Who Will Speak For The Unemployed? - By: Robert K. Lifton

 
As the count down continues to the beginning of August, our nation and the rest of the world waits to see whether Congressional Republicans and Democrats, working with the Obama Administration, can come together to raise the debt ceiling, allowing the government to borrow to fund its activities.  Assuming that Congress resolves that short-term issue, still looming is the much greater and tougher problem of lowering deficits and ultimately reducing the national debt.  Democrats as well as Republicans have accepted the idea that debt reduction is a must. The President appointed a bi-partisan commission headed by Democrat Erskine Bowles and former Republican Senator Alan Simpson that studied the problem and made recommendations about how to reduce the debt.

Private bi-partisan groups like that led by former Republican Senator Peter Domenici and economist Alice Rivlin have also studied the debt problem and made recommendations. Not surprisingly, both sets of recommendations follow the same path with some relatively minor differences. They call for changes in Social Security that would gradually lower the outlay, for addressing the rising costs of Medicare and Medicaid, for revising the tax code in a way that would increase revenues without appearing to raise taxes, for reducing or limiting defense spending and for cutting other expenditures. In western New York’s traditionally Republican 26^th Congressional District, Democrat, Kathleen C. Hochul won by running against the proposals to change Medicare to a voucher program in the budget and deficit reduction plan presented by House Budget Committee Chairman Paul Ryan and endorsed by virtually every House Republican Congressman. This has led some Republicans to have second thoughts about publicly supporting such changes. Now, both political parties are playing a game that consists of trying to get the other party to put a budget before the American people, knowing that it must address Social Security and Medicare. Then other side can gain political advantage by attacking the proposed budget.

Sadly, none of these commissions, budgets or reports seeks to tackle another very serious problem facing our nation: the problem of chronic unemployment. This is a problem that had been festering for a long time. As I noted in prior HuffPost blogs, a significant portion of unemployment is structural; caused by the transfer of manufacturing and other jobs from the U.S. to countries with lower labor costs and by technological changes that eliminated jobs, making manufacturing and other operations more efficient and the remaining employees more productive. The housing and real estate bubble actually covered up the growing structural unemployment. The uneconomic increase in housing and commercial real estate and the industries that benefitted from that increase added to the number of employees. Jobs also increased as a result of increased consumer spending based on the belief in the wealth created by the rise in home prices. When the bubble burst, it brought on a powerful recession that resulted in reduced consumer purchasing and a concomitant drop in production and services. Companies reduced employment in response. Many economists missed the real story, believing that once the impact of the bubble bursting was over, the economy would recover and employment would resume its earlier levels. But the fact is that without the stimulation of another bubble, employment will never go back to its earlier levels.

As the numbers for this past week show, the situation for the unemployed is dire. Unemployment is back to 9.1%. More than 13.7 million unemployed Americans are still looking for work and 25 million more, an additional 16% of the work force, have part time jobs or want to be working full time. More than 45% of those 13.5 million jobless have been out of work for over 27 weeks. They are losing their skills and confidence as well as becoming less attractive to employers. Many of these same people have lost their homes in foreclosures or have seen their home values drop precipitously, eliminating what little savings they counted on to sustain them during difficult times. The toll on their family lives and children is devastating and the hopelessness of their condition in many cases is becoming unbearable.  On top of that, new entrants continue to come into the employment market, many with college or advanced degrees who are already heavily burdened with debt incurred for their educations.

With the unemployment numbers at these levels in today’s economic environment there is only one way to provide enough jobs to make an immediate impact; through government development of large-scale infrastructure programs that address America’s aging infrastructure. But there is no possibility in the current political environment that such programs will be enacted. The Republicans are convinced,  and enough Democrats agree with them, that the overriding issue for America is reducing the deficits and the debt. The focus on reducing budget deficits has consumed all the oxygen in the system. Greater government spending programs are anathema.

The Republican plan for creating jobs is to “create confidence” by lower spending and reducing the debt. It is difficult to understand how such a program will either bring jobs back that were lost to lower cost labor markets or bring jobs back that were lost because new technologies made them no longer necessary. Quite the contrary, as we are already seeing, reducing spending by state and city governments is just adding more people to the jobless rolls. Nor is reducing taxes on the wealthy a formula for increasing jobs. No matter what the CEO’s of large corporations may claim, the truth is that businesses will expand to meet increasing customer demands and contract when customers disappear. They will not expand or shrink in response to the budget deficits. The banks today are loaded with funds and looking to lend them to increase their profits but they can’t find enough secure borrowers. Higher gas prices are threatening the future of increased consumer spending. The housing market is a continuing drag on the economy with foreclosures weighing down the market for new homes and sales of existing homes. None of that will change because of lower federal deficits or lower taxes.

The Democrat’s plan is no less compelling. President Obama talks about long-range programs in the fields of medical research, clean energy technology and education that may be valuable in later years but right now do not change the situation. The drastic state of unemployment requires equally dramatic measures, not dreams of a better future.

At the end of the day, the fate of the jobless lies in their own hands. We have seen how a relatively small number of passionate people who formed the Tea Party, have been able to impose their views on the Republican Party and our country. The thirty nine million Americans who are out of work or not working full time, and their families, constitute a potentially much more powerful voting and lobbying force. There is no shortage of people in our nation capable of providing the leadership to pull this force together to press for decent job opportunities. Only then will someone speak for the unemployed.

Mr. Lifton, a business man and political activist is writing a book entitled “Life’s Lessons and Stories from a Member of the “Greatest Generation.’”

 

 

Comments

[walrus]

I agree 100% with Mr. Liftons opinion. You need another FDR, unfortunately you don't have one and the forces arrayed against such an emergence, and the mobilisation of the unemployed as a political force for change, are too formidable.

The reason that unemployment is now a structural problem is that there are deep structural problems with the whole American economy. Like it or not, America is in competition for resources and markets with the rest of the developed world. For at least the last Thirty years, America has not taken very many steps towards building a sustainable competitive advantage. By "building", I mean changing and adapting to the commercial, economic, technological and social environment. America is resistant to change and this is ultimately why you are hurting.

I know change hurts, we all do; but the ultimate pain you experience if you resist until change is forced upon you by outside forces is much worse.

To give you a trivial example; I pay the U.S. equivalent of $5.63 for gas, and so does the rest of Australia. The European economies pay even more. Does that price hurt our economies? Not really, because we modified our behaviours over time, both private and corporate, to minimise it's impact. Since at least 2002, I've asked my American friends why ferchrissake America is not producing and marketing to its own population the worlds most fuel efficient cars since blind Freddy could see what was coming down the pike? All I got was blank looks, or references to oil company propaganda that "small cars are dangerous".

There are simply too many examples of economic vandalism to catalog, although one recent example stands out. The Health care debate. Where was the rational argument based on an agreed set of facts, starting with an understanding that the raw GDP and health statistics demonstrate conclusively that there is some thing seriously wrong with the performance of the American system when compared to other developed countries?

Where was the "Gap analysis" between the American system and the systems of the rest of the developed world? Where was the mature discussion of what new ideas might be gleaned from the experience of others from which a new and superior system might be developed?

Such discussions were nowhere to be seen, or if they were, they were quickly suppressed. Instead all you got was "Socialism" and "Death Panels". Don't you understand that provision of Health care affects the competitiveness of the entire economy?

My pet examples are these:

"STRATFORD, Conn. -- A Stratford mother and her daughter were arrested in October, charged with stealing more than $40,000 worth of education from the Stratford School district.

Marie Menard and her daughter Ana Wade of Milford were charged with second-degree forgery and conspiracy to commit larceny.

Stratford school officials accused them of illegally enrolling Wade's two sons in the school district."

http://www.wfsb.com/news/28096201/detail.html

"A homeless woman from Bridgeport who enrolled her 6-year-old son at a Norwalk elementary school has become the first in the city to be charged with stealing more than $15,000 for the cost of her child's education"

http://www.care2.com/causes/education/blog/homeless-mom-charged-stealing-school/

Do I need to spell out the economic lunacy of allowing a situation to be created where the above "crime" is even conceivable?

The economic name for what is going on is "rent seeking" and the scale is simply massive and crippling. Moreover, the rentiers own the legislature. The inability of the country to deal with a simple and obvious problem such as the provision of health care demonstrates their domination.

There is no point in cataloging the economic bastardry going on - American economists could do it in a heartbeat if they have not done so already. Furthermore, they know the cures. Trouble is that no one will challenge the rentiers.

Tinkering with Medicare or Social security? What a waste of time! Unless the structural problems are addressed all you are doing is rearranging the deck chairs on the Titanic.

If someone now wishes to play the "States Rights" card and talk about the evils of "big government" I have a caution for you. Consider the possibility that the American system of Government is not "the envy of the world" and that American pre eminence in the Twentieth century is an accident of history; the result of Europe tearing itself apart twice, coupled with the development of the motor car and the discovery of cheap and abundant oil in America?

Can Fifty States really organise to solve nationwide problems efficiently? For example, there are very few State taxes in Australia, there is a national income tax and a national goods and services tax that are collected efficiently at the Federal level, then we argue about how much each of the States will receive from that pool. This has to be more efficient than Fifty individual sets of tax laws and the administrators that police them, which produces costly and economically lethal absurdities like this:

"The Supreme Judicial Court of Maine has ordered the state to repay a Massachusetts aircraft owner about $26,000 after overturning a lower court ruling to do with the state’s controversial use tax. As we first reported in 2007, Steve Kahn bought a Cirrus SR22 in 2003 and registered it in his home state. He used it to visit property he owns in Maine and for Angel Flight volunteer missions. After noting his tail number in Maine, state authorities invoked the use tax, which essentially levies sales tax on goods brought from outside the state and used within it.

.....The assenting panelists said the 6 to 7 percent of its time Kahn’s SR22 spent in Maine during 2004 didn’t amount to enough for the use tax to apply. But the panelists refused to put a figure on how much time in and out of the state warrants invocation of the tax and said each airplane owner will have to present his or her own case....."

http://rescommunis.wordpress.com/2011/04/29/u-s-state-court-overturns-maine-use-tax-assessment/

The problems this creates for the rest of the world are considerable. The first problem is that of a violent upheaval in a nuclear armed America and the existential threat that poses. The second is how we cope and manage as you gradually decline into something like the old and moribund democracies of South America - a rich and dominating aristocracy in a sea of peasants.

[VietnamVet]

Colonel,

The American economic situation is tragic. There is no hope for the millions of unemployed. They are invisible to the White House, Congress and Pundits inside DC’s bubble. Businesses are only hiring workers who already have jobs. Cutting government spending will only make it worse.

What is not discussed in corporate media is the change in the economic base in the United States from manufacturing to financial shakedowns. Both parties have been bought by Wall Street. Public wealth is privatized into credit card debt. The elites then take their cut from the personnel debt payments and fees charge for services that once were paid for with taxes. America is returning to the debtor system were everything is owned by the Company Store. If you are lucky enough to have a job, you never get ahead because the debt payments for college education, medical bills, Lexus Lanes and usurious credit card interest payments.

Since 70% of the American economy is consumer spending, it will never rebound until there is demand caused by the unemployed working again. The economic system will crash and burn again unless there is a universal Medicare System paid for by taxes, affordable college education, and nationalizing the banks and wiping out all of the overhanging housing debt and starting anew with a clean slate with a regulated financial industry.

[William R. Cumming]

Disclosure! I am part of the radical fringe that believes in the Constitution of the US and the Bill of Rights! Why that disclosure? Because we the USA don't need a depression (we may already have one) or a World War to succeed in gainly employing our citizens and residents, even in a "Flat" world. But allowing the Slicky Boys and Girls of Wall Street to strip the inherent wealth of the USA and park it offshore is as bad as the USA and its wealthier allies to allow corrupt leaders of other countries to fleece the USA of its grants and donations. Slicky Boys was a term developed as I understand it by GIs during the Korean War to refer to those who went under fences to pilfer US war stocks and food]!
Most estimate $17 to $28 Trillion has gone offshore from the US in the form of unregulated hedge funds and derivates and CDOs. The Ten Trillion Dollar wars in MENA have certainly added unproductive waste, fraud, and abuse. Almost 25% of health care costs are overhead. 20% of pretax dollars go to the largely unregulated business of insurance. Only 3 states actually have competent actuarial regulators. 90% of profit making colleges exist only by milking student loans. It goes on and on. So wasted investment is the current USA economic strategy. Does no real job future for most Americans surprise anyone?

[J]

Here's a related article for reading:
Will The Banksters And The Corpocracy Eventually Own It All? 29 Statistics About Extreme Income Inequality In America That Will Blow Your Mind
http://theeconomiccollapseblog.com/archives/will-the-banksters-and-the-corpocracy-eventually-own-it-all-29-statistics-about-extreme-income-inequality-in-america-that-will-blow-your-mind

Excerpt from the article: -- "What U.S. corporations are able to get away with is absolutely amazing.

The following figures come directly out of a report by Citizens for Tax Justice. These are combined figures for the tax years 2008, 2009 and 2010.

During those three years, all of the corporations below made a lot of money. Yet all of them paid net taxes that were below zero for those three years combined.

How is that possible? Well, it turns out that instead of paying in taxes to the federal government, they were actually getting money back.

So for these corporations, their rate of taxation was actually below zero.

If you have not seen these before, you are going to have a hard time believing some of these statistics.....

*Honeywell*

Profits: $4.9 billion

Taxes: -$34 million

*Fed Ex*

Profits: $3 billion

Taxes: -$23 million

*Wells Fargo*

Profits: $49.37 billion

Taxes: -$681 million

*Boeing*

Profits: $9.7 billion

Taxes: -$178 million

*Verizon*

Profits: $32.5 billion

Taxes: -$951 million

*Dupont*

Profits: $2.1 billion

Taxes -$72 million

*American Electric Power*

Profits: $5.89 billion

Taxes -$545 million

*General Electric*

Profits: $7.7 billion

Taxes: -$4.7 billion

Are you starting to get the picture?

I wish I could make $7.7 billion, pay no taxes and have the government give me $4.7 billion on top of it.

Our system has become corrupted beyond all recognition.

We need to throw out the current system of taxation and come up with something entirely new.

In fact, the truth is that for most of U.S. history there was not a federal income tax at all. But that is a story for another day.

If you believe in the U.S. Constitution and in the republic that our founding fathers established, then the very high concentrations of wealth and power in our society today should greatly concern you. Income inequality is not a "Democrat" or a "Republican" issue. A vibrant, thriving middle class should be a goal all of us can embrace."

[jerseycityjoan]

Who Will Speak for the Unemployed?

Great question. As Lipton points out, the unemployed and underemployed, along with their close family and friends, constitute a group of many millions.

Yet unemployment has been stubbornly stuck for more than a year and no major politician has done a thing for them during that time.

I believe that Democrats and Republicans alike will later regard that as a grave error. However, as much as I wish things were different, I cannot say with any confidence that things will change.

President Obama has never been heard to utter the phrase "99er" in public. The plan seems to be continue to pretend that good wishes and hope will create jobs and get the jobless working again.

This is a sad continuation of the fantasyland thinking that has so often dominated our political parties and public officials since the election of Ronald Reagan.

In the meantime, not only is nothing of substance done to help them, the government and public is lead to believe nothing's really wrong and anyway, there's no effective govertment action that could help. Yeah right, like additional weeks of unemployment wouldn't come in handy.

In addition, the country's legal immigration machine remains on autopilot and the nothing is done to take jobs away from illegal immigrants. We've handed out more than a million work visas to unnecessary foreign workers since the recession began and no one's doing a thing about it. And yet the government's own experts say full employment will not return for another five years, or even longer.

I think if the average American knew how bad the employment situation was they'd demand action, but they remain ignorant and the politicians just keep on hoping and ignoring reality.

[confusedponderer]

I think that Walrus has a point when he points out structural weaknesses and inefficiencies. In addition to a sea of law enacted by the 50 states, consider this:

How many places can you go to get a corporate charter in Germany? 1. UK? 1. France? 1. Japan? 1. The US? 50. Why? For the sake of folksy tradition? Is there a practical benefit in that? It it a cunning tyranny prevention measure that is lost on me?

In the context of the lobbying power of corporations in the US two party system that leads to a race to the bottom, rationalised by nonsense sentiments like like "The state that governs least is the state that governs best!"

It leads to lunacies like Arizona cutting tax inspectors that cost $ 25 million (and which would, if left to do their job, would have helped raise $ 174 million revenue). In the minds of the nut case legislators enacting this folly apparently tax (law!) enforcement is a competitive disadvantage. Scary!

http://www.harpers.org/archive/2010/07/0083023

In states like Texas the deliberate cutting of taxes has led to a budget that doesn't have enough revenue to even afford the already very modest services Texas offers. They will have to cut education, social benefits and the like.

Every politician in the US, and that's in particular the R's, who tells their electorate that the US will be able to get out of the crisis without raising more revenue, i.e. raising taxes (heresy!), is a brazen liar or an ideological dimwit.

[William R. Cumming]

Vietnam
vet! It turns out that direct deposit systems saved many banks and allowed a failed business plan to wedge itself into the current economy. Even
if funds are withdrawn in cash almost immediately that brief control over them by the banks allows their manipulation. The FED
loans the banks money at almost no interest and they lend it back to the federal government at high interest. This practice will end at some point. The small and medium size banks survive on fees and lending for commercial real estate. If those commercial real estate loans which may well be more "underwater" than residential real estate loans then many banks even now are technically insolvent. Thus all are trapped in the facade that the US banking system does what it is supposed to do, but does not, and that is loan money to individuals and small business. The so-called roll-ups, Wal-Marts and Home Depots have drained small town America of its credit.
The current financial data capture by the federal government no longer accurately portrays the economy or even the CPI or employment. The U-6 employment figure would and does show depression era unemployment in the USA.The first politicians to use the D word will probably be stoned but those who come after will be elected to office.

[Charles]

Would have been more compelling had there been a recommendation at the end of the article. The unemployed need to organize to press for decent job opportunities? Press whom? Government? They don't make jobs. So they should press business? I own my own business and I will hire as many employees as I need to make as much profit as I can. No more, no fewer. So the unemployed are going to press me to hire more people? To what point? If I hire more people than I need, I have to cut the pay of my current employees. Where's the fairness in that? And what about when my employees get disgruntled at their pay cuts and go elsewhere taking their intellectual property with them? My business becomes less competitive and goes under, putting the entire workforce in the unemployment line.

What will get decent job opportunities? More government spending? That hasn't helped the poor. We need to admit that these noble-sounding government programs don't work. We send money to Washington, which can't manage a thing, so it returns it to states in the form of grants and programs (minus a serious vig to fund the bureaucrats, studies, propaganda on how great the programs are, etc) but with all kinds of guidelines and caveats which are in most cases irrelevant to the local situation.

Cutting spending is merely being responsible and places the country on a more stable basis so our economic system can work. It is more than just confidence building when we walk away from a "plan" that will result in us paying back our debt in devalued dollars. If we pay back our creditors with devalued dollars we will also be paying our teachers and firemen in devalued dollars.

And don't tell me that if we just weren't fighting these (three, now) wars we would not be in debt -- DoD, CIA and State total spending is equal to about 1/2 of this year's debt. Wipe out all three and we are still way in the red. Every dollar adds to the pile, of course, but it isn't just defense; not even close.

This article is just victimography. The unemployed are victims of someone -- big business, the government, the evil rich, someone. The bad guy is the out of control government spending which hurts everyone.

[Bill H.]

"a significant portion of unemployment is structural; caused by the transfer of manufacturing and other jobs from the U.S. to countries with lower labor costs"

And there seems to be consensus that nothing can be done about that. One area of job creation I never see discussed is that of trade policy. Too much attention is given to "free trade," which benefits our employers by allowing them to ship jobs overseas, and hurts our workers. We need to bring those jobs back to this country.

We could start by telling China and its friends that their products will not enter our country until their workers are paid on an equal footing with ours, and until their markets are as open to us as our market is to them.

We are the world’s biggest military, but when it comes to economic policy we allow other nations to ship their cheap shit into our market while they keep their markets closed to our products and commodities. Sure, we need them to buy our debt, but they need us to buy their products, too. If we aren’t buying their products their economy crashes, and it’s about time we started using our economic power as willingly as we do our military force.

[Byron Raum]

It seems to me that the very premise of the taxation system is flawed. It is believed that lowering taxes will raise employment. I would imagine that that converse is true - if you raise taxes, under our system the employer has an incentive to hire more people, because he gets to take away less money - might as well take the tax deduction of hiring someone. (Naturally this refers to profits on taxes, and not targeted taxes, such as social security.)

I wonder how much of our unemployment can be explained simply by the fact that the real corporate tax is so low, there's no hiring incentive in the US.

[Norbert M Salamon]

Charles:
A reason [among others] that cutting DoD etc would still leave the Feds in deficit is that the Tax/GDP ratio is about 14% as opposed to historical norms since the 50-s of approx 18%.

The reason the repubs can get away with tax cut nonsense, especially re corporate taxes is that they argue for the statutory rate [35%] which is among the highest in OECD, but forget to indicate that the effective rate is among the lowest in all the world [not only OECD] due to examptions, special treatments and other accounting miracles as propsed and written by K-Street - and enacted by the corrupt Congress and or purchased regulators [approx 1.8% of GDP].
The top fiancial elite does not pay their statutory taxes either, though they art not benefitted as greatly proportionately as the coprporations.

[Brent Wiggans]

Actually, the Republicans are doing something about structural unemployment. They sense that we are at the tipping point of their decades-long campaign to destroy confidence in government, break organized labor and condition the American workforce for employment at much lower pay scales. Huge numbers of workers remaining unemployed for longer and longer makes for ever-increasing pressure to accept less and less for the privilege of having a job. Anything, such as regulations or taxes, that can be plausibly held up to be an impediment to job creation becomes a politically attractive target. The entitlement burdens are pointed to as responsible for making business too nervous to commit to hiring. Cut them down. This is the perfect storm for Republicans to finally overturn the progressive model of American society that became entrenched after finding its own tipping point in the Great Depression and the election of FDR. This is the best opportunity they are likely to get to return us to a state where government functions as nothing much more than a protective container for the economic free-for-all that is the core of the Republican definition of freedom. There is an alarming symmetry in all this as we run the newsreel in reverse and return to the conditions of the late nineteenth century.

Also, remember that, as Krugman and others have reminded us, in 1936 FDR gave in to political pressure from Republicans to cut back stimulus and balance the budget and it almost certainly prolonged the depression right on into the war. I suppose there are always reasons for historical amnesia. Today there is absolutely no incentive for Republicans to effect any improvement in the plight of the unemployed or the economy in general. Getting what they really crave depends upon the failure of the current model. Unfortunately the staleness in thinking and lack of nerve among Democrats stir little more in memory than the despair of past failures and obscure the lessons.

[William R. Cumming]

NSM! Because IRS audit strategy is directly related to benefits versus costs that organization long ago concluded that corporate audits would rarely if ever result in substantial tax revenue. Because the IRS oversight committees in the Congress, including the Joint Committee on Taxation, long have pressured IRS to look to more fertile areas for tax revenues. Of course some of this is driven by the lobbys and politicians.
President Nixon diverted the most skilled and competent IRS audit staff to enforcement of his wage/price/rent freeze in 1971 when he also devalued the US dollar. Over 3000 mostly corporate audit types were diverted and less than 500 returned eventually to corporate auditing for IRS. Of course the tax laws just happen to be one of the most effective ways for the federal government to understand exactly what corporations are doing! I would advocate disclosure of all corporate tax returns but this is precluded under current law.

[William R. Cumming]

NMS! Did I mention that HEDGE FUNDS and derivatives are NOT subject to corporate taxes in any effective way.

[Mattias Dahlstrom]

Bill H!
Maybe I recommend for you and everyone else this most excellent interview with Sir James Goldsmith from 1994 ... he is dead now but he was very insightful, and very smart (and a corporate raider too).
FkDahl
http://www.youtube.com/watch?v=4PQrz8F0dBI

[jerseycityjoan]

Charles,

Your own company's staffing may be just right but that is not the case for many businesses.

There are those who have shifted jobs overseas. There are those who chase cheap legal foreign workers who will work harder for less. Then there are those businesses who laid off employees when they didn't really need to, and now are working the remaining staff harder (and sometimes for less money, too).

It's just not all about the debt.

What do you expect the unemployed to do? That is left unsaid in your comments. There's only about 1 job for every 5 of them, and of course many companies are not even considering the long term unemployed.

If companies won't hire someone who's been out of work since 2008 and the government refuses to help, then what?

Really, then what? The politicians seem to think these people will go away quietly. They have been very quiet so far but they are not going away. Maybe when the broke and homeless land on their relatives' doorsteps and in homeless shelters, then maybe something will be done. I suspect that will be happening in greater numbers this year and really start to accelerate. People can only hold out so long. Even the families in which one spouse is still working can't go on forever.

[Lars]

The Roosevelt we should be looking for is not as much Franklin as Teddy. In his time, Big Money had too much influence and that is again the case. What Franklin got right is putting a lot of people to work on infrastructure, as has been pointed out. That is why he has a lovely memorial in Washington.

[jerseycityjoan]

Looks like I am not the only disgusted and disenchanged one out there. From a Reuters article on a recent ABC/Washington Post poll:

"Eighty-nine percent of Americans say the economy is in bad shape; 57 percent say the recovery has not started and 66 percent said the United States was seriously on the wrong track.

Forty-five percent said they trust congressional Republicans over Obama to handle the economy, up 11 points since March.

The poll shows Obama leading five out of six potential Republican presidential rivals but in a dead heat with former Massachusetts Governor Mitt Romney.

Among all Americans, Obama and Romney are tied at 47 percent each. Among registered voters, Romney is ahead 49 percent to 46 percent."

http://www.huffingtonpost.com/2011/06/07/obama-approval-rating-_n_872444.html

Hmmm, 57 percent say recovery has not started and yet the economists claim the recession ended in June 2009. Personally I'd with the 57 percent. That the market is more or less back to normal doesn't mean much when the jobs situation is still so bad.

I am surprised Romney is doing so well. Are we getting to "anybody but Obama" already?

[walrus]

The suggestions here are well meaning but they are all unfortunately self serving talking points produced by vested interests.

- "Victimography" - no one is to blame but the unemployed, not business, not the rich, but uncontrolled Government spending.

This argument fails when one considers that it ignores exactly where that Government spending actually went. If the Government had spent wisely, it would have created jobs and prosperity - however the rich and the corporations control the legislature.

$2.5 Trillion went on tax cuts for the rich and another Two Trillion on Two optional wars.

A list of what that money could have provided is at the link.

http://www.dailykos.com/story/2011/06/07/982893/-What-the-Bush-tax-cuts-hath-wrought:-$25-trillion-in-lost-opportunities?via=blog_1

Then there is the perennial question of taxation. This argument runs the line that if you reduce tax rates on corporations and the very wealthy to zero, they will respond by creating a workers paradise for Americans.

This is BS since it ignores human greed and the predilection for excess wealth to engage in rent seeking behaviour. What is required is to get excess money out of their claws by an efficient, equitable and neutral tax system and into activities and projects that benefit not only the corporations, but the entire community. This is not rocket science, it is standard economic practice of a sort we have rammed down the throats of plenty of other countries via the IMF and World Bank.

For those who say that taxation is theft of private property, I respond by saying that everyone makes use of public property from the day they are born, provided by their forefathers, and it is our duty to leave the country in better shape than we found it. The rich should think of that when they land their Learjet at a public airport or use GPS. You use Public goods, you pay for their construction and maintenance through taxation.

Then there is the "shipping jobs to China" argument. The simplest way to confute this is to propose that Third world jobs belong in Third world countries. Developed countries are "developed" because they produce high value added goods and services, not cheap schlock.

High value added goods by definition contain the "condensed brainpower" of the people who conceive of and design and sometimes build them. As John Nash demonstrated (for which he won the Nobel prize) it makes sense to ship jobs to where they can be performed reliably at the lowest price because everybody, foreign worker and consumer alike, benefits - this is where real "trickle down" happens.

Of course if you want Americans working in slave labour conditions instead of the Chinese.....

The normal response to globalisation, one that was taken in Australia, was to transition gradually while working to upskill your entire workforce for better, more value adding, jobs. Of course that relies on education and training and America has absolutely no interest in providing such public services, preferring to throw the displaced on the scrap heap.

To put it another way; Yes, we do buy Chinese schlock, but we don't care much since we have migrated our workforce out of schlock producing industries. Our unemployment rate is about as low as it can go - although we are not perfect and will pay for our success in other ways :(

The other variant of this argument is the "industry protection" argument. This is the one run by managers and owners, not the unions. It should be treated with the contempt it deserves. Industry protection costs American jobs, it does not protect them, it does the reverse. This is because one mans job protection imposes higher costs on another American industry that costs them more jobs than it protects.

To summarise; the irony is that the American system of free market capitalism actually works very efficiently - and America is a victim of not being able to compete very well.

You are part of a global competitive system and the global financial system is efficiently rewarding and penalizing America for its successes and failures exactly as it should. Short of adopting world wide Communism, the only way for America to maintain its standard of living, let alone prosper, is to realise that it had better start competing.

American economists will tell you what you need to do to compete. They have known for decades. Your starting point is to give every American child, no matter who they are, where they are, or what their parents means are, the very best primary and secondary education the world has ever seen, even at the cost of this generations ease. All else will follow from that in due course.

"Stealing education"..bah!

[John Kirkman]

Re Walrus/Australia
I was based as a USAF pilot near Melbourne for a couple of years in the early sixties. I liked and respected the Aussies and am still in touch with them fifty years later. They have been honored guests in my home and I in theirs for many years. I would not suggest adopting their form of government however, because, for instance, their very high taxes are crippling to the individuals, did not provide the easy access to higher education available to all of us here in the USA, or provide the excellent highway system we take for granted in the USA. Their beer was certainly better, and Australian Rules a great sporting event, and I miss both.
We should and could have built better automobiles, but marketing, not engineering dominates our automobile industry and I have driven German automobiles for years specifically for that reason. There is some indication that might be changing, but I will believe it when I see it.
We should have a medical industry that serves our people better, but clearly that is not going to happen, and we stand embarrassed in the world for that failing.
I despair that our country can be saved, and the Congress seems dominated by ignorant, corrupt, slimeballs from the worst levels of our society. We have made public service not worth the price to the individuals capable of serving the country. And that makes the good leadership we so desperately need simply not available.
And the criminals from Wall Street that drove our economic world over the cliff are untouched by the results of their crimes. It is a pity that Hogarth is not around to show us how ugly we have become.
Now lacking the shields of the oceans that once protected us, we are ill prepared personally to fight the battles we face, both real and imagined.

[Fred]

Walrus, education? That's what we gave the 'greatest' generation, along with Social Security, Medicare, etc. Give that to all the US Citizens? My, my the 'not rich enough' billionaires would have to pay the same tax rates they did when Reagan got elected. How the heck could they buy the congress and senate with all the hundreds of millions they had left over?

[different clue]

Until we get the larger issues settled, there is something we could do to spread some of the work we have among the unemployed in the meantime. Economist Dean Baker has suggested "job sharing". In super simple terms, if 80% of us have 40 hour/week jobs and 20% of us are unemployed; reduce the full-time workers to 32 hours per week and assemble all that unworked time into 32 hour/week jobs for the unemployed 20%. Here is the link:
http://www.cepr.net/documents/publications/job-sharing-tax-credit-2009-10.pdf

What credibility does economist Dean Baker have anyway? He did spend the last few years of the housing bubble condemning it as a bubble and predicting a correction (which we call a crash). He also claims to have refused to buy a house for years, instead choosing to rent until prices have returned all the way down to their pre-bubble plateau.
So he was provably right about something specific).

[zanzibar]

Unemployment and under-employment are serious structural issues in the US as well as many other western industrialized countries. In the US, we have another issue in that median wages have stagnated for decades and in real terms have declined. We also have reverted to wealth concentration last seen during the go-go years in the 1920s. In the recent past, the golden years for the middle class in terms share of both national income and wealth was in the 50s.

Unfortunately, we have dug a deep hole economically speaking and there are no pain-free solutions. The politicians do not want to address the issues frontally as it jeopardizes their electoral prospects and gravy train. The middle and working classes are not yet willing to exercise their sovereignty. Consequently, the financial and other corporate interests have undue political influence and continue to grab a historically large share of the pie.

From a purely macro-economic and financial perspective we have a catch-22. The classical keynesian argument that counter-cyclical spending by governments running deficits by drawing down surplus reserves has the flip side in the current context where there are no reserves but massive debt. As Reinhart and Rogoff discovered in their excellent empirical study when public debt crosses a threshold it begins to constrain growth. More government deficit spending by adding to the debt load reaches points of diminishing returns where the economy can never grow it's way out of the debt burden. From 2008-2011 we have added over $6 trillion in federal government debt to generate an incremental $700 billion in nominal GDP growth. And in real terms no growth. This of course does not take into account, in my opinion, disastrous monetary policy by both Greenspan and Bernanke.

What we have is a balance sheet recession and not a classic recession when inventory reductions and increased temporary demand would ameliorate the adjustment. Until that balance sheet is restructured there cannot be a sustainable recovery.

[Charles]

Jersey, From other businessmen I speak to I think more businesses are like mine than like your hypotheticals. I have never met one who downsized when he didn't have to. I've talked to plenty who have downsized, but they always worried as much about keeping the right people on hand for when things turn back up and the impact on employee morale (which both affect long-term viability) as they did the company's immediate bottom line.

To be successful, my company has to deliver value to my customers; more value than my competitors. To get me to hire someone, he has to show that he can provide value to my company. It is no more complicated than that. If someone stands around expecting the government to give him something he will still be there when his peers who figured out how to add value have jobs.

That value has to be larger than the cost of employment and that's where the government comes in. When taxes go up on my business, that's another burden we have to overcome. The cost of our product goes up to pay for the increased business expense. In the end it is the individual who pays all the taxes because taxes are baked into his bread and poured into his candy bars as much an expense as flour or almonds. The state of economic illiteracy in this country is such that people believe that "taxing big corporations" is some panacea when the answer is obviously to stop spending so much. Tax cuts don't cost the government -- the money is not theirs. That's like saying that it costs me money not to take yours. Your money is not mine so it costs me nothing for you keep it. Your money is not the government's so it costs the government nothing to let you keep more of your hard-earned money. And the idea that tax rate cuts have ever reduced revenue is contradicted by the data if anyone chooses to look at it. But again, the economic illiteracy is staggering.

The argument that the national debt is caused by needless wars was more emotionally compelling before the Libya circus came to town. If we couldn't afford the wars we had, then we should never have started another. But the numbers aren't on the side of that argument. The national debt is over $14 Trillion. If the Iraq and Afgh wars cost $2 Trillion, there is $12 Trillion more that we overspent on other things. Cutting all defense-related spending won't erase the debt, because we are overdrawing our account by over double the amount spent on defense. Not to say we can't cut defense, but that doesn't get us out of our hole.

[fanto]

Walrus, I like your comments - and would add that there was a huge amount of insincerity among economists, when there was talk about the 'exporting manufacturing jobs BUT we are creating service jobs' - this is a big lie, the service jobs in banking and insurance did not produce any tangible wealth. And I agree with your conclusion that Americans will have to adjust to lower incomes; they will need to pay lower rents in their leased appartments, their owners will need to accept lower incomes from their leased properties etc etc. The banks and insurances will need to lower their fees, commissions and premiums - the hospitals and doctors will need to accept lesser fees - the lawyers will need to stop the lawsuits for malpractice and getting away with megamillions... the lawn mowing people will have to stop demanding 60 dollars per hour , or 250 dollars per cutting my 4 acre lawn ---- ( I am not kidding) - I do cut my lawn now myself - and how does my labor figure in the calcule of GDP?
Other comments are also highly informative and I appreciate that the language is not full of technical economist's jargon. Mr Greenspan and Mr Bernanke should read this blog and learn .( once in their lifetime)