Employment: Neither Quality Nor Quantity 43 comments
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Two dissatisfied customers comment about a restaurant. One says, "The food here is terrible." The other replies, "I know, and such small portions!" In many ways, they could be describing our current employment picture. Not only are the portions shrinking, but the jobs themselves are steadily losing quality.
Today's release of the October jobs report showed the loss of another 190,000 jobs had pushed the official unemployment rate to 10.2%, only the second time since the Great Depression that unemployment was quoted in double digits (factoring in workers who had given up job hunting altogether or have settled for part-time work would push that rate to 17.5%). That didn't stop Wall Street pundits from trying to fashion a silk purse of this sow's ear. The 'green shoots' crowd focused on the slowing pace of job losses, the nascent economic 'recovery' (even if it is jobless), and the projected improvement in 2010. No mention was even made of the quality of what few jobs were being created.
The analysts completely ignored the continued trend of replacing goods-producing jobs with those jobs that require production from other sources. For example, we lost 61,000 manufacturing jobs last month, but added 45,000 jobs in education and health services. In particular, the addition of health workers is nothing to celebrate. Just as a family's economic position is not improved by higher medical bills, the country as a whole does not benefit from increased health-care spending. Until this trend reverses, our unbalanced economy will not regain its stability, a real recovery will never take hold, and the overall job outlook will get much bleaker.
By spending trillions of dollars of borrowed money, President Obama hopes to engineer a recovery and create jobs. However, he has only succeeded in digging America into an even deeper hole than the one he inherited from his predecessor. He believes that if we can simply push up spending to levels seen during the "good times," then those favorable economic conditions will return. The reality, of course, was that those good years came with a heavy price-tag that we have barely begun to pay.
In a press conference today, the President claimed that the latest extension of unemployment benefits will not only help the unemployed, but the overall economy as recipients spend the money. If spending government-granted money really were a benefit to the economy, why not simply increase the amounts endlessly? Why limit the benefits to the unemployed? Let's make this recovery a real barn burner: send out million-dollar checks to everyone! Of course, what Obama and his economic advisors do not understand is that money spent by recipients of unemployment benefits is money not spent or invested by taxpayers. It's a transfer of wealth, not a creation on new wealth.
In addition, policymakers are also struggling with diminishing returns on ultra-low interest rates. No matter how much monetary alcohol the Fed tries to pour down consumers' throats, the swill simply will not go down anymore. Consumers have already had enough and are trying to sober up – by refusing to spend irrationally. The excess liquidity simply weakens the dollar and spills over into other pools, such as goods prices, money metals, commodities, and investment assets.
During the boom, we spent money we did not have to buy things we did not produce and could not afford. As a result, we are now deeply in debt and must sharply reduce our spending to replenish our savings. By focusing solely on consumer spending, the Administration is neglecting the capital investments necessary to improve our infrastructure and productive capacity.
To generate legitimate economic growth and meaningful jobs, we must reverse the trends that brought us down. Consumers may have led us into this recession, but they can't lead us out. The road to recovery is a one-way street, and it's paved with savings, capital investment, and production. It's not an easy road, but we must follow it to ensure our future prosperity.
As a first step, our politicians must stop pushing us backward. Rather than imposing more market-distorting regulations, we should repeal those most responsible for inefficient resource allocation. Rather than creating new moral hazards, we should withdraw guarantees for large financial institutions and irresponsible consumers. Rather than continuing the Greenspan policy of keeping interest rates too low, we should let them rise. Rather than trying to prop up asset prices, we should let them fall to market levels. Rather than increasing the burden of bureaucracy on the economy, we should look for ways to lighten the load. Rather than encouraging people to borrow and spend, we should reward those who save and produce.
Until we acknowledge these fundamental errors, more of our citizens will lose their jobs. As those that stay employed are funneled into unproductive industries like the federal bureaucracy, the country will sink further into stagnation. Worse still, everyone taking jobs in these sectors will be laid off in the next phase of the crisis – and will have lost this opportunity to build practical skills for the new economy.
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This article has 43 comments:
Consider a simplified economy where half of all workers are doctors or nurses and the other half are stockbrokers and financial planners. Could such an economy be self-sustaining? Assuming no one had to eat, maybe. But since people do have to eat, that economy would have to import food. In order to do so, we'd have to export something. (Currently our main export is inflation, but in a sustainable world it'd have to be a zero-sum game.) If the countries producing our food valued our health care and financial services, we could export those, but it's usually not too convenient for consumers to buy health care or financial services from the other hemisphere. Basically, we'd have to export goods to import goods. And that means we'd have to produce goods. Either we'd need farmers in addition to our doctors and bankers, or we'd need some other goods producers to produce goods that we could trade for food.
So in a way, health care is not a productive industry, but in a way it is. Service-producing industries are not necessarily bad, but we cannot survive on *only* producing services.
May I have more gruel sir?
Anyone not preparing a survival pantry better start today.
Time is running out.
Let me say to you that since I lost my job earlier this year, I am able to stay home and watch CNBC all day, everyday. And I've learned two very valuable pieces of information from watching day in and day out that I am happy to pass on:
1)Everything is fine.
2) The economy is just a bit behind schedule concerning employment. That'll solve itself. (refer to #1)
The point I think he is trying to make is that this is not a solution.
The fact that our president is hailing this extension as some sort of economic positive, instead of REAL policy reform to quit funneling our imprisoned funds to the the insolvent captors.
Picture our big banks in much like the premise of the movie "Weekend at Bernie's." with the government holding up the banks on the left and the Fed holding up the banks on the right. Everone is fooled into thinking it's a-ok, business as usual, except for the two institutions proping it up and Henry Paulsen's loose leverage that killed it.
On Nov 08 08:13 AM chris coonan wrote:
> while it may not help the economy jump start, the unemployment checks
> are needed to prevent a collapse of society itself right now
Recently at the gym, a PhD in Chemistry told me as rebuttal to my debt concerns, that debt doesn't matter. We could just default on all this debt, enforce trade protectionism, and it would work out fine. Then he cited the Weimar Republic as an example. I thought he was kidding. He wasn't. I asked him (as just one example) what we do about oil if the dollar is destroyed? After his first nonsensical response (which my memory banks purged for fear of contaminating other data), I reminded him we import 70% of our oil and if that were cut off, our economy would be destroyed. He changed topics.
The frightening part is this is a well "educated" person. He really believes this.
----------------------...
Agree 100%. People need to be told the truth.....5% of our economy for about 5 years was make believe. People that couldn't afford houses bought them. People "found" free money in home equity loans and spent it. The masses of people writing these loans and selling these homes earned commissions that should never have existed, etc, etc. Now we need to adjust to that, not try to recreate it again.
Savings by the American people combined with a national energy policy to rid ourselves of foreign oil and a national industrial policy are the only hope we have. When we see that people used to save 10% of their incomes in 1981, we never see any commentary as to why? Its because people didn't expect the government to do everything for them.....they expected to do it themselves. Now a segment of our population thinks the government is responsible for their lifestyle and well-being. And our cowardly politicians have provided them just that.
We need to cut government spending, promote personal savings and investment, look out for American interests in trade, invest in infrastructure to rid ourselves of foreign oil, and tell people the truth. You aren't entitled to live as well as you want.....your entitled to live as well as your means provide. And its not government's role to fill the void between the two.
On Nov 08 10:22 AM yellowhoard wrote:
> I'm surprised he didn't hurl a personal insult at you and then leave.
You know I used to not do my homework because my parents compliment me for doing it. I was really a lot better off when I started to ignore them no matter what they said. The liberals like to think about healthcare, F them. But ignoring probelms is what got us into this in the first place.
No, Whitslack,l I am not advocating a service economy.
I thank my lucky stars that he isn't running the country or the pain the common man would endure would be unbearable since the wealthy such as himself would come through it fine and on the backs and the suffering of the common man.
He is a pure capitalist without any social conscience.
Really? Isn't that what the whole stimulus thing was about? You can argue about how well it's spent (poor), but you can't say that they haven't ostensibly targeted infrastructure.
On Nov 08 04:47 AM sticktoitiveness wrote:
> I'm not sure I agree about your dislike of adding health services
> jobs. If you want lower costs and have the capacity to handle the
> largest generation getting old and needing more healthcare, you need
> more healthcare workers (not more bureaucracy). These people are
> more likely to recognize warning signs in themselves and family,
> getting them to the doctor sooner and decreasing costs.
I do agree the fed should be disbanded and that interest rates should be set by the markets.
I do think raising taxes considerably on the well to do would help, after all once you've got a few million, 100 million or billion in wealth whats the point in it all?
What is it about oil and coal,who is it in the USA is it thats holding the country back from enjoying all the natural gas they have?
As for peter running for senate well thats insane, he cares about as much for the common man or the country as he does for whats on the bottom of his shoe.
He cares about his wealth period.
American needs to wise up and stop spending money we don't have.
On Nov 08 11:36 AM just mike wrote:
> I've seen this guy on CNBC a few times and now spent the morning
> reading several of his articles. I find him completely negative about
> everything the government and markets have done and are doing.<br/>I
> thank my lucky stars that he isn't running the country or the pain
> the common man would endure would be unbearable since the wealthy
> such as himself would come through it fine and on the backs and the
> suffering of the common man.
> He is a pure capitalist without any social conscience.
But It is a real issue, don't ignore the whole issue based on one bad idea.
On Nov 08 12:07 PM snappers wrote:
> There is nothing the government gets there hands on that has reduced
> cost .
The really 'unproductive' character of economic activities emerges always out of the illusion, money or the transfer of money could reproduce the real equivalent of its nominal worth. A lawyer whose skills settle the way for thousands of people living in the status of divorce is not paid by money he created by establishing new wealth. He knows very well, that money had been earned on a real basis - a basis he is not eager to join ever himself. But even the greediest lawyer knows that this basis grants the buying power of his money.
On Nov 08 04:47 AM sticktoitiveness wrote:
> I'm not sure I agree about your dislike of adding health services
> jobs. If you want lower costs and have the capacity to handle the
> largest generation getting old and needing more healthcare, you need
> more healthcare workers (not more bureaucracy). These people are
> more likely to recognize warning signs in themselves and family,
> getting them to the doctor sooner and decreasing costs.
A fellow can be a capitalist / free market advocate / whatever, and have a conscience. This particular one, however, thinks that when the federal freaking government mandates it, it is unconscionable. JustMike, this is why Peter is so negative...because people like you have hijacked the country.
Even if we, as 'evil capitalists', are in the minority (and frankly, we might be), our system of government is *supposed* to protect the rights of the minority. Instead, we have a grabby-hands government which is on a path to abuse us mightily because of our ideas about personal responsibility.
To simplify it, our official government policy is one of "take from the Ant for the benefit of the Grasshoppers". And don't give me any crap about lack of 'social conscience'. I spent a night last week working (for free) in a homeless shelter and providing (for free) some much needed groceries. I am completely positive that I am not alone in this kind of behavior...because I see it.
blog at strikeback2010.com ...and yes, I support Peter for Congress.
The above description may be ascribed to the present administration and financial systems in place in the U.S. today. Nothing will change until this cancerous rot is cut out and discarded for some old fashioned justice and honesty. Prosecute and punish those that are responsible and enforce the letter and spirit of the Constitution.
Until this happens any 'new' people in Washington DC or Wall Street will just be contaminated by the overpowering rot and hubris that is present in towering dung heaps. This is a shameful blot on the American National character and requires excising.
www.planbeconomics.com.../
If a person has already been out of work for over a year, one has to wonder what efforts he/she has made to find employment. Is he/she refusing to take a job that pays less than accustomed to? Does he/she have a working spouse? It doesn't hurt so bad when your spouse is working, and you sit home and collect $300+ tax free dollars each week.
Do the math: wages are taxed by state and federal agencies, and Social Security and Medicare costs are also deducted. Add to that your transportation expenses. You may also be paying daycare to watch your children. So, what's really left out of your paycheck? And most importantly, how does that amount compare to your Federal unemployment check?
Bottom line: are those unemployed REALLY trying to find jobs?
blog at strikeback2010.com
On another note. I am so totally sick of hearing Obama cheerleaders in the liberal media telling us that the economy will roll next year but slow after that as the stimulus wears off. If any measurable portion of that insane bill was actually stimulating anything beyond loyal supports of the Democrat Party, it would never wear off! The economy, once "stimulated", would benefit from the money spent for years or decades! Almost nothing in the bill was dedicated to building the long term economy of the nation.
Yes. I am talking about another Depression. I don't like the thought of having to live through that any more than anyone else does. But, I don't think the chances are very good that we will avoid it unless the government changes directions very quickly. I don't see that happening either. I suspect that the 2010 elections will bring more balance of power between the two major parties in Congress, but I don't see any silver lining in that scenario. The likely outcome is either more of the same or stalemate. Either way the direction doesn't change.
As a nation, we are staring at the cliff just ahead and arguing about who should be steering while all the leaders in a position to steer are jostling for position to get re-elected. We see the cliff. Our leaders tell us that must be a mirage because all the reports that they read tell them that everything is fine. As things get worse there will be bouts of finger pointing and more denial, but the course we're on is the course we'll stay on until it is too late and the rest of the world decides to pull the feeding tubes.
I hate being doctor doom. I really am the eternal optimist at heart. But I can't remember such idiocy in government lasting for so long. The sooner we pay the price the less painful it will be; likewise, the longer we put off the inevitable, the more painful it must be. Most of our leaders in Congress will feel very little pain due to their position, wealth, and gold-plated benefits/parachutes (provided by none other than the taxpayer). Their friends (the super rich) will not feel any real pain, either. In fact, when things get to their worst point, those who still have anything left will be able to pick and choose from all the opportunities to profit. After all, in every disaster there is opportunity for someone. The rich will get richer and the middle class will all but disappear.
static.seekingalpha.co...
We could have spent 100% on bridges, roads, sewers, water mains, A WALL BETWEEN MEXICO AND THE U.S., but no...it went to buying social programs, office chairs, iMacs, and "programs" to study problems about problems and hold committee meetings to discuss what committees we need to form to save the economy.
Any person living their life this way would be said to be on a road to perdition.
On Nov 08 11:51 AM User 450686 wrote:
> "the Administration is neglecting the capital investments necessary
> to improve our infrastructure and productive capacity"
>
> Really? Isn't that what the whole stimulus thing was about? You can
> argue about how well it's spent (poor), but you can't say that they
> haven't ostensibly targeted infrastructure.
Gov spending (and debt) will increase and increase and increase and increase and increase. You are not fighting for fiscal responsibility. You are at war with the dogma of socialism. But don't worry, serfdom is just up the road.
Under socialism its the reverse.
To that little homily you should understand that under capitalism the individual makes choices, under socialism, the state makes them for you; and not to your best interest. See world history.
On Nov 08 11:36 AM just mike wrote:
> I've seen this guy on CNBC a few times and now spent the morning
> reading several of his articles. I find him completely negative about
> everything the government and markets have done and are doing.<br/>I
> thank my lucky stars that he isn't running the country or the pain
> the common man would endure would be unbearable since the wealthy
> such as himself would come through it fine and on the backs and the
> suffering of the common man.
> He is a pure capitalist without any social conscience.
Note that the banks are in tight, low risk mode, the consumer is tight, not spending...and yet the markets are trying to recover ...why? I think one reason is the echo game going on. A turn of the millenium tech crash echo of the echo boomers is resounding through the market. That old crash had a relatively fast recovery, they do not recall a slow recovery. Are they betting that they can play this market using their computer programs to be quicker than the market? Not get caught in a steep swift correction because of computer trading? I remember when the computer jammed. I remember when if gapped down and missed stops. I remember when phone lines were jammed. They have 'solved' all these glitches, of course. The global market can handle trillions moving in one day, in basically one direction, of course. This is definitely going to get interesting. Like hawks hitting roadkill, they are fast and hungry...and then a semi plows into them...and didn't even notice the feathers flying in the wind...it is not 2005, it is not 1995 either...you have to go back further, and the rules have changed since then.