By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness
Westpac Institutional Bank yesterday released a sobering note (below) on the ongoing income squeeze taking place in the US.
In spite of the current cyclical economic recovery, the recent fall in the US unemployment rate has been driven almost entirely by lower labour force participation (see next chart).
In fact, the overall number of jobs is still 2.5 million below its peak, the employment-to-population ratio has also barely moved off its lows, and aggregate hours worked is yet to recover lost ground (see next chart).
To make matters worse, real average hourly wages are still 0.5% lower than their June 2009 level, with real weekly wages (inflation-adjusted take-home pay) having grown by only 1.3% over the past four years (see next chart).
And while households have benefited from lower interest rates, this boost to discretionary incomes has been offset by rising health care and gasoline costs, meaning that real discretionary incomes have not grown since 2006 (see next chart).
This all leaves Westpac to conclude:
It is little wonder then that consumption growth has failed to accelerate in a significant and sustainable fashion. Not only do households continue to be weighed down by large historic debt burdens, they are having their purchasing power eaten away by price rises for life’s ssentials.
It is all well and good for asset price gains to bolster confidence, but real improvements in spending power are necessary to see broad-based, persistent spending growth. This is not the case at the current juncture; and, in the absence of a positive exogenous shock, seems unlikely for the foreseeable future.
Full report below.
US – Desperately Seeking Income (Westpac 26 June 2013)
88 comments
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Obviously, the solution lies with the fate of the immigration bill. Passage guarantees an influx of new consumers who will, by their mere presence, will boost AD. With increased demand comes an increase of confidence. Also, TINA.
Forgot to include this, thouh I think I’ve shared the opinion here before… If by some miracle, immigration reform does not kick-start the economy, then and only then will the political will for stimulus be found.
I’m not sure I agree.
1) the Immigration bill will possibly give citizenship to people already here.
Those people ALREADY consume here.
I’m not sure giving them citizenship will cause them to buy more.
2) Amnesty will of course lead to a horde of new illegal entrants to our country.
however, this will only help our economy if we have JOBS for those people AND the people already here.
it won’t help if a bunch of new entrants come and decimate salaries in the housing, agriculture, and services sectors like they have thus far.
we need JOBS.
I cannot believe that anyone who has any knowledge of the environmental devastation & resource depletion that is occuring in the U.S. and worldwide would advocate more people consuming more crap. If the Senate version of the immigration bill passes, it will only hasten the environmental destruction of this country and drive real wages even lower. With millions of people unemployed what we do not need is more of them. There are many policies that can be used to reduce unemployment and raise real wages, but more immigration is not one of them. The post-WWII golden age for workers in this country occurred during a period when there was virtually no immigration. Other factors, of course, were also important – unions, foriegn demand for U.S. output, etc. – but do not neglect the fact that very limited immigration is also to be included in this list.
Did you read the CBO analysis? The Senate’s immigration bill will make the rich richer while decreasing wages and increasing unemployment and for the nation’s poor and middle-class.
‘households have benefitted from lower interest rates?’
Anybody over 65 has been crucified by ZIRP. Reports of low inflation are based entirely on statistical manipulation. Prices of things people actually need are rising rapidly. My own expenses are increasing at 15% per year, although I continue doing exactly the same things in the same place.
Nobody but leveraged speculators running other people’s money, and those taking foolish risks in manipulated real estate and financial markets has made a damn thing since 2008.
Every small business person I speak to looks on the verge of a nervous breakdown. Bernanke has saved the looters and is ruining everyone else.
Just got vaporized again. Maybe you only have one comment because you don’t want any others?
I saved this one. You can have it if you ask nicely.
Jake,
I’ve got no idea why this is happening to you. You keep getting caught in spam. This is not personal, we use Akismet, which is standard and widely used software. I hauled your comment out of spam. It must be your ISP has lots of spammers or some other way your remind the software of a spammer.
what’s an ISP?
“Internet Service Provider”.
My internet service provider is Time Warner Cable. They are a monopoly. I knew they were incompetent but you’re telling me they are running spam? Maybe that’s why I can never get them on the phone. All those people in Bangladesh are busy!
“what’s an ISP?” Cripes Jake, even I knows what that means, and that’s saying something! I think a lot of us (probably most) don’t want to miss your comments. Pleeze, They’re more important to us than your snarky complaints.
What makes a complaint snarky?
Would you prefer hysterical, angry, self pitying, morose, haughty, self deprecating, other?
I vote for morose, jake.
Because it would make me lol
Since you give me a preference, I’d say make your complaints measured rather than “hysterical, angry, etc.”
“Cripes, Jake” — I know what an ISP is, too, and I’m a total Luddite. But here’s the thing — I want to read your comments, of whatever flavor, so please don’t give up!!!
P.S. I have Time Warner, too. I feel a little funny publishing that, but it’s okay. Because I know the NSA already knows.
Welcome to the club Jake. Buck passing along the way to absolve responsibility regardless of who does it. I wonder, have you ruffeled some feathers along the way, which might be the case for your inquiry? Of course, if you’re also “moderated” too, that says alot. Cheers
Maybe the spam filters “Don’t know Jake?”
Time for a compulsory consumption law?
“Henceforth all citizens must accept a 30% wage cut and spend more than their income on consumer goods. Non compliant subversives will be subject to summary execution by the NSA. Any working citizen found with savings above $1.00 will be subject to summary execution by the FBI. God Bless America”
those already exist (just not here)
it’s one of the primary purposes of estate taxes and wealth taxes.
Someone tell Bernanke he can’t leave yet, because we’ll need someone to blame when his lab experiment fails.
The statement households have benefited from from lower interest rates seems axiomatic, but probably not that true. With the exception of mortgage debt, most other debt taken on by consumers has not seen rate comparable rate drops if any. And to the extent consumers have seen their mortgage costs go down, they’ve also seen a loss of income from any savings held at banks, or bond income for that matter. And while one might point to the rising stock market, the truth is the average American simply is not that invested in the stock market.
Agreed. Retirees and other people who live on investment income have been whacked, but they are a minority. And to your point re consumer rates, from what I see of the various credit card offers, the deals were better in 2002-2004, when a lot of credit card companies offered LIFE OF THE BALANCE deals, with rates ranging from 4% to 10%. They were clearly hoping for a missed payment so they could kick the consumer into a super punitive rate. No more of that, now just 7-18 month teaser rates.
Jimmy Carter killed inflation, not Paul Volcker.
Warren Mosler: “[Paul Volcker] put on what might be the largest display of gross ignorance of monetary operations with his borrowed reserve targeting policy. However, a year or so after the price of oil broke as did inflation giving tall Paul the spin of being the man who courageously broke inflation. Overlooked was that Jimmy Carter had allowed the deregulation of natural gas in 1978, triggering a massive increase in supply, with our electric utilities shifting from oil to nat gas, and opec desperately cutting production by maybe 15 million barrels/day in what turned out to be an unsuccessful effort to hold price above $30, as the supply shock was too large for them and they drowned in the flood of no longer needed oil, with prices falling to maybe the $10 range…”
” … but they are a minority.”
Retirees trying to survive from investment income may be a “minority” relative to the size of the US population, but they represent millions of human beings who have worked their whole lives and likely paid taxes in this country. I do not think it is appropriate to dismiss the shafting of this sizeable group of the 99.9% with a cursory brush off like “they are a minority.”
The other group shafted by ZIRP is anyone who was intelligent enough to get the heck out of equities and bond markets (the retail variety) and to stash money in money markets or T bonds. Those people represent 10s of millions (to the great chagrin of sell-side money managers) — they all are getting royally shafted as well.
So bemoaning the possible withdrawal of QE — which has been a federal intervention to artificially prop up the wealth of some but not others — is really to say that the only people who deserve to have their wealth propped up by the federal government are those who are not in the 2 aforementioned categories.
Also, there was no QE direct-to-citizen — let’s remember that one. People-Who-Don’t-Have-Mortgages-And-Rent, for example, did not even get Potemkin style relief (e.g. HAMP, et al) in the form of, e.g., massive rent subsidies, etc.
All this to say, really, that the debate about the pluses and minuses of Bernanke announcing the possible end of QE really boils down to a very simple one — which group of citizens is going to get their wealth preserved and/or increased and which group is going to get shafted.
Apparently, there is still one minority which can be abused with impunity, even here. After all, what did those retirees do with all that income when they already have Medicare? They just throw it away on golf greens fees and cruises, right? And they all play so damn slowly!
Hey Jake, Your post is sarc, right? (:)
I sure could have used access to that Fed Facility to facilitate keeping up with rising costs (rent, electricity, transportation, phone, food, destroyed defferred comp. accounts, and declining income — I would have spent some into the economy (pay bills) and parked a bunch (a lot) in US treasuries, which was apparently the only game in town to receive some passive income from a safe investment (for the V.I.P.s, that is).
Also on the entering the workforce side, market-sensitive interest rates don’t help with student debt, while new grads will disproportionately be slotted into lower wage, loer hours portions of the economy. That cadre may not be particularly dominant in the economy, but they would tend to be more consumption-prone historically, whereas in the present environment they’re decidedly consumption-constrained.
To Aussie F –
I have been seeing sequestration since the 1 Aug 2011 budget debacle. Got hit indirectly in 2012 by halving of staff, but same work load. Got a health benefit cut in 2013. Another coworker got a 30% salary cut 1 May 2013 (funny you should mention that … are you a profit? ;-) Of course all us government contractors and government workers should be throw alive into a chipper, if you believe the public opinion. Given that attitude, don’t expect a quick resolution to your motor vehicle license problem etc … what goes around comes around.
I do believe that the money I have been saving, but keeping out of the banks, the government and banks would love to get their hands on (they need collateral for their ponzi). In old Russia, it was required that you drink vodka, it wasn’t optional. The Czar took a cut of the proceeds, and that was one of the only ways they could tax the serfs … forced alcoholism.
“Of course all us government contractors and government workers should be throw alive into a chipper, if you believe the public opinion”
That would kill demand, in the DC area in particular. My coworkers on my ‘Government contract job’ apparently despise Government, or public schools, and rage on about taxes.
Have no fear, the rednecks (not politically correct) will soon be replaced by cheaper foreign talent in greater numbers if it is even worth while to bring them here, instead of just putting the work over there (outsourcing).
Stock-splits are a non-usury based way to distribute profits. Moreover, they do not reduce a company’s assets as dividends or interest do.
Interest and dividends remind me of the Huns who used to bleed the very horses they rode on for food.
Though I suppose interest is equivalent to bleeding some one else’s horse.
Leith van Onselen’s analysis is, of course, fatally flawed. He quite obviously has not incorporated the transformative insights of Richard Burkhauser:
http://opinionator.blogs.nytimes.com/2013/06/26/what-if-were-looking-at-inequality-the-wrong-way/?hp
Income matters little to income inequality. What matters, Burkhauser brilliantly tells us, are paper gains in asset values that are derived from averages across the wealth spectrum. You know, “Bill Gates walks into a bar …”
This isn’t about income inequality, it’s about the “recovery” such as it is.
Lower income people consume a much higher % of their incomes than Bill Gates, so it’s more relevant to spending, as in consumption. And he’s looking mainly at wage measures, not total incomes. The metric is more relevant. Incomes of rich people also include gains on investments in PE funds and hedge fund investments. Those are illiquid (PE funds particularly so, and most hedges allow at best quarterly redemptions).
Guaranteed bsic income now:
http://truth-out.org/opinion/item/17104-jobs-are-not-the-answer
While I definitely believe that the government needs to step in with direct job creation, I still don’t believe that we can guarantee a job for everyone.
And can our planet support jobs for everyone?
This is the most important notion we never think about and I commend you for bringing it up–this is what we ought to be talking about here–we all know the current state of capitalism is harmful yet we suffer from such a failure of the imagination that we cannot conceive of alternatives. I won’t get into the origin of this failure other that say it is based on fear and the manipulation of that fear by people who are fearful, i.e., the power-elite who cling to power because they fear life.
We are now in a position where we can create money from a few keystrokes–this is what the Fed does. It chooses to give the money to its constituents the banks but it could give it to us just as easily. We are also coming into a world that, if capital investments are made, we can create manufactured products using robots and more sophisticated 3-D printers and expert systems can solve many of our practical problems as computing power continues to grow. This will make human efforts, less important and thus the idea of “work” will change and move toward “play.” We denigrate play to our detriment–play is where creativity comes from and that is and will be the future growth sector. Buckminster Fuller once said, in effect, that if we gave everyone a basic income then even if 99% of these people just partied or “went fishing” as he put it, that 1% would create, through their play something valuable to the collective to pay for the other 99%’s right to party. I believe his view was sound then and is even more so today.
The whole “hard work” ideology that is central to our culture is just crap–I’ve seen, up close, how hard work often becomes harmful not just to the individual but actually creating bad results–after all cluegy systems in IT are often created because programmers put their nose to the grindstone and overwork (been there) rather than take time to play and be creative (been there too) and thus come up with more elegant solutions.
Millions of Sisyphus jobs out there.
The problem with your philosophy is that a large percentage of those with the hard assets do not believe in liberal arts. So you can sing and dance as much as you want, but they might not want to throw you some bread.
In fact, there is growing condescendence in America for liberal arts at the exact same time we should see growth in that area…
Houses have gone from 1200 square feet in the 60s to 2700 in 2009 while rainforest destruction has been accelerating at an alarming rate. We need to shrink our material lives and embrace non material GDP growth. This means embracing liberal arts.
However, it’s the exact opposite that is happening, people are limiting themselves to bare essentials which are material and skimping on intangibles.
..emphasis has long been on “what to think” rather than “HOW to think”..:
http://williamblum.org/aer/read/118
I don’t disagree–right now the oligarchs are completely in love with themselves–they believe they have “achieved” great wealth out of thin air and that their own usually very privileged background had nothing to do with it and the rest of us are just, well, inferior. Most of these people believe something like that–they need narcissism to fend of fear. Once, some ruling elites had some sense of honor and noblesse oblige this seems to be diminishing.
I’m just trying to explain what is possible–we still outnumber the oligarchs and they are in power because we let them be there–we are more the problem, as I see it because we think being afraid is the default state–it’s not–it is something deliberately created–we don’t have to buy into it.
It’s all about creating scarcity or the illusion of it to control the hard physical assets. The 1% buy stuff from dead artists because it is rare.
Ironically, the middle class has bought into this philosophy as most around me frown upon liberal arts. Most believe that the only worthwhile studies are those that contribute to the growth of hard assets.
It’s like the electric dog fence. Even when you turn it off, the dog will stay in its own yard after a while. The same with North Americans. We’ve been brainwashed into believing in materialism above anything else.
Even now, everyone seems to be pushing for more infra projects when we should be getting more energy efficient and probably getting more smart about increasing our energy consuming infra. GDP growth is always promoted through hard assets. Why?
It all starts with money creation which is usually based on collateral… hard assets. It’s the owners of hard assets who essentially get to decide what art is worthwhile. In North America they have done a good job of convincing us that we do not need many types of art… but the middle class as been brainwashed into agreeing.
Just this morning I solved an imposing and nagging problem by doing what I do best, f*ck off. In this case f*cking off was reading slash dot and the answer is schema.org.
Back to the grindstone.
Banger, there are enough jobs for everyone and the government could afford to pay a living wage for any and all of them–they just don’t want to.
For example, there are jobs in reclaiming land lost to environmental degradation; there are jobs planting trees (I know that is really hard work); there are jobs for fixing the infrastructure that we now have (roads, bridges, dams, etc.); there are jobs in agriculture (reclaiming land, educating proper land use, etc.); there are jobs in the arts (as already suggested) and we should be educating the public to go to plays, go to art galleries, to make their own creations and crafts, etc.); there are jobs for building houses for the homeless; there are jobs in creating restaurants that serve good food (not junk food); there are jobs working in parks giving guided tours, making paths, educating people re forest and animal husbandry; there should be jobs for craftsman who work with their hands making boats, furniture, airplanes, etc.
I am sure that there are thousands more ideas for jobs out there. If the people were asked what jobs they need or could do, there would be lots and lots of ideas that I haven’t thought of.
Not all jobs have to degrade the environment.
I agree that there is much important work to be done, but I’m going to have to say that there are also a lot of jobs out there that are essentially useless or of little value. I would like to see some substitution rather than addition.
Isn’t a choice between more jobs and fewer useless jobs a false dichotomy? Why not both?
More jobs could eliminate useless jobs by 1) reducing the value of manipulating the system to maintain a useless position, and 2) offering an incentive to employers to restructure useless positions to deal with the higher unit cost of staffing them.
Same medicine, two cures.
Keynes said pretty much the same thing in Economic Possibilities for Our Grandchildren. The Sixties were a time in which many of the young opted to abandon mainstream ‘work’, and the oligarchs out foxed them by engineering a quadrupling in the price of oil.
A good deal of the work required to keep society going is not eliminated by technology. How about collecting elephant semen, for example?
>And can our planet support jobs for everyone?
Indeed. With their guaranteed basic income people can commit systematic acts of kindness and create considered works of beauty, and the world will be a better place.
That is in fact how science works. (So long as it’s not programatically driven “science”).
Yeah. The bottom-line question is “Can the planet support a life for everyone?” Jobs are a means to an end; finance is a means to an end. Talking purely about jobs or finance often replaces an answer to the actual question.
Wow!
The usury for stolen purchasing power cartel is the obvious root problem but let’s depopulate the planet instead, huh?
You first.
Absolutely it can and then some. The technical problem is relatively easy the main problem is cultural and political–people are really sold on misery.
If they are based on material goods, probably not. If they are based on social goods, jobs are infinite.
Have you hugged someone today? That is a job without $$$ compensation. Everything single activity we do in our lives is a job. However some are compensated with $$$, others not directly.
Trade is what increases our quality of life.
Essentially, we need to take a good look at what should get $$$ compensation and what not.
Point taken.
Also, perhaps the middle and upper classes should thank some of the chronically unemployed who squeeze themselves into ever smaller spaces and don’t go much of anywhere (and probably don’t have a car). Do they not realize that they benefit from such things?
I haven’t noticed that hugging pays all that well, and hugging the wrong person could get you arrested for assault. Best to be careful about hugging.
I love that on basic aspects of simple governance, like drugs and income, conservative icon Milton Friedman was more liberal than today’s DC Dems. And of course MLK’s views on economic justice are basically completely whitewashed by today’s faux leftists.
Personally, I prefer social insurance programs to a guaranteed minimum income, but both are preferable to this bizarre job fetish that has sprouted from the comfortable academic left – Team Trickle Down.
Working isn’t good; it’s bad. It’s a means, not an end. It’s a variable to minimize, not maximize. Time is the most elemental and valuable resource we know.
“In 1972, Democratic Presidential candidate and Senator George McGovern knew the economy was changing. He proposed a $1000 annual “demogrant” for every American.”
Such subsidies should only go to the poor, not every American. We need to have a razor-sharp focus on abolishing poverty.
Actually Healy, giving a thousand dollars only to the poor will cause INTENSE resentment in the middle class. Your argument sort of sounds like the flawed one for exempting the rich and upper middle class from social security checks: It eliminates the universality of the program.
To be fair, we could probably compromise and get away with excluding the top 10% from that check. They all get over $100k a year anyway. I assure you the 90% of the country would not be very angry about getting free money, even the conservatives.
False. If your proposal works, it would have already.
Everyone needs to be less dependent on the aristocrats, even (or especially) the middle income quintiles. Building in mechanisms for exclusion merely provides opportunities for captive constituencies, hot-potato underclasses, broken-by-design identity politics and a generally stronger overclass.
Captivity is the disease; poverty is merely a symptom.
While I definitely believe that the government needs to step in with direct job creation, I still don’t believe that we can guarantee a job for everyone.
And can our planet support jobs for everyone?
Aaaargh! It is beyond belief how weird people’s thinking has become under the onslaught of decades of brainwashing by innumerate modern mainstream moronic “economics”. Leisure for all is easy for societies to support, while everybody who wants to work working isn’t? Labor is not a scarce, valuable good? Where do all the good things the BIGgers consume come from, if not from someone, uhh, working to provide for them? Yeah, right. That makes a lot of sense.
Sure, have a BIG / Basic Income Guarantee. But what supports a BIG is a Job Guarantee. A basic income guarantee is hard to support, is inflationary. A Job Guarantee is not, because it supports itself. BIG = something for nothing. Yeah, something for nothing deals work real well all the time in real life, just like get-rich-quick schemes. Why didn’t we think of that before?
The kleptocrats will give in on a BIG first – because they know that a BIG CAN’T WORK (can’t work without a JG, without at least near-full employment, like in the postwar Keynesian era, protecting it). Read that article. When the kleptocrats see the proposal of “eliminating most of the 20th-century programs like unemployment insurance, welfare, Social Security, Section 8 housing” etc – they say “ME LIKE!!”.
People should explain such well-meaning, brilliant BIG vs JG reasoning as Allan Sheahen’s to their Moms:
Just tell Mom that the household just cannot support their doing chores in return for all the good stuff Mom does for them. Wisely inform Mom that “Chores [like doing your own laundry] are not the answer.” Guaranteeing my basic income of living on the couch playing videogames all day is the idea of the future!
Make-work can easily be negative work while with a BIG, people can at least do work that is meaningful to them. And then there is the matter of justice:
Yeah, something for nothing deals work real well all the time in real life, just like get-rich-quick schemes. Calgacus
Hey, it works for the banks since they have driven the population into debt with the population’s own (legally) stolen purchasing power. What about restitution since all it requires is a temporary ban on new credit creation and a metered, universal bailout with new fiat? Huh?
Injustice is NOT fought with injustice-LITE, don’t you know?
A well-regulated “private” banking system, like those of the postwar era until deregulation – is not very different from a state-run system, and does not steal purchasing power, since that makes an invalid full employment assumption.
Of course a JG could be used to produce bads. That is the near-JG we have had in the USA – the military, the prison-industrial complex, etc. MMTers mean by the JG, a WPA. What are the Bad Things that the WPA did?
The JG is not injustice light. The “injustice” is the state forcing people to live in a monetary economy it created. The JG is the restitution, the reciprocity for the gross insane injustice and crime perpetrated against the unemployed and poor. The only one that can work.
A BIG without a JG will still insanely prevent people from doing work which is meaningful to them. The MMT JG is for people to “do work which is meaningful to them”. The BIG is paternalistic, anti-individual, while the JG puts the decision in the individual’s hands as much as possible.
The BiG is a stupid fairy tale in comparison to the JG. (Hey, now that we have invented fire, the wheel, the wheelbarrow etc, we’ll all have it good in our hypertechological society, with nobody having to work.)
A BIG without a JG will still insanely prevent people from doing work which is meaningful to them. Calgacus
Baloney! A substantial BIG would allow people to buy land, tools, workshops, education, whatever and do the work that is meaningful to THEM.
And the government-backed credit cartel DOES steal purchasing power, at least temporarily, and in the case of some things, like land, the theft is likely to be permanent.
And the money system created this mess. Many families, for example, have lost farms and businesses to the banking cartel.
In the 1960s, when banking regulation was good, the average house was maybe 1200 square feet. In 2009, it was 2700.
If banking regulations had stayed sound, chances are the US average house would still be around 1200 square feet and infra would be much more energy efficient.
Why? Because in the 60s the US hit a wall in material growth. Had it kept all of its production internally, life would have been much more expensive for all kinds of rasons. Impeding environmental laws are one but another is the cost of importing oil. As a net oil importer, your debt-to-gdp would have ballooned a few decades ago. By producing in emerging, you managed to get them to increase their debt ratios by importing the oil needed to produce your stuff.
The deregulation of banking and exporting of jobs is what gave you 40 years of consumerism orgy. That is what has permitted you to double the size of your homes and permitted you to consume increasing amounts of stuff.
I believe American consumerism is peaking and millions of households will be forced into shrinking their lifestyles. I believe many more Chavez will come alive over the next couple of decades.
When I read the posts here and see how many still believe in printing free lunches, I am even more convinced that it will get ugly out there.
Moneta:In the 1960s, when banking regulation was good, the average house was maybe 1200 square feet. In 2009, it was 2700.
If banking regulations had stayed sound, chances are the US average house would still be around 1200 square feet and infra would be much more energy efficient.
Bonkers. If banking regulations had stayed sound, we would have 5400 sq ft houses. Maybe we would have 1200 square feet houses – on the Moon.
Why? Because in the 60s the US hit a wall in material growth. Nonsense. The oil crises etc produced some real inflation, that enabled the elites to impose decades of comparative stagnation. They convinced societies to go from half-scientific, half-numerate quasiKeynesian economics to moronic innumerate mainstream “neoclassical” “economics”.
The deregulation of banking and exporting of jobs is what gave you 40 years of consumerism orgy.
What frigging consumerism orgy – comparable to the real, broadbased consumerism “orgy” of the postwar era? Before the shithead empire struck back, there were no homeless people in the USA. Does the reappearance of homelessness figure in those housing calculations above? Scientific & technological progress slowed down since the 1970s-Now Great Moderation = Great Stagnation. Easy way to tell sci & tech is slowing down: there’s a lot of MSM BS about how technology is speeding up and changing everything. Look at Graeber’s Flying Car essay in The Baffler for a rare statement of the manifest reality. [Graeber must not have gotten his psychem dose.]
That is what has permitted you to double the size of your homes and permitted you to consume increasing amounts of stuff. Deregulation of banking benefited nobody overall, made nobody’s houses bigger except for a microscopic criminal elite, for a short time. Exporting jobs? Well, fine, good overall, deflationary – as long as the job-exporting country decides to perform the extremely easy task of maintaining full employment. While the USA had a shitty record post 1970s, it was less shitty than Europe’s overall insane 40 year high unemployment austerity-stagnation. The return to innumerate preKeynesian quackonomics and resurgence of elite financial criminality diminished growth, made everything worse for practically everyone.
I believe many more Chavez will come alive over the next couple of decades. Don’t see the relevance, but let’s hope so: One, Two, Three, Many Chavezes. Chavez = Good Guy, help ordinary people. Obama, Bush = Bad Guy, hurt ordinary people.
When I read the posts here and see how many still believe in printing free lunches, I am even more convinced that it will get ugly out there. Moneta: your post above declares a belief in free lunches: Let rich criminals rob everyone and Moneta says we will better off for 40 years and have big houses. IMHO, this free lunch belief is Loony Tunes. My free lunch belief, the MMT free lunch belief is that if you stop preventing people from gainful employment, if you stop smashing the free lunch YOU ALREADY HAVE, then you will have a “free lunch”. Not destroying stuff = magically creating stuff. All you gotta do is: Notice you, the state, the society, are destroying stuff, destroying lives.
Basically, the elite asshole-ocracy decided to start shitting on everyone else 40 years ago. They convinced all that their shit was a necessary food, that their shit like banking deregulation helped people have a consumerism orgy. In reality: 40 years of comparative stagnation. Now with the GFC & the Great Recession, they have decided to speed-shit their diarrhea onto everyone. To change from decelerating growth to mass pauperization.
Calgacus: A BIG without a JG will still insanely prevent people from doing work which is meaningful to them.
F. Beard: Baloney! A substantial BIG would allow people to buy land, tools, workshops, education, whatever and do the work that is meaningful to THEM.
Baloney to your Baloney!
Me like BIG. Me think the USA should have BIG. But again, compared to the JG, a BIG is SHIT. You have to be born yesterday to believe in a BIG over a JG. If others are reading, I’ll dig up the Wray-Kelton (?) paper carefully showing how stupid the BIG is compared to the MMT JG, the WPA.
C’mon BIG supporters: explain to Mom & Dad why a BIG is wonderful videogames-on-Mom’s-couch wave of the future, while getting a uhh, job, through the JG and living in your own apartment is an obsolete, 20th century insult to your dainty hands. A BIG most certainly will, does and has prevented people from doing “the work that is meaningful to THEM.” The BIG is intrinsically paternalistic, authoritarian and less individualistic than the MMT JG. Think it through, don’t just wishfully think, daydream to the naive, opposite conclusion.
The BIG is some asshole bureaucrat saying: Here is bread & circuses. Here is a pittance which we glorious assholes of the asshole-ocracy poop upon you. It is our wonderful largesse, not a right, because it is an intrinsically unworkable-universally something-for-nothing. Want to get more than the BIG pittance? NEED to get more than the BIG pittance? Sorry, Charlie, we all-wise asshole-ocrats know your needs better than you do. See, our hireling Harvard-Chicago morons have calculations that show that modern Americans can live like Kings on a BIG of 15 cents per day! We have the best pseudomathematics produced by the world’s stupidest pseudomathematicians to prove it! Need more than our glorious BIG for luxuries like eating, like living indoors? Tough luck, underclass parasite. And if we Assholeocrats want to take the BIG away, AS THEY ALWAYS HAVE AND ALWAYS WILL, time and again, tis easy as pie: Just inflate the currency, and make the BIG worthless.
The JG is a RIGHT. Something for something. Reciprocity. Trading value for value. Money to ordinary people for work that these ordinary people, not assholeocrats decides needs doing. It can, will and has worked forever. The USA is the world Titan, China is the coming Titan, because they have been the closest to having a JG, to not destroying the source of wealth = labor. Can the JG give the Moon to everyone, immediately, as the BIG, as non-Minskian, 60s “Keynesianism” falsely promises? No. But within limits imposed by the real world, the JG CAN put the decision of how much money each individual can get in that individual’s own hands. The JG is the end of the asshole-ocracy. And the asshole-ocrats (see e.g. Grover Norquist, in another context) damn well know that, damn well would prefer a stupid BIG to a fatal-to-them JG. See Victor Quirk’s work for collected assholisms shat against full employment by the assholocracy. There is nothing they hate and fear more than the lesser people being allowed to provide for themselves instead of occasionally perhaps being granted a drip of BIG charity from them as a momentary respite from the millennia of diarrhea from their assholes of great wealth.
Calgacus,
Let’s forget a BIG then and instead:
1) Reform the money system to eliminate all explicit and implicit privileges for the banks. Those have been used to dispossess the population and drive it into debt.
2) Distribute new fiat equally to the population at least until all deposits are 100% backed by reserves.
3) Equally distribute the common stock of all large corporations since these were likely built with stolen purchasing power.
4) Return farm lands to their original owners ala Leviticus 25. Create a new Homestead Act.
There. Now the population can live dignified lives as affluent land owners.
Objections?
Bloggers and commenters at NC have debunked the false conflation of sovereign debt and non-sovereign debt so many times and so frequently that it’s hard to presume you are posting this with good intentions.
Read. Learn. Then speak. With all due respect, if Bucky Fuller, a prolific inventor and pragmatic futurist, says that only 1% of humanity actually *needs* to perform directed labor, I’m inclined to believe his judgment over the judgment of a random commenter who apparently projects their own indolence-vs-privation struggle onto everyone else.
I agree that the risk is that something like that is simply used to eliminate other programs, and then after that’s accomplished, it’s simply wound down over time through inflation.
But I think the chore example highlights exactly the challenge of JG. Mom is asking that productive chores be done – work that improves the wealth of the household. She is intimately familiar with the larger goals of the household, the specific tasks to be done, and the skills of the people she is tasking to do them. She is not just making up work to do that serves no purpose other than keeping people busy.
Furthermore, who cares if a few people in society play video games constantly? Their numbers are so dwarfed by people who want to participate productively in society that they’re not worth worrying about. This insinuation requires evidentiary proof that the ‘slackers’ are of significant number that they are a material drain. Without such evidence, this whole smear can be ignored as an overblown rounding error.
Indeed, centralized systems that attempt to weed out such leisure and play and anti-authoritarianism usually stifle more productive creativity than they empower.
“their numbers are so dwarfed by people who want to participate productively in society”
This is America. Applicants for the job of Plantation Overseer stretch as far the eye can see.
We need a Solar EM Pulse, get boots moving on the ground. I’ll put in my prayers.
Alas, you who are longing for the day of the Lord,
For what purpose will the day of the Lord be to you?
It will be darkness and not light;
As when a man flees from a lion
And a bear meets him,
Or goes home, leans his hand against the wall
And a snake bites him. Amos 5:18-19 New American Standard Bible (NASB)
Gee wiz, folks! All we need is monetary reform including restitution with new fiat, not a calamity!
let’s see. who isn’t participating and why is marriage at an all-time low?
Priorities & Multiplier Effects
“We are the people our parents warned us about.”
So, how do you turn a flattop around on a dime and accelerate in the process?
Yes. Microsoft is a piece of crap.
Yes. Apple is a piece of crap.
Yes. Google is a piece of crap.
Yes. GM is a piece of crap.
Blah, blah, blah.
But what has the empire spent $30T in future income to protect, to save its own arse? Where do all the problems intersect?
If you look at the empire margin, where all it its crap surfaces, what do you see?
Boeing.
Boeing is retiring planes right off the end of the assembly line to produce more, and it is responsible for all marginal production. From the perspective of the empire majority, global compliance pacification, Boeing is the solution.
Ultimately, labor gets paid to fire people, not to roll out developments, but you want to have your prototypes ready before you begin.
Now, who do we fire? It’s not the idiot hiding in the CEO’s office, and you have to rebuild Navy from the bottom up…by firing operationally from the top down…hmmm….
The flattops have the same problems as the cruise ships, because they are built for entertainment. Ignore the fireworks anxiety.
Choose your priorities on the margin with feedback appropriate to your development and everything else will take care of itself. Across the empire, entertainment trumps work, which is why it’s a circus, of, by and for passive aggressive clowns and their aggressive Chihuahuas.
You can fix this problem, from anywhere in the economy, depending upon the acceleration you want, or you can let the middle class die off. Each generation has its time. Complaining about previous generations doesn’t get the job done, and serves the empire. Recycle.
Unless a welfare police state is your goal, the Dreamliner process is a nightmare. Throw it in the cesspool with the Internet and get on with your life, productively. The cornerstone of every community is its school. Build it while others sleep.
If you need to wire around the global HR co[n]mpliance function, and most of you do to complete the bridge out, create new job titles and write new job descriptions to eliminate empire licensing requirements; hire those with bad credit records, no recent criminal activity, and no more than two criminal convictions; and learn to employ aggressive behavior effectively. Become more aggressive if you are passive.
If Social Security and Medicare are so great, why are retirees working and in constant fear of failing health? Why do they need pills from the system, to deal with the system? Why is that you cannot trust a doctor, a lawyer, or a priest – professional birth control “in a vortex of intrigue, betrayal and violence (R.T./S&S/BCE)?”
If divorce is an option, it’s not a marriage. Three generations are the minimum requirement to build a bridge. And Military Law excludes civil marriage authority for a reason.
“To make matters worse, real average hourly wages are still 0.5% lower than their June 2009 level, with real weekly wages (inflation-adjusted take-home pay) having grown by only 1.3% over the past four years”
I liked to see how much income by quintile has growth. The problem with averages is the 1% wages (or income) go up a thousand percent, but everybody else’s going down by 10%.
If your feet are in a fire and your head is in an icebucket, it all evens out – quit your bitchin…
Re the first chart, seasonally adjusted, the participation rate topped out at 67.3% in April 2000. By October 2009, the flection point used in the chart, it was down to 65%. So the picture would be even worse than shown. In May 2013, the participation rate was 63.4%.
Re a right to a job, I agree with Moneta. We have been trained to view all things economic as divorced from their social purposes. We need to relearn two things. First, we commit to provide to each other the basic necessities for a good, decent, and meaningful life: food, housing, education, healthcare, and retirement. Second, we recognize the value of all contributions to the realization of these social goods, instead of as now defining a job only in terms of pay whether it works for or against these social goals.
It is important too to recognize that there are decades of traditional work out there as we rebuild our infrastructure, industrial base, and communities in sustainable non-polluting ways.
“decades of traditional work out there as we rebuild our infrastructure, industrial base, and communities in sustainable non-polluting ways”
“decades of traditional work out there as we rebuild our infrastructure, industrial base, and communities in sustainable non-polluting ways”
Amen. And just think of what our society would look like with universal pre-K, excellent schools with tons of materials and teachers and helpers – all good jobs that do not all require higher education – just good training. Not to mention the care for the aged and infirm that we so desperately need as a culture. It could be another Renaissance – if we could just get rid of the Modern Medicis, who seem to have zero sense of noblesse.
Just read the bill, America just saved the social security program for atleast 100 years going into the future. It’s amazing how you can twist and turn and still America turns out to be a winner in this world. I love America. God bless America and ALL the Illegals who saved the greatest program in American history.
This is it for the cash transactions, They are done atleast for now. Any large cash transactions will be scrutinized with the big data programs. It will be a new hollywood movie. The real losers are the poor whites and African American people. They are screwed for good now. They want the GDP, Economy ball rolling. They got it. America will grow at anywhere between 8-9% GDP for atleast 30 -40 years. With that being said. If you are an investor buy some houses to rent. Because it will take a life time for some of these folks to own a home, Rentals will go crazy. The government got the additional money to spend. 11 million illegal, Considering a very optimistic estimate of being here for more than 5 years and have to be between age group of 20-25, 11 * 10K ( 2K/Year back taxes) + 2000k Application fee = 11 000,000,000,0 + 22, 000, 000, 000, I lost the count. Any way the bottom line is (Debt+ New War Funding)— I mean to say. Its all good now for America. It will never go broke. Go Obama. Healthcare is the only one left and America is a Holly wood Movie.
Not to worry. The US Senate is rushing legislation to import a massive number of additional foreigners on temporary work visas.
US corporations will then sponsor these foreign workers to help Americans find jobs.
ALIPAC, which is industry funded, perpetuates old style bigotry, nationalism and conservative delusions of the social contract. This serves the purpose of obscuring what the legislation actually does.
The legislation if passed will: Support corporate domination of labor, which is harmful to all labor, Americans and foreign workers. It will harm people who have been here for years, by purporting to help them with a lengthy pathway to citizenship. There is big money going to defense contractors and prison warehouses to “secure” the border.
One of the really ‘nice little earners’ that clever American businessmen have created is the internet market for medical supplements. They have just about everything one might want.
Quelle Surprise (excuse me Yves) to learn today that the pharmaceutical people have got government to close down sites selling meds, apparently because they’re too cheap although they have included an allegation of fraud to make it more believable.
This self-flagellation will do nobody any good.
“Not only do households continue to be weighed down by large historic debt burdens, they are having their purchasing power eaten away by price rises for life’s ssentials.”
And maybe also unemployment, disemployment, McJobs with no benefits (and, as the author does mention, massive inflation of daily expenses on the other end of the scale).
What would be an exogenous shock” help with this latter part of the cause of “insufficiently robust aggregate demand” (my paraphrase).
Edit:
“… ‘Exogenous shock’that would help …”
It is all well and good for asset price gains to bolster confidence, but real improvements in spending power are necessary to see broad-based, persistent spending growth.
We need another credit bubble, baby!
Or we could, you know, give workers a bigger share of the money. But that’s just crazy talk.
Did you say “share?”
Please note that common stock is an ethical form of endogenous money that “shares” wealth and power rather than steal and concentrate them as the current money system does.
If we want equity, then why isn’t money equity? Hmm?