Barron's Roundtable: Upbeat Stock Market Outlook for 2010 - Barrons.com

Barron's Roundtable: Upbeat Stock Market Outlook for 2010 - Barrons.com

More on aspects of the labor connundrum:

Jobs accounting:

“Median household income has barely kept up with inflation for more than 10 years.”

A serious question should be “why not?”

Ans. Part of the answer is that the government is trying to provide a lot of social benefits. These include Medicare and Medicaid. In the former case, users pay pennies on the dollar; and, in the latter case, little or nothing.

Now the government has tried to shift part of the latter cost to the states. So, what is the result? Higher state taxes and the transfer of tax revenues to medical and social consumption rather than to education, infrastructure and job creation. (Sound familiar? – poor roads, etc.)

Additionally, since the government can’t afford to pay market rates to its doctors, clinics, hospitals, etc. and the Medicare tax rates are fixed legislatively, the government does the next best thing – “cost shifting” – i.e. the government pays 70 cents on the dollar for services and the private payer pays 130 cents on the dollar. Can we say tax or subsidy in all but name?

So as the government increases its redistribution of the production of the society, it raises the costs both directly and indirectly on producers. If the government is taking more, then it only makes logical sense that there is less for the actual producers (read also ‘workers’) to keep for themselves.

Thus, the old saying “there’s no free lunch” applies. We just don’t like to admit it! (either as producers who keep less or recipients of government largess, who feel entitled).

The bottom line again is the same – producers move jobs from the country or pay lower salaries (manufacturing, some services); producers find ways to increase productivity – maintaining salaries (read: banks and finance); workers keep salaries but bankrupt their companies or states (read: the UAW and GM, public sector unions, etc.).

Let everyone do the math and decide for themselves where they think the country will be in the future?