The Terrible Jobs Report
Total job losses since the first of the year are now 438,000. That's a loss of 73,000 a month. The economy needs to CREATE 125,000 jobs a month just to keep up with population growth.
In other words, this hole is getting deeper.
Consumers have no money left. This is the first consumer-led recession in over twenty years. Consumer-led recessions are worse than the normal kind, where the Fed has overshot by raising interest rates too high or corporations have pulled back their spending. Consumer-led recessions are deeper and longer, which makes the case for major infrastructure spending. (The normal worry with infrastructure spending as a stimulus is the lag effect -- by the time the spending gets into the system and creates jobs, it's too late. But not this time.)
In other words, this hole is getting deeper.
Consumers have no money left. This is the first consumer-led recession in over twenty years. Consumer-led recessions are worse than the normal kind, where the Fed has overshot by raising interest rates too high or corporations have pulled back their spending. Consumer-led recessions are deeper and longer, which makes the case for major infrastructure spending. (The normal worry with infrastructure spending as a stimulus is the lag effect -- by the time the spending gets into the system and creates jobs, it's too late. But not this time.)
posted by Robert Reich | 7:35 AM
70 Comments:
Hi, great post. I just dugg it. I'm michaelwong38 on digg.com.
Also was wondering if you'd like to exchange links with me?
If yes, please leave your blog url as a comment at:
http://bigmoneylist.blogspot.com/
I'll link to you first, then when you have time link back k?
Thanks, Michael
BTW--I'm michaelwong38 on digg. If ever you want something dugg, just send me a shout anytime.
One of the ways to increase infrastructure spending is to reduce military spending. We also need to invest in our education system.
Yes! All of that. Wow. I am amazed at how FEW people seem to be saying that lately.
Trains please?
And if you discount at least 50% of the Birth/Death Model adjustment, how much are the job losses then? What's U6 looking like? Is there any reason why we should be believe that even this terrible number is not worse than reported?
Really, between the fudging going on with the unemployment numbers, the GDP numbers, and the CPI, its little wonder that people are starting to lose faith in economists. They've already lost faith in government statistics.
You'd do the country a service by speaking out on this matter.
Excellent post, short & to the point. The rabbit hole is only beginning. It's grim & is going to get way grimmer.
Where's a little blue dress when ya need it?
tt
Fireworks canceled amid economic woes
Some small cities and burbs are foregoing fireworks as they need to keep the money in their coffers as their expenses are also going up. The economy's trickling down in interesting ways. It's a sad state of affairs.
Happy 4th. **~~{{BOOM}}~~**
tt
Here are some drivers that led us to our no-jobs or low-pay jobs situation.
The rich republicans in this country are not investing in America anymore. They are investing abroad.
Our corporations are globalizing.
Have you seen the investments that our corporations have made in China and other emerging markets, lately?
Our tax system favors the rich and provides big tax breaks to corporations ASSUMING that all the profits and capital will be invested back into our economy. But that is not happening.
GLOBALIZATION has changed all rules.
We have shifted from an industrial-manufacturing economy to a service and intellectual capital economy.
The service jobs are low pay and the intellectual capital is being pilfered by other countries after we invest heavily in R&D.
The middle eastern countries enjoy the advances of western civilization without having invested in the development of these advances. We depend upon emerging market raw materials and they can easily control pricing & distribution. An example of this is our research into medical devices, pharmaceuticals, and procedures. These save middle eastern lives and all they do is pay for the service cost of these medical advancements. We are paying to advance research.
Global economics has no balancing system. It is only based on maximizing monetary opportunity. There are now some new financial entities with huge capital pools that can play in the global market space.
There is no cross border oversight or control. These entities are like the pirates of the open seas in the 16th and 17th century.
Argh !!!
We could always just fight our way out of it. Literally.
Let's just annex Iraq and claim its oil. Force and then fence them off their land the way we did the Indians. The frontier never really closed, as our far-flung military presence illustrates.
Why do we kid ourselves? We owe everything we already have to conquest, so why not keep going?
Mr. Reich,
If the employment situation is so terrible under President Bush, what say you about the Clinton administration?
Average unemployment during the Clinton years (1993-2000):
5.20%
Average unemployment during the Bush years (2001-2008):
5.19%
Source: U.S. Department of Labor, Bureau of Labor Statistics.
The Bush tax cuts cannot possibly create jobs in the United States, given the size of the labor pools available in India and China. The people who voted for George W Bush can re-take arithmetic and common sense as courses online.
The credit card debt is the difference between "then" and "now" as American lifestyles drop to equilibrium levels of India and China lifestyles.
Credit the right wing noise machine for dimwit US Labor Secretary Elaine Chao holding on to a Cabinet level position (and was it Barack Obama who stated about two months ago that he didn't understand why Americans weren't rioting in the streets?).
The free comedy to watch will be Roger Ailes, Rush Limbaugh, drug addict, and the Swift Boat Veterans for Truth as they try to distance the GOP from George W Bush. The other free calculation to make is that the banks will either lose money when people declare bankruptcy or they will accept less in the way of credit card debt payment. Zero or less than expected will be the American mantra. I thank heaven every day I didn't vote for George W Bush, and that's with more fervent prayer than any evangelical will ever experience.
unemployment is running at 5.5%, far under historic norms. The problem is not employment but rather DEBT.
Robert Reich still does not understand that default is the best way to solve high levels of consumer and corporate debt. We don't need anymore bridges or other federal spending since we are allready exceeding budget by close to 500 billion dollars, how much more gov't kick in the arse do you think matters?
SFH housing has lost it's ability to be a meaningful collateral for anytype of loan, in fact the gov't GSE's are basically the only meaningful player in the mortgage market because investors know that the houses are not worth the asking price!.
America is going to go thru a very painfull deleaveraging process which includes SFH that most Americans have borrowed either in HELOC or 1st mortgage againist so they no longer can borrow and spend.
This is not a problem that gov't stimulus and bridge building can solve. If as many posters on this site believe that greater investment in mass transportation or alt energy is a good idea those may be very good ideas but they have nothing to do with the current consumer and financial debt crisis.
sbvor:
Spinning more of your lies or are you just ignorant?
Clinton came into office on the tails of Bush 41's recession with very high unemployment rates. He managed to get them down to around 3.6% while adding 23 million new jobs. Best Bush (Dumbya) has done is 4.5% and his net new jobs is still falling but not near 23 million.
Go back in your hole!
It seems that unemployment is just beginning as a problem. There are still jobs out there but mostly replacement jobs for the higher paid workers let go. Most of the new jobs don't pay a living wage.
The wealthy can see benefits in the current climate as it will lower costs of labor that will benefit them as the "Help" will be even more scared and helpless and willing to work for peanuts.
I agree with JD about the stats being reported and those not being reported ie M3 (total money supply)
The assumptions being made in the calculations don't seem to remotely relate to the real world. I'm not sure if it's deliberate deception or just gross incompetence.
It's getting real hard to determine just what GDP, CPI, PPI, unemployment rate ... mean anymore.
"That's a loss of 73,000 a month. The economy needs to CREATE 125,000 jobs a month just to keep up with population growth."
For those who have seen my posts in the past; it's nice to see Dr. Reich is beginning to realize the impact population growth has on unemployment. Now, when people begin to realize it's impact on the worlds economy, the environment, and the chances of civilization surviving into the next century, then we'll be on our way to finding REAL solutions to these problems.
:) :) :) :)
Toast:
Uh-oh! Have you been drinking already this morning?
To your point, it's becoming more and more apparent that most all the government statistical reporting has moved into the realm of fiction. Gonna cost libraries a lot of money to reposition them.
The web site Financial Ninja is a good financial web site to start with, because the blogger is Canadian. He owes not allegiance to any political party in the United States. He put himself through university on what he earned investing.
One of the links he posts on the right hand side is the "Mish's" blog.
http://globaleconomicanalysis.blogspot.com/
Check out Table A-12, from the Bureau of Labor Statistics web site, which shows a much higher unemployment rate. The official annoucement is the lowest percent, a fictional percent, the Republicans can possibly post.
As we have more and more computers, and as Uncle Sam can take your withholding tax from your paycheck or from your business, in a matter of two days, max, when your IRS withholding tax drops to zero and stays there, after your unemployment insurance runs out, or after you sign up for food stamps, that's the real unemployment rate in the US. Leap in credit card debt is another indicator. Of course, no Republican wants you to figure that out. You can see how Bush has only reluctantly signed the extension of unemployment insurance after 8 years of rarely meeting any meaningful jobs creation target.
On the positive side, there will be plenty of unemployed people who will be able to spend ample time voting at the polls in November! unless the Republicans figure out a way to tie voting in a presidential election to full-time employment and withholding tax. Note the Republicans have already succeeded in requiring the elderly to show ID cards!
kayxyz,
Using your own source, U-1 of table A-12 shows unemployment at 1.9% (oh, happy days!).
U-3, as your own source documents, is, and always has been, the “official unemployment rate”. Sorry, no Republican conspiracy here (or anywhere else).
If you want to use U-6 of table A-12, then show me what the same measure was under Clinton.
Art,
Clinton presided over the inflating and the bursting of the single largest speculative bubble in the entire history of humanity (the dot.com bubble). Many of the jobs created during that period were purely illusory and summarily went “poof”.
More importantly, Clinton also failed to address the gathering threat from Islamo-Fascism. His team was so afraid that Bin Laden would “Boogie to Baghdad” that they would not even send a U-2 flight to look for him.
It was left to Bush to deal with the fallout of the bursting of the NASDAQ bubble and the consequences of Clinton’s inaction against those who, as early as 1996, publicly declared war on the United States.
In short, Clinton’s economic gains were illusory and it was left to Bush to clean up Clinton’s various messes. Even so, as I previously substantiated, the average unemployment rate under Clinton was slightly higher than the average unemployment rate to date under Bush.
If it was not so pathetic, it would be amusing to watch Dems smear and slander the objective data which prove them wrong. It’s a consistent pattern all over the net.
Dr. Reich,
The 5.5% unemployment rate in May, a full percentage point higher than last year,excludes people who were jobless and had given up looking for work, or who had been demoted to part-time jobs.
When these people are added, the so-called "underemployment" rate rises to 9.7% from 8.3% in May
2007, according to the U.S. Labor Department.
Surprisingly, gross job losses have been falling much less than gross job gains ... the creation of new jobs. This will get worse as declining job hours, slower hourly wage growth, and faster price growth cause families to further reduce spending, thereby accelerating fall in gross new jobs and unemployment to peak at 6.4% in late 2009, according to one forecast.
More job losses are expected in housing, finance and construction as the housing downturn and credit crunch have still some way to go.
Fasten your seatbelts! Until the new party in power launches an integrated Plan of action to revitalize our social-infratructure, to lower lower-middle class tax rates, to set powerful policies for Alternate (green) Fuels, Fuel Efficiency, and Conservation of energy -- Times Are Going to be Rough!
Frank,
We survived Carter. In the unlikely event Obama is elected, we’ll survive him too. We will also relearn how bad things can get when Dems control the House, the Senate and the White House.
sbvor:
Continuing to peddle your meaningless information I see.
In analysis what do averages tell us? Nothing!
To answer your question to kayxyz, the U-6 line for Dumbya at June, 2008 is 10.3%; the U-6 line for Clinton at June, 2000 was 7.0%.
When Clinton took office the unemployment rate was 7.4%, when he left office the rate was down to 3.9%.
When Dumbya took office the rate was 3.9% and when he leaves office the rate is forecast to be 5.7%. Progress should be made of sterner stuff.
Another view, the unemployment rate decrease from Jan 1993 to Dec 2000 (Clinton) was 3.4 or a 46.5% decrease. The UR rate decrease from Jan 2001 to the CB's forecast for Dec 2008 (Dumbya) is -1.5 or a 35.7% increase.
New jobs created on Dumbya's watch through Jun 2008, 5,171,000. New jobs created on Clinton's watch through Jun 2000, 22,114,000. Dot.com bubble was big but not 16,943,000 jobs worth.
A lot of analytical data all reflecting that Dumbya ain't come close to Clinton's job growth performance. Now you can piss and moan about this and that but there is no way to calculate what impact any of those this's and that's had on the numbers. Best we got to go with is the numbers. Read 'em and weep.
Dumbya isn't capable of cleaning up after himself let alone anyone else, The constant spiel of conservatives about Clinton not taking on Islamo-Facism is fanciful BS. Dumbya didn't rush to do anything upon entering office either. You really don't want to go there, the fact's are not in your favor. Of course when have we ever known you to worry about facts.
It is always interesting that conservatives hold out Clinton as the benchmark upon which to measure Dumbya's performance. What happened to Reagan?
This interview will remove the blindfolds from your eyes, but beware of the bright light.
An interview with Michael Hudson
http://www.smirkingchimp.com/thread/15652
Art, et al,
This chart is a preview of a post to come on my blog (wherein I will fully document and substantiate my sources and methods).
Anytime Dems control a majority among the House, Senate and White House, the economy does more poorly.
For 6 of his 8 years, Clinton was dominated by a Republican controlled Congress (except, of course, when it came to neglecting his duties as Commander-in-Chief).
sbvor:
Really impressive, NOT!
If you want to present meaningful information go back to 1945 to current or maybe 1930 to current. The graph actually says nothing so your sources are immaterial. I doubt your methods will be enlightening either.
One learns fairly quickly that those desiring to support a political point of view will select data that appear to support their premises.
Best be careful, it wouldn't be the first time I took some of your BS and turned it against you.
Hey! By the way, did you catch that big miss on forecasting the June unemployment rate by the Conference Board? Put your money on those forecasts.
Art,
1) The Conference Board forecast is quarterly, not monthly.
For Q2, their original forecast was 5.0%. Their revised forecast was 5.3%. It came in at 5.3% (for Q2).
A typical recession will see at least “a two-point rise in unemployment to at least 6%” (as this chart demonstrates).
So far, we are a mere 1.1% above the lowest level reached during the current (and ongoing) economic expansion.
Unless unemployment reaches 6.4%, it is unlikely that a recession will take place at any point during 2008. And, the current forecast does not call for that.
Poor Dems! They are not going to get their much hoped for recession!
2) My timeframe was chosen for both contemporaneous relevance and lack of clutter. I have not examined the data prior to 1977. If you would like to, be my guest.
It is absolutely undeniable that, over the course of the last 31 years, anytime Dems control a majority among the House, Senate and White House, the economy does more poorly.
P.S.) The last time the Dems controlled the House, Senate AND White House for more than two years, the economic destruction was quantitatively MUCH worse than 9/11!
I love that SBVOR's little chart shows that the very worst two-year GDP occurred under Republican ascendancy. I wonder what rationalization he's going to trot out to explain that?
Oh, I know. He's going to blame it on Carter - in the same thread where he blamed Clinton for Bush Jr.'s bad economy but refuses to blame Bush Sr. for the "poor" averages of the Clinton economy. Such intellectual dishonesty is unbecoming. And really, SBVOR, you must try harder. I didn't even go to college and I can see right through your spin.
And I'll leave it at that out of respect for Mr. Reich's space.
Snowwy,
I assume you are (incorrectly) referring to the period from 1981-1982.
The fact is that the “very worst [decline in] two-year GDP [performance]” occurred in the 1979-1980 period.
The damage done by the Democrats from 1977-1980 resulted in what was in fact (as opposed to media mythology) the “worst recession since World War II”.
After sustaining that sort of damage, what reasonable person would not expect that it would take some time to reverse the policy mistakes and thereby reverse the fortunes of the economy? It did take some time. But, immediately after the period from 1981-1982, the Republican dominated period from 1983-1984 produced the very BEST two-year GDP performance presented in the entire chart.
The correlations which I note are quantitatively undeniable.
sbvor:
As usual you exhibit a total lack of understanding anything that has more than one parameter. Your chart, as expected, says nothing to cause and effect. It is a presentation of a conglomeration of variables that may or may not bear any relationship to your premise.
Most scholarly folks, excluding an awful lot of conservatives, attempt to present analyses that explain the results and the interactions of the variables involved. You take data, which you do not comprehend, and combine it into a chart and in your ignorance you think if you can chart it then it must be valid and present a realistic picture of something. Not surprisingly, that something is what you ineptly define it to be.
I have told you before you have zilch for credence. Your total lack of intellectual approach to any of the subjects of which you hold yourself out to be expert in is beyond laughable. It is hillarious. It approaches the epitome of lunacy.
Best if you go back to school and learn a little more, maybe a great deal more, before you undertake to be a political and/or economic analyst. Currently you don't even present a talent for the subject matter, let alone a comprehension. Education might help but without talent you may still be lost.
There are a multitude of flaws in your conclusions. In your consistent manner you confuse quantitative correlation with qualitative correlation. Any idiot can throw together variables which occurred concurrently, put them in a pretty chart and then proclaim that the resulting graph proves a correlation of cause and effect.
Alas there is far more to intellectual analysis and debate. Were it that simple likely we would be farther advanced as a nation than we are.
Go back to your drawing board, rather your canvas, and try again to paint a meaningful picture. Try it without the paint-by-numbers next time.
It is most unfortunate that one who has so much time on his hands is capable of nothing more than balderdash.
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anonymous 1:38:
Thank you! THANK YOU!!!
Fantastic interview and I was enthralled with Mr. Hudson's wisdom and knowledge. I am not totally objective here because I had arrived at many of Mr. Hudson's conclusions on a kind of hodgepodge basis. Nor are my premises and assertions anywhere near as well founded in history and experience as his.
I would suggest to all who enter here, follow the link and read the interview and gain true enlightenment. Many of the issues discussed here are brought into focus in the interview.
Thanks again for the link.
This chart is for all you class warriors who constantly obsess over quintiles.
Art a Layman, you are quite welcome!
Some people use language to try to change the way that others perceive reality. Mr. Hudson simply describes reality with the words he uses.
Mr. Whitney has been an accurate predictor for as long as I've been reading him.
Sbvor is lost in fraudulent government statistics. I second Mr. Driscoll's call for speaking out about this fraud.
When confronted with peer reviewed science which debunks the Man Made Global Warming Hysteria (or any other facet of their Socialist dogma), Dems merely slander, smear and insult the messenger.
When confronted with objective data from non-partisan sources which they also find to be “inconvenient”, Dems slander and smear the data.
What is amazing is how many sheeple fall for this pathetic tactic.
Anonymous 1:38
Thanks also for the tip about the Hudson interview. I sometimes lose all hope that America has such inclusive thinkers who can get to the depths of how we Americans can shoot ourselves in the foot in failing to recognize or simply denying the excesses and complex fundamental flaws in our social-economic model.
Having experienced deeply the American and European cultural-capitalistic-political systems, I of course find a lot of common ground with his analysis and perceptions.
Thank you again for bringing my attention to this most thoughtful of discussions about our economic dilemmas and their historical roots.
Frank Thomas, The Netherlands
sbvor:
You don't seem to be making progress. Your peddling the same tripe that you've been peddling for weeks, maybe even months or years.
One would think that you would pull your head out of the sand every once in awhile. I guess it's possible that you do but then you just put it in another place where the sun don't shine.
Has it not yet dawned on you that everyone is now aware that your graphs, your tables, your peer reviewed articles, are nothing more than consevative political bullcrap.
There's no sense us wasting our time to follow one more of your links only to find out, once again, that you can't seem to comprehend how to interpret data.
Best that you repair to your own blog where you can better fend off those with whom you disagree by just deleting their comments. That way you win all the arguments.
sbvor:
Oops, forgot.
Your data may be objective at times. The problem is that most of it is meaningless garbage, rendered even more so by the conclusions you think you can draw from it.
Why don't you try graphing the number of days it rained when Dems were in majority control of the government versus the same statistic under Cons. If it turns out that it rains more when Cons are in control, you can then proclaim to the world that Cons will protect them from drought.
That is analogous to most of the idiocy you present.
Most of we adults understand that you don't bring toy cars to a Demolition Derby.
We slander and smear and insult you because you make it too easy to do so. Those who scream fire in a crowded theater deserve no quarter when it is discovered that there was no fire.
anonymous 1:38:
Interesting interview but:!!!
How on earth can you discuss economics in the modern world without bringing up the life blood of the worlds economy and of civilization itself, energy?! Followed closely by the natural resources which make up our modern lives and the 900 lb gorilla of global warming?
I have been politically a progressive all my life, but the "liberal" approach that redistribution of wealth will solve our economic problems is really stuck in the last century and doesn't address the problems we are now facing or will be facing in the future.
Redistribution of wealth in America, through a progressive and fair tax policy, is the "morally" correct thing to do and should be done. But it is a moral issue and not an economic solution. It will allow middle and underprivileged classes in the U.S. to temporarily compete against Chinese and Indian citizens for oil and other natural resources. But I have a serious problem with bettering the lives of our citizens at the EXPENSE of other people in the world. This is an 18th century colonial attitude. There are other solutions where all can benefit.
Keep in mind that the current trade and budget deficit is a major redistribution of American wealth to the rest of the world. Any economic advantages to some of our citizens through a progressive tax policy will be temporary. If liberals are going to push this, at the expense of the much more important declining natural resources problem, than they are shooting themselves in the head, and they will be repeating the mistakes of the 1960's when they helped usher in a dark ages of conservatism which has all but killed my country.
Don't for a second believe that the problems we face in the 1st half of the 21st century are the same as those of the 1st half of the 20th century. And you can be certain that the solutions will not be the same.
The problem is education. We are dumbing down America in K-12 and making public higher education into a feed lot for wage slaves while making the elitist schools training centers to credential their masters.
Google this: macroeconomic saturation.
A stimulus package and infrastructure rebuilding plan will be forthcoming, more military spending will occur and tax laws will be rewritten in the next few years redistributing wealth. The US economy's year to year growth in the last five years has all been debt driven via both Federal Reserve interest rate policy, the new American industry of financial engineering and enhanced credit leveraging, the loss of wealth in savings accounts via inflation and dollar devaluation, and governmental fiscal and entitlement policy. America's entitlement and future budgetary process is a mirage. The US government has promised much more than its future economy can deliver. And while the statistics may not indicate a defined 'recession' as of July 08, the trend of defined indicators points the way. The economic evolution will likely not be defined as a recession. The qualitative conditions - of debt load, credit contraction, empty bank vaults, and consumer saturation coupled with high commodity prices(which have likely peaked last week or wlll peak on 7-8 July) - these qualitative conditions will likely result in a second great US depression.
Toast:
You must really be having a bad weekend, notwithstanding an alcohol influence.
I didn't get the same take on Mr. Hudson's taxing ideas. He argued for a redefinition of taxes directed at a structure that promotes production/labor and demotivates financial/capital gains as the driver of our economy.
This was not, in my opinion, predicated on the concept of redistribution of wealth but rather on establishing a tax methodology that favors those functions/institutions which move the economy and the populace, collectively, forward and upward. Would that return us to a more competitive stance in the world economy? I tend to think so. Would the net effect be that we might end up slowing economic growth in some of the emerging economies? A strong likelihood.
Like it or not that is the model which competition and free markets exist in. Two statements you make are troubling to me:
But I have a serious problem with bettering the lives of our citizens at the EXPENSE of other people in the world.
Keep in mind that the current trade and budget deficit is a major redistribution of American wealth to the rest of the world.
Currently, and in recent years, we have seen the betterment of "other people around the world" at the "EXPENSE" of our citizens, mostly working class citizens. As wages have stagnated in the US, as jobs have been lost in the US, our consumption habits have fed the economic growth of many of the "third world" countries just entering the capitalism model.
The "American wealth" that is being redistributed is not the "wealth" of the wealthy but rather the "wealth" of the middle and lower classes. The wealthy have been enjoying the fruits of the emerging economies by investing in those countries and reaping the returns from their success. It is, once again, the working class folks in the US who have seen their present and future wealth redistributed.
As our consumption abilities commence to wane it bodes ill for the entire world. The best thing we can do for the rest of the economic world is to strengthen our abilities to continue consumption, albeit, hopefully, at lower percents of GDP. That will keep a huge market alive to feed economic growth around the world. Granted that may slow their rate of growth but will not necessarily kill it.
Natural resources, especially energy, limits and rising costs will impair growth here and abroad. What better way to gain a collective approach to alternatives than to level the playing field and have all nations seeking solutions. Rising costs of vital commodities will always inflict more pain on a declining economy than on a growing one.
Do silver linings abound? Perhaps not abound, but they exist. Forget the falling dollar that is causing no end of problems. Higher transportation costs are beginning to make it difficult to produce products in one country and ship them around the world to consumption markets. What this could lead to, and is beginning to, is more production back here in the US, which means more jobs and hopefully rising wages. Other countries, China, India, others in of Europe, may find it cheaper to locate production facilities here to minimize transportation costs. Japan and Germany learned this years ago and began locating automotive assembly plants in the US.
This will of course slow down job growth in their countries but through transfer pricing most all of the profits, and then some, will stay with the ownership country. The costs of shipping goods from point A to point B will not change but I can ship a significantly greater number of carburetors or engines or TV/computer chips on one boat than I can ship finished autos or TV/computers thereby spreading transportation costs over a larger number of units. By doing final assembly here they provide incomes that enable them to keep feeding the pig.
Your concern for limited natural resources is valid and is fast becoming an urgent problem. Options and alternatives are far more likely to be discovered in a healthy world economy than in an anemic one.
Many of the problems of the 21st century are exactly the same as the 20th century. We have added scarcer resources to the mix and it was a huge addition. We have also expanded the scope of the problems from primarily Western civilization problems to worldwide problems. Mankind has not progressed this far without exhibiting an ability to solve problems.
It can be argued that capitalism is our worst enemy but a controlled capitalism is our best hope.
Art:
You are ABSOLUTELY wrong!!! I've never seen anyone so WRONG in all my life!!!
I'm actually having a wonderful weekend; good friends, and an appropriate alcohol influence. :) :) :)
I'm sorry to see that you find it acceptable to inflict suffering on other peoples of the world so Americans can continue their wasteful ways. You've opened the door for the justification of the current oil war, and future resource wars. Hmmm, I'm not liking your vision of the future.
"The best thing we can do for the rest of the economic world is to strengthen our abilities to continue consumption..."
I have only heard conservatives come up with a better recipe for disaster.
"Your concern for limited natural resources is valid and is fast becoming an urgent problem. Options and alternatives are far more likely to be discovered in a healthy world economy than in an anemic one."
A "healthy world economy" and "limited natural resources" are mutually exclusive concepts. Unless you've come up with a way to turn cosmic rays into copper, oil, and iron, good luck with the industrial America you see in the future.
"Many of the problems of the 21st century are exactly the same as the 20th century."
You really know how to rip the last glimmers of hope from a persons heart and stomp them into the muddy earth. :)
Toast:
An "appropriate alcohol influence" in the eyes of the imbiber could be looked at as less than objective science.
Let me attempt to soften the blow.
The good news is that I am well beyond peak procreation years.
Kudos for "why do Republicans want to hold out Clinton and not Reagan?" as a measure for George W. Bush, to which I'll add another comment I've seen on blogs: no person will want to be remembered as a Bush Republican.
i am stymied by the 'facts' coming from d.c. if we listened to the powers-that-be (including the 'wizards' behind the curtain) we would believe that unemployment is down. balderdash! the 'numbers' are down because most of us have run out of benefits and thusly no longer qualify as unemployed. i am saddened and stunned that i (a professional, intelligent woman of a certain age) cannot find a job other than in retail. and to put a finer point on my plight, my car died! ah, at least i still have the ny times on sunday and basic cable. i feel better now.
kayxyz:
Hindsight being 20/20 I doubt there are many left who want to remembered as Reagan Democrats either.
p. c. sevigny:
It is always the little things in life that provide the greatest pleasure.
sbvor:
Playing a little catch-up.
1) The Conference Board forecast is quarterly, not monthly.
For Q2, their original forecast was 5.0%. Their revised forecast was 5.3%. It came in at 5.3% (for Q2).
Not to mention that their revision to the forecast was delivered on July 1, 2008 just three days before the actual number would be released.
The Conference Board appears to be made up of knowledgable folks but they seem to suffer your malady. Their forecast is the average for the quarter. I haven't run across any other source that reports or forecasts an average unemployment rate for a quarter. Again it's a meaningless number. 1st month of the quarter could be 4.0%, second, 4.5% and third 8.5%, yielding us an average for the quarter of 5.7%. Could this be how they came up with their 4th qtr 2008 number? The average of 5.7% is totally without import if the final month saw a rise to 8.5% unemployment.
It is customary when reporting or forecasting on a quarterly basis to reflect the statistic as you believe it is or will be at the end of the quarter, not the average for the quarter. If one is to deviate from the normal practice then it should be labeled as such, even if it is meaningless.
Toast,
First you say population growth is civilization's approaching threat and now you say the scarcity in natural resources is the real threat. The two are interlocked, I know.
But it sounds like your good intentions to isolate our "Root Problems" lead to the conclusions we should all have one child or less and perhaps live the sedate life of, for example, the Quakers in my State of Maine -- who live entirely off the land and from selling fresh fruits/vegetables and homemade artifacts. In other words, Western society should go backwards to the simple basics of life's necessities to help impoverished nations go foreward. Great ideal, but it doesn't work socially and economically for society in general.
Threads of your reasoning in the sense we are an "Overconsumptive Society" that wastes much of its scarce natural resources on frivolous spending and wasteful practices speak to me.
That's why we appreciate "The Old World-Europe" that consumes far less, saves 6% of its income for a rainy day, constantly invests in social-infrastructure, makes smaller cars having an mileage efficiency of 44 miles per gallon vs. a U.S. fuel efficiency policy that has been dead since 1980 at 24 miles a gallon. In fact, hybrid cars here will be at 48 miles per gallon, perhaps higher, by 2012.
Compare this to our Congress approving its first fuel efficiency standard in 32 years at ... GUESS WHAT?... 32 miles a gallon by 2020! It's these kinds of misguided (yes,stupid) policy directions that are causing such stress on natural resources and making our nation look backward.
About 70% of all our fossil fuel costs are for transportation and about 75% of that relates to cars, the rest to airlines and trucks. But where's the leadership to take us off the pollutive, inefficient energy dependence we're so hooked on?
Japan is now the leading, green energy conserving innovator in the world. They respected the seriousness of the 1970s energy crisis and went on an aggressive R&D effort regardless of falling fuel prices after the crisis. In addition to cars, they have made massive progress in cutting energy use in manufacturing industries.
Our leaders went to sleep on the energy warning of the 1970s. Our government even eventually relaxed fuel standards in the 80s because they didn't want to stand in the way of the car companies,
"providing what the customer wants." So we deliberatly allowed the fuel-devouring SUV craze to take its self-destructive course.
It happened in Holland too but, fortunately, on a minute scale because there's a +$3.50/gallon Fuel Tax here and a Road Tax based on vehicle weight that can reach over $1,200 a year for a medium sized Japanese SUV. Fuel costs per gallon are now above $8.50/gallon and have always been more than twice U.S. costs. This does wonders in encouraging sale of small, green-fuel efficient vehicles as well as investments in Transit systems.
A fundamental problem John Edwards rightfully focuses on is that U.S. government leaders are bought and sold by industry merchants. This means they often compromise their values for what is good for selected selfish interests rather than for what is good for the general society. Insuring a disciplined, fair, energy, and environmental system has not made European industry any less competitive or market successful than U.S. industry.
So it's possible to exercise some control over our destiny in the battle for scarce natural resources. That's why the U.S. must rediscover its new product Innovative Power and Punch ... so much needed by the developing nations. China is already in deep talks with Japan about thier advanced energy efficiency and avoidance of waste knowhow. Time is not on our side.
AS for fears of the coming population bust, this is an uphill battle that is part fiction. The fiction is that, as I've already said, all major countries are in a "Depopulation Cycle" which by 2015 will result in 83 million fewer babies and young children, rising to 127 million by 2025, then to over 250 million by 2050. Data is from UN reports.
Population will continue rising mainly because of a longer life span. There's no way this can be stopped, so a population forecast going from 6.5 billion ntoday to 8.5 billion by 2040-50 may well be on the high side.
Whatever happens here, it's going to happen, and western and developing countries will have to deal with it. I'm of the opinion nothing is more critical to our moderate growth styles than Human Capital, represented in the energy, creativity, skills and knowledge of young people.
For the number of elderly people is about to dramatically increase in coming years while the working class will continue to shrink. Japan has experienced this for 20 years now and unemployment is up not down. When workers are taxed so much to support the swelling ranks of the non-workers, they work less. Economic stagnation sets in.
I recall visiting with some people living in a town of 2100 residents in a beautiful mountain range in France. The town was 65% composed of aging people. You had to look hard to see some young people. Gave me a pretty lonely feeling.
As I said, anyone fighting this trend is fighting a losing battle ... slowly but surely, moderate population growth is with us at least through 2050.
But I do agree with you that we need to get adjusted to slower economic growth patterns that are more stable, human and environmentally sensitive. But that requires taking the right, pragmatic steps NOW on critical issues facing our nation ... that many posts to this blog have been talking about for weeks.
Frank claims Europe “consumes far less”.
But, the data on crude oil consumption says we’re conserving and they’re expanding.
Oopsie! Another Liberal myth bites the dust!
For more on that topic see this post and this report.
Yeah, I know…
European Socialism has driven down consumer consumption and World Socialism would result in less consumer consumption worldwide (owing to collapsing world economies). But, is that what we really want? Not me!
Wait till we get to the heating oil season, and $850 tanks of oil.
What sort of Christmas season is it going to be. The retailers supposedly run in the red until so-called "Black Friday," when they start turning a profit.
Landlords, though, do just fine, thank you very much!, every month of the year.
Is there something wrong with this picture, or are property rights really totally supreme?
John Dewey gave a talk in 1933 which I commend to your attention. It is online at http://www.wealthandwant.com/docs/Dewey_Steps.htm
Among other things Dewey said,
"I do not claim that George's remedy is a panacea that will cure by itself all our ailments. But I do claim that we cannot get rid of our basic troubles without it. I would make exactly the same concession and same claim that Henry George himself made..."
It's not as if there's not enough to go around. It just isn't going around. It is stuck in private pockets. 1% of us have 33% of the wealth. Another 4% of us have 24% of the wealth. [Source: http://www.wealthandwant.com/issues/wealth/50-40-5-4-1.htm, Table W50-2, line 1] That doesn't leave a great deal for the other 95% of us to work with, especially when one considers that 12% out of the remaining 43% -- over a quarter! -- is in the portfolios of the next 5%!
Don't redistribute wealth. Predistribute the economic value of our natural resources, what the classical economists categorized as LAND. It rightly belongs to all of us, and those who will put it to good use will gladly pay others for the privilege of its possession. (They already pay someone else -- but our system has them paying private somebodies, rather than the public treasury! Correct that, and we'll be on our way to unburdening our economy and financing our necessary public spending in a logical, equitable and efficient way.) Or we can keep doing what we're doing, and expect it to turn out differently, if we wish hard enough and cross our fingers AND toes. I think I'd like to try the logical solution!
Alex, that web site CareerEnclave.com is:
"CareerEnclave.Com - Jobs India"
"India's No.1 Job Site"
I find that obscene.
tt
Frank:
With all due respect;
The U.S. census bureau projects a world population of 9 billion by 2040.
http://www.census.gov/ipc/www/idb/
worldpopinfo.html
Your premise that population growth is due to an aging population is simply incorrect. It is a very minor factor in growth. Here is a death rate chart for the U.S. Over the last 30 years, the death rate has very slightly declined, contrary to the implication that small increases in longevity have largely impacted death rates, while population growth has been consistent at about .9%
http://www.infoplease.com/ipa/
A0005131.html
I believe you are suggesting that the rate of population growth is declining. I agree, but this is like suggesting to a person who is bleeding to death, don't worry the rate of your bleeding is declining.
I did not suggest that Americans should choose an impoverished life style. I will suggest that they will HAVE NO CHOICE and will be forced into an impoverished life style.
Your conservation suggestions are very good. But as I have stated in previous posts, conservation is a tool to buy us time as we implement the policies that transition us to a 100% renewable resource economy AND at a population where the earth can sustain a reasonable life style (approx 1 billion). A policy of conservation only, will lead to a political backlash when it fails in the intermediate term.
You suggest this is a problem of the future. Much of our current problems are due to ignoring this problem for the past 50 years.
In 1977 Jimmy Carter commissioned a report that is known as the global 2000 report to the president. The report has been amazingly accurate (given anyone trying to predict 20 years into the future) in it's predictions of the shortages we are now experiencing. Amory Lovins has been working on energy efficiency problems for over 30 years. Dr. Paul Ehrlich predicted these problems more than 40 years ago.
To think that economists can twiddle with the knobs of their alchemist profession, and by simply adjusting interest rates, or supporting the dollar, or imposing tariffs, or changing the tax laws ... that the laws of declining supply and increasing demand will somehow be suspended is simply a continuation of the foolishness of the past and a speeding up of the holocaust that lies ahead.
India is approaching draconian population measures, China is already there. Ignoring this problem is like ignoring our national debt. By the time we understand how serious it is, it may very well be too late.
I saw a great bumper sticker that some of the more senior readers of this blog might enjoy;
"where are we all going,
and why are we in this handbasket"
Toast:
Great bumper sticker!!!
More good news for you. By 2040 it is highly unlikely that I will be included in the 9 billion.
Re: the heterodox Marxist Michael Hudson and U.S. economic imperialism
In his book Super Imperialism: The Origins and Fundamentals Of U.S. World Dominance, Hudson traces the development of this pathological strategy and lays it squarely at the feet of liberal democrats. They were the main architects of the Bretton Woods system; World Bank, IMF, etc. wanting to create a structure that could counter socialist or Marxist influence during times of social unrest and as a defense against growing Soviet ascendancy. This is the same primary underlying motivation for earlier New Deal policies and interventions. This later morphed into a neoliberal paradigm but retained a fundamental purpose of ensuring U.S. world dominance.
Expect exactly the same from Obama or McCain. The U.S. is inherently hostile toward politicians who step beyond current doctrine and unequivocally rejects them. If Obama wins, many young voters who voted for him because he persuaded them that he represents change, will quickly join the disillusioned as he obediently complies with ruling class expectations.
Poor A-Rod lol
madonna
notsofast:
Given that you have an edge up on me for I have not read Mr. Hudson's book, nevertheless, I tend to disagree with your conclusion - I think it's your conclusion - that because of his root philosophies or political views his expressions of problem definitions have no merit.
I found most of Mr. Hudson's reasoning to be sound and full of wisdom, regardless the underlying motivations of his thoughts. Actions, good or bad, generally take place after reasoned dialogue.
Drawing on the wisdom of all sides of the political spectrum is not a bad thing. When that wisdom appears to be influenced too strongly by political dogma, then is the time to consider discarding it. Until that point listening is a good way to learn.
Toast,
Thank you for your good response. We are in total agreement on the threats but expend different energies on how to take the right package of strategic steps NOW to resolve complex financial and social investment crisis we're in. First, I'll try to come a bit more into your concerns.
My population data source is a 2004UN report. It says that population will grow from 6.5 billion today to 9.1 billion by 2050, but all of this growth will come from the UNDEVELOPED countries. That, as you correctly say, gets to my point that the RATE of population growth is Going Down dramatically over next 45 years in the DEVELOPED countries. This is also true, but at a slower pace, for the UNDEVELOPED countries.
Here's only a few indicators from the UN report:
1. Over next 45 years, almost all population growth will come from undeveloping countries where population will increase from 5.3 billion today to 7.8 billion by 2050. In contrast, population will remain at around current 1.2 billion for the developing countries. So well-managed immigration systems will be a necessity for survival over next half century and beyond.
2. The average age of undeveloping countries today is 50 and is expected to increase to 66 by 2045-50 (as Aids is mastered). This compares to an average age today for developing countries of 75 expected to go to 82 by 2050 (others say much higher).
Globally, there are 86 million people 80 or older today (6 out of 10). This is expected to rise to 394 million by 2050 (8 out of 10).
So, you are partially right that most of the 2005-2050 growth is coming from real growth and not aging. I was focusing too much on the developing countries where population growth will be null over next 45 years due to DEPOPULATION combined with a much LONGER SPAN of LIFE.
I agree this 9.1 billion is the population reality that is a serious challenge to world natural resources. But it might be surprisingly lower if the fall in fertilty rates in Undeveloped countries goes faster than the UN report conservatively assumes.
But, as I've been writing for months now and you are saying the same thing in effect for different reasons, the pressures on our natural resources are going to explode primarily because such large numbers of people from undeveloped countries are entering the CONSUMER SOCIETY at a rather quick pace (2.2 billion out of 2.4 billion from China/India alone).
This is going to place as much if not far, far more pressure over next 30-40 years on our natural resources than population growth!
That is why, in my PART III -- Transition to a Stable U.S. Economy, I have repeatedly emphasized we Americans are in a fantasy world if we continue with an Economic Model driven by Consumption at 70-72% of GDP, Savings at ZERO, and Investment at less than 4% of GDP with stagnant wage growth ... forgetting for a moment that such an economic mixture is not sustainable and is self-destructive.
The explosion in oil and commodity prices, which is here to stay, perhaps will help bring people to this stark realization out of pure necessity.
Our government can help achieve a new more stable, equitable social-economic equilibrium by: adopting an aggressive Innvestment policy for Social/Infrastructure/Alternate Fuels/Energy Efficiency/Conservation; Tax Incentives for Savings; implementing a fair Restructuring of Tax Rates that addresses excesses favoring only the top layer, (where in Holland, for example, highest progressive rate is 50% and lowest rate is around 25% -- before one main deduction of interest expense on one's home.
But if we make a renewable fuel from the wrong natural product that contributes to food shortages as well as higher food prices, that´s the old American way of going for the `quick buck´ and to Hell with everything else.
As one person said in responding to Mike Hudson's great interview, "This is the "Me" society instead of the European "WE" society ... the latter being what Sbvor foolishly and ignorantly calls Socialism. I call it "Compassionate, Constructive Capitalism," not the perfidious "Two Economy Society" Mike Hudson describes so well.
As Mr.Hudson (and Art) are trying to say, we need to be producing tangible products with our considerable R&D skills that provide real added value to society as opposed to trivial amusement objects or money on money pyramid schemes in search of short-term profits.
We can still learn much from the Japanese.In the whole area of Energy Efficiency, the Japanese are already far ahead of us in producing related products and selling rare technical knowhow.
May I digress with a light story that gets at our Overconsumption culture. For years now, my wife and I have been visiting our family in New York. Two astonishingly blatant, bizarre habits hit any visitor in the face, but particularly this American: first, all the constant quantity discount sales on almost every retail item, and second the increasingly enormous portions of food eaten.
I started following toilet paper sales 20 years ago. In 1985, I could buy 6 in a package at an 8% discount; in 1990 it became 12 in a package at an even lower price; in 1995 the offer was 24 for a sensational discount; in 2000 the allure was increased to 36 in a package at 10% discount; and much to my consternation the latest offer in 2005 was 48 in a package for a still more attractive unit price ... if you didn't break your back pushing the paper mass to your SUV!
Now you know what happens to this paper. It gets used for a broad assortment of side events and with great generosity in the bathroom. So, back to the store again much sooner than if one had
been "stingy" in his or her purchasing habits. Even toilet paper has a longer life span if we allow it to happen. Probably have to lose weight first, though.
This story applies to so much in our Consumption society that we've lost touch with what quality is. I know that clothes, appliances and most other things except food are more expensive in Holland ... but they last longer and you replace them less frequently. So far less waste going out of the system. And retailers make a decent profit at lower unit sale volumes and at reasonable quality/price relationships. Products are designed to last longer. Things are in some logical balance.
It's amazing how you value having more of something slightly above the ordinary whether it be that garden honed fruit, bread from the baker, or a 3-week vacation. I'm not just referring to high ticket items the upper class dwell on.
Europeans realize this and that is why they save 5-6% of their income and are very selective in what they weekly buy. They prefer the higher price for quality with the idea of not coming back for a while. So total Consumption here in Euros as a % of GDP is balanced with a 5-6% savings, less frequent repeat unit sales, and higher prices on the average.
If we get trivial, excessive Consumption down and save money at the same time, this will also help preserve scarce natural resources... especially if accompanied with the right government innovation incentives.
But Americans will fritter away natural resources until they learn (in their way) that slowing down Conspicuous Consumption opens the door more to the little, hidden pleasures of life ... that a healthy savings balance can take care of.
This means discovering that BIG and a LOT of anything is not always BETTER.
You are the best journalist. Question though, one that seems more prevalent after your NYT Q&A. Why can't we simplify energy purchases? Why must the US continue to act within a communist style system where all goods are thrown into a big market? Why can't we pay a fair price for a shipment of oil?
Notsovast,
I just read your message to Art after my winded message to Toast.
I've grown to prize Art's intensive, perceptive thinking. My following comments are to a deeper relevance your well-said remarks have for me.
In few words, you summarized exactly the social-political communicative style I've had the pleasure of experiencing in Europe. No cut and slash, personal stereotyping. Got to win with openness, logic, facts, humor, compromise, creativity, and a touch of self-deprecation.
The mature and credible 3 or 4 party systems here develop one's listening skills in some poignant ways to the benefit usually of the majority involved in heated discussions.
Notsovast and Art,
Sorry to you both as I got your names switched on Art's message.
It's late here and I'm still recovering from a hectic weekend.
No excuse though. So glad I didn't
get personal! Ha!
Brooklyn said...
"Let's just annex Iraq and claim its oil. Force and then fence them off their land the way we did the Indians. The frontier never really closed, as our far-flung military presence illustrates.
Why do we kid ourselves? We owe everything we already have to conquest, so why not keep going"
Nice post. Stark reality.
What a bunch of:
WHINY
CRY-BABIES
Geez!
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I would like to access the report done in the 90s that demonstrated firms that kept on workers in the downturn did better on a variety of financial indicators (and any subsequent research).
Phil Drew
52 Cromwell Street
Leichhardt NSW 2040
Ph: +61 (0)2 8213 2708
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Yeah, it's been pretty crappy. But I think that more people need to get out there and do a job search. There's plenty of companies that are hiring, they just need to lower their standards a little bit.
I don't know, according to the job listings available online, I would say that a lot of people are just feeling sorry for themselves. If they want a job, it's totally available.
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