Saturday, May 3, 2014

Dirty Secrets About The U.S. Economy (That They Don't Want You To Know)

 
It's a day of dirty secrets about the economy today, motivated by this excellent article by Umair Haique: 5 Dirty Secrets About the U.S. Economy (HBR). Go read it now.

Since we're on the subject, I thought I'd contribute a few dirty secrets of my own that Umair missed.

Here's the first one - there are not enough jobs for everyone and there are never going to be.

My local corporate-funded establishment fishwrap today trumpets "288,000 jobs created; Unemployment falls to 6.3 percent!!!" Nice propaganda for the desperate rubes who read it. But here's the real truth - even though "job creation" has been way above what it has been for the past few months, the workforce is still shrinking!
Happy jobs day everybody! First, the good news: the BLS reports that the economy added 288,000 jobs in April, which “crushed expectations,” as Business Insider put it with typical understatement. Better yet, the totals for February and March were revised up, so we now appear to have added 200,000 jobs or more for three straight months, which is all the more impressive (and slightly puzzling) considering that the economy barely grew over the winter.

Meanwhile, the unemployment rate tumbled 0.4 points to 6.3 percent. That's where the iffy news comes in—much of the drop happened because the labor force shrank by 800,000, driving the participation rate down to 62.8 percent. It hasn’t been that low since 1978, when women were still in the process of joining the workforce.
We Added Tons of Jobs in April, but the Labor Force Still Dwindled (Slate)

And similarly:
There is currently an all-time-high of 6.2 million missing workers (potential workers who are neither working nor actively seeking work due to the weak labor market). Almost a quarter of them (1.4 million) are under age 25. The ... unemployment rate for young workers would be 18.4 percent instead of 12.8 percent if the missing young workers were in the labor force looking for work and thus counted as unemployed.
Number of Missing Workers Jumps to All-Time High (EPI)

And I can inject here about the idiocy of basing our economy on these apparently mystical things called "jobs" that supposedly just generate themselves by some magical power? We talk about "jobs" as if they are these these generic things even though we're talking peoples' actual careers here - you know, the things that are supposedly necessary for an economy to function and what we spend most of our time doing. Why is everything dependent upon jobs? We've been obsessing over every jobs report since 2008, as if one's going to come along that will fix everything. Before 2008, we didn't obsess over jobs reports like primitives reading entrails to determine when the rains will come. What does that tell you?

Here's the second one - the majority of jobs created are abysmal.
The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.

In essence, the poor economy has replaced good jobs with bad ones. That is the conclusion of a new report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.

“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”...
Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones (Economists View)

The third I've been meaning to mention for a while, and have before, but bears repeating - we already spend as much "government money" on health care as every other country in the world (except Norway), except all those other countries cover everyone and no one goes bankrupt from health care costs. Really. Here it is:
Why U.S. Health Care Is Obscenely Expensive, In 12 Charts (Huffington Post)

Healthcare spending in US dwarfs the OECD (DailyKos): "In other words, we’re spending more on government-provided health care than most countries where government-provided health care is pretty much all there is."

So "we can't afford it" is patently untrue, "we" are already paying for it, and with relatively low tax rates compared to other wealthy industrialized nations. In addition, we pay far, far, far more for health care than anyplace else on earth, yet have a sicker population:

The Singular Waste of America's Healthcare System in 1 Remarkable Chart (The Atlantic)
It costs $13,660 for an American to have a hip replacement in Belgium; in the U.S., it's closer to $100,000.
'Paying Till It Hurts': Why American Health Care Is So Pricey (NPR)

And the final one I have mentioned before too - we already spend enough "government money" to give everyone a free education if we wanted to. Instead we turn 18 year olds into debt donkeys and indentured servants for life.
Here's a little known fact: With what the federal government spent on its various and sundry student aid initiatives last year, it could have covered the tuition bill of every student at every public college in the country. Doing so might have required cutting off financial aid at Yale, Amherst, the University of Phoenix, and every other private university. But at this point, that might be a trade worth considering.
How Washington Could Make College Tuition Free (Without Spending a Penny More on Education) (The Atlantic)

So if anyone tells you how "we can't afford" this stuff, they are, to put it bluntly, a blithering idiot. The fundamental problem is, we need to pretend that the "private sector" is doing these things, because government is bad, so we turn health care and education over to predatory industries that have us over a barrel and are bleeding us dry. Collages are effectively toll booths to the middle class, so they can charge what they want with impunity. And health care, well that's essentially a hostage racket. Sure would be shame if you couldn't afford those pills and cancer treatments...

So there are just a few dirty secrets about the U.S. economy. And we've not even covered how all "economic growth" is going directly into the pockets of the richest Americans and not the rest of us: Wealthiest Households Accounted for 80% of Postrecession Rise in Incomes (WSJ)

Now here's Umair Haique:
Contrary to nearly everything you hear on the subject, my humble suggestion is this: fixing the U.S. economy isn’t impossible. It’s not even that difficult. It’s straightforward; about as complicated as tying your shoelaces if you’re wearing Velcro sneakers.

The US is a rich country that’s beginning to resemble, for the average person, a poor one. Its infrastructure is crumbling. Its educational systems barely educate. Its healthcare is still nearly nonexistent. I can take a high-speed train across Europe in eight hours; I can barely get from DC to Boston in nine. Most troubling of all, it is poisoning its food and water supplies by continuing to pursue dirty energy, while the rest of the rich world is choosing renewable energy. The US has glaring deficits in all these public goods — education, healthcare, transport, energy, infrastructure — not to mention the other oft- unmentioned, but equally important ones: parks, community centers, social services.

So the US should invest in its common wealth. For a decade, and more. Legions of people should be employed in rebuilding its decrepit infrastructure, schools, colleges, hospitals, parks, trains. To a standard that is the envy of the world — not its laughingstock.

Why? If the US invests in the public goods it so desperately needs, the jobs that it so desperately needs will be created — and they will be jobs that (wait for it) actually create useful stuff. You know what’s useless? Designer diapers, reality TV, listicles, reverse-triple-remortgages, fast food, PowerPoint decks, and the other billion flavors of junk that we slave over only to impress people we secretly hate so we can live lives we don’t really want with money we don’t really have by doing work that sucks the joy out of our souls. You know what’s useful, to sane people? Hospitals, schools, trains, parks, classes, art, books, clean air, fresh water … purpose, meaning, dignity. If you can’t attain that stuff, what good are five hundred aisles, channels, or megamalls?

So: invest in public goods; employ armies to build them; create millions of jobs. And they won’t be the dead-end, abusive, toxic McJobs that have come to plague the economy; they will be decent, well-paid, meaningful jobs which people will be proud to have.

Dirty secret number two: This is a bogus recovery—and it’s going to poison society, unless we are wise enough to recover from the recovery. The rich are getting vastly richer, to the point that it’s absurd that anyone should be so rich. But the average household is getting poorer; and the poor are getting trampled. The US is becoming a caste society; and the divisions between the castes are widening. Investing in basic goods is the only way—the only way — to lift millions out of the ruins of imploded lives, and into prosperity again. Yes; the only way.

Selling doggy dating apps for billions while the average household can’t afford healthcare and education isn’t an economy — it’s a travesty. Too many of our growth industries produce low-paying service “jobs” that amount to essentially being being maids and butlers to the super-rich. Sound like a healthy economy to you? I didn’t think so. Hence: invest in the basic building blocks of society — if, that is, it’s a functioning society we wish to enjoy.

Where will the money come from? Dirty secret number three: It doesn’t matter. Print it. Borrow it. Tax it from the super-rich, in whose coffers it’s merely sitting idly. It does not matter one bit. It’s a second order question. If the U.S. doesn’t invest in public goods, it will not prosper; and if it doesn’t prosper, it cannot pay off the debts it already has. Conversely, if it does invest in public goods, and creates millions of decent jobs, the source of investment will matter little; for the economy will have grown and people will be prosperous. We can debate until kingdom come whether to borrow; print; tax; and we should. But we are having a fake “debate” if we pretend that we cannot invest in society first; and then wring our hands that society is falling apart.

Key word: pretend. Here’s dirty secret number four. The pundits don’t want you to know any of the above...

4 comments:

  1. Where is our revolt? Can't we too pull a Ukraine style massing in the streets?

    I ruminate about these things that are SO OBVIOUS to me being my age and having experienced life so differently - but I really don't know what to do about it.

    I have never felt as depressed about our country in my life. I worry for my children's small ones....

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  2. Here's another "dirty little secret".

    A little bit of background. Technology has two purposes in relation to the economy. It creates things that improve lives(like, for example, cars) and ways to produce things with fewer people(say, robots that make cars).

    Since we have had an economy these forces have worked together to push civilization forward. When you develop a technology that makes people's lives easier then the labor required to implement that takes care of the jobs that are lost because of technology that makes labor more efficient. In those cases where the increases in labor requirements for new technology didn't quite cover the jobs lost we could expand into new markets.

    An example to make it more clear.

    When we had automation to reduce the amount of people needed to make cars we created the industry to create and maintain the tools of automation. This took care of most of the jobs that were lost due to automation in the first place. Those people that were "left out" were taken care of by increased car production due to the need of cars in other areas of the world that didn't have cars before.

    The above example hinges on two things. First, you need a "next big thing" that can be produced to account for labor saving technology and second, you need new markets to expand into.

    Economists, when you point this out, state that a "new big thing" will come along and we will find new markets to expand into.

    The "dirty little secret", in a nutshell, is two fold. The "new big thing" at this point in time is app creation and internet related jobs which require labor on an order of magnitude below what we need for full employment. Even when you count the ancillary individuals who allow the dot com employees to live like kings. Second, we have run out of new markets. We are producing so much stuff that we don't need more people to ramp up production.

    ReplyDelete
  3. @Jim Jones: You've really drunk the Kook-Aid, bro.
    Technology does not automatically improve the economy by creating things like cars. Cars have destroyed community, by increasing mobility. Cars have polluted the environment, and the lives lost in car accidents every year is astounding.
    This is just an example of a process Ivan Illich talked at length about in many of his books:

    The supposed benefits are not really benefits, and the negative consequences of many technologies are left out the equation.

    Technologists use an extremely narrow vision of what good lives are, and what improvement means, when they spout the dogma you just spouted.
    In fact, your writing, other than the slight incoherence of your thoughts, could probably have been composed by a rudimentary AI that scoured the Internet for standard economic justifications of "progress." Bromides.

    Humans are miserable outside of close-knit communities, doing work that they feel empowered by, and which they feel to be important to others.

    Technology will never deliver that. In fact, it is destroying it.
    Of course, enough soma might make it all OK.

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  4. @Publius

    I can concede your point as that isn't the thrust of my post.

    We have a little under 314 million people in the United States.

    In order to produce what people actually need(such as food, shelter, medicine, etc), we only need about 100 million people. At most. The rest are excess population from the point of view of providing for direct needs.

    In the past the invention of new stuff(which creates jobs) just about balanced out the ability to make stuff more efficiently(which destroys jobs). Since you don't seem to be a fan of cars at all you can instead insert any form of technology that you like(if any). The effect, in theory, is exactly the same. Something new is invented, that makes up for the jobs that were destroyed when we invented a way to do things with fewer jobs.

    And if your answer is, "If it isn't required to survive we don't need it", then you have to answer the follow up question of, "What do you do with the people who can't work because we only need 100 people to provide the vital services for 10,000?"

    That balance of job creation and job destruction doesn't exist anymore. The new stuff that is invented is creating jobs at a vastly lower rate than jobs are being eliminated due to technological advancement.

    Also, do you think you could possibly lay off the ad hominem and stick to the points in question? It isn't helping your argument at all.

    ReplyDelete

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