Friday, January 6, 2012

Prosperity Is Right Around The Corner

[Warning, rant ahead]. The headline on the BBC today: US economic hopes lifted by jobs figures.

Yes, the propaganda mill is at it again, and this time, it's global. According to the article:

The US economy created 200,000 jobs in December, marking the sixth month in a row of gains, official figures show. The rise was much more than expected. Analysts had forecast an increase of about 150,000 jobs. The unemployment rate dropped to 8.5%, which was the lowest level in nearly three years, from a revised 8.7% in November, the Labor Department said.
Gee, what happened in December? Oh, that's right, the credit-card fuelled consumer binge that is Christmas, originally a Christian holiday to celebrate the birth of Christ. Maybe that had something to do with it? And after a binge comes a purge. Taking a closer look, we see:

Some 28,000 jobs were created in retail in December, 23,000 in manufacturing, and 23,000 in healthcare.

Gee, I don't work in any of those fields. I work in architecture, and what should I see this morning but this:

Want a Job? Go to College, and Don’t Major in Architecture:

The unemployment rate for recent graduates was highest in architecture, at 13.9 percent, probably at least partly because of the housing market collapse. Even architecture majors who went on to receive graduate degrees, which usually safeguard workers from unemployment, are doing poorly in the job market. With a jobless rate of 7.7 percent, architecture majors who hold graduate degrees are still more likely to be unemployed than newly minted college grads who studied journalism (!).
Further proof that my life is just an endless cavalcade of bad choices and wrong decisions. In fact, the lack of viability in architecture is exactly why I didn't pursue a master's degree. That, and I was in debt up to my ears, making minimum wage, commuting 30 miles one way, and could not afford to not work for 2-3 more years. Plus the fact that I learned absolutely nothing about how to be an architect in my previous 4 years of architecture school. Oh, and I haven't even gone into how much social connections, family wealth and nepotism play into the architectural jobs market. This report really depressed me, and made me realize that I really do need to think about what I'm going to do to support myself the rest of my life, now that I'm a few years shy of 40. Of course, I could just cut my life short, but that's another matter.

Anyway, back to our topic. One good comment made this point:

What jumps out at me from this data is that the only two sectors with low unemployment rates for recent graduates are Health and Education. These are also the only two sectors who have roughly maintained (Education) or even increased (Health) employment since 2007. By employment I mean the raw number of people employed in the sector. By comparison, other sectors have lost around 10 or even 20% of their previously employed workers.

It also says to me: As a nation, the US seems to be putting much of any extra income it gets into healthcare. Given the runaway nature of healthcare costs in the US, I wonder to what extent the extra spending on healthcare is really productive, in the sense that it translates into better health outcomes such as higher life expectancy or lower infant mortality.

Bottom line: If you want employment to grow in sectors outside of Health, start getting serious about reigning in healthcare costs.
Given this fact, why are we celebrating these huge numbers of health care jobs created? Does that not mean that we're getting sicker? Yes, we have an older population. But what are we really getting as a society by plunging all these resources into health care? Are we really getting better off as a society in any way? Are we getting healthier? Or are we just spending enormous amounts of money keeping elderly people alive and in pain? Ran Prieur featured a good letter on his blog recently:

I work in a busy emergency room. I had left ten years ago and just returned last May. At first I was amazed at how much sicker the patients were and how heavy the work had become. This weekend I realized that we do a lot more for the patients. It seems that almost everyone who comes in with anything more serious than a twisted ankle gets blood work and an EKG. It doesn't seem like a lot until you multiply it by hundreds of patients every day. When you have a very elderly person and/or a very sick patient, they amount of care they receive skyrockets unbelievably, even if that person isn't expected to live much longer. For example, I had a 90 year old woman with an extensive cancer history come in with difficulty breathing. Probably she had inhaled some food because she couldn't really feed herself any longer and developed pneumonia. Her family had made her a DNR (Do Not Resuscitate), so that if her heart stopped we wouldn't do CPR or stick a breathing tube in her mouth. But other than those caveats, she got numerous, costly tests and possibly will spend the remaining weeks of her life in a hospital, undergoing daily blood tests and CT scans and god knows what else.

Now, this isn't really news to me, as a nurse, that the US spends more on health care and has poorer outcomes than any other rich country. But it did occur to me that we might be at the peak of what we can provide. We take care of more and more baby boomers as they're getting older and they are not as healthy as the generation before them. Fifteen years ago I'd take care of a lot of 80 year olds who had never been really sick, had never taken any medication other than aspirin and had never been in a hospital. Now, I'm seeing 60 year olds with all kinds of health problems and we haven't even got to the baby boom bubble yet. I can't imagine that we're going to have enough staff, resources or even space to take care of these people in another ten years.
Ran comments:
It's important to remember that the American medical system is predatory. Doctors and nurses may be trying to help people, but the system as a whole is just trying to suck as much money as possible into the giant black hole of private capital around which the whole economy orbits. This means that any procedure a hospital can bill insurance for, it will do, and it's very difficult for patients to refuse. Meanwhile insurance companies will raise rates, and governments will pretend to do good by throwing more money down the hole while cutting more valuable services.
Does this sound like a sustainable economy to you? And the other jobs were created in transportation (truck drivers?) and retail. Yup, retail is what we expect this time of year. You too, can work at WalMart. Jobs problem solved! I guess I'll know what I'll be doing when my architecture gig folds.

Matt Iglesisas of all people (he's bullish on 2012 - I'll deal with that later), does a good job of shredding these ridiculous assertions of 'recovery':

Above you'll find employment growth in the 1990s. You'll see that a 200,000 jobs month, though good, is hardly record-setting. And that was at a time when we weren't climbing out from a terrible ditch. Just a reminder that when I say things are improving and are likely to continue improving, that doesn't mean we're living through the best of times or that these policies we're being governed by are working out great. It's clearly logistically possible for a country to add jobs at a much faster clip that we're currently doing and it's possible to do it even without such an enormous overhang of excess capacity. The people in charge should be stepping on the gas and not just congratulating themselves.

So this same amount of jobs that is being touted as' saving the American economy' would not have even caused any notice for the decade of the nineties (the pre-crash decade). Keep that in mind. And one quibble with the above: I don't think it's possible to create jobs at a faster rate, unless you mean useless paper-pushing and busywork jobs that will just evaporate anyway. Remember automation and outsourcing! As another commentator to the Times article put it:
Anything not tied down, or can be transported, is being offshored to some extent. Even construction. What has to be done on site and stateside, can be done with engineers with H1B's, their employers specifying purple-squirrel credentials in justifying their need.
Americans need to get MUCH more education just to stay employed, and the amount they need is much higher than the folks in the mainstream media are telling us. The rate of automation is slower than the rate of invention, but still fast enough to mean that in 20 years, unless somebody has skills that today would be considered advanced past the PhD level, someone isn't going to be able to get any job. Its already like that in some places. People dont get it, nobody owes them jobs. They have to do something new, unique, and better than anybody else. And of course, once people past 40, their brains shrink, and they can't keep up. We need to start talking about an almost workless future for people without those advanced skills, and how we are going to deal with it. We need to be considering things like a 30 or 25 hour week NOW to increase employment and give more of us us a few more years of breathing room before we're completely at the end of our work lives, not just individually, as a society. After that, almost all wealth will be inherited or come from investment or enterpreneurship. Hiring will be of your friends and family. And with machines doing almost everything, the options for small businesses will be much fewer and require levels of skill and specialization that are unimaginable now. There's no way around it, we need to SLASH military spending and invest massively in education for ALL people: Whenever one is unemployed, they need to be IN SCHOOL.
Of course, more people in school just means more competition for jobs, leaving you no better off. Education does not create demand. I don't get why nobody understand this. Education doesn't magically create jobs. And the barriers we put up for education in this country are ENORMOUS - either dropping out of the workforce for years (and supporting yourself how?), or going 'part-time', taking probably 6-7 years to train for a jobs, which, by the time you get your degree, will probably not be in demand anymore. Oh, and becoming a debt-slave to boot. And that's assuming you can even get a place:
Kwanhyun Park, the 18-year-old son of Korean immigrants, spent four years at Beverly Hills High School earning the straight As and high test scores he thought would get him into the University of California, San Diego. They weren’t enough.

The sought-after school, half a mile from the Pacific Ocean, admitted 1,460 fewer California residents this year to accept higher-paying students from out-of-state, many from China.

“I was shocked,” said Park, who also was rejected from four other UC schools, including the top-ranked campuses in Berkeley and Los Angeles, even with a 4.0 grade-point average and an SAT score above the UC San Diego average. “I took it terribly. I felt like I was doing well and I failed.”

The University of California system, rocked by budget cuts, is enrolling record numbers of out-of-state and international students, who pay almost twice that of in-state residents. Among those being squeezed out: high-achieving Asian-Americans, many of them children of immigrants, who for decades flocked to the state’s elite public colleges to move up the economic ladder.

In 2009, University of California administrators told the San Diego campus to reduce its number of in-state freshmen by 500 to about 3,400 and fill the spots with out-of-state and international students, said Mae Brown, the school’s admissions director. California residents pay $13,234 in annual tuition while nonresidents pay $22,878.
Lure of Chinese Tuition Pushes Out Asian-Americans

Yeah, "more education" is working out great, isn't it? There is now a global elite class, and a global proletariat, and those categories have more in common with each other across national borders than they have with their countrymen. American universities are there to educate the global elite, not to educate Americans. That's why class mobility has been, for all intents and purposes, eliminated. Times have changed.

Seriously, is there anyway to win in American society today? Living in the U.S. is best summed up by the restatement of the laws of thermodynamics - you can't win, you can't break even, and you can't quit the game.

UPDATE: Here's Mokoto Rich writing in the Times Economix blog:

As my colleague Floyd Norris has pointed out, manufacturing has actually been a standout, generating a net gain of 302,000 jobs – or about 13 percent of the total — since American employment hit its recent low in February 2010. But about a third of all jobs created in that period have been in relatively low-paying sectors like retail, leisure and hospitality, and home health care.

And temporary help services account for 356,900 jobs – about 15 percent of all new jobs added since the trough.

Another number that has some economists dispirited is the number of people who are working part time because they cannot secure a full-time position. That number has remained stubbornly high. In November, it was 8.5 million, more than double what it was before the recession.

“A lot of firms have learned to hire and find people who are willing to work part time,” said John Silvia, chief economist at Wells Fargo. And he said that this is “not simply a short-term temporary thing, but it’s become much more permanent.”

UPDATE2: Apparently, architects have it tough everywhere:

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