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August 14, 2010 09:30 PM UTC
88 Comments
so I’m not sure anybody would vote for it right now. But it is much better than welfare or just extending unemployment benefits, I’ll give you that.
Off Budget.
Then you couldn’t complain about the budget deficit.
No more excuses about the budget from anyone. And no you can’t just raise taxes to balance it; that depresses economic growth and limits revenues. I want someone who will cut federal government down to the size it was intended to be and give us our dang money back.
For one thing, the “federal government” (Some people would call it the “American government.” Some people would call it “our government:, even “my government.” Strange, I know.) is in financial trouble right now. It needs your dang money — and mine — to keep afloat: You know, two off-the-books wars, terrific off-shore debt payments, national security operations around the globe and at home, measures to ensure our very economic survival through this serious (Yes, bj, this is serious stuff.) recession… Our American government needs our money to pay for these things, and a few more to boot.
Now, I’m going do a few things to make sure it doesn’t take any more of our dang money (yours and mine) than necessary in the future. Why don’t you join me? Let’s do everything in our power, bj, to make sure our government stops giving tax subsidies to fossil fuels corporations that don’t need them because they are already making record profits, to trans-national corporations that make profits in our country but pay taxes to other countries, to individuals that have seven-figure incomes but don’t carry a seven-figure American load, and to finance-related corporations and their officers who contribute not one scintilla to America’s economic strength and well being. Because our American government needs not only every bit of our dang taxes but every dollar of those dang taxes, too, just to get us out of the hole it’s in (oops: we are in).
And none of this starts to address Davidthi808’s new-economy-building discussion starter, and a good one it is.
I don’t have much money as it is, and I’m dang sure not going to give more money to big spending liberals who tell me that “America needs my money”. Screw them and their lavish Spanish vacations.
Spare me the bumper sticker rhetoric.
How much did your beloved wars cost? Who started them?
and paying for Michelle Antoinette’s luxury world tours and the like, I think the choice is easy.
Is that the best you’ve got? Attack the wife and kids?
You already live in Spain.
Sorry, Pols, for the partial outing.
has been provided by taxpayers.
And like all “faceless bureaucrats,” we can have confidence that the Beej did not earn his taxpayer-supported paycheck.
(Playing with stereotypes can be so much fun. Thanks for starting this game, Beej.)
would be somebody who works in government, not education.
I get so confused by
OrwellianRepublican terminology. Obviously, you do too, Beej.I thought “government schools” was the pejorative you R’s used for public schools. By your adopted language, you are a faceless bureaucrat at a government school (living off the taxpayers’ collective teats).
According to whom? Originally, the federal government was big enough and strong enough to keep a sizable portion of the population enslaved and to steal 2/3s of the country from Indians and give it to white men. That is pretty big, bub.
Both Clinton and Reagan raised taxes. But you knew that.
Now a question: were you born in “83”?
If you want to argue against the Constitution, be my guest, but you’re not going to get very far. The Constitution was set up with an amendment process so that wrongs could be righted, and they were. I no longer discuss the meaning of my screen name due to threats of lawsuits.
Where laws passed by Congress are subject to the review by the Supreme Court to determine if they are constitutional or not? So which laws of the federal government do you feel are against the Constitution? Or are you setting yourself up as an authority above that of the Supreme Court?
I am just trying to figure out what year they stopped teaching american gov/civics in school. That is why I asked.
Re your name: No problem, you could just post your birth certificate…oh wait.
Again, I expect an answer from you. This is not a playground. You make a statement, back it up. Put on your big boy/girl pants and defend your statement. That is what grown-ups do.
In addition to this I would like to see major national investments in the following:
(1) Remodeling the countries energy grid. We need one that will reliably handle contemporary needs and that is friendly to wind and solar. Also one that includes “fueling stations” for tomorrows electric vehicles.
(2) fixing our aging bridges, roads, sewers.
(3 my favorite) creating a new transcontinental railway for high speed rail from New York to L.A. and several north-south corridors.
If I remember correctly, most of the G.I. bill grads earned degrees in engineering fields. I think that we not only need to reeducate people, but we need to be sure that there is good work for them when they move into the workforce.
Finally,(a bit of a different topic) we need to do a better job educating people on the front end. I think our high schools need to rethink the way they try to push all of their grads into 4 year colleges. Not everyone is cut out for it. There are a lot of well paying jobs that one gan get with a technical degree from many of our great community colleges like welding, h-vac, electrical, just to name a few.
I agree that we should do this. But once it’s done, the electrical utilites will need fewer people to run the grid. So the end result is fewer jobs.
… are you arguing that the phone companies shouldn’t have computerized their switchboards, thus throwing all those operators out of work?
A vibrant economy depends on a certain amount of churn. Let inefficient industries wither and allow new ones to come into being.
The rise of virtual businesses is very intriguing to me. Via the web, individuals and groups can form virtual partnerships to provide services, exchange expertise and build businesses.
The business models are still evolving, and it will take the current twenty-something generation to work it out completely.
In the meantime, maintaining and upgrading our fixed asset infrastructure, and preparing for the increasing switch from an oil-based economy to a renewable energy economy should be very high on our investment list.
My point is that a lot of the fixes suggested, while they will provide some new jobs today, will reduce jobs in the future. As such, they add to the long term issue we face.
So yes, we do need to keep adding efficiencies. But we need to figure out what to do to address the issue of fewer and fewer jobs remaining after we make industries more efficient.
I’d just rather do it without 200 years of a giant underclass. It’s the transition that can be so awful for many.
There are two intriguing concepts based on anthropological research. One is the oldest surviving culture still using the same technology over time and space are (or were until they were discovered by tourists and oil companies) Forest Tropical Indians in the Amazon. They sustain their population on about three hours of work a day, they cultivate manioc and have survived for thousands of years.
This is one of the most efficient cultures in terms of man hours, the world has ever known. Now, they are non-industrial and non-literate; but they have a sustainable life style. They reproduce and they survive.
We do not have generational knowledge of the impact of our technology, mainly because it changes so quickly, and we are addicted to that change. It looks like based on the unforeseen consequences of technological changes that our way of life is not sustainable. IE. The industrial world is not reproducing. Our reproduction rate is below replacement. The pollution alone generated by out technology may destroy the environment in ways which we cannot predict. The collapsing population resulting in aging “empty mouths” people may well destroy the First World economies. Technology also cannot provide all the medical care which people are demanding.
Now, the second concept which appears to be contradictory is that a culture needs a leisure class…or excess food to support a leisure class in order to have inventions. It wasn’t until plants were domesticated and agriculture developed that there was surplus food and a lesiure class which was able to invent the wheel, astrology, writing, etc. etc….so theoretically with unemployment benefits and social security we have created a leisure class which any day now may solve all our problems.
I think your idea of a GI Bill for the unemployed is futile.
I don’t think that most GIs became engineers. A lot of them went into education because of the job security.
Education certification is an industry in and of itself.
You do not answer the fundamental question of how to employ the educated unemployed today. The people you would remove from job market are not the same people who are competing for the jobs requiring the skills you would send them to college to attain. The people with those skills are already competing for jobs.
I think our road forward will require a more educated workforce. But that is a WAG on my part. And you are correct that we probably won’t need a lot more engineers.
I read a history book where it titled the rate of change starting with the industrial revolution “acceleration.” That has always struck me is the key description of our world, change is ever accelerating and so we have no way of predicting where it will take us.
So no, I don’t have even a suggestion of an answer to this problem. But I do think it would help if we had people focused on this issue.
Unemployed engineers, technicians, geniuses of every stripe and the largest number of old farts in the history of the world….I wonder what will happen.
Very provocative diary, David….
A thought: We could subsidize, not college education, but women to leave the job market and nurture their own children through the first five years….
If it came between extending benefits and providing tuition, I’d rather provide tuition.
I’m not sure I’m for the tax rate increase after college part. If someone is going to spend 8 years paying back tuition for 4 years of college why can’t they just do that with a loan instead of using taxpayer money?
It also eliminates the horrible incentive we have right now that drives people to the highest paying job, not the one where they can do the most good.
1. Over the past 30-40 years, a much larger percentage of the population is/was in the job market. I’m referring here to the current predominance of “two-income households,” which were relatively less common. One could say there was a “job market bubble” that has now burst, along with the real estate bubble, the high-tech bubble, and perhaps some other bubbles that others might name.
2. What some (including me) call “deindustrialization” might just as well be described as “export of manufacturing jobs.” Nor is this a question of “free trade” when currency markets are not also free. I’m referring, of course, to the artificially low value of the Chinese yuan, kept low as a matter of policy by Beijing and tolerated (why and why for so long, I don’t know) by the United States. That may well be one of the easiest, cheapest first steps back: tariffs designed to equalize the value of the two currencies. There is absolutely no inherit reason for goods manufactured in China to be cheaper than U.S.-made products.
All service jobs depend ultimately on the added value of manufacturing (and in “manufacturing” I’d include things like agriculture, making movies, writing software, designing buildings, etc.). The importance of the massive export of manufacturing jobs (narrowly defined as factory work) beginning in the 1970s simply cannot be overstated.
We’re seeing the same thing happen in manufacturing – it’s becoming a very small part of the job market.
Is giving way to the localvore movement, under whose umbrella I would include small-scale organic farming. Things change.
Industrial manufacturing is a different story. One example: clothing is manufactured today much as it always has been; only the locales have changed, from New York to the American South, to Latin America and Asia.
But my point is that manufacturing needs to be restored.
So you just want to let that happen?
Not being able to grow or make most of what we need/use is a national security issue. We cannot be totally at the mercy of the whim of other countries.
You give up too easily. Our President thinks that we need to manufacture products, thank goodness! We can’t just keep importing everything. Besides a lot of it is trash when you buy it. We also need quality.
I see little written about why manufacturing is so able to support a solid middle class. (This is my theory, others probably have said it, but I’ve not seen it.)
It’s the matter of value added. You take a bunch of dirt (iron ore, coal) and you make iron. It’s worth far more than the cost of materials, capital, and the labor to make it. Then that iron goes to a make of deluxe widgets and the same thing happens. The value of the product is enough more to pay good wages.
Agriculture, software development, none of the modern alleged alternatives have a lot of value added. Service industries have essentially none. Labor is a bottom line expense, often the largest expense, of operation.
While manufacturing requires many well educated people, it also has been able to provide good employment to many times that of not so well educated people.
Not everyone can benefit from a higher education. If the good jobs aren’t there after that education, all said education does is reduce the value of said education as the grads become a labor commodity.
I’d emphasize over and over your point–exactly right–about the manner in which manufacturing adds value to raw materials. That value is then exchanged over and over for a series of goods and services, from which service providers get a share of the added-value. Once created, that added value of manufacturing can be subdivided and exchanged many times. BUT: remove the added value of manufacturing, and what is there to exchange?
The economic history of the United States between about 1880 and 2000 could be summarized as the period in which the “working class” managed to earn a bigger share of the added value of manufacturing, and thus the phrase “rise into the middle class.” This was especially true during the decades after World War II, when American manufacturing grew rapidly and was exported on a huge scale. Of course, the word “class” isn’t just about income levels, as some have been misled to believe, but not to be distracted.
In fact, a great deal has been written about this and related phenomena in economics journals, starting, perhaps, with the phrase “labor theory of value” coined by KM a few years ago. A daily dose of Paul Krugman’s blog on nyt.com is a useful start to plug into this discussion.
There is, so far as I can tell, little evidence of what a post-industrial economy looks like–except what’s happening in America since about 2000. The real incomes of the great bulk of Americans have not risen for the past decade — possibly for the first time in over a century — and there is widespread apprehension that today’s children won’t be as well off as their parents. Virtually ALL of the wealth generated since about 2000 has gone into the hands of a very small sliver at the very top, 1 or 2% max.
And that‘s the issue we ought to be talking about day and night, day and night, until it begins to penetrate heads buried in the Jersey Shore and/or the Family Credit Card Theory of Money & Banking.
In fact, nothing to offer contradictory.
Wages for the vaunted “middle class” have risen no more than 10% since 1973, per Krugman.
Our kids and their kids are already looking at shorter lifespans.
What does a post-manufacturing economy look like? We could turn to history – and Kevin Phillip’s “Wealth and Democracy” for a possible answer. This is a VERY depressing read if you take the observations and project into the (our) future.
It’s been a few years, but it runs like this: Looking at the mercantilist eras of great nations like Spain, the Netherlands, the British, there were similar phases. At the start of their respective dominances, there was a farmer/mercantilist class that eventually gave way to a finance class. The latter nothing to create wealth, it just shuffled wealth.
Does this not sound familiar?
One hundred years ago the typical Brit probably saw the empire as perpetual, that they ruled the waves….and always would.
Ask an uninformed American, i.e., average voter today, and you would get similar platitudes.
I weep.
You make a good argument. And the bad news is the banks are still putting most of their effort into derivatives and other financial instruments – and blowing off loaning to small business.
If this is the end or transition out of a historical era as in the end of the European-American Industrial Capitalism Era than simply employing a retro Education Bill will not be the answer. The thing about the GI Bill was that the Europe had to be rebuilt and because of the war and Great Depression there was much industrial and consumer pent up demand. Personal savings was near an all-time high but the US Govt Debt was 130% of GDP.
The opposite is in place now as consumer-personal debt is at a all time high and government debt is approaching 80% of GDP. Demand is not high for consumer or industrial products and there is no rebuilding of a continent either.
All this thinking of the big picture conjures up many references to writing like John Stewart “Evolution’s Arrow” and Strauss & Howe’s “Fourth Turning” and “Millenials Generation”. Michael Dowd also discussed that we were entering a new paradigm era that he described as “Nested Creativity” coming out of the “Mechanistic Era”.
Both writings in summary describe upheavals and collapses of the prevalent social, economic, and political systems, but at even at a deeper level psychological and cultural prevailing worldviews.
Long term more education would be a good thing, but not skills training for something that is a dead end. Economies are built and prosper because things are produced that provide a need or want, some form of utility.
Transforming the energy grid to a decentralized, distributed system could be in part the core of a new beginning. But there will need to be much more.
I think another necessary strategy will be breaking up the Trusts or Capitalist monopolies that have formed, so that there is a broader, decentralized activity of discovering things that are desired and needed in the transformation.
This transformation will have to take in account the environmental footprint where taxes or costs are fairly accounted to the economic activity and the cost to the commons.
These are all radical departures to the present selfish capitalistic system of seeking only profit under basic regulations.
But then that is what we all said about Marx.
One quibble — very minor — about education: We must stop thinking of education as producing usefulness (as it’s bandied about so much when the subject of “educational reform” is discussed). For instance, we too often hear the goal of education should be to prepare skilled workers, or responsible citizens, or, even, informed consumers. I believe the real need, from before K through death, now and in the future, is to put creative thinking, the ability to honestly identify, analyze and solve problems, at the head of the curriculum. That ability is the most utile product I can imagine. That’ll help workers, citizens and consumers gain the skills, responsibility and information they, and we, need.
Please amplify your solutions at the earliest opportunity these threads provide. You’re headed the right direction. Thanks.
I studied Marx and I am not advocating any prescribed system. Reality is that the next 30 years will have to rebuild the institutions that exist and are viable or build new ones. But that will be a process not a prescription.
As for long term education of course, but the current system is also proving to being broken down.
Again, not skills based education credentialing but real education where critical thinking is demanded.
Thanks for the great topic. It’s this kind of question that will have to be debated over many years. I tend to shy away from an overarching set of goals or rules. I think it will take people in neighborhoods, communities, cities, and regions working together to come up with solutions. That is the role that government can play: paying for the intellectual infrastructure.
I think the idea of paying something back over time with higher taxes unappealing. I would prefer to see government loans that are forgiven or discounted over time for public service. These loans could cover medical school (aimed at getting more GPs into rural areas and other areas that don’t have medical services now) as well as engineering and technical training. An Apollo project for renewables would go a long way to securing more employment and preparing the country for the future. As far as only being temporary, that is the nature of jobs in the future. People who have done solar installations for a few years will be able to turn that skill to other opportunities down the line. Look at machinists. They don’t work for a single industry but can make parts for almost anything. That will be the nature of blue collar work. There are vast amounts of water-delivery systems in this country that need updating. We still use open ditches for ag water in this country – we must do better if we want to eat and have clean water. Truck farming is making a comeback – national support for that could do a lot.
My point is that you have a great question but it needs to be decided by communities and take advantage of technology: the community of people working on an issue don’t have to be literal neighbors.
FWIW…..
One facet which receives little to no examination and discussion is labor as a commodity. It might be pushing a broom or pushing a scalpel, but all labor is a commodity. Some, like scalpel pushing, have stayed in short supply and hence have stayed valuable.
One of the reasons the middle class did so well from WWII to about 1973 is the low rate of immigration. Previously, there was always “fresh meat” for the corporate grinder keeping wages low, even for the second and third generation.
With the relative disappearance of “fresh meat” there was little choice but to pay the higher wages and benefits that organized labor demanded.
The jobs that (often illegal) immigrants now do as said to be ones Americans won’t, well, Americans did. Pick fruit, mow lawns, build homes.
I’m not so naive as to think American Andy is ready to pick fruit after decades of letting “the other” do it. But more Americans can be put to work doing janitorial, agricultural, and construction work. It didn’t get to the way it is overnight, and we can’t ever return to that past, but w/o cheap labor due to immigration SOME more Americans will be able to find jobs.
Yeah, I know, I’m a racist cretin…. That charge always comes out of the woodwork here.
In the sense that I understand what you mean, what changed is that the workers stayed put and the jobs, meaning factories, went there, most notably to China.
Old story: workers come to America where the factories were.
New story: factories go abroad where the (cheap) workers are.
As for “can’t ever return to that past,” if by that you mean the era when the most substantial portion of manufacturing added value took place in the United States, why can’t we return to that? I wrote somewhere else about the importance of exchange rates in this process; that’s an issue that is ever so gradually coming to the fore. It needs to come to the fore a helluva lot faster. At the heart of it: why should labor in China cost less than in America? Does it? Or does it seem that way under fixed exchange rates?
Big political/diplomatic/economic issue. Fact that it’s never discussed in elections, like the one just past, is soooo depressing.
“We can’t ever return to the past” is mostly due to changes in technology and transportation. Fifty years ago China was weeks away by boat, a difficult hop by plane. In the early 80’s I had a lot of dealings with companies in Israel. We had a Telex machine to do real time texts. If we needed diagrammatic information, it came by relatively slow and expensive post.
Unions and wages could thrive with such barriers. Now communications are instant and cheap and even moving goods is rapid. This is what I mean by we can’t go back.
The exchange rate situation certainly exacerbates my points. Why don’t we insist? Well, every time any politician tries to level the playing field, the international lobbyists go to work. With any changes, there are American companies that will suffer, at least in their opinion. So they buy off Congress and we, average folks, are out jobs, ultimately.
I read the other day about India intending to pass a law that mandates cellular equipment providers have security inspections (!) and provide all source code to the Indian government. Nokia, Siemens, Motorolda, whomever would be at a huge disadvantage compared to any rising Indian home brew company.
We need to play hardball. “You do that, we strike back.” Too often “free trade” means “take it in the shorts.”
BTW, I mostly do like your posts. Better informed, and yes, often wittier, than the average here.
There needs to be short term and long term thinking. Short term we need to do much more with infrastructure, including bridges, high-speed rail, water, sewer, electrical etc. These areas would not take so much now if we had not neglected them for the last 30 to 50 years. If we upgraded these to get them into the safety category where they should be but also took advantage of new technology over the next 10 years, that could be a lot of jobs. Then we need to be careful to maintain them so that not everything falls apart at the same time.
I don’t go for the ‘we should just be content with 2% of jobs being in manufacturing’! We will always need products that wear out or become outdated. It is actually very much against our security interests to buy all but 2% of what we use from another country. It may be a global economy but that is dangerously out of balance! Besides we could make things that didn’t fall apart within a few months or a year. We should take pride in making products that last a long time, not with built in failure so that they have to be replaced every year or so instead of every 10 or 20 years! Many years ago, I purchased a pair of Dr. Scholls sandals that I wore for over 20 years. Last year I purchased a pair of sandals that were supposedly Dr. Scholls that did not even last one summer, let alone a year! That is pathetic but too many people just take it for granted that nothing is made well enough to last a decent amount of time.
The same goes for farming. There are fewer people in farming because the multi-national agri-businesses have bought out the smaller farmers. Unfortunately the huge agri-businesses don’t care about sustainability, communities or anything except their bottom line. This is also a national security issue. We desperately need to be able to feed ourselves. Besides, do you really like eating frozen fish from China that are grown in ponds with chicken cages above them? Not me, no thanks!
I could go on and on but I will stop with a couple of links.
The Dept. of Agriculture has a lot to do with food, of course but also with many other things like water systems, sanitation and broadband that are in the ARRA bill. Even though I live in a city now, I grew up on a farm and in a small rural town so these things are important to me. Food is also important to me.
We need to determine what is left undone after ARRA projects and find a way to get them done.
http://usda.gov/wps/portal/usd…
http://usda.gov/wps/portal/usd…
http://www.usatoday.com/news/n…
Think that we have a little more work to do?
We have the UPS tracking hardware and system being made in Israel. We have numerous military electronic systems being made in France and elsewhere. We have Boeing making airliner components in China, which extracts technology transfers as part of the labor saving bargain.
Once upon a time Americn corporations would have been ashamed and castigated by union labor to do these things.
Now, it’s just bidness.
This won’t solve all the problems, and it will make life difficult for the rich (and therefore it will never pass) but…
1. Cap immigration at a very low number
2. Legalize drugs (marijuana and cocaine) – and tax them
3. Impose tariffs on good manufactured below US labor costs
You have to both #1 and #2 simultaneously because a major pressure for immigration is or will soon be people wanting to escape the drug war mess at the border. You can use the taxes from #2 to fund enforcement of #1. And then the tariffs can go back into R&D or into medicare-for-all or something else useful.
Your #1 has virtually nothing to do with unemployment. In fact, the level of immigration, certainly illegal immigration, is in fact going down insofar as there are no good jobs left unfilled.
The immigration debate is a canard.
I wont’ repeat what I posted above.
But, if you have evidence to the contrary, that labor is a commodity outside the laws of supply and demand, I’m all ears.
Economic immigration has been an economic staple throughout history — but only for a while. It’s ebbed and and it’s flowed. Polish labor to France, and back. Turkish labor to southern Europe, and back, etc. But, since the rise of nation states it has been regulated. And, if it wasn’t of value to the receiving states, it wasn’t, ipso facto, needed or, therefore, rewarded or allowed. As you point out, Latin American emmigration to this country has slowed. It’s not needed as much and it’s not being rewarded as much. Plain old economic immigration is not a problem. It has, instead, been of value. Or it wouldn’t exist.
A real problem in America is, we (the sort of societal “we”) do not value labor as it should be valued. Instead we have come to value only capital. We even encourage capital to cross borders, giving American corporations, financial and otherwise, incentives to do business elsewhere, whether they repay our societal largesse or not. Part of the solution to the “immigration problem” is to recognize in America the true value of labor in America, in relation to capital, and to reward it in America commensurately. We can achieve that, and we must.
Another very large problem is that many of the current immigrants are not here to take our jobs. They’re here to live our lives. From Nicaragua, Guatamala, Mexico: they are fleeing failing states. Their homelands are becoming places where no human should be forced to exist, where schools are non-existant or shams; where health care is nearly non-existant and impossible to reach or to purchase; where their own governments cannot or will not protect them from even petty thieves and criminal bullies, much less private armed militias and drug gangs; and where, in many cases, their governments are the thieves, the armed thugs. America can and must, for the sake of these humans, as well as our own interests, intervene beyond our borders. Not within the Bush/Cheney model of intervention, but within armtwisting and Truman/Marshall models.
To those who would say they deserve the country they’ve allowed: look around. Do you really believe that if the people cleaning office bathrooms, maintaining the malls, tending our lawns, joining two-by-fours, picking up trash, etc., at their wages had the political and economic clout and protections back home to change things for their betterment there they’d be here? Just to take our jobs? Hell no. In many cases they’ve traveled from, frankly, natural paradises, surrounded by loved extended families, and they’d have jobs there and living our lives there, at home. They’re not here for the money; they’re here for a chance to live.
The current immigration debate is a canard. It takes our conversation away from what Americans can and must do, ourselves. And no one is able to take those jobs away from us.
you’re not a racist cretin. Your postings here point to just the opposite. Except the cretin part. 🙂
This is directed mainly at China. It’s hard to do with with the number of T-Bills they own.
We also need to expand green energy production on a scale that the highway sysem was built, the way the space race took place, and how this country mobilized for WWII.
The general public doesn’t understand Keynes.Nevertheless, the WTO and the trade agreements need tweaking or the world’s consumer market( the USA) will not have the ability to buy the goods produced.
Debt is a two-way street. In fact, it’s the borrower who has the money, not the lender. The lender has high hopes.
But you are exactly right about floating currency rates, and we need to get a helluva lot more insistent that Beijing moves in this direction pronto.
Meantime, there’s a huge market for US government debt. I think our supposed indebtedness to China is way overstated.
and counting
and global warming has nothing to do with it!
No wonder they resist floating the yuan. If they paid 8 yuan to get $1 in T-bills, and now they should offer to get back just 6 (or maybe 4) back when they cash in the T-bills, interest notwithstanding?
As I said above, debt is about trading money for hope — hope that the borrower will be good for the dough. Is that what Obama meant by “Hope” in the campaign?
It would be worthwhile having a discussion on globalization, trade policy, monetary policy:i.e. Keynes v monrtarist policy.
I think the general public would fall asleep and prefer 30 second sound bites
You GIVE money to people who will spend it.
You don’t give money to help people with their mortgages because they send the money to the bank which will “bank” it.
You don’t give tax breaks to people who will save the money.
You give money to people who will/have to spend it. For example: cooks, waiters, gardeners, hookers, etc.
Milton Friedman was right about money supply. And, velocity is important.
Money in the hands of poor people has a higher velocity than in the hands of rich people.
If you had a choice between:
1. paying an extra $2 towards your mortgage
2. tipping the skycap $2
the best action for the USA economy is tipping the skycap.
You want to help the economy? Go to your local liquor store and buy a bottle of MD20 and give it to the first wino you meet.
As companies cut back on hours, the government made up salary differences. Money kept flowing to the butcher, the baker, the BMW maker.
Germany, Sweden, and most of Europe is already out of the recession. They put the dollars/marks into the consumer’s accounts. Demand stayed up.
China, as a percent of GDP, did much more than the US. They are rebounding, we aren’t.
I’m not saying we would only have 2% of manufacturing done here. I’m saying that the total percentage of the workforce needed for all manufacturing will be 2%. 200 years ago the majority of American workers were farmers. The vast majority. Now it’s 2% and they feed the entire country plus export.
I think a lot of manufacturing will return to this country. But it will be highly automated. And so just as we eliminated almost all farming jobs, we’ll eliminate almost all manufacturing jobs – regardless of where they are located.
That’s what I think is the critical issue we need to address – what do we do when there are no manufacturing jobs anywhere?
In 1973, 24% of US workers were in manufacturing.
In 2007, 10% were (not 2%).
That said these numbers are highly misleading since they do not reflect the relative value of manufacturing, relative wage levels (higher in mfg than in services), etc.
We didn’t wake up one day and find farming went from 60% to 2% overnight. But it’s declining at a fast pace. From Auto Observer labor hours required to build a car:
So in 5 years the labor required dropped 14%. This is occurring across all of manufacturing. Intel has a wafer fabrication plant where it can run with no one there, and did once when a big storm hit.
So what do we do when a relatively few engineers and brainiacs can make everything run on auto? I don’t know.
Take the profits and give the riff raff beer vouchers?
Assuming, argument’s sake, the value of the car remained the same. Who did/should benefit from this increase in productivity? Were workers paid 14% more? If not, why not?
… the worst, most boring, often dangerous of occupations?
Ignoring for a moment the 2-5% of the genius population that are the Nobel Laureates in Physics, Chemistry, Molecular Biology, etc., what are the rest of us supposed to do to earn a living?
Let’s see — engineering, medicine, education pay pretty well. Say higher ed isn’t for you, ok, how about a aircraft mechanic, heck — an auto mechanic? What about building homes, skyscrapers, roads, and bridges? We still need electricians, plumbers and carpenters.
What about artists and craftspeople? Those jobs give great satisfaction to the practitioners and they won’t get outsourced to cheaper overseas suppliers (unless they are much higher quality or under priced for the same quality).
But the element people are missing is the velocity of money. If money doesn’t move, then wealth is lost. Keep liquidity in the markets and jobs and the economy will take care of itself. It’s all about consumption. Where we went wrong was in borrowing to pay for over consumption. So this period of contraction — working off the overhang of debt — while necessary, will be painful and not over nearly soon enough.
Large companies have a big psychological impact on our economic outlook, but it really is the individual, the small businessperson and our local communities that make or break our overall economic well-being.
What’s changing is that with the web/social media revolution, we are returning to an almost pre-industrial revolution model, where people didn’t/can’t depend on large organizations (unless you were a government bureaucrat) for their livelihoods.
We are returning to a mode where the individual must be self-sustaining through particular skills and relationships. Providing value (content, products, knowledge, service) that isn’t available elsewhere. It’s not easy, and the money model is still evolving. I think aggregation is still the key (bringing together large numbers for a relatively small revenue per transaction), with a frictionless payment system (add it to your telephone/cable/utility bill).
It’s not an easy transition for most, as this is the Mother of all paradigm shifts. But it’s happening and while it may be too late for some of us geezers to adapt, the younger generation better get prepared.
Very good points. Maybe part of the shift will include a return to the craftsman model of making goods of all sorts.
But that adds a lot of management overhead both to find a qualified person, and to then manage them. I’ve found independent contractors cost more because of that overhead and only use them when it’s an expertise we don’t have that it’s not worth the cost of learning.
Part of the issue here is that jobs are a lot more interrelated. For example “programmer” is not sit down and write this code, it’s do some customer support so you understand the customers, it’s work with marketing to figure out what should be in the program, it’s help co-workers when they hit stumbling blocks.
My observations are in part based on what I’ve seen my wife do with her business over the past couple of years. She only has one full-time local employee, but may have a dozen or more task or project oriented business associates at any given time. And she is likewise, a provider of expertise to other businesses as well as her own customers.
She has developed many deep relationships over the past decade or two in her field, and leverages them via joint ventures and/or independent contracting to further her business. It’s really the only way she can tap into the expertise she needs to be successful. But, yes, there is a lot of turnover and do-overs when initating a new relationship.
I think as this becomes more commonplace, the kinks can be worked out. In a mature market, you have to have accurate information and experience in order to execute a mutually beneficial trade.
BTW, to follow up on the notion of a “frictionless payment system”, I’d like to see PayPal or a sharp young ex-First Data entrepreneur come up with a low overhead B2C clearinghouse for consolidating payments and subscriptions for web-based services (partially answering how newspapers can survive, but applicable to may other businesses, I believe).
Arianna must have read our discussion – Third World America: Chronicling the Assault on America’s Middle Class…and the Solutions
is peak oil. Whether we suffer a quick decline or weather a long decline, or even if we offset it with alternative sources (unlikely), energy prices will only be going up. Coping with that will, at least, bring many jobs back home. It’ll no longer be cost effective to make socks in China.
Which brings me to repeat why I value this place. There are so many critical aspects to important issues. Thankfully there are thoughtful people here that bring in-the-back-of-my-brain considerations to the forefront of whichever current interest is posted for our discussion. Obviously I’m a sucker for “Oh, that’s right! Can’t forget that.” moments, stadt.
We should subsidize mothers to stay home and take care of their own children for the first five years of a child’s life. This would increase readiness for school and take millions out of the job market. It would create a more realistic career ladder for women.
And I’d agree with it. True, I know lots more stay-at-home moms than dads. But I know some dads.
You find away around that little problem and it’s not a bad idea.
That comment is not like you….mothers are more likely to be crackheads than anyone else????WTF
Not all of them, not most of them, but some of them.
I don’t want to subsidize this small minority of mothers to stay home and breastfeed their kids.
You have done a personal home visit to all nursing mothers with your crack detection kit and what? a subpoena? Or you would like to apply for that job? Want it written into some legislation giving you the right to “inspect” breast feeding moms in the privacy of their home? Do you have any idea how sick a comment this is?
You know that if a baby is identified as a “crack baby,” the law requires Social Services to become involved, immediately.
Relax. I like your plan. I just think that the devil is in the details.
One aspect of this situation that didn’t get much attention is the overpopulation of our planet by homo sapiens. Until we are able to reduce the number of people alive at the same time, we are going to have dwindling resources and an overabundance of labor both skilled and unskilled. Education is not a panacea when there are 100 people with college degrees all competing for the same job.
The immigration issue kind of gets to this point but then you have all Americans evangelicals who don’t have a problem with six to eight kids per family. I have relatives who are following the no contraception philosophy and actually do have eight children. Until you get serious about reducing the population you face a losing battle to find jobs for every skilled and unskilled worker in the country.
I’m not advocating forced abortions or sterilization of certain subgroups like those with a known genetic disorder but if we don’t find a way to reduce populations it will make climate change look manageable.
Most 1st world countries aren’t even at replacement levels now (we’re an exception, but barely). And in the rest of the world we’re seeing significant drops in birthrates.
http://www.nytimes.com/2010/08…
Time to act?
What’s a tweater?
Or Spun Junction as we call it.