Tag Archives: economy

This Best of all Possible Worlds

The recession is over, and now it seems like everyone is waiting for the jobs to come back. There is talk of a ‘jobless recovery’ and the financial press counts every tick in the latest unemployment numbers while new college graduates and the unemployed sweat and scramble for any scrap of a job that comes along, and wait for things to get better.

The trouble is, there is every indication that there is no more better. This is as good as it’s going to get.

Oh, employment numbers may tick up a little bit. Even accounting for all the people who just give up on looking for a job, or are working at a much lower level than they were two years ago, the job market may improve a little compared to the worst. But I see no reason to think that it will ever be as good again as it once was. At least not for a generation or two.

When job markets were local, there was an ebb and flow in the demand for and availability of workers. When the economy boomed, companies hired more people, the pool of available workers shrank, and in the best practices of supply and demand, wages went up as employers competed for the best workers.

Now the job market is global. There are no more labor shortages, and there won’t be until the whole civilized world is at approximately the same level of prosperity and economic development. When times are bad, companies lay off expensive Americans and move operations to cheaper countries, and when times are good they keep doing that and pocket the higher profits. They are, in fact, required by law to do so. (A corporation has a fiduciary duty to make as much money as possible for the stockholders, and they can be–and some have been–sued if they let little things like morals or ethics get in the way of making a bigger profit.)

With no more labor shortages, all the power is in the hands of the employer. They know that most of their employees have no options, and are terrified of losing their jobs, and many of them use that power ruthlessly. I know people who have been fired for refusing to spend practically every waking hour at work (without compensation for the overtime), requiring them to never see their children. That is the work environment we have now; do what your employer says, whatever they say, or risk being fired and not being able to find another job for months, or years, or ever again. They can replace you tomorrow.

Even worse, if you try to stand up to your employer you risk losing your healthcare. In many cases, that gives employers the literal power of life and death over their employees.

This is the reality for most American workers now. The employer holds all the cards, you have little or no bargaining power. Welcome to part-time jobs, the low pay and oppressive work environment of the service industry, and wondering every day if you are going to have enough money to pay your bills, and if you are even going to have a job at all next week.

People have become angry when I attempt to point out that is may be about as good as the job market is going to get. I can’t really blame them; it’s easier to get mad at someone for pointing out a problem than to get mad at the people who caused the problem. Those people are powerful and scary and far away.

However much the government might be talking about jobs and job creation right now, they really don’t care. They haven’t for decades, at least. They can’t care; it’s against policy.

The official US policy for years now has been globalization. Reducing barriers to trade, encouraging multi-national corporations, and whatever is good for business. Globalization may be great for big corporations, but it is as bad as can be for the average worker.

I can’t really blame the government either, though. They’re just doing what their constituency wants. That, of course, being the big corporations. They are who put our elected representatives in office, and keep them there, so that is who those representatives listen to.

(Sure the voters count, but you can only vote for the people on the ballot, and no one who hasn’t been approved by the big interest groups is going to get on the ballot. That is the fundamental fact that you must keep in mind whenever you watch ‘our’ government in action; it’s not our government.)

So, the middle class shrinks, the divide between the rich and poor gets bigger, and people spend more and more of their free time playing games like Farmville, because it gives the illusion that they have control over some part of their lives. Is there anything we can do, besides wait for the global economy to reach equilibrium, leaving no low-wage regions for the corporations to flee to?

Take back the government. That’s more easily said than done, but the government will not act in the best interests of the average person as long as it represents interest groups rather than people.

This was your county once. Take it back.

A Thinking Point

If a socialized health industry is bad, why is a socialized police, fire, and rescue industry good?

What Does It Do?

Thinking point:

What is the purpose of a society’s economy?

The Leaky Economy

It’s a pretty standard course of action these days that when the US economy gets in trouble, the government starts ladling out ‘stimulus’ money. This ‘stimulus’ (whether in the form of direct payments, tax breaks, or low interest rates) is supposed to jump-start the economy and create jobs. The idea is that creating demand for products (either from consumers or other businesses) will encourage companies to hire people to meet that demand. Increase demand, increase production, create jobs. Seems straightforward. Unfortunately, the borders of the US economy are porous.

That was not always the case. Between WWII and 1990, it took about eight months for the jobs lost in a recession to be recovered. Job recovery from the 1990 recession took 23 months. Job recovery from the 2001 recession took 36 months. We’re still waiting on the current recession.

The reason behind these ‘jobless recoveries,’ I think, is that in our globalized economy the demand created by stimulus spending no longer has to be met by workers in the US. The stimulus money basically leaks out of the US and stimulates economies all over the world. Imagine a colander in a sink. You keep pouring water into the colander, but it never gets full. Not until the entire sink is full enough of water to raise the level in the colander.

That is the situation we have when the government tries to ‘stimulate’ the US economy. The money pours out into the global economy as fast as they can pour it in. They’re not really stimulating the US economy; they’re stimulating the entire planet’s economy, which takes a lot longer and a whole lot more money.

And so we get ‘jobless’ recoveries. As the global economy grows, these recoveries are going to take even longer, unless we drastically re-think how we go about managing our financial crises.

There seems to be three different ways the problem could be approached. (Well, four if you count “Don’t do anything,” which is the likeliest course of action.)

The social safety net could be strengthened so that there isn’t as much urgency to stimulate the economy. The downside of this is that increasing unemployment payments, and extending low-cost health care to the unemployed, would be expensive. The upside it that it would probably be less expensive than what we’re doing now.

The stimulus could be made more direct, to focus it on the US economy. That would require more direct government involvement, not just writing checks to consumers and businesses and hoping they do the right thing with the money. The government would have to directly put people to work, require that companies create their new jobs here in the US, that sort of thing. The downside is that government job programs are generally inefficient, and any government involvement in the economy causes some people to begin bleating, “Socialism!” The upside is that it would keep some of the money in the US economy.

Finally, we could make the borders of the US economy less porous. This would involve a small tariff, say about 5%; just enough to impose some friction on the money leaving the country. The downside is that it would annoy many of our foreign trade partners, who are used to having unfettered access to markets in the US, and many US companies which are used to being able to move parts of their operations overseas without restriction. The upside is that it would restore some of the competitive imbalance that US companies currently operate under, and keep many jobs here in the US.

I favor a mixed approach; strengthen the safety net for workers, and impose a small tariff on all imports. The tariff would go a long way towards paying for the safety net.

This would raise the cost of some goods, either directly in the case of imports, or indirectly in the case of companies having to maintain more expensive operations here in the States (as opposed to hiring people in China or Indonesia and importing their products), but with more jobs and money kept in the country people would be better able to afford the more expensive goods. NOT doing it will mean increased taxes to pay for all that stimulus money that is pouring out of our country, to benefit workers all around the world. We simply can’t afford that any longer (though that is exactly what the powers-that-be want to keep doing).

In either case we pay. This plan at least lets us pay each other.

Occupy This

Some people have claimed that the rich financiers on Wall Street are the wrong target for protesters; that those people haven’t done anything wrong. They’re not out to hurt anyone, they’re just really good at getting rich. Should we punish them for that?

The problem is, that’s not true. The super-rich Wall Street bankers didn’t simply get rich by playing the game better than everyone else; they changed the rules to favor them. Those government agency that don’t oversee the banks like they’re supposed to? That’s because the agencies are run by investment bankers. (It’s actually quite common to have an agency that is supposed to regulate an industry staffed by representatives of that industry. They’re the ones who have a sustained interest in what the regulating industry does.) They bribe our elected officials to get their taxes cut, and laws passed to loosen the regulation of their business. They get taxpayer bailouts to cover their losses when their wild gambling spree finally collapses.

The competitive economy isn’t a matter of sitting down at a table with a poker player who is more skilled than you. It’s a matter of sitting down at a poker table with a player who may or may not be more skilled than you, but who can–and will–unilaterally change the rules to favor himself as the game goes on. It’s tough for anyone else to win that game.

If the Occupy Wall Street protesters sometimes sound as if they don’t know what they want, or if their goals sound foolish, that’s because of the nature of the problem. It’s impossible to reform the system because only the people benefiting from the system as it is now can do the reforming; the interlocking marriage of government and big business/finance can’t be broken from within the system, because they control the whole system. Any suggestion for reform sounds absurd when reform is impossible.

My own absurd idea (which couldn’t possibly be implemented, but which is no less absurd than any other attempt at reform) would be to fill offices by lot. Pick people at random from the pool of registered voters. Sure, some of the people you get will be corrupt, or crazy, or stupid, but some won’t be. The system we have now practically guarantees that _only_ the corrupt, crazy, or stupid get in. Adding 12 randomly chosen Tribunes of the Plebs, with laws making it high treason to give any Tribune or member of their family a bribe or ‘valuable gift’ would be a nice bonus. Corporations would still find a way to buy them, but having to buy all 12, and a different set every year, would get expensive.

(Tribunes of the Plebs are another Roman institution, one our Founding Fathers didn’t want to touch. We got a House of Representatives instead. In American terms, all 12 Tribunes would have the same Veto power as the President, plus the power to bypass Congress and bring legislation before the American people directly. Awesome, huh?)

Crazy? Of course. But what isn’t?

Who Owes Who

Paul Krugman is right in that national debt isn’t necessarily a terrible thing. It isn’t good, but it doesn’t have to be terrible, especially when, as he says, the money is owed internally. Cutting government spending is useful, but spending more in some areas can also be useful. That’s why I suggest cutting military spending, but increasing spending on worker training.

It more important to spend on the right things than to not spend at all.

See The Future Of Employment

This is the future for most workers. It sucks.

Perhaps before we worry too much about working conditions in China or other ‘Third World’ countries, we should look at conditions in the Third World country right here in the United States.

How Screwed Are We?

A well-educated population is a necessity for a country’s economic success. Destroy a country’s education system, and you destroy their future economy.

So, why are we deliberately destroying our own education system, top to bottom?

This comic lays it out.

Trickle Up

Have We Bought Enough Yet?

“Obama could have, instead of giving money to these large mortgage holders, said ‘We will pay off all mortgages up to $300,000.’ It would have cost far, far less than what they gave the banks.”

This is an excellent idea. The only thing wrong with it is that in this country we consider it morally wrong to give money to people who aren’t already rich. Only the rich and corporations are morally worthy of government largesse.

As far as the government is concerned, us commoners can fuck off; they’ll bail out Wall Street, but we don’t give them enough campaign contributions to be worth the investment.

Also, it would go against the interests of the very rich to question the benefits (to the very rich) of ‘trickle down’ economics. (For those not familiar with the term, it is a Reagan-era idea that if we give all our money to rich people, they’ll give a little of it back to everyone else. It remains very popular, with rich people, despite the resounding proof over the decades that that whole ‘give a little of it back’ part never happens.)

The way out of an economic downturn is to put money in the hands of people who will actually spend it; the common folks. Trickle UP. We’ve known that for generations. (it’s how we got out of the Great Depression; Social Security money and wartime mobilization jobs.) But what we actually do is give money to rich people and corporations. The only people that benefits is the rich and their corporations. So why do we do it?

Why do our legislators only do things that benefit the people who give them massive amounts of cash every year? Hmm. I’m stumped.

Broaden The Base

There’s a lot of talk about ‘broadening the tax base.’ That basically means making poor people pay more Federal income taxes.

Here’s a suggestion: Instead of broadening the tax base, how about we broaden the prosperity base. Let’s move more poor people up into the income tax paying brackets, rather than moving the income tax paying brackets down to encompass more poor people.

Same result for the tax base, less human misery. Unless it’s the misery that you’re after?