Rolling US Economy Into The Shitbin Thread

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html

terrific article. I'm struck by the tension between the claim that Americans lack the right education & skills for those jobs, & that it's the flexibility of those workers wrt hours & working conditions that matters. Or is there tension? Is it just that flexibility that's meant by education?

it's not 'education & skills' it's 'standard of working' which for americans means a humane standard

no that's what I'm wondering about! apple said Americans lack the right skills, something between hs & college, but I wondered if that meant anything besides "live in the company dorm & work 12hour shifts in shitty conditions without protesting"

I think that's exactly what is meant

I'm not sure if framing the question as a matter of 'supply-chain synergy' rather than low wages is putting the cart before the horse - you have to think that the whole reason supply chain synergy exists is because a bunch of tech companies decided it was cheaper to build all the factories in china

Take a lot of skill to wipe an iPad screen.

I guess I don't know; factory workers in the USA heyday often needed some fluency in algebra & trig, which is bw hs & college for the kinds of workers in question. Is iPad assembly like that? I haven't a clue.

no fucking way - it's p much all manual labor

I would say that the majority of foxconn factory workers are definitely not college educated

sorry, that should prob be high school education - and even if they were, I highly doubt they are doing a trig problem before inserting chip A into socket B

they have to do a trig problem every 15 minutes just to make sure they're not sleeping on the job

Or trying to kill themselves.

euler it's also important to note that when the supply of workers looks like this:

http://graphics8.nytimes.com/images/2012/01/22/business/apple/appple-articleLarge.jpg

the average education of a worker might be higher than the necessary education to do the work

see: american degree inflation

dont get the pic but I'm sure I'm inclined to agree with your conclusion re inflation

(it's the pic from the nyt article w/ dozens of young chinese workers trying to hand their application to this one dude)

because they are mostly male and wear glasses?

http://money.cnn.com/2012/01/27/news/economy/gdp_growth/index.htm?hpt=hp_t1

Its ridiculous that we're going to have 0% interest rates for 6 years.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/Shadow%20Inventory_0.jpg

Americans Brace for Next Foreclosure Wave

http://upload.wikimedia.org/wikipedia/commons/thumb/4/40/Tectonic_plate_boundaries.png/500px-Tectonic_plate_boundaries.png

http://www.interfluidity.com/v2/3212.html

An interesting "decline of retail" article:

http://www.businessweek.com/articles/2012-04-12/the-future-retail-wasteland

Article on why too-big-to-fail banks must be broken up, published by the Dallas Federal Reserve Bank:

linked within iatee's link - http://www.slate.com/articles/technology/technology/2011/12/how_eliminating_paper_money_could_end_recessions_.html

why not just put an expiration date on money?

Some early utopian socialists used to have that as part of their scheme. Which I suppose is why it wouldn't happen - capitalist accumulation would become impossible.

no, you could still accumulate things that were worth money

The ancient Hebrews had the Year of Jubilee once every 49 years when all land would revert to its original owners - so basically no accumulation of land was possible since land was only "sold" for the remaining period until the next Jubilee.

http://en.wikipedia.org/wiki/Jubilee_(biblical)

Yes, I suppose.

x-post

I'm trying to remember who it was that most notably had expiration dates on money - the 'money' was in 'labour-hours', so had a more explicitly egalitarian bent.

linked within iatee's link - http://www.slate.com/articles/technology/technology/2011/12/how_eliminating_paper_money_could_end_recessions_.html

― pleural eff u son (k3vin k.), Thursday, April 19, 2012 3:39 PM Bookmark Flag Post Permalink

This article is basically economically illiterate. Savings accounts have fuckall to do with the use of rate cuts to spur growth.

no, interest rates are all related

Yes, but the reason to cut rates to spur growth (regardless of whether it's a good idea) is not to get people to take money out of savings accounts, it's to spur large-scale lending and business spending. In any case, our savings rate is near zero so it wouldn't do much good, and the money would run out pretty quickly. You're not going to get much of a demand boost out of it.

Also, assuming below-zero rates would be necessarily inflationary, people's money is going to lose value whether it's in electronic form or in cash in a shoebox.

I mean there are a million other reasons why his idea is implausible and absurd.

yeah I don't think the goal was to get individuals to take money out of savings accounts, where the difference wouldn't even be noticeable. I'm not going to spend the 1k in my savings account because there's a -1% interest rate. but apple might not sit on $100b.

why would moving from 1% to 0% be any different from 0% to -1%?

Yeah but eliminating paper money has nothing to do with whether Apple sits on $100 billion.

well his argument is more about negative interest rates than eliminating paper money. paper money isn't gonna be here forever anyway, who knows what the time horizon is gonna be, but I could see an end to paper money within 50 years. anyway his argument is in line w/ a lot of market monetarist stuff so it's not really 'economically illiterate' or even super far out of the mainstream dialogue atm. .

steve waldman had a better critique a few months ago:

http://www.interfluidity.com/v2/2535.html

Some sort of non-metallic money is likely to stay in use, but the essence of such money is trust in the issuer, so paper money is always vulnerable to a catastrophic loss of trust and can rather quickly plummet to zero value outside of areas where its face value can be enforced by government edict and police action.

The whole premise of this article 'Economy's Biggest Drag Right Now Is Government' seems incoherent to me, I'm throwing it out there though to see if anyone agrees with it ...

well I would imagine most people here do....you're misreading the premise - it's not that government is too big, it's that when governments are forced to cut spending it tears into economic and job growth

rereading it tho, it does seem like the premise almost wants to be misread

"Incoherent" pegs that article pretty well. The linkage between the thoughts contained in consecutive sentences and paragraphs are so weak the most charitable description would be "scattershot".

Buried in all that incoherence is the basic truth that government spending cuts when overall economic growth is very, very slow are anti-Keynesian. btw, Keynes actually recommended that governments use revenue surpluses to pay down debt when economic growth was high.

well his argument is more about negative interest rates than eliminating paper money. paper money isn't gonna be here forever anyway, who knows what the time horizon is gonna be, but I could see an end to paper money within 50 years. anyway his argument is in line w/ a lot of market monetarist stuff so it's not really 'economically illiterate' or even super far out of the mainstream dialogue atm. .

steve waldman had a better critique a few months ago:

http://www.interfluidity.com/v2/2535.html
― iatee, Thursday, April 19, 2012 6:44 PM Bookmark Flag Post Permalink

No, his argument is about eliminating paper money. The article is subtitled "How eliminating paper money could end recessions" and contains this premise, which I don't think it's a stretch to call "economically illiterate": Stop for a moment and ask yourself why the interest rate can’t be reduced much below 1 percent. The trouble is cash. At any given time, relatively little paper currency circulates in the United States. Instead, most of the American money supply consists of bank accounts and other electronic stores of value. People prefer to keep money in bank accounts because it’s convenient and because you get interest on it. If the rates were driven below zero—in effect a tax on holding cash in the bank—people would just withdraw money and store it in shoeboxes instead. But what if you couldn’t withdraw cash? What if all transactions were electronic, so the only way to avoid keeping money in a negative-rate account was to go out and buy something with the money? Well, then, we would have solved our depression problem. Too much unemployment? Lower interest rates below zero, Americans will start spending and investing again, the economic will grow, and unemployment will go back down to its “natural rate.”

the issue of paper money is a segue to talk about the idea of negative interest rates

Well I have a lot of reasons for thinking that further driving down interest rates (which are already "real" negative) isn't going to do any good, but I don't even think Yglesias is really getting at the issue because he misunderstands basic concepts.

Anyway, in re Apple, their calculus is not going to be "Are we losing money by sitting on this cash" but "are we losing more money by sitting on it than we would be doing something else with it." -1% interest is only going to motivate them to do something with their cash if there's anything better to do with it. In that sense it really doesn't matter whether interest rates are 1%, 0% or -1%.

well it "2% matters"

Sorry, the missing point from that line of thinking is that the -1% interest rate is also going to bear on the kinds of returns they can get elsewhere.

how is that any different from going from 3% to 1%, do you just not believe in monetary policy

I believe in monetary policy and I believe in the limits of monetary policy.