Tuesday, October 12, 2010

I am not a great fan of

Paul Craig Roberts

He's a bit too negative for me, but....

For a number of years I reported on the monthly non-farm payroll jobs data. The data did not support the praises economists were singing to the "New Economy." The "New Economy" consisted, allegedly, of financial services, innovation, and high-tech services.

This economy was taking the place of the old "dirty fingernail" economy of industry and manufacturing. Education would retrain the workforce, and we would move on to a higher level of prosperity.

Time after time I reported that there was no sign of the "New Economy" jobs, but that the old economy jobs were disappearing. The only net new jobs were in lowly paid domestic services such as waitresses and bartenders, retail clerks, health care and social assistance (mainly ambulatory health care services), and, before the bubble burst, construction.

The facts, issued monthly by the U.S. Bureau of Labor Statistics, had no impact on the "New Economy" propaganda. Economists continued to wax eloquently about how globalism was a boon for our future.

The millions of unemployed today are blamed on the popped real estate bubble and the subprime derivative financial crisis. However, the U.S. economy has been losing jobs for a decade. As manufacturing, information technology, software engineering, research, development, and tradable professional services have been moved offshore, the American middle class has shriveled. The ladders of upward mobility that made American an "opportunity society" have been dismantled.

Why are we surprised??

I remember the late 60's when Toyota first came into the US followed by a host of others. Slowly they whittled away at our automotive industries and just sucked up the entertainment electronics industry and shrunk the telecommunications industry.

Twelve miles from where I write this there was a factory making telecommunications equipment that in 1966 worked three shifts and employed over three thousand people. A sister factory to the south employed around 2000 as did a factory 500 miles to the east.

About 40 miles to the west a small firm made TV tuners on contract to the large manufacturers and three miles from here a small firm made wiring assemblies and other products for the automotive industry/market.

To the north the "coat" factory made coats and near here shoes were made.

None of these exist today.

To be fair, the South played "beggar your neighnor" to the now "Rust Belt" by promising industries cheaper labor and low taxes. And the Japanese did open some electronic plants and some auto plantrs.

But on the whole those were PR sops and a bandaids.

The facts are that while we couldn't sell in Japan, and other countries, they could here. We deluded ourselves into thinking that we could stop building things, adding a value that someone else coud not.

There is a reason why a skilled mechanic makes more money than a waiter.

The value added by the mechanic is worth more and can be provided only by a decidedly smaller group who have more training and skills.

And to again be fair, the jobs slipped passed Japan into SE Asia and China.

But that doesn't help our shrinking middle class.

Do I have a solution? No. I don't.

Some say that the wages and working conditions around the world will catch
up and even out. But I doubt it. The unions were what expanded economic democracy by demanding higher wages and management was constrained by a knowledge of what it meant to be poor and while they were greedy, their greed was tempered by social responsibility.

China doesn't have unions but they do have Crony Capitialism. So don't expect China to change short of a war and regime change.

We still have unions but they are dedicated to promoting Left wing social issues and electing Democrats who they expect to give them more power. We also have Crony Capitialism, only it is more between Wall Street and Government than anything else.

The Tea Party offers some hope of reform but too many of these folks are more interested in making sure Paul doesn't smoke dope and that Jane doesn't marry Sue. Not, mind you, that I cease to be a fan of the Tea Party movement but they are just the tip of what must be changed.

Just over two years ago we bailed out Wall Street from their stupid tricks and unbounded greed. Yet 99.9% of the players suffered nothing for their actions. That's like letting a puppy diddle on the floor without even a strong, "No! No!" The puppy's reward for you will be another puddle and a pile of poop. Probably in the middle of the living room.

We don't know just yet how Wall Street will screw us again but they will.

Hat tip to Edger

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"Unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them." - Karl Popper

“Necessity is the plea for every infringement of human freedom. It is the argument of tyrants. It is the creed of slaves.” - William Pitt

"Logic. There is little logic among the cultural elite, maybe because there is little omnipresent fear of job losses or the absence of money, and so arises a rather comfortable margin to indulge in nonsense." - Victor Davis Hanson

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