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So, here we are, waiting for President Obama to give his long awaited “Jobs” speech tonight. However, from the news reports and “analyses” in the TradMed speculating on the content and potential proposals I will not be holding my breath on there being much if anything worthwhile coming out of the speech. The cliche of “too little, too late” most comes to mind. While CNN had this report today on the stimulus from February 2009 having created jobs, it was nowhere near large enough. This article from Center for Economic and Policy Research from October ’10, points out that there was a need for a stimulus nearly three times the size of the $787B from February ’09.
We are and have been in an employment/jobs crisis for years now. Even while the official unemployment figure stays above 9%, even optimistic projections have unemployment to stay high through 2012, some projections have the high unemployment continuing as far out as 2020. Unfortunately, the current White House seems to be more willing to pretend to do something for show rather than actually doing something that will be effective.
As always, there are just some things that I do not understand. A large part of President’s Obama’s plan is further tax cuts (or rather, extending existing tax cuts such as the payroll tax cut). We have fairly strong evidence starting with the initial Bush tax cuts in 2001, that tax cuts have created few if any jobs over the past ten years yet we continue to be presented with tax cuts as a job creating panacea. Read the rest of this entry →
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Well, today’s Jobs Report from the BLS for June 2011 is out and the news is not good. In this post from Tuesday (July 6), I had predicted:
My guess is that the private sector jobs (the ADP number) will be in the 50K range while the overall economy will be 20K to 25K max.
As I admitted in this post from yesterday (July 7), I was off fairly badly on my prediction for the ADP number. Unfortunately for the economy, I was a hell of a lot more accurate on the BLS number than the supposed expert economists (via Reuters):
U.S. employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.
Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists’ expectations for a 90,000 rise.
Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000.
The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.
CNN in this article from yesterday is actually fairly pessimistic overall (as they should be – though they poo-poo the idea of a “double-dip” recession):
But don’t get duped into thinking that Thursday’s stronger-than-expected ADP private payrolls number, as well as some solid data about the manufacturing sector in the past week, is a sign that the economy is back on solid footing either.
At his “Twitter Town Hall” Tuesday, President Obama continued to paint his theme that the jobs are being created in his response to a tweet/question from Speaker of the House John Boehner:
THE PRESIDENT: — John obviously needs to work on his typing skills. (Laughter.) Well, look, obviously John is the Speaker of the House, he’s a Republican, and so this is a slightly skewed question. (Laughter.) But what he’s right about is that we have not seen fast enough job growth relative to the need. I mean, we lost, as I said, 4 million jobs before I took office, before I was sworn in. About 4 million jobs were lost in the few months right after I took office before our economic policies had a chance to take any effect.
And over the last 15 months, we’ve actually seen two million jobs created in the private sector. And so we’re each month seeing growth in jobs, But when you’ve got a 8 million dollar — 8-million-job hole and you’re only filling it 100,000-200,000 jobs at a time each month, obviously that’s way too long for a lot of folks who are still out of work.
There are a couple of things that we can continue to do. I actually worked with Speaker Boehner to pass a payroll tax cut in December that put an extra $1,000 in the pockets of almost every single American. That means they’re spending money. That means that businesses have customers. And that has helped improve overall growth.
Uh Mr. President? The economy does in fact include both public and private sectors. Using June as an example, it doesn’t really help much when the private sector creates 157K jobs in a month but the public sector cuts 139K jobs. As I noted in this post yesterday, everything is interconnected and none of the pieces of the economy operate in a vacuum. And as for the “…payroll tax cut in December that put an extra $1,000 in the pockets of almost every single American?” That “…almost every single American…” does not include the millions of people who are and have been unemployed. Roughly 14M or more. It also does not include all the people who are now “independent contractors” or “self-employed” who are not counted in the official unemployed ranks but are struggling to find work of any sort nor does it likely include many of the people who are underemployed. When you add all these folks together, you are approaching 30M people or more is my guess. Which is nearly 10% of the total population of the United States.
Reuters had this article yesterday on the “99′ers” – people who have exhausted up to 99 weeks of unemployment compensation and are still struggling to find employment:
Unlike in much of Europe, the safety net of the U.S. welfare system times out for the long-term unemployed. The federal government and many states have provided extra help for those caught up in the worst labor market in decades but the U.S. debt crisis rules out further extension of the programs.
Coyne is typical of many middle-class Americans now struggling to get by.
She used to earn $70,000 a year as an administrative assistant until her firm began to downsize and left Coyne among the growing number of Americans struggling to live on unemployment benefits, and eventually on minimal food aid.
Now Washington is considering cuts to social welfare programs to shrink a swelling budget deficit.
It may not only be Americans like Coyne who feel the pain. Some economists say the cuts could make it even harder to shrink long-term unemployment that damages the wider economy by dampening consumer demand and lowering output.
Unfortunately for millions of us, nothing seems to be penetrating the Beltway Bubble and the consciousness of the (un)representative elected officials.
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This past week, President Obama was in Pittsburgh to tout a government/industry/academia initiative for technology. CNN had this to say:
President Barack Obama — whose poll numbers have dipped in recent weeks amid a stubbornly sluggish economic recovery — touted the hard-hit manufacturing sector Friday, saying the country’s best production days may well lie ahead.
“We are inventors, we are makers, and we are doers. If we want a robust growing economy, we need a robust manufacturing sector,” Obama told a crowd at Carnegie Mellon University, the school founded by steel industrialist Andrew Carnegie nearly 100 years ago.
President Obama visited a university research center in Pittsburgh on Friday to announce a new partnership between the government, industries and leading universities to speed the movement of technological advances to commercial users. The trip was the latest of his increasingly frequent travels to battleground states to showcase administration efforts to create manufacturing jobs.
After touring the National Robotics Engineering Center at Carnegie Mellon University, a high-technology facility adjacent to a rusted factory symbolic of the area’s industrial past, Mr. Obama said federal agencies would invest more than $500 million to seed the initiative. Of that, $70 million is to go to robotics projects like one he viewed at the center: a boom-box-size robot that inspects sewer pipelines, made by a company started by a Carnegie Mellon professor.
Now, I am all for technological advances. My professional field is Software Quality Assurance and Testing and I have worked in every phase of software development projects. I remember all the “world of the future” type stories that Disney and other film makers would do, showing their visions of how robots would affect the world of the 21st century, making life so much easier for everyone from the assembly line worker to the housewife in her kitchen. Yet for all the potential this initiative may have for the long term future, it does nothing for the “stubbornly sluggish economic recovery.” The US economy needs something along the lines of $500B investment (and that is probably no where near enough) in initiatives that bring jobs now, not five or ten or twenty years from now.
We need good jobs for people so that they don’t need to juggle four jobs just to eke out a living (via the NY Times):
Some of these workers are patching together jobs out of choice. They may find full-time office work unfulfilling and are testing to see whether they can be their own boss. Certainly, the Internet has made working from home and trying out new businesses easier than ever.
But in many cases, necessity is driving the trend. “Young college graduates working multiple jobs is a natural consequence of a bad labor market and having, on average, $20,000 worth of student loans to pay off,” said Carl E. Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers.
…snip…
An entry-level salary often doesn’t go very far these days. According to a study by the Heldrich Center, the median starting salary for those who graduated from four-year degree programs in 2009 and 2010 was $27,000, down from $30,000 for those who graduated in 2006 to 2008, before the recession. (Try living on $27,000 a year — before taxes — in a city like New York, Washington or Chicago.)
Many earn even less than $27,000. Maureen McCarty, 23, who graduated from American University in 2010 with a journalism degree, makes $25,000 before taxes as managing editor of TheNewGay.net, a blog focusing on gay issues, with no benefits like health insurance or a 401(k). The salary doesn’t cover her expenses, so she often baby-sits five nights a week for six families in the Washington area.
MSNBC had this the other day on how people who are un and underemployed pay their bills:
Transamerica enlisted polling firm Harris Interactive to survey 668 people who had been fully employed but are now unemployed or underemployed, meaning they are working part-time but would like to be working full-time.
Not surprisingly, the most common source of funds were savings and unemployment benefits, with half of those surveyed reporting that they rely on each of those. About one-third also reported relying on credit cards and/or a partners’ income.
When the unemployment runs out, the retirement funds don’t last a whole lot longer either, believe me.
Despite an unemployment rate of 9.1 percent in May, nearly three million job openings went unfilled — up from roughly 2.1 million when the recession ended in June 2009. To be sure, that’s not nearly enough jobs for the roughly 15 million Americans who are out of work.
But many of those positions remain unfilled because employers can’t find qualified candidates to do the work. From manufacturing to health care, employers report that they can no longer rely on hiring entry level workers and training them on the job.
…snip…
Darlene Miller, CEO of Permac Industries in South Burnsville, Minn., said the days are long gone when a new hire could learn how to operate machinery on the job. Miller said she would add another half-dozen workers to her payroll of 38 workers — if she could find people skilled at operating the high-tech equipment she recently purchased to boost productivity.
…snip…
Miller is a member of President Barack Obama’s Council on Jobs and Competitiveness, which recently announced a goal of turning out an additional 10,000 American engineers annually by leaning on the private sector to boost university funding, add internships and create other incentives.
So apparently while sitting on record amounts of cash, industry is willing to invest in technology but not people. Again from the MSNBC article:
“In the ’60s and ’70s you could go from an entry level job on the loading dock to manufacturing engineer or accountant to maybe a manager in a corner office,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. “It doesn’t work that way anymore. The qualifications have gone up. The commitment between employer and employee has gone down. And (employers) don’t want to take five years to get you ready. They want you ready to start working — and learning — the day you walk in the door. “
What this article conveniently misses is that a lot of businesses, in their search for a better deal in a new location, create these types of problems for themselves. They want the state and local governments to subsidize the building of new facilities; they want the long term tax breaks and credits to “create new jobs” in the new locale but they are still not willing to bring a corresponding level of investment in the people to develop the necessary skills themselves. Friday’s Hartford Courant had the results of a poll of area businesses:
Fully 25 percent of the firms in the Hartford-Springfield region said they had been approached by other states, according to a report issued Friday by the Connecticut Business and Industry Association. More than 650 firms participated in the 2011 Hartford-Springfield Business survey.
…snip…
Forty-three percent of respondents said the region’s quality-of-life is its greatest asset; 30 percent of firms surveyed said the area’s best asset is its proximity to customers, while 17 percent cited the area’s skilled work force as its primary asset.
If management does not actually value proximity to a skilled labor force, then management should probably not whine about not being able to find workers with appropriate skills.
Now, poaching of businesses has long been a staple of life in the US. Growing up in small town Kentucky, I remember when the factories first came to town from the upper parts of the Midwest. I also recall how easily a factory could shut down and move on if a union were brought in.
I saw this story this week on the governor of the state in which I reside wooing of the Chicago Mercantile Exchange. Of course, if the CME were to move from Chicago to Florida, it would not help the overall economy of the US as it would destroy a corresponding job in Illinois for every job it created in Florida. And how soon would it take for the CME folks to start whining about not being able to find qualified workers in Florida.
It just seems that too many corporate executives look only at the next quarterly profit statement rather than at a long term sustainable future, for their companies and for their workers.
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I spend a lot of time confused about things that are happening in the world today. I mostly write about the economy at my sucky little blog and stay away from foreign policy issues but occasionally there are days like today that just leave me scratching my head and looking around for a scorecard.
“I would take the course that conservatives have been taking for the last 30 years — The War Powers Act is unconstitutional, not worth the paper its written on,” Graham declared. “It’s an infringement on the power of the commander in chief.”
So much for the Congressional power to declare war and control the purse strings.
McCain didn’t go quite as far as Graham:
Former Republican presidential nominee Sen. John McCain (R-AZ) took aim at his party for what he called its growing movement towards isolationism, chastising the current GOP presidential field for not supporting U.S. military intervention in Libya and calling for speedy troop withdrawals from Afghanistan.
…snip…
President Obama has come under fire recently for the U.S. involvement in Libya, which is taking place without congressional approval. Although McCain criticized Obama for “leading from behind” by having NATO take charge of the operation, he encouraged Congress to pass his co-sponsored resolution with Senator John Kerry (D-MA) giving congressional authorization for U.S. military involvement in Libya, which reached the 90-day mark today.
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So what makes today any different from any other day? Not a thing. It’s a day ending in “y” so that means we are treated with a mix of articles and opinions where the headline doesn’t actually match the story or the lede is buried or the cheerleaders try for the misdirection.
One of the first articles I saw this morning in my surfing of the news sites was this one from CNN on jobs returning to the US from overseas:
It’s still only a trickle compared to the flood of jobs that America lost to overseas outsourcing in recent decades. But some American businesses are bringing jobs home again.
…snip…
This trend of reshoring or insourcing is likely to grow in the coming years, as the cost gap between building overseas and building at home narrows. It’s an encouraging sign in a job market where hiring has stalled in recent months.
…snip…
According to BCG, Chinese labor costs are rising about 15% to 20% a year. That makes producing goods in China not nearly as cheap as it used to be. For many manufacturers, that narrowing is enough to tip the balance back to U.S. plants.
…snip…
What’s more, countries such as China and India that have profited from U.S. offshoring won’t stand pat and lose the potential jobs without a fight.
“It’s not as if the Chinese government is helpless is to offset this rising wage trend,” Tonelson said.
Anyone else find it interesting that the Chinese government isn’t helpless on jobs but the US government is? Apparently, repression is good for business in all ways.
From this article in today’s Washington Post and this one from the Daily Caller (via Yahoo), it seems that White House Chief of Staff William Daley wishes he had the power to do away with many of the regulations in government. You know, those pesky little things that go to protect food, the environment, rivers, air, and other aspects of life on earth. From the Post article:
One by one, exasperated executives stood to air their grievances on environmental regulations and stalled free-trade deals. And Daley, the former banker tasked with building ties with industry, found himself looking for the right balance between empathy and defending his boss.
…snip…
On the status of free-trade agreements with South Korea, Panama and Colombia, he suggested politics was proving to be a challenge. He said there are “people who lose from these agreements” and urged businesses to lobby their workers to help overcome opposition on Capitol Hill.
…snip…
White House officials described Thursday’s encounter as part of a work in progress. Spokesman Eric Schultz described the meeting as a “frank and open conversation . . . about steps we can take to drive private-sector job growth.”
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Talk about getting it from all sides. Economists want Americans to cut down on debt and boost spending all at once, even as home values tumble and gasoline prices soar.
It may all be a bit too much for the average U.S. household, particularly with an already sluggish labor market stuttering again.
From the second Reuters piece:
The big mystery in the United States today is why the job crisis is not at the center of the political and economic debate. After all, the numbers — and the human tragedies they reflect — could not be bleaker. Read the rest of this entry →
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When I was a kid, I used to love double-dips. I’d go to the doctor and afterwards, we’d stop by the drug store soda fountain for my free ice cream. Summers, there would be all the ice cream suppers at the churches with fresh home made ice cream and cake. Double-dips of chocolate ice cream and cake!
Unfortunately however, today’s double-dip will be a recession. Yes, there it is; I’m predicting that we will officially fall back into a recession in the very near future even though for the 25M to 30M long term un and underemployed, we’ve never, ever left the recession that began officially back in December ’07 and ended officially in June ’09. I do so very much hope that I am wrong on this but will even go so far as to act like an economist and claim to be surprised if I am wrong.
What makes me think this will happen? Well, to start with, too many folks like The Benbernank in his speech last Tuesday in Atlanta and the presidents of the Philadelphia and New York Federal Reserve Banks all saying the economy will improve in the second half of 2011. In addition, Bloomberg has a survey of economists claiming this as well:
After growing at a 2.3 percent annual pace this quarter, the world’s largest economy will expand at a 3.2 percent rate from July through December, according to the median forecast of 67 economists polled from June 1 to June 8.
Rising exports, stable fuel prices, record levels of cash in company coffers and easier lending rules will be enough to overcome the damage done by one-time events like poor weather and the disaster in Japan, economists said. Nonetheless, the current slackening means Federal Reserve policy makers will wait even longer to raise interest rates next year, the survey shows.
The reality is, the corporations have been holding those record levels of cash for over a year now (via WSJ). They have used the money to buy back stocks or to invest in equipment (NY Times). Another reality is there are always “one-time events.” This year it is earthquakes/tsunamis/nuclear melt-downs in Japan and tornadoes in Alabama and Missouri combined with floods along the Mississippi and Missouri Rivers and wildfires in Texas and Arizona. This past winter, it was record blizzards. Later this summer it will be hurricanes in some areas and droughts in others. All “one-time events.”
In 2008, Fortune magazine wrote, “In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he’s a sage”.[1]
I find it interesting that if you check the link at the footnote on the Roubini wiki page and scroll through the “8 who saw the financial crisis coming and the 8 who didn’t,” the “8 who didn’t…” are the ones still being quoted all the time. So much for Roubini becoming a “sage” instead of a Cassandra.
As always, we are not helped when we see Dana Milbank proclaiming that Austan Goolsbee leaving means President Obama is losing a “voice of reason.” That is the same Goolsbee who just last week was bragging about 1M private sector jobs having been created while ignoring the hundreds of thousands of public sector jobs lost.
“Now, government is not — and should not be — the main engine of job-creation in this country. That’s the role of the private sector, ” the president said in his weekly radio and Internet address.
“But one thing government can do is partner with the private sector to make sure that every worker has the necessary skills for the jobs they?re applying for,” Obama added.
As I noted in this post from Thursday, Dean Baker has already written the rebuttal to the “necessary skills” argument.
President Barack Obama, seeking to ease voters’ concerns about his handling of the U.S. economy, said on Saturday a meeting with his jobs council next week would focus on possible further steps to boost hiring in the short term.
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Austan Goolsbee, head of President Obama’s Council of Economic Advisers was making the rounds of various political shows this past weekend. HuffPo quotes him telling Christianne Amanpour of ABC:
“It’s not a jobless recovery. That is an incorrect phrase,” he told Amanpour.
Goolsbee is correct in one fashion. It can’t be a recovery if it is jobless. But he is way wrong on a couple of points (also from the HuffPo link):
Austan Goolsbee, who heads the president’s Council of Economic Advisers, says the addition of a million new jobs over the past six months shows “we have improved a long way from when the economy was in rescue mode.”
My bold. Now a million new jobs over the last six months sounds good, right? Not so fast there Bucky. In an economy that needs to add roughly 125K jobs every month just to maintain status quo (that would be 750K jobs for a six month period), then a million jobs in six months doesn’t begin to put a dent in the 14 or so millions of unemployed, much less the un and underemployed numbers sitting somewhere between 25M and 30M.
But wait, it gets worse for Mr Goolsbee and his figures. Being the somewhat anal retentive person that I am, I went back and looked at the blog posts I had done starting in December 2010 based on the BLS report on the first Friday of each month for the month just past. Other than the report for February 2011, I have a post that covers the jobs number for each month going back to November 2010′s figures and for February 2011, I found a link to a site that includes a PDF with the appropriate numbers:
Now I actually went back seven months rather than six months and using information gleaned from the monthly BLS press release for jobs created, I still only come up with 784K jobs. And I haven’t accounted for the little nugget in this past Friday’s report that the March and April numbers were revised down 39K, placing the seven month total at 745K jobs created. 745K jobs created instead of the 875K jobs needed just to maintain the status quo, still leaving the 14M unemployed and the 25M to 30M un and underemployed. No wonder McDonald’s had over a million applicants for their summer hiring binge. And made up the bulk of the “new jobs” for May. Read the rest of this entry →
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Clue Game 1960 by Thrift Store Addict, on Flickr
No. It probably isn’t. Probably just some more wishful thinking on my part. Nevertheless, I was quite surprised this morning to see a few pieces around the web pointing out that a “new Republican Jobs bill” was just another tired rehash of the same failed policies of the last thirty years. Ezra Klein at the Washington Post, Paul Krugman at the NY Times, Steve Benen at Washington Monthly all pounded on the Republican “Plan” and for good reason. From the Klein link:
The best evidence that Washington has forgotten about the jobs crisis is to look at the plans emerging to address it. Yesterday’s House GOP plan was a perfect example. It was, as MIT economist David Autor told me, a classic case of “now-more-than-everism”: Everything on the agenda was also on the GOP’s agenda in 2006, in 2002, in 1987, etc. It’s lower taxes, less spending, fewer regulations, more trade agreements, more domestic oil production. You can argue about whether these proposals are good for the economy. But as Autor says, there’s “no original thinking here directed at addressing the employment problem.”
Actually, you can argue whether those “proposals” are good for the economy as we have thirty years of evidence that they are not good for the economy.
Krugman points to how foolish it is to try to negotiate with the Republicans on these issues (as does Blue Texan at FDL this afternoon). Krugman said:
Anyway, the new “jobs plan” illustrates, once again, the foolishness of believing that we can reach any real bipartisan agreement on economic policy. The GOP stopped thinking a long time ago; all it knows how to do is parrot Reaganite rhetoric over and over. And there’s so little there there that the document — look at it! — has to rely on extra-large type and lots of pointless pictures to bulk it out even to 10 pages.
Benen is even less forgiving than both Klein and Krugman:
As we discussed yesterday, the jobs agenda, such as it is, is practically a conservative cliche: the GOP wants massive tax cuts for the wealthy, deregulation, more coastal oil drilling, and huge cuts to public investment. Republicans are confident this will work wonders, just as they were equally confident about the identical agenda in the last decade, and the decade before that, and the decade before that.
Indeed, the most glaring problem with the GOP jobs agenda is that it won’t work, but nearly as painful is the realization that it’s already been tried, over and over again, to no avail. They either don’t care or can’t understand the famous axiom: “Insanity is doing the same thing over and over again and expecting different results.”
The agenda is the agenda: tax cuts for the wealthy, deregulation, cut public investments. Good times and bad, deficit or surplus, war or peace, it just doesn’t matter.
It’s as if someone bought an iPod, uploaded one song, and hit “shuffle.”
There are times that I begin to despair a bit about all the crap going on all over. I can’t do anything about earthquakes, tsunamis, and nuclear disasters (all in one) but I can address some of the reporting I’ve seen in the TradMed the last couple of days.
Apparently the Beltway Village Idiots Pundits are anxious to stop writing all those bummer articles about the un and underemployed and the destruction of the global economy. I guess it’s just too Debbie Downer for them. So they’ve started the “Everything’s Getting Better” articles. The NY Times and Floyd Norris started with this headline:
Crisis Is Over, but Where’s the Fix?
Of course, without anything being fixed, it’s rather difficult for the “crisis” to be over. And to be fair, Norris does address some of this in the article:
When the financial system began to crumble more than three years ago, the world rushed to rescue it. Country after country went deeply into debt to keep banks afloat and prevent a deep recession from turning into something worse.
…snip…
But the world has changed since then. The economic recovery in most developed countries is stuttering at best, and governments are struggling with their own finances. It is time for remorse and second-guessing.
A surprising citadel of that second-guessing is at the International Monetary Fund, where researchers this week concluded that the rescues “only treated the symptoms of the global financial meltdown.”
The researchers, Stijn Claessens and Ceyla Pazarbasioglu, warned that “a rare opportunity is being thrown away to tackle the underlying causes. Without restructuring financial institutions’ balance sheets and their operations, as well as their assets — loans to over-indebted households and enterprises — the economic recovery will suffer, and the seeds will be sown for the next crisis.”
…snip…
In retrospect, it is clear that the bailouts came with too little pain for those responsible. Bondholders who financed banks that failed largely escaped pain. That was true even in Ireland, where the bailout would have led to a default of government debt had Europe not stepped in. It is still not clear how Ireland will pay its national debt, but the bank bondholders did fine.
Norris goes on to point out that one of the problems is the lack of accountability. Imagine that?
The economy has been growing for 18 months after the longest recession since the Great Depression – but public opinion has yet to fully reflect what economists generally agree are incipient signs of hope. One truism of presidential politics that actually happens to be true is that voters’ perception of the economy trumps just about any other issue, so Obama, acutely aware of both the need to present a successful economic record and the dangers of prematurely declaring victory, is treading very, very carefully.
…snip…
Yet despite several quarters of real — if uninspiring — growth, the pessimism remains deep. A Bloomberg National Poll conducted in early March found that more than a third of Americans continue to believe that the U.S. is in a recession, more than a year after it ended, and 63 percent of Americans say the nation is on the “wrong track.”
Structural unemployment – unemployment stemming from a mismatch of workers’ skills and job requirements – has been cited in mainstream media as the main cause of current, high unemployment. Data from the National Federation of Independent Business (NFIB), however, suggest that structural unemployment is not what is ailing the economy. The graph below draws on data from the NFIB’s monthly survey from December 2007 (the official start of the recession) to January 2011. Each month, the NFIB asks its sample of small businesses to state the single most important problem facing their business today. Since the recession began, respondents overwhelmingly have cited “poor sales,” suggesting that today’s unemployment is primarily due to a lack of demand. “Quality of labor,” the factor most consistent with structural unemployment, barely made the list.
Why the shortage? Many of the people who were laid off from factory jobs and are looking for work don’t have the specialized skills companies are looking for, manufacturing execs say. And they’re not eager to acquire them, because, having been laid off from one manufacturing job, they’re convinced that the whole sector is on the decline. So they don’t want to spend time retraining for jobs that they fear could soon be shipped overseas.
Some say those fears are misplaced, arguing that skilled manufacturing jobs are difficult to outsource. But the numbers tell a different story. As we’ve reported, middle-wage, middle-skill jobs — a category that includes both skilled manufacturing jobs and white-collar clerical work — are shrinking rapidly as a percentage of total U.S. jobs, thanks to the effects of offshoring and mechanization. So it may make sense for a worker to decide against spending a year retraining himself to learn these skills.
My bold. Today’s (Saturday, March 11) Hartford Courant had three articles that reflect the reality of things today.
Links to the articles are embedded in the titles but there we have it. UTC is laying off workers and moving the jobs elsewhere. They are doing it because they can (profitable but want more profits) and they reward the CEO with $24M in compensation to oversee these cuts and outsourcing. And the CEO likes to brag about it (from prepared remarks delivered in Mumbai to NASSCOM):
…snip…
Today, we have almost 5,000 employees in India. Our Otis factory in Bangalore has produced more than 30,000 elevators since the 1990s. Our Carrier factory in Gurgaon produces 200,000 air conditioning systems per year. In addition, Pratt & Whitney engines power the aircraft of many Indian airlines, including Air India, Kingfisher, and Indigo – as well as more than 225 turboprop aircraft, business jets and helicopters in India.
From our perspective, this is really just the beginning of our relationship with India. Before talking about some of the big macro forces that will shape the global economy over the next decade, I’d like to share just a little data that highlights the size of the opportunities in both the infrastructure and aerospace markets. Last year, UTC’s sales in India were $500M. We expect this to grow to $2.5B by 2015. I’m confident in this level of growth based, in part, on the current per-capita consumption rates. As countries like India become more urban, consumption levels for air conditioners, security systems and air travel will increase toward the levels seen in more mature markets.
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But surely there are folks in the US working to see US workers employed, building things useful to all citizens, right? Just today there were two more articles on Republican governors attempting to justify killing rail projects within their states. First up is John Kasich in Ohio refusing to put up $52M for a project estimated to cost $128M for streetcars in Cincinnati:
Gov. John Kasich said he can’t justify spending $52 million in state money for Cincinnati’s streetcar – the new governor’s most emphatic statement on what Cincinnati leaders consider a major economic development project.
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Without the state money, the project could be up to $30 million short of the $128 million needed to build a streetcar route from Downtown’s central riverfront to the Uptown communities near the University of Cincinnati. The city could seek that money from Washington or other sources, say backers.
The federal government had agreed to pay $2.4 billion of its estimated $2.6 billion in construction costs, railroad companies were vying to build and operate it, and state transportation planners had even dummied up proposed timetables: Train 7092 would depart Tampa at 8:10 a.m. and arrive in Orlando at 9:04 a.m.
The fast train was sought, and won, by Florida’s former Republican governor, Charlie Crist. But it was killed last month by his successor, Rick Scott, who joined several other Republican governors in spurning federally financed train projects over fears that their states could be on the hook for future costs. The final nail in its coffin came last week when a Florida court ruled that the new governor could not be forced to accept the federal money and start building it.
Of course, buried w-a-y down in the Times article is this little nugget that negates the article’s premise (and Scott’s justification for canceling):
Last month, Mr. Scott decided to scuttle the project after reading a report by the Reason Foundation that questioned its ridership estimates. The foundation is a prominent libertarian policy research organization that employs several respected transportation analysts, but it gets some of its funding from donors with ties to the oil industry, including foundations related to Koch Industries, which owns oil refineries.
“The truth is that this project would be far too costly to taxpayers, and I believe the risk far outweighs the benefits,” Mr. Scott said.
But a state-sponsored ridership study, which was released this week, concluded that the proposed line would actually have been a money-maker from the start.
Regardless of the complaints that Tampa and Orlando are too close together and as cities are “virtually unnavigable without cars,” the line would have been a money maker. It would have eventually been extended south to Miami as well.
So here we sit. Private industry destroys jobs because they can. Governors destroy jobs because of ideology even though those jobs could eventually help people get around cities and states without buying gas, contributing to pollution and auto gridlock. Saving gasoline that has spiked in price once again, chewing up more financial resources that the long term un and underemployed could use on things like, oh food or medical care.
Let’s let the Village Idiots Pundits declare Victory Recovery and move on so they can cover such news as Newt Gingrich’s Patriotic Affairs.
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