers) to believe that “they can do it themselves” and to come to a corresponding devaluation of the work itself on all levels. Nobody in America has ever thought construction work was valuable or worthwhile, at least during my lifetime, but the level of misapprehension among customers of what the work entails and how much it costs is truly astounding,
As I like to point out about really disagreeable clients, “I bet they didn’t ask for the low bid dentist or the least qualified surgeon.”
Yep, yours is skilled labor. It’s no different than anything else. My step son is damn good with his hands and innovative too, but when he did his back deck it was a little rough in spots. I doesn’t look real good compared to having an expert with 10 years of experience do it.
The guy around the corner tried replacing his damaged fence all by himself, and it looks like hell. It was quite obvious to me he didn’t know what he was doing, and in the interests of saving money he created an eyesore.
A workman is worthy of his wages.
I think it’s valuable. The problem is, as with everything, it’s hard to tell who’s honest and doing good work.
In other words, I’m quite happy to pay well for honest and good work. Luckily I have a smart carpenter friend for that.
Those who might know more on the subject can correct me, but it is my impression that in most industrial processes the cost of labor is fairly small. And when you work in all the externalities, outsourcing is often not a particularly good deal for the companies that participate in it.
Automation is indeed a major part of this. I read in Rifkin’s “The End of Work” that Japan has near workerless factories. The book was written at the end of the 90s, if memory serves. Basically, the vast majority of grunt work is automatable, and with software (narrow AI) baked into to the modern pie, human soft skills are likewise becoming increasingly replacable. I know, I know, lump of labour and all that, but this time it’s different.
Change is the only constant, folks. There was no point in the past where everything was as it should be, nor is it at all possible to halt change (whether we call it ‘progress’ or not). The multiple challenges we face as a species, not as this or that nation, require a totally new way of doing things; a new distribution mechanism, new money type, new objectives, new political structures, new cities, new transportation, new energy sources, and so on. ‘The way things were’ is behind us. It’s how things are, and where we’re headed, that matter.
“Basically, the vast majority of grunt work is automatable, and with software (narrow AI) baked into to the modern pie, human soft skills are likewise becoming increasingly replacable. I know, I know, lump of labour and all that, but this time it’s different.”
As you allude, people have been freaked out over the end of work for about 200 years now.
AI is a joke, in the sense of strong AI. Narrow AI? AI is actually best at very expert tasks. That doesn’t replace manual labor; it replaces expert labor, like forecasting.
Everyday things like speaking, listening, driving, gardening, etc, are _extremely_ difficult to automate.
The fact that tech hasn’t appeared to decrease the wage gap (by suppressing high wages and leaving lower wages alone) is one more bit of evidence that high wages are largely if not entirely rents, not true wages.
Just to clarify my position a bit.
There can be no such thing as the end of work in totality, nor do I seek a world where all I have to do is lie down for my entire life and be pampered by machines. However, the general and ongoing thrust of technological progress, as it impacts wage-for-labour particularly, has a corrosive (in the long-term) and bumpy (in the short) affect on society’s ability to fairly distribute goods and services among its people. We are passing through a very bumpy phase right now, and it will get a lot bumpier before it gets smoother I fear. Technology is one of the many reasons for this.
Adjustments are constantly needed, though most always resisted. Clinging to old paradigms and religiously grounded attitudes to, e.g. the nobility of ‘earning a living’ causes more harm than good. The more successfully TPTB retain their power and position the more violent the upheaval when the dam finally breaks.
As for things like driving, future transport solutions might be quite different from the cars on roads we all know and love. ETT (Evacuated Tube Technologies: http://www.et3.com) offers such an alternative, a kind of car-train hybrid, where no driver is needed, AI or otherwise, just routing tables. Besides, Google has a fully automated car that has already clocked up thousands of driverless-miles, so even this is not ‘impossible.’ It’s kind of already ‘solved.’
In case you’re interested, here’s a talk on narrow AI by I guy I respect a lot:
http://fora.tv/2008/08/08/Daniel_Suarez_Daemon_Bot-Mediated_Reality
AI has been twenty years away from fruition for about thirty years apparently, so I take your point about it being a joke. However, never say never. Who knows what we’ll accomplish in the next hundred years or so, if we survive the coming multiple challenges. But as Mr Suarez says, we really don’t need fully fledged AI to have a serious wage-for-labour problem, and that’s where we are today…
The human brain is a machine. It will be replicated — and improved. However, it won’t be a simulation on a digital computer. That’s way too inefficient and power hungry. Neuromorphic processors are at most a decade away. These hardware brains will evolve to capture more and more of the temporal processing features of living neurons for robust and adaptive control while also integrated with classical digital processors for speed and precision. We’ll get the best of both worlds. We’ll be able to train an artificial brain to build up expertise and then dupe the neural pathways and digital data to millions of ‘blank slate’ systems to make an instant robotic workforce. Want your ‘workforce’ to ‘learn’ new skills? Just reboot them with a new neural configuration and database.
Thanks for the info, I always appreciatiate being introduced to new info. It sounds very interesting. Technology always find new avenues to crack problems that have become unsolvable along some other path.
I’m not expert enough to make a qualified judgement of what you say here, but the 10 year time-line is one of those predictions that’s easy to make and impossible to ‘prove,’ however I’m sure humanity will do this or something like it in due course … should self-destruction be avoided. My worry with the work force you describe is how to bestow intelligence on a robot without also bestownig reason, some sort of low-level sentience, and perhaps even something approaching life. Do we risk creating robot-slaves? It’s an old question asked intelligently by many others, but it is an important one…
Since globalisation appear irreversible it would appear that wage arbitrage is something you need to live with. But lawmakers make it worse with tax-credits providing more incentives to move the jobs.
Also if policy makers are interested in ensuring the well-being (highly doubtful given that it is tax-payers, savers and retirees who are getting rammed by the Fed and Government policies) then they would also analyse what are the repercussions (which would be a cost) and just look at the benefit of outsourcing. Focus on Education, new skill training would be the 2 areas which leaps to one’s mind. Also create incentives for creating jobs which cannot be moved (e.g retail).
How do you ensure living standards do not drop would need a big debate ..
Net domestic profits earned by US corporations since Q4 2008: $609B
Net decrease since then in the amount these companies spent on wages and benefits: $171B
-Harper’s Index Nov 2010
Test
“Criminal Wall Street MBAs don’t become petroleum engineers.” I do have an engineering background and am pursuing my MBA. Hopefully, I can help create some of those jobs you eluded to earlier. What I see is that many people particularly from India have a similar professional background to my own. But it seems less common for Americans like me.
Manufacturing jobs are leaving. The global economy is still functioning though. Our educational system has gone from 1st to 8th by some measures since the 1970’s. Are people getting trained for the new global economy?
That being said, a large proportion of people in India don’t get enough to eat. So I have a hard time making the argument that this is the Depression 2.0 in the States. I think Americans have an expectation for there to be jobs, and we feel entitled to be able to afford much. To meet these demands, manufacturing and IT does get outsourced. We should also look at the consumer. We are not fully victims.
Yves, can you please verify the legitimacy of the ShadowStat data. I have not found a coherent explanation of his methodology or how exactly one man is able to estimate nationwide macro data. SGS states: “SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.”
How exactly does SGS estimate such a thing? Given the nearly perfectly parallel relationship between the SGS Alternate and the U-6, it appears to be fixed adjustment. Is that useful?
Additionally, it seems naive to leap to the conclusion that old data/methodologies are necessarily superior to new methodologies. The goal should not be to paint the bleakest picture of the economy, but the most instructive. In a paper about the 1994 CPS redesign, the authors comment in particular about discouraged workers: (http://www.bls.gov/ore/pdf/ec950090.pdf) Removing individuals who would like to work but are making no effort to find work for a long period of time is not necessarily a government conspiracy but an effort to be more precise.
“In the unrevised CPS, individuals who are not in the labor force who wanted jobs, but had
not looked for work in the prior month because they believe no jobs are available, were
defined as discouraged workers. Discouraged workers have been the focus of attention in
the past as one indicator of the economy’s health and as a group of individuals who may be
suffering particular economic hardship. Nevertheless, the definition of discouraged workers
in the unrevised CPS frequently has been criticized. The National Commission on
Employment and Unemployment Statistics faulted the definition as being too subjective
because it was based primarily on individuals’ desire for work rather than on more objective
criteria such as recent job search. The definition in the unrevised CPS also has been
criticized because individuals’ information about availability for work was inferred from
their reasons for not looking. To address the Commission’s concerns, two new
requirements were added to the definition in the revised CPS questionnaire. To be
classified as discouraged under the new methodology, individuals have to have engaged in
some job search within the past year (or since they last worked if they have worked within
the last year) and currently be available to take a job, in addition to the old criteria of
currently wanting a job, and having given up looking for reasons related to the economy 8
The adjustment factors for discouraged workers, contained in Table 12, indicate that the
two additional criteria in the revised CPS decreased the proportion of those not in the labor
force classified as discouraged workers by fifty percent.”
I think the general thrust of ShadowStats is reasonable—that government underestimates inflation, for example—but the actual methodology is questionable. IIRC, the guy complains about self-rent, where the guvmint imputes a rent homeowners pay to themselves. Now, it’s certainly possible that the way the gov’t actually does this calculation is flawed, but IIRC the ShadowStats guy thinks this shouldn’t count towards CPI at all, which is simply silly—the notion of self-rent is completely reasonable.
If you are discouraged for over a year, you are excluded from U3 and U6. That is how we get to the REAL number of 22.5%.
As explained on the Shadowstats website:
The Bureau of Labor Statistics (BLS), U.S. Department of Labor, conducts two monthly surveys of U.S. employment and unemployment. Results usually are released on the first Friday of the month following the survey:
Household Survey (also Current Population Survey) — The household survey generates the unemployment rate from a statistically designed monthly sampling of roughly 60,000 households. Other surveys, such as the annual poverty survey, often are piggybacked on the employment questions. The survey measures the number of people who have jobs.
Payroll Survey (also Establishment or Current Employment Statistics Survey) — The payroll survey generates an estimate of the number of nonfarm jobs in the U.S. economy, based on a monthly non-random sampling of payroll tax filings of about 160,000 U.S. corporations and government agencies. The survey measures the number of jobs (some individuals hold more than one job).
The household survey is conducted during the week that includes the 12th of the month. The payroll survey is conducted as of the payroll period that includes the 12th of the month. Other than for seasonal factors, the household survey gets revised only with series or population redefinition. The payroll series is revised for two months following the initial release and then again in an annual benchmark revision.
Where the household survey includes farm workers, the self-employed and workers in private homes, the payroll survey does not. The payroll survey counts jobs, making no adjustment for multiple jobholders. Yet, adjusting for all differences, the BLS never has been able to reconcile the two series within one million jobs.
Conventional wisdom in the financial community is that the payroll survey is more accurate, given its larger sampling base. To the contrary, the household is scientifically designed, and the error can be estimated to any degree desired. The payroll data are haphazard at best, and the BLS has no idea of potential reporting error.
The BLS estimates a 90% confidence interval for a change in the unemployment rate of ±0.22%, and a 90% confidence interval for the monthly change in payrolls of ±108,000. The BLS, however, admits the payroll survey’s confidence interval is not solid, given built in biases and the lack of randomness in the monthly sample.
The payroll survey used to include a regular monthly bias factor of about +150,000 jobs. Those jobs were added each month for good measure, as an estimate of jobs created by new companies. Companies that went out of business generally were assumed to be employing the same number of people as before they went out of business.
In the last couple of years, the BLS has modeled and seasonally adjusted its bias factor; there is no more guesstimation. Accordingly, new monthly bias factors have ranged from -321,000 to +270,000 during the last year. This, combined with continuous seasonal adjustment revisions, has added to the volatility of recent monthly reporting.
Suggesting that the household survey is more accurate than the payroll survey, however, does not mean household survey accurately depicts unemployment. While its measures have definable statistical accuracy, the accuracy is related only to the underlying questions surveyed and to the universe of people surveyed.
The popularly followed unemployment rate was 5.5% in July 2004, seasonally adjusted. That is known as U-3, one of six unemployment rates published by the BLS. The broadest U-6 measure was 9.5%, including discouraged and marginally attached workers.
Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.
The Clinton administration also reduced monthly household sampling from 60,000 to about 50,000, eliminating significant surveying in the inner cities. Despite claims of corrective statistical adjustments, reported unemployment among people of color declined sharply, and the piggybacked poverty survey showed a remarkable reversal in decades of worsening poverty trends.
Somehow, the Clinton administration successfully set into motion reestablishing the full 60,000 survey for the benefit of the current Bush administration’s monthly household survey.
While the preceding concentrates on the numbers that tend to move the markets, the household survey also measures employment. The payroll survey also surveys average hourly and weekly earnings and average workweek.
Mr. Quinn – I appreciate your reply, however,
(1) I am still unclear on how Shadowstats estimates the adjustment to the U-6 to get to his Alternate measure. If he does not conduct a survey and if the BLS does not report a “long-term discouraged worker” figure, then his adjustment is simply a guess. (http://www.shadowstats.com/alternate_data/unemployment-charts)
(2) From what I see on the BLS website the U-4, U-5, U-6 measures include discouraged workers. (http://www.bls.gov/osmr/pdf/ec090020.pdf, p10)
(3) The BLS definition of a discouraged worker does not revolve around how long they have been discouraged. I see nothing to indicate there is any such thing as a long-term or short-term discouraged worker. (http://www.bls.gov/cps/lfcharacteristics.htm#discouraged)
See also: http://www.bls.gov/opub/ils/pdf/opbils74.pdf
Yes. His adjustment is an educated guess based upon how the figures were calculated before Clinton changed the methodology.
Misinformation like this just kills me (and makes me wonder why I’m reading this blog! Yves – some editing control please?).
Shadowstats cannot make an “educated guess” based on the pre-Clinton methodology. The pre-Clinton methodology involved a survey taken by the BLS that ASKED QUESTIONS IN A DIFFERENT MANNER. Unless he is in possession of that survey and conducting it monthly, he is not using that methodology, just a randomly selected number that is convenient for him. There is a huge difference!
Also, as my points #2 and #3 demonstrate, Mr. Quinn’s (and apparently Shadowstats for that matter) conception of discouraged workers and the U-4 to U-6 measures are incorrect. If the U-6 includes discouraged workers and then you add some half-baked “adjustment” for discouraged workers back to that number, you get a really big and really WRONG number. This matters.
Everyone, please, once and for all, STOP PAYING ATTENTION TO SHADOWSTATS. One man behind a computer, accurate stats does not make. Sheesh.
More posts like this and I’m deleting my RSS.
JS
Do us a favor and disconnect, so we don’t have to read your drivel.
I suggest that anyone who is interested go to the shadowstats site, read what John Williams has to say and make up their own minds whether the US Government consistently and systematically massages and manipulates the figures to make our economic situation appear better than it really is. Don’t trust me. And certainly don’t trust JS.
Try thinking.
http://www.shadowstats.com/
The idea that American workers will just accept poverty, low wages, and shuffle quietly off stage left to rot is delusional.
This IS a depression and all folks(rich and poor) are simply talking their book.
Rich folks blame govt debt and push for lower taxes
to help their already plush bottom line.
Everyone else will just push for tariffs, mandated higher wages, and failing that… govt work.
This will make a bad thing worse.
But if you’re poor, being less poor is politically popular.
In a democracy, there is a misery number to watch.
It’s 50 to 1 well off to poor.
If capitalism impoverishes too many, they will simply vote to change the game. and bad things happen.
In the past this was understood and the “social contract” was in place to prevent a class war from happening again.
The upcoming push back will be ugly.
but should be expected considering how societies function.
(or not, as the case may be)
I agree that we are in another depression, and I’m pretty upset about it, but the angry nastiness of Jim Quinn’s replies to people’s comments strikes me as immature and unhelpful (“pompous pricks; masturbation; etc.). You do yourself no favors by using language like that.
@eric,
Shhhh. He may get mad at you for being pompous enough to believe that your comment was worth sharing on Yves’ blog. Just lay low and be vehwy, vehwy quiet, or else he might call you a “liberal” or some other word that he thinks will hurt your feelings.
Looks like I’ve really gotten under your skin. Mission accomplished.
Good luck with your strange mission, Jim. Most come here to enlighten and be enlightened. But based on your confused, hope-less essay, and your obnoxious defensiveness, I’ll wager your audience and influence is now considerably reduced.
Do you have a counterfactual argument to the facts presented in the article?
Your wager would lose as the article was read by at least 100,000 people as it was a featured article on:
Financial Sense
Seeking Alpha
Zero Hedge
Market Oracle
Op-Ed News
Lew Rockwell
Huffington Post
Business Insider
International Business Times
Dollar Collapse
Jesse’s Cafe Americain
Chris Martenson
See above. You never responded.
On the wager, sadly, you’re likely right. Glenn
Beck, Rush Limbaugh, Bill O’Reilly, and Ann Coulter are proof that reality-free fear, loathing, and despair does draw an audience.
Jim, the facts in the article are one thing, the bullshit evidence-free claims (like “Politicians don’t create jobs. Businesses create jobs. When politicians and the Federal Reserve get involved in the job market, bad things happen.”) are quite another.
I know. Keith Olbermann, Rachel Madow and Chris Matthews are the voices of reason in America. It’s a shame they don’t draw an audience, except for hate spewing Progressives – I mean liberals. What do they like to be called now? I forget.
Sorry guys devolving into polemic camps is just what the doctor ordered, you take your medicine well.
@Jim, sorry Jim the good old days are not coming back, it was like the eye of a hurricane which pasted over the USA and now we face the wall on the other side. Many beliefs were allowed to proliferate during this time, served your masters needs, this era is at an end.
We cannot go back or tweak the present to resemble the past, it would be like a 90 year old getting a boob job..eh. We were all lied too Jim, from the_get go_it was a lie, lies of pacification eaten like the corn fructose laden garbage many call food today, make us fat and complaint. The promises on the out side of the cleverly advertised box really draw ones attention away from the FDA approved ingredients (in small print) of which the Mfg can arbitrary modify (genetically or chemically) to suit new regs…were a lie.
We will always be one too many steps behind, always reactive, never proactive. And if Americans ever decided to en mass call for the destruction or reduction of the powers that be….forces are in place to nullify, our history is replete with it. Chip at the edges is all that can be done, victories of the past have been little more than token offerings which can be rescinded at a moments notice, hell just look at all the new laws in the last 10 years, your worth to this country is imbued by a FICO score, your just a set of electrons in some quasi corporate government database.
Skippy…why own slaves when you can make them come to your door, begging to serve, swearing fealty, to only drink their brand of koolaid…eh.
PS. republicans, democrats, progressives, liberals et al…are all just brands of koolaid, all fighting for market share, religious like affirmation, we choose wisely I’m better than you….so easy divided and conquered. Hell now days its in plain view, no need to be oblique or sophisticated, hell everyone is so dumbed down the throw a stick and every one chases to pick it up for them, massacring each other in the process….shezz
Oh, how embarrassing.
Some more disinformation from Mr. Krugman that I obliterate with facts.
http://theburningplatform.com/blog/2010/10/23/depression-within-a-depression-featured-article/
Keynesians are so angry. If you examine the facts as I provided in the article, you will see that private investment was crowded out by government spending. The economy was not allowed to bottom and recover. After 10 years of Keynesian “solutions”, the unemployment rate was still 15% in 1939.
Them is the facts.
One BIG piece of bullshit from Mr. Quinn:
“Politicians don’t create jobs. Businesses create jobs. When politicians and the Federal Reserve get involved in the job market, bad things happen.”
Well, if you do it the STUPID way like the Bush and Obama administrations, yes.
On the other hand, if you establish the Works Progress Administration and the Civilian Conservation Corps, then
(1) Politicians create jobs. Directly.
(2) When politicians get involved in the job market, good things happen.
FDR knew a hell of a lot more than Mr. Quinn does.
“We have tried spending money, we are spending more than we have ever spent before and it does not work. I say after eight years of this administration, we have just as much unemployment as when we started….and an enormous debt to boot.” Henry Morgenthau, Jr. Treasury Secretary for FDR May 1939.