Rolling US Economy Into The Shitbin Thread

in that respect it is probably similar to 'a world lit only by fire' and 'the last apocalypse' which are popular histories abt the same topic--the grim reality of the middle ages.

daniel esq I have been wondering the same thing lately and have come to pretty much the same conclusions. what's a blue collar guy gonna do in a world like this?

I don't know if "blue collar" as we've known it for two hundred years will survive. The natural process of extinction that began during the Carter and Reagan administrations -- when deregulation and globalization were in their nascent phases -- is almost finished.

this is an interesting discussion.
folks who say the british drank so much gin because the drinking water was polluted by waste etc. xp

are you intentionally misreading me to make me paranoid if so you are succeeding I just meant the book is kinda cool but it doesn't really go super-deep on stuff

― gross rainbow of haerosmith (underrated aerosmith albums I have loved), Thursday, July 29, 2010 11:34 PM (5 minutes ago) Bookmark Suggest Ban Permalink

it's a cool if not super-challenging book is more my point

^^^ rather a challenge to tease "you are suggesting I can't read challenging books" out of this tho

I was saying like I imagine a fair bit of what you read is advanced-level stuff, this book I'm talking about which I now deeply & painfully regret bringing up is more popular-history-for-the-talk-show-circuit stuff but is kinda interesting for all that

― gross rainbow of haerosmith (underrated aerosmith albums I have loved), Thursday, July 29, 2010 11:37 PM (2 minutes ago) Bookmark Suggest Ban Permalink

;-)

it was just a goof!

Union Membership In America

According to the Bureau of Labor Statistics, between 2007 and 2008 unions gained 428,000 members - 152,000 on private payrolls and 276,000 in government employment.

As a result, the percent of the total workforce that belonged to unions increased from 12.5 in 2007 to 12.4 in 2008. On private payrolls it rose from 7.5 to 7.6 percent and in government employment it fell from 35.9 to 36.8 percent.

This is the second year in a row that the BLS has reported a small increase in union membership. The source of the information is the BLS's Current Population Survey. In both instances the small increases were within the margin of error for the survey.

Click here to see the whole BLS "Union Members Summary" report for 2008.

There's a good reason union membership is so much higher in government. Politicians have bartered the dues of public employees for union political support. Maybe public employees are getting tired of being exploited for the political gains of their union bosses and the politicians.

There was a time when things were different. In the mid 1950's more than 35 percent of all employees on private payrolls were union members. But then unions decided to focus more on political power than representing the interests of workers. Not surprisingly union membership has been on the decline ever since.

Unions like to blame their failure on opposition from management but the fact is that the working people of American have rejected the unions' class-warfare, us-against-them approach to employment.

Proof of this is available from several sources. According to a 1999 Gallup survey only 21 percent of employees who aren't union members would like to be in a union.

A Zogby Poll conducted in 2005 found that only 16 percent of employees said they would definitely vote for union representation compared to 38 percent who said they would definitely vote against. When you combine those who would definitely and probably vote for a union compared to those would would definitely or probably vote against a union the numbers were 36 percent for and 56 percent against with the rest undecided.

Another indication is the results of National Labor Relations Board Elections. Even though employment covered by the NLRB grew by more than 2.3 million jobs in 2006, the NLRB conducted only 1,755 union representation elections covering 87,172 employees. Unions won 60 percent of these elections but they don't petition the NLRB to conduct an election until they think they have a pretty good shot at winning.

In other words, even when they thought they had a good shot at it the unions only won 60 percent of the time and only tried to organize workers in less than 4 percent of the new jobs.

The NLRB also conducts decertification elections - elections where employees petition to get rid of a union - the unions lose about 65 percent of the time.

Updated September 2009

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xp man you sounded mad I was like damn

think I'm going to bed though, everybody have fun in in the middle ages and/or the economic shitbin

I don't know if "blue collar" as we've known it for two hundred years will survive. The natural process of extinction that began during the Carter and Reagan administrations -- when deregulation and globalization were in their nascent phases -- is almost finished.

if that's so, it leads to a host of interesting -- and sobering -- questions, like (a) whether we seriously miscalculated by thinking that globalization would allow us to primarily occupy the highest-tier of the workforce (with less of a need for blue-collar workers and jobs) and (b) what, precisely, are the social and economic impacts if waves of blue collar jobs permanently disappear across-the-board?

Is the spike in membership related to the promise of health care and benefits?

i bet the economy sucked in the middle-ages, too.

http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html

have you read this, daniel? it made the blog rounds a few weeks ago. i'm not sure people were really sold on his solutions, but it's a pretty interesting assessment of what's going on.

that is a good read. he mentions the "Golden Projects" but never says "we should do that!" Instead he goes with tariffs?

i hadn't seen it. what a sobering and fascinating article. this jumped out at me --

Today, manufacturing employment in the U.S. computer industry is about 166,000 -- lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers -- factory employees, engineers and managers.

-- as did the notion that the cost of creating an american tech job jumped from a few thousand per job in the 70s to 100K per job today. the importance of "scaling" as an essential compliment to "innovation" also makes sense. all the innovation in the world won't help if, once innovated, the ideas are physically produced elsewhere (i guess it's good for american innovators, management and shareholders, but bad for prospective workers). this notion of "scaling" produced another crucial point in the article:

How could the U.S. have forgotten? I believe the answer has to do with a general undervaluing of manufacturing -- the idea that as long as “knowledge work” stays in the U.S., it doesn’t matter what happens to factory jobs. It’s not just newspaper commentators who spread this idea.

not just tariffs, bnw. it seems to me a much more radical proposal to (partially, at least) roll-back globalization. use the revenue from the "foreign-product" tax to loan to companies that will "scale" domestically? that's massive gov't engineering of the economy. i'm not afraid of it, but many in the nation (many, frankly, who stand to benefit from such a plan) are rabidly opposed to such an idea.

counterarguments from the WSJ:

So what if we have outsourced 100,000s of low-level semiconductor manufacturing jobs to China? Silicon Valley has continued to innovate with Google, Facebook, Ebay, Amazon, etc. There are lines around the block still for the latest Apple iPhone and the chipmakers for the iPhone (BRCM, TXN, OVTI, etc) don’t seem too worried that they have to outsource to Foxconn in China. If we bring the jobs back here, would the iPhone suddenly become twice as expensive. Would a trade war start that would drive up prices even further? Furthermore, would the resulting spikes in unemployment in the third world countries we outsource to suddenly dip into massive recessions, causing a global spiral down in the economy?

the whole trade policy coupled with industrial policy is pretty radical, especially since if you ask economists and policy people whether the u.s. should have a active industrial policy, the answer's been a pretty resounding "no" for a long time (though it happens to an extent anyway, obv). paul krugman's been banging on some similar stuff lately, but he's much more focused on currency manipulation and the way that it ends up being protectionism by other means. i think he'd probably disagree about grove's basic prescription and would say that any sort of trade barriers should be solely about rectifying currency imbalances.

a totally different perspective on the broader situation by (boring, but undervalued) nyt op-ed columnist bob herbert

What sucks is that I have a friend with a cushy top tier job at a corporation that probably has more money than they know what to with. So he gets a huge paycheck doing little to nothing while his corporation isn't hiring anyone but actually had layoffs last year (my friend got to fire people).

I have no job and it might take forever to work my way up to a high tier position even if I had a job. Meanwhile it's hard to even hang out with my friend because he has the cashflow to eat at any restaurant and I have to be picky with where I eat and how often I can go to the movies etc. What I hate the most is that I feel belittled even though I'm doing my near best at trying to find a job while he acts like a pompous ass when he occasionally says things like "I get invited to VIP sections at clubs all the time where I can drink as much as I want for free but I don't drink" (and he would never be caught on a dancefloor).

I don't have many friends so sometimes I take what I can get even if my friend can be annoying

I was going to say, exactly why is he your friend again?

i hope you lol at that kind of nonsense talk from your friend.

Or else just make sure he picks up the bar tab at least.

lol at him, then hand him the bar tab.

Then pick his pockets, then steal his identity.

I hope your friend is saving money.

^^^^^^^^^^^^^^^ ominous.

1) get him to post to ILX
2) we'll schedule a FAP at an expensive restaurant
3) Daniel will hand him the tab
4) Ned will pick his pockets
5) Alfred will walk up to him and "ominously" say "I hope you're saving money."
51) we'll suggest ban him

i'm just a reporter from rolling stone
http://www.thedailyshow.com/watch/thu-october-7-2010/mortgage-bankers-association-strategic-default
i blame the poor for all this tbh

this editorial in today's nyt caught my attention, mostly for what i don't understand. here's the key paragraph:

The betting is that the Fed will soon start buying up Treasury bonds to push down long-term interest rates. That would weaken the value of the dollar, increasing exports and cutting imports. The Fed’s overarching goal is to head off deflation — a sustained period of falling prices like the one that has stalled Japan’s economy since the 1990s.

every step in the chain is a mystery to me. if anyone can explain the following, in layman terms, i'd appreciate it.

• does the fed "buy up T-bonds" from those who now hold them (like redeeming them early at a discount to the gov't)?
• why does buying up T-bonds push down long-term interest rates?
• why does pushing down long-term interest rates weaken the dollar?
• why does weakening the dollar increase exports/cut imports?
• why does this proposed solution prevent deflation?
• all deflation can't be bad; people like lower prices. what turns falling prices into a crisis?

<3 wyatt cenac

I can sort of answer a couple of those questions although I'm still confused about some of it (and anyone more financially savvy than me can feel free to correct)

- Buying T-Bonds pushes down long-term interest rates because the more demand there is for a bond the lower the yield needs to be to attract buyers. I don't know the exact mechanism of bonds but I'm pretty sure this is the basic idea.

- Lower interest rates weaken the dollar because cheaper money = greater money supply = pressure in the direction of inflation

- hence it reduces deflation

- the danger of deflation is a "deflationary spiral" -- as assets and goods get cheaper people and institutions sit on their money expecting a lower price tomorrow than today, causing prices to get cheaper, causing money to stay put and not get spent, etc.

- weak dollar increases imports because if, e.g., the Euro is worth more in dollars, you can get more American stuff for the same amount of Euros. Weaker dollar = weaker versus other currencies = other currencies can buy more American stuff.

The thing I never get about this is that I thought we were a very import heavy country, in which case you'd think the benefit of increased exports would be canceled out or outweighed by the higher prices Americans would pay for foreign goods (although I guess the hope is that we'd start importing less and exporting more).

It is important to note that when the Fed buys any asset, including but not limited to T-Bonds, it does so by simply creating the money it spends, thus injecting new money into the system. This injection is immediate. It's kind of like a shot of B-12 for the economy.

Injecting instant money does not instantly inject more goods and services into the economy, so it can create more demand without increasing supply. When demand is weak, this is not a bad thing.

Part of what is going on right now is that money already in the system is being used to retire debt, most notably paying off credit card debt, rather than buying things. Retiring debt (somewhat paradoxically) removes money from the economy.

This sort of thing is what drives the business cycle. The Fed is supposed to smooth out booms and busts by acting counter-cyclically, adding money when credit contracts and sopping up money when credit expands. As you may have noticed in the past boom, the Fed did a shit poor job of damping down the boom in housing credit. Few people in the USA understand the degree to which the Fed is complicit in the recent bubble and bust and how blindly and badly it performed. Of course, the wealthy understand this stuff, but they benefitted enormously, so they aren't complaining.

Part of what is going on right now is that money already in the system is being used to retire debt, most notably paying off credit card debt, rather than buying things. Retiring debt (somewhat paradoxically) removes money from the economy.

right. and, as i understand it, much of the money that was handed to, say, banks in the broader bailouts of the past few years was -- contrary to its intended purpose (lending) -- used to pay down debt or accumulate cash. i heard an economist discussing this, who said, "right, well, that's really what they should do, isn't it? we justifiably criticized banks for making imprudent loans, and now they're overall just less likely to loan, as the citizen is less likely to spend." there's certainly an internal logic to it. it also makes me think of an episode of the west wing, when the president intervenes on behalf of a staffer who has some tax difficulty. the president works out the numbers, and the staffer is overjoyed that he's actually getting a rebate. he says, "i think i'll save it!," to which the president replies, "well, we'd prefer you spend it, but okay."

Esquire:
The Commission to Balance the Federal Budget: The Results
How to Balance the Federal Budget (in Three Days)
http://img685.imageshack.us/img685/3383/budgetresultschart1110x.jpg
they didn't even touch universal health care

google "the paradox of saving"

most salient thing for average Joe re deflation: part of the costs being reduced will be their paycheck (including any benefits). which will make paying off their debts more onerous.

reading a book that came our earlier this year, winner-take-all politics, by two poli sci professors, jacob hacker (yale) and paul pierson (berkeley), who claim ~
"The top 0.1 percent-—one out of every thousand households—-received over 20 percent of all after-tax income gains between 1979 and 2005, compared with 13.5 percent enjoyed by the bottom 60 percent of households. If the total income growth of these years were a pie, in other words, the slice enjoyed by the roughly 300,000 people in the top tenth of 1 percent would behalf again as large as the slice enjoyed by the roughly 180 million in the bottom 60 percent."
no wonder we're so fucked. not entirely brand new news to me, but its reiteration makes me want to go mug some rich asshole

color me surprised

i'm still waiting for it all to start trickling down

maybe we need to lower taxes

esp on the wealthy, cuz, y'know, they already pay so much it's not fair to them

they are the job generators. taxes hurt their feelings

Speaking of deflation:

http://www.nytimes.com/2010/10/17/world/asia/17japan.html?_r=1&src=me&ref=homepage

The thing I never get about this is that I thought we were a very import heavy country, in which case you'd think the benefit of increased exports would be canceled out or outweighed by the higher prices Americans would pay for foreign goods (although I guess the hope is that we'd start importing less and exporting more).

The idea is to make the US less import dependent, although the problem is twofold: 1) there aren't easily accessible substitutes for a lot of US imports; 2) Every other economy is working hard to make their currency weaker.

Point 1 is structural and is what happens when you spend 30 years with a laissez fair attitude to maintaining competitive advantage wrt other countries.

Point 2 is a sign of the times and a macroeconomic game of chicken, which will end in tears (probably inflationary tears in the US and a real estate crash in China)

xxp Aimless and Daniel

The article is about a month old, but the statistic of Americans off debt is mostly due to some of them defaulting and the credit asset being written off:

Defaults Account for Most of Pared Down Debt

0.08% — The annual rate at which U.S. consumers have pared down their debts since mid-2008, not counting defaults.

The sharp decline in U.S. household debt over the past couple years has conjured up images of people across the country tightening their belts in order to pay down their mortgages and credit-card balances. A closer look, though, suggests a different picture: Some are defaulting, while the rest aren’t making much of a dent in their debts at all.

http://s.wsj.net/public/resources/images/OB-KB753_number_E_20100917220343.jpg

Something that's just occurred to me and now seems amazing that I'd never thought about before:

I know basically two things about Japan -

It has been for many years in 'a cycle of delation'.
Tokyo is incredibly expensive to visit or live in.

How can the two co-exist? I get that a cycle of deflation also deflates wages, but wouldn't these 'downwards pressures on prices' also have affected rents, pints of beer, etc?

Imagine what it was like in 1989 before the cycle of deflation.

Gravel Puzzleworth: inflation/deflation often refer to money supply growth/contraction, rather than price increases/decreases. The commentators I read often make the distinction explicit as "monetary inflation" or "price inflation" to reduce confusion.

Japan's main mistake was to prop up de facto insolvent banks, rather than allow them to enter bankruptcy and be restructured.
So they've languished with technically insolvent banks with huge non-performing loan portfolios they refuse to write off, and the banks are hence reluctant to lend and the money supply has hence barely grown, even declined. See how M2 (currency + a variety of bank accounts) has had little year to year growth in many years:

http://www.garynorth.com/public/images/5921a.gif

Instead, they've chosen for twenty years to stimulate their economy by government deficit spending. Sound familiar?

Some of the Japanese government's stimulatory infrastructure projects were just absurd - lining their rivers and streams with concrete was a big one. And now their national debt is twice their GDP, their aging population has stopped saving (so there's no one to buy the postal bonds), and I've read a 1% increase in government bond yields would increase their interest service to 60% of their national government revenue.

Some commentators say the reluctants to write off loans in default, and restructure the banks, is due to both the Asian aversion to "losing face", as well as the incredibly interlinked (and hence vulnerable) capital structures of the keiretsu (groups of corporations with reciprocal share holdings). The American acceptance of the process of bankruptcy in enabling fresh starts is actually a huge cultural advantage.

Japan's also suffered from imported wage deflation. As Korea and later China undercut both their heavy industry and consumer products manufacturing, their main hope was to remain a big producer of higher margin capital equipment (from automated machine tools to wafer fab equipment) to mainland Asian manufacturers. But capital equipment has also become pretty competitive.

The bank restructuring could be done. Japan's central bank can get heavily into quantitative stimulus to increase money supply (at a cost to savers). Japan's huge, insoluble problem is their aging demographics. Retired people don't produce much, indeed they're a liability for national income.

I see Japan as the canary in the Keynesian coalmine.

I wish Obama had the balls to tax the rich

xpost -- wait, you're linking a graphic from Gary North?

http://www.wired.com/science/discoveries/news/2000/01/33445

(Among many other things.)

Honestly, I didn't check the site. It was just a GIS on "japan monetary aggregates".

Here, is this better?

http://lh5.ggpht.com/_H262-zY4QpU/TDLxgcgpaQI/AAAAAAAAFQY/oFi7wFRtpv8/s1600/clip_image001%5B3%5D.jpg