This should be no surprise in retrospect, given two disastrous underlying trends. One is the decline of real median household income....The other article is from the NYT, which focuses on the effect of the two "disastrous underlying trends" identified. There's no point trying to sell to anyone except the rich:
The other is the collapse of the labor force participation rate, which is the flip side of the coin: if fewer adults are working, median household income will be lower. It’s even worse than it looks, because Americans who have jobs are working fewer hours. Average hours worked are down 1% from pre-recession levels. That doesn’t seem like a lot, but it’s the equivalent of 1.4 million jobs in a labor force of 140 million. The U.S. has restored 2.5 million jobs since the financial crash, but adjusted for hours worked, it’s the equivalent of just 1.1 million jobs.
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.Their solution is unspecified, but the clear implication is that America can't get back on track until people have money to spend. Of course, to have money to spend, they'll need a job: the thing that distinguishes the upper classes they are talking about from the lower classes is that they tend to have two jobs, as well as access to wealth from investments so that they are not wholly dependent on work for wealth.
Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.
There's a strong agreement on the need to find a way to infuse work-earned wealth into the lower classes (including what remains of the middle class). Spengler's on stronger ground because he also recognizes the damage being done by regulation, especially of health care but also of other industries.
Interesting to see the right and left come together on a big-government vision for the future. But they seem to agree on amnesty, too. Of course, amnesty happens to directly conflict with the goal of creating fuller employment among the existing lower classes... but it will help ensure political support for big-government programs.
11 comments:
Not so much on Spengler.
The problem is NOT government spending, contrary to the well-meaning obsession of the Tea Party. That will BECOME the problem a decade or two from now. The problem now is obstacles to investment: the highest corporate tax rate in the world, onerous regulation, the crazyquilt uncertainty of Obamacare. America needs aggressive tax cuts and regulatory rollback.
Apparently this closet Keynesian doesn't see an out of control national debt--a debt so bad that major international creditors are starting to dump US debt instruments and so bad that our administration now sees the need to create a new borrowing mechanism to con pennies from our poor and lower middle class--as a problem. Spend more while cutting taxes!?
He is right that we need to cut regulations and taxes. But his insistence on increased Federal spending--using FDR's spending and "jobs" programs as his template, yet--shows a lack of understanding of free markets and how to get one going again. It's not by increased government involvement in the private sector. It's not by increasing the public sector, with its crowding out of the private sector. It's not by continuing too high government spending, which is crowding out the private sector NOW (I can shout hysterically, too; I'm just doing it for literary effect. Such as it is.) And never mind that Spengler's FDR template extended the Great Depression by roughly 100%. Sort of like today with the Panic of 2008.
We need prompt and drastic tax rate reduction. And we need to get rid of the idiocy of using the tax code for social engineering (aside from its distortion of the market, it leads directly to the sort of Byzantine and inefficient structure we have now), which means getting rid of all the deductions, exemptions, credits, dodges, etc. Everybody making money from any source pays the same rate. We need graduated--but rapid--spending reduction, which must include graduated--but rapid--cessation of transfers of Federal dollars to the States. We need free market implementations of the vast bulk of our social safety net--which means privatizing Social Security and Medicare. Among other things.
...spend more on infrastructure, which is becoming a major obstacle to growth. It needs to spend more on R&D, particularly on cutting-edge military R&D. The way to do this, I’ve argued for years, is to emulate Roosevelt’s alphabet-soup federal agencies and put unemployed Americans to work repairing infrastructure at $20 an hour, rather than paying $50 an hour to the construction unions. That’s heresy from a free-marketeer like me, but it makes economic sense and will drive the Democrats crazy.
It's true enough that our infrastructure wants improvement, badly. What infrastructure would that be, exactly? And how many of those infrastructure efforts actually are ready for jobs today? In the next quarter? In the next six months? In the next...? Especially given, contra Spengler, that if those jobs aren't required to be union jobs, contractors are required to pay the going union wage.
Let the free market roll. Don't keep it hobbled with a different set of Federal bureaucracies and regulations.
I won't dignify the NYT with a response. The article is idiotic on its face. See above.
Eric Hines
E.Hines- I agree- and we have related problems few want to acknowledge. So to stray rather wildly-
Technological leverage is eliminating jobs rapidly, even skilled jobs. Any machinery magazine from 1943 will show vast factories, lines of lathes and mills, hundreds of workers running them. Today a couple of CNC multi axis machines and a handful of workers will produce that output. The same is true in most fields that are of enough size to warrant investing in the machinery. The corollary, of course is that the jobs machines won't take over, are those that have a limited market- making high end custom widgets for example. Not many jobs there... Even sensitive jobs like handling ripe fruit, are going over to robotics. Minimum wage laws of course accelerate this trend..
So what are we to do with a vast number of people who are simply not ever going to be able to have any job? We see the leading edge of this trend in our inner cities, generations worth, but to those numbers will be added a significant body of what is now the middle class.
Those folks can be paid not to work, and supported by the efforts of a few, but the few will eventually run out of money,or be unwilling to pay, and the borrowing will eventually destroy the buying power anyway.
We have gone from nearly all persons working in agriculture to survive, to most working in industry to purchase goods, and now humans themselves are becoming obsolete to the production process-in the span of 200 years.
Extrapolation of this trend leads to some distopian futures.
As a side note- one of the machinist forums I frequent had a thread on hiring-seems since extended UE beni's were cut off, a group of shops have had a lot of applicants. None of them were qualified to fill any position.
Technology always has eliminated jobs. And created new ones.
What new jobs will the current wave of tech advance create? I haven't a clue. But an unfettered free market will create them. There's always something somebody wants and somebody else willing to make it and sell it.
There're also always new lands in which to make one's fortune--or at least earn one's way. We're on the verge--that private enterprise thing, again--of getting off planet and out into the solar system. And then....
160M adult Americans, and no few non-adults, always will generate more and better ideas than any government "elite" can hope to do.
Eric Hines
That's all very comforting, if they have access to capital -- and aren't forced to face the kind of regulatory barriers to entry that keep them from actualizing those ideas.
But I think Raven is right. There will come a time when human beings aren't needed for the production process, unless -- as is quite likely -- civilization collapses rather than continuing to advance. I have long thought that we needed to come up with a concept for how it would be just to distribute resources in a world in which most people weren't productive of anything anyone actually needs.
No quibble on private enterprise- of course we will do better than the gov. if we can prevent them from eating out our substance...
It is true that technology creates jobs-but not nearly as many as it eliminates. And the jobs it does create, tend toward the very highly skilled. Our schools seem to generate swathes of people who graduate , as my neighbor used to say, "dumb as a post". Witness the NY school who just canceled a gifted program because it was not "diverse" enough. Gotta love that- We can name it the "Harrison Bergeron effect".
I would love to see humans get off planet, hopefully we do not burn up the window of opportunity before we do- it will take a solid base of persons, material,tech and energy to do it. If we waste it all on bread and circuses our starship is not going to get built.
I'll go back to a long-standing meme of mine: all of those problems are entirely--and solely--solvable by We the People.
We just gotta stop being fat and lazy, and get off our duffs.
We haven't been hungry, in any sense of that term, for far too long.
Eric Hines
The problem with memes is that they don't change, they persist. That is their character. That one may need to be re-examined, with a careful eye to what the obstacles are to repairs of the kind you envision.
You've got something/someone more legitimate than the members of the compact?
Eric Hines
How about a vision of the ones who are willing to pull their weight overthrowing a compact that has been hijacked, and is currently being used to shackle them to the work of destroying their civilization while paying ruinous taxes to support the lives and desires of those who hate them and everything they love.
Lots of people are part of that 'compact' who are part of the problem. In fact we need to rethink the idea of a 'social compact' or 'social contract' at all. What we need is a polity constituted by the actual exercise of political virtue, not a "People" claiming rights from being born into some 'compact' to which they never need contribute.
Ah. So it is We the People.
Very good. You're on the right track.
Eric Hines
It's 'We the Comitatus.'
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