Even in a Recovery, Some Jobs Won't Return - WSJ.com
We might also focus on the big picture re: employment.
Ask some questions:
1) What is employment?
Ans. It's the part of the production equation:
Production = raw materials + labor + capital
2) What might the US do to improve its demand for labor?
Ans. The obvious first answer is if nothing else changed, the cost of labor has to come down. This could mean the actual wage paid or it could mean the total cost to the employer of hiring an employee (i.e. all the mandated other costs, including social security through healthcare, etc. - sometimes suggested to be at 300-400% of the actual gross wage).
3) What is the impact of this anti-bank, let's tax capital approach currently being discussed by populists and the administration and congress?
As in the above equation, if the production sale price is to be held constant, if the cost of labor is high and the cost of capital goes up, then something else has to give. It appears unlikely that raw materials are going to get cheaper, so the answer can be that the business closes down because it's no longer profitable or sustainable (as with GM and its bankruptcy).
SUMMARY: Solutions to unemployment should involve the basics, but they don't. Rather we are hitting business with every negative impact we can: the dollar is declining (in part because the US wants to see it go down and in part because of high government borrowing, etc.) so raw materials will cost more to import (think of fuel as a start); labor costs are going up even if workers don't see it in the paycheck, they are just being asked to support additional government sponsored benefits (are they really a benefit if you don't have a job); and, by raising the cost of capital, it makes it harder to compete and can put American-based companies at a global disadvantage.
But, you take your choice; and, while there are laments at the employment picture coming from Washington, it's Washington policies that are driving away jobs!
Tuesday, January 12, 2010
Sunday, January 10, 2010
Dragons and Other Fairy Tales - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
Dragons and Other Fairy Tales - Up and Down Wall Street Daily - R. Forsyth - Barrons.com:
Some say that there is nothing to worry about with inflation as incomes will keep up?
"What a great many people are concerned about is that there income is 'not' keeping up with the cost of things.
Which, of course, makes sense when the economy is not keeping up with the level of either (or both) capital formation or capital investment.
This can take the form of too much consumption (i.e. social redistribution) or excess allocation of societal resources to non-producers (read: excessive public and union retirement packages - see article on LA public unions effectively causing taxpayers to fund 2 sets of civil servants, one working and one retired) or lack of rewards to producers (read: taxes on investment capital and equity).
The United States is not self-sufficient in all materials (read: oil, etc.), so the value of the dollar clearly impacts some of the underlying cost structure. And, as seen in lots of industries, the way to keep a lid on prices is to reduce the allocation to labor - i.e. wages don't keep up."
Other people suggest that if people had a legitimate concern about inflation, we'd see hoarding?
People may also not be hoarding because their credit lines are tapped out and they're unemployed.
Back in the 70's people leveraged up into real estate. But, that was after inflation got going.
Today the driver could be the combination of anti-business government policies with huge credit demands from government going into socially redistributive consumption?
Clearly, the country and investors haven't made up their minds. However, there was an interesting news note in December on the Asian central banks likely to decide by April 2010 about whether to continue resisting the falling dollar by printing their own money and using it to buy Treasuries.
If Randy is right that US investors will be using their money to buy treasuries, it certainly doesn't seem very positive for investment of capital into creating new jobs in the USA. After all, the government borrowing isn't going into infrastructure or investment, it's going into current consumption.
Some say that there is nothing to worry about with inflation as incomes will keep up?
"What a great many people are concerned about is that there income is 'not' keeping up with the cost of things.
Which, of course, makes sense when the economy is not keeping up with the level of either (or both) capital formation or capital investment.
This can take the form of too much consumption (i.e. social redistribution) or excess allocation of societal resources to non-producers (read: excessive public and union retirement packages - see article on LA public unions effectively causing taxpayers to fund 2 sets of civil servants, one working and one retired) or lack of rewards to producers (read: taxes on investment capital and equity).
The United States is not self-sufficient in all materials (read: oil, etc.), so the value of the dollar clearly impacts some of the underlying cost structure. And, as seen in lots of industries, the way to keep a lid on prices is to reduce the allocation to labor - i.e. wages don't keep up."
Other people suggest that if people had a legitimate concern about inflation, we'd see hoarding?
People may also not be hoarding because their credit lines are tapped out and they're unemployed.
Back in the 70's people leveraged up into real estate. But, that was after inflation got going.
Today the driver could be the combination of anti-business government policies with huge credit demands from government going into socially redistributive consumption?
Clearly, the country and investors haven't made up their minds. However, there was an interesting news note in December on the Asian central banks likely to decide by April 2010 about whether to continue resisting the falling dollar by printing their own money and using it to buy Treasuries.
If Randy is right that US investors will be using their money to buy treasuries, it certainly doesn't seem very positive for investment of capital into creating new jobs in the USA. After all, the government borrowing isn't going into infrastructure or investment, it's going into current consumption.
Saturday, January 9, 2010
Policies that Would Support Employment: Our Financial Godfathers - Up and Down Wall Street - A. Abelson - Barrons.com
Our Financial Godfathers - Up and Down Wall Street - A. Abelson - Barrons.com
In dealing with the lack of employment, what we have not seen, do not see and would like to see are policies that are "pro-business". Instead business is looked upon as either a 'cash cow' to supply the funds to the do-gooder bureaucrats; as a bunch of miscreants who could but don't create American jobs; etc.
We need to have policies that support education (read: get rid of teachers unions; or, better yet consider jailing their leaders); support small business owners (read: lower taxes); support employment and fair pay to workers with worker choice of benefits (read: less money taken from worker paychecks to support government redistribution programs) - fight the labor conundrum; support venture capital (lower capital gains taxes - or, at least don't raise them; we need cutting edge new jobs); etc., etc.
In dealing with the lack of employment, what we have not seen, do not see and would like to see are policies that are "pro-business". Instead business is looked upon as either a 'cash cow' to supply the funds to the do-gooder bureaucrats; as a bunch of miscreants who could but don't create American jobs; etc.
We need to have policies that support education (read: get rid of teachers unions; or, better yet consider jailing their leaders); support small business owners (read: lower taxes); support employment and fair pay to workers with worker choice of benefits (read: less money taken from worker paychecks to support government redistribution programs) - fight the labor conundrum; support venture capital (lower capital gains taxes - or, at least don't raise them; we need cutting edge new jobs); etc., etc.
Friday, January 8, 2010
A Realistic Jobs Program (Take you pick): Report Raises Pressure on Obama to Focus on Jobs - WSJ.com
Report Raises Pressure on Obama to Focus on Jobs - WSJ.com
What the economy should be concerned about is not bringing back jobs that have to shift to the large part of the world that doesn't enjoy America's standard of living; but, to do everything to encourage learning and entrepreneurial start-ups and venture.
On one hand, a lot of small businesses using current technology could be sustained by not being drained through taxes to support income transfers and overly generous benefits (e.g. Los Angeles scheduling a vote to reduce gov't employee benefits because "they're now paying for 2 police forces and other sets of gov't employees - one working, one retired" - see LAT 1st week of Jan., 2010).
Next, we have to support venture capital. High capital gains and income taxes is pulling the wool out from under this industry.
To rely on government to fund make-work jobs just runs up taxes and the deficit - both of which work against sustaining small scale entrepreneurship and venture capital.
Thus, it would seem reasonable that current gov't policies need to be turned around.
However, if one sees government as the true panacea, then one doesn't really care about supporting the private economy (e.g. Obama, Pelosi) - it's all just talk. The private economy is just there to fund government programs. (One can see how that works in US states like Michigan and foreign countries like Greece.)
What the economy should be concerned about is not bringing back jobs that have to shift to the large part of the world that doesn't enjoy America's standard of living; but, to do everything to encourage learning and entrepreneurial start-ups and venture.
On one hand, a lot of small businesses using current technology could be sustained by not being drained through taxes to support income transfers and overly generous benefits (e.g. Los Angeles scheduling a vote to reduce gov't employee benefits because "they're now paying for 2 police forces and other sets of gov't employees - one working, one retired" - see LAT 1st week of Jan., 2010).
Next, we have to support venture capital. High capital gains and income taxes is pulling the wool out from under this industry.
To rely on government to fund make-work jobs just runs up taxes and the deficit - both of which work against sustaining small scale entrepreneurship and venture capital.
Thus, it would seem reasonable that current gov't policies need to be turned around.
However, if one sees government as the true panacea, then one doesn't really care about supporting the private economy (e.g. Obama, Pelosi) - it's all just talk. The private economy is just there to fund government programs. (One can see how that works in US states like Michigan and foreign countries like Greece.)
Should the States be Helped? Richard Ravitch: Washington and the Fiscal Crisis of the States - WSJ.com
Richard Ravitch: Washington and the Fiscal Crisis of the States - WSJ.com:
"Sadly, the states and the Democrats in Washington and their union cronies believe there is always another golden goose to sacrifice to social benefits, early retirements, etc., etc., etc.
Never do we hear about doing things to encourage the well-being of businesses and rewarding productive workers. Instead, the producers are looked upon as limitless suppliers of largess to be handed out by government - with no consequences.
Well, there are consequences. Those states with higher tax rates also show higher unemployment rates. Where union demands have really run-a-muck, as with the UAW and GM, investors have been wiped out.
This article would have been more productive if it had looked at building up the economy rather than looking for ways to sustain what is clearly excessive government spending.
As citizens, we just have to make decisions as to expected outcomes. Sadly, for those receiving government benefits, the liklihood is that at some point they'll be reduced (by how much and how drastically, that's something else - as the lieutenant governor discusses in part). Even more sadly, for those who would like to sustain, grow or start a business, they have to recognize that more of what they produce will likely be taken by government - so they'll end up with less; and, that as government borrows more and more money, the long-term debt will grow, debt servicing costs will rise and private borrowing will become both more expensive and less available.
Nothing is said about encouraging Americans to accumulate capital and look to taking care of themselves.
History and common sense certainly don't suggest a positive outcome."
"Sadly, the states and the Democrats in Washington and their union cronies believe there is always another golden goose to sacrifice to social benefits, early retirements, etc., etc., etc.
Never do we hear about doing things to encourage the well-being of businesses and rewarding productive workers. Instead, the producers are looked upon as limitless suppliers of largess to be handed out by government - with no consequences.
Well, there are consequences. Those states with higher tax rates also show higher unemployment rates. Where union demands have really run-a-muck, as with the UAW and GM, investors have been wiped out.
This article would have been more productive if it had looked at building up the economy rather than looking for ways to sustain what is clearly excessive government spending.
As citizens, we just have to make decisions as to expected outcomes. Sadly, for those receiving government benefits, the liklihood is that at some point they'll be reduced (by how much and how drastically, that's something else - as the lieutenant governor discusses in part). Even more sadly, for those who would like to sustain, grow or start a business, they have to recognize that more of what they produce will likely be taken by government - so they'll end up with less; and, that as government borrows more and more money, the long-term debt will grow, debt servicing costs will rise and private borrowing will become both more expensive and less available.
Nothing is said about encouraging Americans to accumulate capital and look to taking care of themselves.
History and common sense certainly don't suggest a positive outcome."
Maybe It's Wiser to Rent - Fed Plan to Stop Buying Mortgages Feeds Recovery Worries - WSJ.com
Fed Plan to Stop Buying Mortgages Feeds Recovery Worries - WSJ.com
What I never see reported on is the common sense of a traditional (or new) homeowner?
In other words, if jobs are hard to come by and (as shown on a recent series on job hunting on CNN), lots of Americans have had to make major geographic moves to find a new job.
Thus, would you want to buy a house, which it's likely you won't be able to sell (and, it used to be you needed to plan to spend 5-7 years in a house to recoup the selling costs); or, would you want to rent?
I'd think a great many potential home buyers would be renting now. Especially as the job market isn't forecast by anyone to revive vigorously in the next few years!
What I never see reported on is the common sense of a traditional (or new) homeowner?
In other words, if jobs are hard to come by and (as shown on a recent series on job hunting on CNN), lots of Americans have had to make major geographic moves to find a new job.
Thus, would you want to buy a house, which it's likely you won't be able to sell (and, it used to be you needed to plan to spend 5-7 years in a house to recoup the selling costs); or, would you want to rent?
I'd think a great many potential home buyers would be renting now. Especially as the job market isn't forecast by anyone to revive vigorously in the next few years!
Monday, January 4, 2010
Deficit, Budget Woes Need Solutions as U.S. Nears the Precipice - WSJ.com
Deficit, Budget Woes Need Solutions as U.S. Nears the Precipice - WSJ.com
What clearly needs to be on the table if one wants to have economic growth (including the changes and adaptations to a post-industrial economy) is a reduction in the amount of GDP being taken by government (i.e. the 19% number discovered in the 1980's).
The alternative, which the Democrats believe will work but hasn't in the US (i.e. California, Michigan, etc.) is the soak the rich and businesses and hope you can continue to give people benefits based on need and not on the ability or desire to pay (which appears to be the approach as outlined in this article).
It sure looks as though the US is embarked upon the current consumption vs. a better future life mode. It's impossible to think of the US going back to the image of the hardworking immigrants who do menial jobs to give their children an education and chance for a better future.
Instead we want everything we can get now; and, the country is taking the place of the consumer running up their own credit cards, they are asking (with Pelosi, et al being more than willing) to have the Federal and State governments run up government credit cards - with a never mind about ever paying them off.
If the rest of the world acts like the banks who raise rates and fees to consumers - but, this time, raises them for the whole society - the current period may look like a golden era (just as the 1960's did for those who saw the country languish in the 1970's).
What clearly needs to be on the table if one wants to have economic growth (including the changes and adaptations to a post-industrial economy) is a reduction in the amount of GDP being taken by government (i.e. the 19% number discovered in the 1980's).
The alternative, which the Democrats believe will work but hasn't in the US (i.e. California, Michigan, etc.) is the soak the rich and businesses and hope you can continue to give people benefits based on need and not on the ability or desire to pay (which appears to be the approach as outlined in this article).
It sure looks as though the US is embarked upon the current consumption vs. a better future life mode. It's impossible to think of the US going back to the image of the hardworking immigrants who do menial jobs to give their children an education and chance for a better future.
Instead we want everything we can get now; and, the country is taking the place of the consumer running up their own credit cards, they are asking (with Pelosi, et al being more than willing) to have the Federal and State governments run up government credit cards - with a never mind about ever paying them off.
If the rest of the world acts like the banks who raise rates and fees to consumers - but, this time, raises them for the whole society - the current period may look like a golden era (just as the 1960's did for those who saw the country languish in the 1970's).
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