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The U-Shaped Jobs Recovery

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Cross-posted from Credit Writedowns

Since the recession in 1990-91, the recovery of employment in the US has had a U-shape that is nothing like the previous post-World War II employment recoveries. This one will be the worst.

Source: The Changing Shape of Unemployment

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This entry was posted in Economic fundamentals, Guest Post, Macroeconomic policy, The destruction of the middle class on by .

About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward

79 comments

  1. Mogden

    Perhaps it was a mistake to raise the minimum wage by 40% in the middle of the deepest downturn in 70 years? How could this ever have been predicted?

      1. albrt

        If the policy goal is to get US wages down below Chinese wages, then Mogden’s comment makes a lot of sense.

        If the policy goal is virtually anything else, then this comment is just a product of the noise machine.

        The key is to understand that it’s no longer a “right wing” noise machine, it’s a status quo noise machine sponsored by everyone to the right of Nancy Pelosi.

        Whether Nancy Pelosi is in or out of the status quo party may be subject to debate, but I think it’s fair to say she is roughly at the boundary.

      2. Benghazi Medical Support


        minimum wage by 40% in the middle of the deepest

        ~~Mogden~

        In some states minimum wage does not apply to companies with less than 25 employees. Of course these things are in a state of flux. Is it true that most new jobs are the product of small business expansion & new-tiny-businesses? Not the child process of large monopoly’s. Who knows? One thing for sure, “There is a better way.”!

        Why not, *minimum wage above which salary is taxed*? If you make less than $22 / hour == no problem! Dooon worry! No withholding of wages, no F I C A / social security drag on you wages. Go free, My People! Earn without paying tribute to the mrekcufrehtos in charge. Nor does your new employer need to contribute to your payroll tax by any equal amount formula

        Tell me something! Would that kind of approach get big chunks of our downtrodden back into the mainstream of work, spend, pay hidden taxes on products, get promoted eventually to a full load of tax forms to fill-in, and let the good times roll?

        Got soul?

        Get it
        !

      1. Doug Terpstra

        Ideologues don’t need no stinking evidence! Indeed, Mogden’s shameless attempt at revisionism is absurd given the real unemployment rate across all sectors (even Goldman is now outsourcing to Singapore). Evidence would only be confusing.

        So, to date the global financial crisis is the fault of ACORN, predatory subprime borrowers, and now minimum wage earners. Did we miss anyone? Oh yes, of course … illegal immigrants! But oops, they’re not really covered by minimum wage. Still, who cares? Political hacks don’t let reason, evidence or decency interrupt their service to plutocracy.

        1. F. Beard

          How skilled is the usury and counterfeiting cartel that recurrently wrecks the economy? And is it not better to be unskilled but honest than skilled in dishonesty?

          What is desirable in a man is his kindness, And it is better to be a poor man than a liar. Proverbs 19:22

        2. Art Eclectic

          So, you would prefer them collecting welfare and/or engaging in criminal activities in order to eat?

          Thanks for the reminder of why I don’t vote Republican.

    1. Francois T

      Perhaps it was a mistake to allow corporate fat cats to go from 30 times median earnings to 362 times median earnings in 30 years.

      But do not let reality hit you in the face on your way out.

        1. EricT

          Its called removing the expensable cap on excessive compensation by corporations and businesses. Reagen removed the 3 million dollar tax limit during his reign of terror.

        2. liberal

          “Allow” means allowing the existence of a set of laws and regulations which allows corporate executives to capture massive economic rents.

      1. FatCat!

        Hey, watch it, Franky! If I hear one more derogatory word about fat cats, I’ll foreclose on your house, ship your job to China, and throw your kids in one of MY private juvenile prisons next time one of MY cops catches them jaywalking.

        Is that clear?!!!

        FatCat!

    2. Human

      Haha, Mogden, not one person understood your comment. Perhaps they don’t understand the basics of economics?

      1. Moopheus

        It’s true–putting the unemployed to work for $5 an hour is surely the way forward to prosperity.

          1. Anonymous Jones

            Ha! Problem solved! It’s amazing how simple the solutions are when you’ve made the problems so simple!

            Perhaps there are some consequences of this (both internally to the decision-maker and externally to the decision-maker) you are missing in this? Any at all?

            No, surely not. Your analysis is bulletproof.

            MW job > no job. No other analysis necessary. :-).

            Idiot.

          2. Justicia

            Not if it doesn’t pay your rent or keep your kids fed.

            The question for Mogden and other Gradgrinds out there is, how do you keep the consumer driven economy moving if consumers who’ve seen their wages stagnate or decline (that is most of us) don’t have disposable income to spend?

            Oh, I forgot. American consumers are so yesterday, who needs them. There are all those Chinese consumers just waiting to buy all those U.S. brand goods made in China.

          3. FatCat!

            Correction:

            A $1 an hour job is better than starvation. Expressing this mathematically:

            $1/hr > _________

            Where “_________” = Flatliner working poor moron

            FatCat!

          4. Mogden

            @Justicia

            So in your great concern for the low skilled / low opportunity worker, you have decided that they shall receive an income of $0 rather than an income of $5 / hr, and that this will assist them in paying for their rent or children (regardless of whether or not they pay rent or have children)?

            I am sure that they appreciate your interventions on their behalf.

          5. liberal

            Where’s the empirical evidence that increasing the minimum wage will cause a substantial loss of jobs? There’s an entire literature showing that at the level of the current minimum wage and the size of these increases, job losses will be very small.

            It’s more likely that the cost of the increase will be a decrease in rents collected by someone else (e.g. land rents).

          6. jonboinAR

            How about, refusing to let our jobs be shipped overseas by tariffing the a$$es of the companies that do? Then they can’t wage-arbitrage us down to Chinese standards, we common people have money to spend, the economy moves again, everyone’s happy (except maybe FatCat who might shed a few ounces and think he’s starving).

        1. Justicia

          I’ve decided no such thing. I’m in favor of a living wage — one that enables workers to support their families with some degree of dignity and security, without having to become debt peons.

          And you still haven’t answered the question. Where will domestic consumer demand come from when you’ve driven American workers into poverty level subsistence?

        2. Human

          You all chant for higher minimum wages and then are shocked when you find out that many jobs went to illegals who are willing to work for less.
          Keep living in your fantasy land.

          1. liberal

            Nah. We chant for a higher minimum wage, and also for employers who take on illegal workers to have assets seized and to serve jail terms.

          2. Attitude_Check

            So how about enforcing illegal immigration laws, to prevent wage arbitrage (polite way of saying corruption), and exploitation of illegals at the expense of US citizens? Fine companies that hire illegals $100K per person per offense. That would stop it quickly. Also end H1B Visa’s which are a legal way to exploit legal immigrants at the expense of US citizens.

          3. nonclassical

            First “unemployment”-Reagan changed stats to indicate if anyone EVER took unemployment prior, they are not to be counted in unemployment stats-they are not NEW unemployment claims. 2 of 5 who apply for unemployment are denied. Those who never applied, those 99′ers who have used up and fallen off, are not counted. Figure U.S. unemployment rates are apprx 2.5 times phoney “official” figures.

            Second: Derivatives valued (stats by Kevin Phillips-Nixon’s economist-editorialist) $880 Billion circa 2001. By
            2007, derivatives valued $600 trillion. Robert Johnson, Senate Banking Committee designee in charge shows thus:

            http://www.newdeal20.org/wp-content/uploads/2009/10/raj-revised-testimony1.pdf

            Johnson’s testimony to Congress was stopped after 5 minutes,
            considered too incendiary=derivatives.

            Then there’s Bartlett and Steele=two time Pulitzer Prize winning investigative journalist telling the truth on Bushit
            bailouts=PIRACY:

            http://www.globalresearch.ca/index.php?aid=15420&context=va

            …as in banks were TOLD they WOULD take bailouts, even when
            nearly all didn’t want, nor need bailouts=SMOKESCREEN.

            No reason to listen to Bushitter fundamentalist followers..

    3. F. Beard

      Perhaps it was a mistake to raise the minimum wage by 40% in the middle of the deepest downturn in 70 years? Mogden

      I agree! Instead a 100% reserve requirement should be slapped on the banks to prevent them (and their business borrowers) from stealing any more purchasing power from their workers.

      And to make up for past theft and to prevent deflation, monthly and equal bailout checks of new, debt-free fiat should be sent to every American citizen equal in total to the amount of credit retired in the previous month. These checks should continue till all credit is repaid.

      That way, far fewer people would need to work and business would have to pay higher wages anyhow.

      1. F. Beard

        And lest you think I’m joking:

        Your gold and your silver have rusted; and their rust will be a witness against you and will consume your flesh like fire. It is in the last days that you have stored up your treasure! Behold, the pay of the laborers who mowed your fields, and which has been withheld by you, cries out against you; and the outcry of those who did the harvesting has reached the ears of the Lord of Sabaoth. You have lived luxuriously on the earth and led a life of wanton pleasure; you have fattened your hearts in a day of slaughter. James 5:3-5 New American Standard Bible (NASB) [bold added]

    4. Attitude_Check

      I don’t think the majority of the unemployed are minimum wage, which would be required for your thesis to be reasonable. Therefore your thesis is unreasonable and most likely wrong.

    5. thelonegunman

      oh yeah… giving people a living wage instead of paying them what the prisoners of the chinese gulag get is reeeealy causing this…

      the downturn certainly hasn’t hurt CEO pay during the same period…

    6. decora

      If the minimum wage sucks so bad, how come Henry Ford vastly increased the wages of his workers, including janitors?

      Was he a dum dum with no understanding of capitalism and profit?

  2. F. Beard

    The good news is that more people can retire. The bad news is that they have been cheated out of a share in the productivity gains that make that retirement possible.

  3. Neo-Realist

    A U shaped recovery? It’s more like an L to me: Very little in the way of net job creation over the past decade.

    F Beard, I suppose that the people that retire who are not quite old enough for social security are still agile enough to dumpster dive for food when necessary.

    1. ambrit

      Dear Neo-Realist;
      I’ve had to ‘dive for pearls’ lots of times on jobs when some yobo throws needed stuff out because ‘Mr X told me to clean this place good!’ On the food front, because of various liability related issues, big food vendors now usually employ locking dumpsters and surveillence cameras to catch those ‘lousy deadbeats’ at their nefarious tasks.
      In most jurisdictions, a dumpster and its contents are considered “property” to be protected from predation by wild eyed anarchist types. “The poor are always with us,” just not in my dumpster, thank you!

  4. ambrit

    Friends;
    Am I being a tad too paranoid, or is the fact that the graphic is from the dreaded Council on Foreign Relations not set off alarm bells? Has the CFR been rehabilitated of late?

  5. Hugh

    I am not sure what this graph is supposed to tell us. Is it trying to convey that the “new normal” is that job growth out of a recession is going to be slow? And that consequently we of the rubiat should not expect jobs to get back to 2007 levels until 2016.

    What the graph does not show is how slow or fast job growth was in the expansionary periods. It was fast in the Clinton years and very slow in the Bush years.

    It also doesn’t show jobs needed. The population continues to grow. So just getting jobs back to the previous peak is insufficient because the population will have grown in the interim.

    Then there is the fact that all these treatments consider that a job is a job is a job. But if you are a rube, it makes a difference whether the jobs out there are solid, good paying ones with benefits or poorly paying ones with no benefits and high turnover.

    Finally, note that almost all of the so-called recovery of jobs this time around isn’t real but a projection running 5 years out. We already are looking at job growth for this year petering out. Given the track record of Establishment forecasters, does anyone seriously believe a 5 year projection from them?

  6. duffolonious

    That trend looks optimistic as well.

    Especially with many overleveraged (note the same store sales of Walmart declining), and all the US Federal/State govt. cuts.

  7. Eureka Springs

    What recovery? The chart appears to be projecting from a pip off the lowest low to be able to assert such a recovery might exist. When we know criminals are still in control of the kleptocracy.

    The patient is still terminal. Morphine is not a cure.

  8. KnotRP

    Uh, someone spent a trillion plus to put a dent in your U, so maybe you should prepare yourself for that picture turning into a skewed W.

    1. Graveltongue

      My letter of choice would be a wonky ‘h’.
      But I have an idea, well I don’t, Professor Hoerman does, but I thought I’d share it with you.
      High unemployment is the future because that is what we humans do. We invent ways of making LESS work for ourselves. From the wheel to the computer chip, it’s all technology designed so that we can produce more while doing less. Oh sure there’s plenty of stuff that still needs doing; bringing up our children, caring for our sick and elderly relatives, keeping the streets clean and the grass green, plenty of stuff to be done.
      So let’s set a minimum income just for being alive, just for being human. After all, that carries some pretty big responsibilities just by itself. Let’s get paid for being nice to each other, helping out a neighbour in a scrape, fixing stuff that’s broke. Building stuff that won’t break so easily. Enough so that we can eat healthily and live in safety and comfort. We would all be responsible for the nasty jobs that need to be done but would get a little extra spending for doing them.
      ‘We can’t pay people for doing nothing!!!’ I hear you cry. Well we do and we should. Food stamps. Welfare. Social security. A rose by any other name…..
      The problem is cultural, not technical.

        1. Graveltongue

          Most people just want to feel relevant, they want to know that what they do and who they are matters. Dignity is key here. Without that your humanity crumbles. If you remove the social stigma of being unemployed you’re a lot close to dealing with the cultural issues.

  9. Tom Shillock

    As Michael Spence pointed out in the WSJ (Why the Old Jobs Aren’t Coming Back, June 24, 2011) employment has a ‘structural’ problem. That’s a kind of dues ex machina economists invoke when the macro phenomena fail to live up to their theories. Pro plutocrat economists attribute this to the obsolete or irrelevant skills demanded by today’s employers. Blaming the victim is a vaunted if churlish American tradition. But the abilities and skills of Americans nor the abilities and skills needed by employers suddenly change.

    As Richard Freeman (Harvard economist) has pointed out in several places the global workforce doubled since 1990 (1.47 billion workers added). During that time workers from the former Soviet bloc and Asia entered the global labor force. Many of these workers were reasonably well educated and possessed comparable abilities and could at least quickly develop the needed skills. These workers could be had at far lower cost and continue to be lower cost. The increasingly free global capital flows quickly shifted the balance between labor and capital in developed countries as more employers located manufacturing facilities in low cost countries. Back office jobs and call centers were outsourced as well.

    One obvious result has been that the wages and benefits of Americans have either fallen or barely kept up with rising costs, particularly medical costs. And this explains why simply looking at the unemployment rate, whether the BLS’ propagandistic U-3 metric or the more inclusive U-6 metric, is inadequate to understanding how well the American economy is meeting the needs of most Americans. Indeed, the vast appeal of home equity loans in the 2000s was motivated by the desire to keep up with lagging incomes, not merely the fiction that home prices would always rise. The term “the economy” suggests that we are all in this together. But the upward shift of income and wealth since about 1980s reveals otherwise (‘Income Inequality in the United States, 1913-1998. E,mmanuel Saez and Thomas Piketty). Neither the record amount of cash held by American corporations nor the equities bubble created by Bernanke have resulted in new investment, productivity and job creation even low level job creation.

    In 2006 Alan Blinder suggested that we might be in the midst of a revolution (‘Offshoring: The Next Industrial Revolution?’, Foreign Affairs March / April 2006). Blinder has argued that within two decades, 30 to 40 million U.S. jobs, mostly in the service sector that require no physical customer contact, could be offshored. Recent research from the Dallas Fed support this conclusion 9’Virtual Immigration Holds Up During Global Recession’, W. Michael Cox, Richard Alm and Justyna Dymerska, December, 2009). Plutocratic economics claimed that offshoring jobs would create more, higher paying jobs in America producing a net economic gain. We’re still waiting. The fact is that those higher paying jobs, such as in research, are not immune to the same labor economics as manufacturing and service sector jobs. That was cultural hubris, the belief that somehow we in America are smarter, that capital is patriotic, or that we can appropriate knowledge and extract its greatest value for America while the rest trickles down to Asia and the former Soviet bloc countries. As incomes and standards of living in these countries increase ours will continue to decrease. At the very least the federal government could ameliorate the shift. But the government is kleptocratic and has been selling out to the highest vested interests as a matter of sound economic principle since the Carter administration.

    And as Warren Buffett has said “There’s a class warefare, all right, but it’s my class, the rich class, that making war, and we’re winning.” (‘In Class Warefare, Guess Which Class is Winning’, NYT, Nov. 26, 2006).

      1. Elpa

        Ahahahaha gs thanks for your link, that Manpower things has provided me with a fine laugh! I stopped after a dozen pages of “Woe is Company, we don’t find what we want”…and then all of the suddend, the strategy the Brains at Manpower suggest goes like this “The employee must assess his own skills and learn more skills to remain employable”. Ahahahaha, there we go ,it’s the victims failure if they are not good enough for our standard, god forbid we’ll ever spend a dime in traning them! No no no!

    1. chris

      Tom,

      I agree with your analysis but would extend your timeline further back. Nixon being incapable of handling the cost of Vietnam and the Great Society (trying to maintain a guns and butter economy) was more an early indication of what we should not do. Our military adventurism has cost us trillions in the last ten years and we are not better for it. And we are moving much more quickly in the last ten years towards kleptocracy (although the smell of oligarchical collectivism- a boot stamping on the face of man forever- may be a better description).

    2. rps

      Free trade undermines the citizens of advanced civilizations. Labor’s value is negated when foreign countries are allowed entry of goods/services produced by unprotected (slave) labor with non-existent EPA laws, nil labor standards, zero compensation, unregulated work conditions, non-existent healthcare or social safety systems. These nations undermine advanced countries with labor regulations and advanced social systems. Tariffs/adjustments must be imposed to insure Fairness; protect the labor and social safety systems of a nation and secondly to encourage the cultivation of a balanced society of the unregulated nations.

      The tragedy of free trade was the complicity of the US laborer/consumer in search of cheaper goods due to their fallen wages/compensation based on a contorted CPI.

      Class Warfare?, we can no longer sustain the unsustainable; the undeserving rich

      “Despotic government……politically depend more upon breaking the spirit of the people by poverty, than they fear enraging it by desperation.” T. Paine

    3. Ransome

      I don’t know if you had an opportunity to read all the Dallas Fed annual reports but Cox and Alm are the neoliberal’s neoliberals. When housing was inflating out of sight and beyond all reason, they were dancing in the street. The future is so bright, you need sunglasses. When a fireman called up a talk show to complain about the inflating cost of housing, Cox told him to work two jobs (it would look good on his resume) or live in the boonies. He missed point that wages were not moving, or maybe he didn’t care.

      Around the same time, the mayor of Ft. Lauderdale received a similar call about the un-affordability of housing relative to median wages. He said anyone working 40 hours a week was a couch potato and didn’t deserve to live in the city. He told the caller to get some roommates and buy a condo, the new starter home. The guy responded that he was married, had two kids, had a median income IT job and the Ranch house was paid for. He couldn’t afford the taxes, insurance and other fees and raise a family. The tax assessor had been having a field day raising the assessments.

  10. Alex

    The extrapolation in that CFR graph is probably optimistic. It seems unlikely that the US will be able to go on regaining jobs at the rate it has over the past couple of years. That would depend on raising yet another stimulus package.

    1. Max424

      One thing I’d like to ask the wild-eyed optimists in the U, V, and W shaped recovery camps: What happens if our economy bypasses the no-dip, the double-dip and the triple-dip scenarios, and heads straight in to the Big Dipper scenario, instead?

      It’s a real possibility. In fact, looking at my economic model, which factors in things economists are not allowed to factor in (by law?), things like: the price of oil, Republicans, neo-liberals, Beltway gridlock (aka: the nasty ole filibuster!), general stupidity, wimpy Democrats, banks, Fukushima (Ft. Calhoun?), the War on Drugs, the 4 Wars on Terror, war, oil supply and demand and … banks and oil; I’d have to say the Big Dipper is looking more and more like a mortal lock every day.

      1. KnotRP

        Right, Max424….that’s what I mean by a skewed W….we’re tanking until global wage rates (and global lifestyle) pressures equalize.

        We will be there when we the average American Family of Four riding a scooter around town (right — four people on one scooter), and it’s considered “normal”.

        1. Max424

          “…the average American Family of Four riding a scooter around town…”

          Too funny.

          The family canine, no longer having it’s own comfy bed in the rearward section of a 12 seat SUV, would have to run alongside.

          Which would be good for the pooch, I suppose, because I’ve noticed; American dogs, like their masters, are getting fat and lazy.

      2. Skippy

        Did you say economic models[?], Ha, methinks carney show flim flamery.

        Skippy…Would they build and pilot a spacecraft with their modeling protocol, one can only wish.

        1. Max424

          I hear what you’re saying.

          Every time I set my economic model up, it either collapses, or it gets torched to the ground — by nefarious forces* — the moment I turn my head.

          *Though I’ve only seen their smoldering remnants, I’m assuming the forces are nefarious (what else could they be?).

          1. skippy

            “I’m assuming the forces are nefarious (what else could they be?).”

            As long as destruction is more profitable than preservation, it will be so methinks.

            Skippy…some start fires for profit, and some for revenge, some for plesure viewing.

  11. Kakko

    Is hate directed toward some of these people because of alleged abuses or because of their economic success?

    The US economy is 70%+ consumerism. Consumers have demanded the goods and services of the most unethical companies because consumers want to save a few cents.

    That’s right. Ethical companies have been nickel and dimed out of business by consumers. Now the chickens come home to roost.

  12. Fred

    So just how does the presence of tens of millions
    of illegals who are willing to undercut any wages
    offered to American Citizens help our unemployed?

    And why are the “living wage,” “social justice”
    and “immigrants rights” cheerleaders not held to
    account for the effects of their activism on the
    abilities of Working Class Americans to survive?

    1. decora

      those ‘millions of illegals’ were allowed in the 1990s and the 2000s – and republicans were in charge of congress and/or the whitehouse for a good portion of that time. ask yourself your own question. why do politicians allow an open border?

      because businesses can hire people for under minimum wage, exploit them, deport them if they cause trouble (joining a union, resisting sexual harassment, reporting illegalities to authorities), and in general get lower cost labor with less hassle.

      businesses love illegal immigration. thats why it has been de facto legal for the past 20 years. it has nothing to do with liberals. if liberals had their druthers, then there wouldn’t be camps for children in the US who are about to be deported back to some central american country where they dont even know the language. if you dont believe me, go watch the CNN report they did on these camps a few years ago. meanwhile, H1B workers get a free ride into town based on the lies of certain high tech firms who — love to have workers who cannot stand up for themselves for fear of deportation.

  13. Wyntunnel

    Do we need any more proof that humans, despite their seemingly limitless imagination and ability to “innovate” are, in the end, no smarter or dumber than any other biological population on the planet (and likely in the Universe). Greed is, at its root, a relentless and instinctual drive to satisfy basic needs in a world of scarce resources. The illusion of abundance has only really been with us for a few hundred years… One has to wonder if Louis Pasteur is in some way more to blame for our current problems than cheap oil as our apparent triumph over one of Nature’s favourite regulatory schemes has contributed greatly to the physical expansion of human markets.

    Goldman Sachs and their ilk may very well be doing “God’s work” in setting up a cosmic end game that will see a massive cull of the World’s population opening the way for the “Elites” to return to that extravagant lifestyle which allowed the Greeks in the first place – what with all that slave labour and free time to hang out in togas, think and get naughty with young boys and all – to bequeath unto us the mess that is Democracy.

    And as noted in an earlier contribution by (I believe it was) Michael Hudson, here at Naked Capitalism, Democracy flourished mostly thanks to democratic governments ability to make good on their debts to bankers compared to Monarchs and despots. Is not the crux of this present Mother of All Crises that the Money Lenders refuse to take responsibility for their credit creating largess and expect the puppet governments whose strings they pull to use their arsenals (emphasis on arse) of men and machines to collect on debts that, to any rational, ethical, human being would have been obviously un-repayable from the get-go. Methinks that War is not politics by other means. It is banking.

  14. kstills

    What a load of bloviating nonsense.

    The US enjoyed a period after WWII where it faced little or no foreign competition for markets, either home or abroad. That allowed an unrealistic rise in living standards relative to the mean. As the first world economies regained their ability to recapture their home markets and begin to expand into foreign markets, the expectations in the US, abetted by a compliant political class, was to continue to ‘raise the standard of living’ instead of learning to compete.

    Which began a descent into private and public debt.

    Europe, meanwhile, existed in it’s own unrealistic world where it’s security no longer rested in the hands of the income of it’s own people, but instead relied on Pax Americana. This allowed them to promote a ‘fair’ society where everyone was taken care of for wages and HC from cradle to grave.

    An ideological shift that will soon prove to be as unsustainable as the penchant for folks in the US to all buy houses, regardless of price or location.

    The world is not fair, and crying that it should be makes you weak and foolish and a prey animal. A family of four on a scooter may indeed be the new normal.

    So get used to it.

    1. Mark

      “The US enjoyed a period after WWII where it faced little or no foreign competition for markets, either home or abroad.”

      Just as it takes two to tango, it takes two to trade. If the rest of the world’s economies were moribund, how exactly did they contribute to US prosperity?

      1. Fred

        Seriously Mark,

        Those moribund economies still had something to offer:

        Less competition for foreign resources and what little they did buy was made in the USA.

        All of the original machine tools and transportation
        that they used to slowly build up their nascent econoies was still made here.

        If the U.S. had been smart, we would have banned
        all exports of machine tools, machine tool technology and made it illegal under national defense strategies.

        Of course as Jay Gould said, “there’s more money
        to be made in dismantling an empire than building
        it”.

        Suggest “Confessions of An Economic Hitman” by
        John Perkins as an excellent primer.

    2. Fred

      Yeah, but we bombed the Yugo factory…

      See, Clinton wasn’t all bad when it came to exporting jobs?

    3. A Real Black Person

      I tend to find that the people who are saying that the world is “not fair” the most are the people at the top of the food chain. In the old days, they would claim their superiority as a sign of divine intervention or physical prownesss. Nowadays, they just like to claim that they’re smarter, better-looking and more talented than everyone else, that’s why they deserve the same net share of a shrinking pie. They like to downplay that their wealth comes from the existence of other, unfortunate desperate people from far-away lands who toil to bring them their energy and consumer frippery, as if there were no U.S hegemony, their lifestyle would be possible. This is why they want to keep the myth of abundance alive, so that there is always a source of cheap labor to be exploited, believing that if they pay their dues, they will ALL rise to the top. They know this is not true, that is why there is a proliferation of gated communities. If things are improving, why is security an issue?

    4. decora

      and what about the economic booms before World War I?
      what about when people like Andrew Carnegie and Henry Ford were using phrases like ‘Social Justice’? where giving people a job and a good wage was considered patriotic instead of a ‘cost center’ that should be eliminated?

      1. A Real Black Person

        That’s a very good question, Decora. I’m not a scholar on the subject, nor am I a genius, but it seemed to me that Andrew Carnegie and Henry Ford were genuine philantropists, and I don’t think they are normally the kind of people who rise to the top. Carnegie, was a surprsingly a moral, if not particularly religious. He thought acummulating wealth tended to lend itself to the worship of money, which he thought was bad. That sounds positively bizzare in today’S global economy, where companies are not particularly concerned with ethical or moral consequences of their activities. The economic situations in Carnegie and Ford times were situations of significant growing wealth due to the Industrial Revolution. Their times were situations of an expanding pie. The world was on the left side of the Hubbert Curve. This may sound a bit cynical, but I think early 20th century philantraphy was the ruling class’s rebuttal to socialism and communism. They were willing to voluntarily share more wealth with their workers and the public in order to preserve social cohesion and capitalism itself. In Carnegie’s and Ford’s lifetimes, capital could not freely move between international borders, so ,in a way, they did not have many choices other than to share the wealth. After the 1970s, which was interstingly around the time the production of petroleum in the United States peaked, the business leadership became more interested in developing overseas markets and importing increasing quantities of petroleum. What may have become obvious was that a stable population and a stagnant natural resource base was not allowing growth to continue the way the needed it to, so they, persued growth elsewhere. They had no choice, you see. They’re legally obligated to maximize profits but they can’t degrade the environment any further in the U.S., so they moved operations to where they can maximize profits.

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