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07/24/2011

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TANSTAAFL

Wow. Based on the string of posts above, carrying on a weak debate between the author at one moment in time, and the author at other moments, Observer ought to consider setting the bong aside.

Predeep Despandee

There is a short-term and long-term component to unemployment. The short term perturbations of the economy are not that important in the general scheme of things, and the general scope of the irreversible structural changes now underway in America.

However, I ran across the following cartoon the other day, which best describes the emerging permanent structural component of unemployment, and, more importantly, the emerging lower production and underlying backdrop of irreversible decline. If the cartoon had also included the emerging class-warfare component, it would have completely captured the essence of the impending American decline.

http://sanctification.files.wordpress.com/2008/11/image.jpg

It doesn’t really matter who the president or politician making the promises is. It is not a direct attack on your current president. Just the description of an electorate that is Europeanizing and will follow the same fate of decline, growing at 1-2% in a world that is on a 4-5% trendline.

Sorry to remind of the sad news Americans: There is no perpetual motion machine of prosperity. If there were, what makes you think that other countries cannot copy it or that other countries would have not already discovered it.

But it sure feels good and hopeful to vote for politicians that make you encouraged that somehow it will all be conveniently centrally planned for you so that you can maintain prosperity 6 times the world average, by doing the same thing that 3 billion people in the world are now becoming capable of doing and somehow top up any deficit in expectations by harvesting the efforts of those most productive amongst you.

Refraining from this natural electoral impulse is indeed a difficult thing and that is why so few counties were able to pull it off (like America did, but no more). So if you’re getting to the point where you’ve started hating your Steve Jobs’, I’m sure one of us in the Developing World will, sooner or later, start offering them refuge once we raise our standard of living a bit -- which we are well on our way to doing.

leather jackets

I cannot choose the best. The best chooses me..

Jack

Pradeep! Thanks for stopping by and singing your old "Sad news Americans" blues number for us, not once, but TWICE!

I especially liked your reminder of "There is no perpetual motion machine of prosperity." and then singing along about the events that might take place were the first lyric true.

"There is no perpetual motion machine of prosperity. If there were, what makes you think that other countries cannot copy it or that other countries would have not already discovered it."

Offhand........ I don't see the makings of a hit cowboy song, but perhaps with some tweaking?? Maybe bring it down to the more personal level of lazy American cowpokes being soon to lose their woman, p/u truck, dog, prairie and worn out guitar all at once? Or? given the largely America audience, something a bit more upbeat? anyway, economically speaking wouldn't it be best to lull us further into our deep sleep that you and others might better slip by in secrecy?

Doudoune Moncler Pas Cher

So fun article is! I agree

Ema Van

I am an optimist and I hope that soon - very soon the situation will be very very different and the percent of unemployed will be the smallest ever!

Ema Van

I am an optimist and I hope that soon - very soon the situation will be very very different and the percent of unemployed will be the smallest ever!

an observer

To: RWW (right wing wackos)

Re: Facts

Here is a link to a single news story that proves that every charge made against Obama etc. is false.

APNewsBreak: Arctic scientist under investigation

http://news.yahoo.com/apnewsbreak-arctic-scientist-under-investigation-082217993.html

This is the ice is melting and polar bears are dying guy. I have no idea why the investigation (speculation over what it is about is stupid), but given this guy's prominence, etc., that he has been suspended, etc., shows that someone is trying to do the job we elected them to do, honestly

Martha

The threshold to refraining from productive behavior and becoming a surfer or similar conduct, is being lowered, while, at the same time the threshold to produce and profit is being raised. It is hard to see how all this possibly ends well. With our competitiveness already under pressure, we proceeded to clobbering it.

An increase in competitiveness was what was necessary to pay just for the existing expectations and entitlements. Not only did we take a more hostile stance towards business competitiveness, but we also voted for new entitlements. It’s hard to see any scenario where all that can even begin to be reversed. Pradeep is right. We will wither away just like the Europeans ahead of us.

NEH

Jack and Observer, the pradeeps, tanstaffls and fellow travelers remind me of little children who have gotten a hold of a box of crayons, Sharpies, spray paint, razor knives and given free access to the library. The end result is mindless nonsense and vitriol masquerading as intellectual effort. To respond is to justify the nonsense and vitriol. Much like the "Teabaggers" in Congress that John Boehner can't control. ;)

Donald Pretari

"So it is hard to be optimistic that an additional stimulus package would be designed better or work any better, and of course, it would add to an already large fiscal deficit."

I don't see how this follows. Presumably, some things worked while others didn't. Also, you are engaging in a Counterfactual, in that you really don't know what would have happened without the Stimulus, since, well, it didn't.

"Aside from the depth of the financial crisis, I believe the main source of slow hiring initially were the many anti-business proposals voiced by some members of Congress and even by the president."

Yes. You did tell us. Sadly, that tells us a lot about you, but nothing about the Real World, where, presumably, you could ask people what they're doing. It's hard work, but it has the advantage of being more than an opinion.

'The analysis in this post to me implies that the most effective solution to the weak recovery is not further stimulus packages, nor subsidies to employment or hiring, but an agreement between Congress and the president to cut trillions of dollars from federal spending during the next decade, and to reform the tax system toward a much broader and much flatter personal and corporate tax structure."

And there would be No Uncertainty about the terms of this deal coming to pass? Come on!

Finally, you had a good idea when you advocated a Dated Coupon. Are you now saying that was a silly idea?

Donald Pretari

One additional point:

"So it is hard to be optimistic that an additional stimulus package would be designed better..."

It wasn't 'designed'. It was a Political Compromise, and would be so again. None of us would get everything we want.

John

"None of us would get everything we want."

No but pearhaps we would get more if we did not try to impose on others what we want.

Jack

I'd urge Prof Becker to zoom in more closely on the details of our massive rate of unemployment. Thus far, he, and most of Congress tend to yack in vague generalities such as ladling pork to well heeled (to say the least" "job creators".

A closer look should show that a very large fraction are those no longer engaged in constructing 2.5 million new homes/year (down to 300,000 now) those related occupations, from selling appliances, feeding on our archaic "title search and "insurance"" scams and, of course those providing financing for the new home buyer....... and for those buying that guy's previous home, and perhaps that of the purchaser of THAT guy's former home....... along with those building fences, decks, and all those other items filling out the new home purchase -- including some fair share of $40k swimming pools.

I'd certainly not have to remind Prof Becker of the down-stream aspects.... such as the propensity of construction guys to go out and purchase new or near new trucks and vans when things are going....... and their need for pizza, and other fast foods when working a lot of hours.

Yester-night Congress had a cast of Fortune 500 biggies "up there" in a QUITE well rehearsed dog and pony exhibit featuring "earnest" queries as to what these, now very international bigs, would "have to have" to "create US jobs".

The gifts considered were quite fancy, but one does wonder what "PMC semi-conductors" with virtually all of its mfg in Asia (though "they do most of their research" (of some undisclosed but likely small staff) "here".

Oh! and another real hoot!!! Ha! They ALL really liked "putting "it all" on the table", and one could quickly see why! Like an early visit to a garage sale each were clearly hoping to bring home some real jewels. The juiciest seemed to be that diverting the "getting rid of loopholes" (usually the ones least important to themselves) in favor of a much lower corporate tax rate in the "low 20's".

One Senator did remind them, mid-prospective feeding frenzy, that with our Treasury lying bankrupted and beyond, that (some) in Congress were eying the closing of some of the often abused loopholes in terms of a bit more revenue for the nation in which they sell most of their products, and that not all of the loophole closing benefits would accrue to much lower tax rates for them. It's quite amazing to see how deftly the CEO's and/or tap dancing spokesters could turn the conversation to what they "needed" and away from the dangerous shoals of abusive transfer tax havens such as the Cayman Islands; real artwork!

Oh! Ha! One more! Walmart, of one of the very fattest bottom lines in corporate history, but famously underpaying their "valued associates" to the extent that US welfare and food stamp programs make ends meet for WMT employees to the substantial tune of a billion bucks a year.

Ha! you'll love this one! They bragged of "investing half of the funds they were going to invest this year into .......... the US! by targeting the urban areas they've had a tough time conquering......... or fear of unionization?

And Ha! went on to invoke ha-ha "job creation!" This despite the well known history of such "category killers" knocking out local family businesses, drugstores and businesses using more employees that were often better paid than the fewer who took their place when Walmart moved in.

I don't recall the entire panel..... but "we" had at least PMC the offshore semi-conductor outfit, WMT, and someone from the huge CVS Pharmacy chain up there talking about "job creation" and the nicely wrapped corporate tax packages they'd "need" for a vaguely worded.............. yadda. Given the in this globalized world the tax scheme does need substantial tweaking, it's clear these dudes were foraging for PORK.

Jack

Martha: Perhaps dig deeper into what has changed? Today our GDP is still growing, albeit more slowly, and allowing for a similar rate of productivity gains, too slowly to include all who'd like to offer their services in return for a job paying something akin to a living wage.

Last I looked (an perhaps I'll be corrected) our effective tax revenue is but 15% GDP. (For most of our post WWII era we've spent about 18% and raised something close to that percentage -- except when what appears to have been "stylish" to employ a sneaky version of perpetual Keynesian spurring become popular and resulted in most of our $14 trillion in D E B T but call it "supply side Laffer curvehsht"

As you likely know? the result is that we've added a new mouth to feed; that of servicing the interest payments on the debt which is now an amount nearly as much as what our military budget SHOULD be had it not grown so cancerously during the recent - ill-considered "go it alone" warmongering activities. That ADDS about an extra 3% of GDP.

Thus if we expected about the same level of gov services (18% of GDP) to achieve balance we'd have to collect 21-22% of GDP to cover the debt service, plus a bit more if we favor anything close to "balance" in a time of DEEP recession when our nation typically bleeds a lot of red ink.

I suspect Pradeep's pessimistic blues riffs are quite attractive to our ultra "right" for dealing only in vague innuendo while ignoring for the most part the economic principles or percentages and numbers that are often so pesky to those favor ideology over objectivity and science.

It seems RARE for ANY to mention that we've been left in a DEEP recession spawned of a total meltdown after an almost complete corruption of our banking and WS financial sector....... including those famous bond raters apparently able to quantify something as complex as whether US bond rates ought to be triple A or just AA...... but who were ......... flumoxed? and unable to discern the value of flagrantly flawed mortgage packages and their derivatives.

http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

In closing I'd urge you to look at the above graphs, if only to ascertain that America IS still (on Average) a very wealthy nation easily able to return to raising the traditional 18% of GDP and if need be (in time of $4 trillion wars etc we do know that even "off budget trillions have to be paid?) to handle a 10% income tax surcharge as we did when LBJ passed the hat for the costly Viet fiasco that would bring us up to 20%.

For the rest? some judicious and moderate cutting, closing long abused corporate loopholes, and patiently waiting for the wounds of the financial sector melt down to gradually heal.

And lastly? both the polls and common sense would indicate that getting our folks back to work is THE #1 priority as deficits will NOT be "fixed" with 18% either under or Unemployed.

Pradeep Despandee

I don’t know about the others, NEH, but personally I’m part of a well known international conspiracy to deny the American people their natural human right to commanding a prosperity that is 6 times the world average while doing the same work that 3 billion people in the emerging world are finally free to learn how to do and engage in.

But my work is easy. Because there are not nearly enough of you who understand the fundamental structural changes towards Europeanization that you have requested from your politicians. That will prove to be the pivotal banana peel you stepped on at a difficult time. So as your politicians become the more than willing gatekeepers and allocators of the ever decreasing centrally planned wealth that you will be producing, you also do not understand why Steve Jobs is your friend -- and pivotal to any hope you may have about maintaining what you consider a miserable standard of living.

Whom does the American middle class expect to tell them that they need to leave Steve Jobs alone and seek to maintain their standard of living by tugging along with him so they can continue to produce 6 times more value than my Indian cousins, rather than trying to live off the Steve Jobses. They expect their politicians of some party to tell them that? The same people that are soliciting their vote? That’s why if you hope to maintain your privileged American middle class standard of living, you’re doomed.

You are now living in that brief period of time where momentum is still masking a lot of the structurally pernicious changes that you have made. But momentum economics describe a very short period. Have you noticed the tide around you rising? Have you noticed the price of commodities rising? It is the swell of a Developing world that is now ever more capable of competing with you. How are you going to keep up? By attacking Steve Jobs?
Once you’re down into low productivity, desperation at the polls and a sense of need will hardly be an environment where you will reverse the environment of mandatory collectivism and state dependence you are now creating. Keep hoping though that effective central planning was your big secret of success so far, a central planning that somehow no other country has been able to come up with or duplicate. I wonder what kept these other countries unable to complete this dream of centralized economic planning and redistribution. The European, the Indian or the Chinese free market conspiracy?

So the members of the Clobber America Conspiracy have little to worry. As a matter of fact, they were no longer needed, so they were laid off. They have joined the unemployed.

FourLeaf

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Jack

NEH?? You just having a grumpy attack? Well........ there is truth to the discussion dipping to new lows..... but then isn't there something of a gas loose in the atmosphere?

What with "Reps" guided, one assumes? by erudite?? economists ready to risk their seat, the future of what remains of the "GOP" and the fate of the nation on a "hunch" with not one scintilla of evidence, that even rolling back the Bush tax breaks to Clinton era levels would be to destroy the very fabric of the American Dream?

Even here, near the top of the "Chicago School" we have the Nobel Prize winning Becker with

"Although little consensus exists on what in fact was achieved by the major $800 billion stimulus package, I do not know of convincing evidence that it accomplished a lot in reducing unemployment and raising employment." Of course Prof Becker would "not know of convincing evidence otherwise" either. Are economists no longer able to track, at least approximately, the effects of $800 billion of direct government spending?

If not, what chance would they have of discounting the effect on the economy of, say $400 billion/year worth of increased oil price gouging?

With the stim being rushed ahead two years ago could it be difficult to measure for disappearing amid soaring H/C costs? the "pre-emptive" premium gouging? "just in case?"

Anyway, indeed it is a dumb era. What we need is for those carrying the holy grail carved in platinum plates to come down from the mountains and share any god-given absolutes with the rest of us who are wondering, lost in the desert.

BTW........ 'tis the truth about Boehner and the Forty Thieves. I chanced upon a Senator just the other day who attributed the mess to forty stubborn newbies. One suspects the founders did not envision 40 "duly electeds" from gerrymandered districts made safe for those of the wackiest "right" to hold the nation hostage.

Jack

""None of us would get everything we want."

No but pearhaps we would get more if we did not try to impose on others what we want."

Indeed! When I go out for pizza with a group of friends, I just KNOW I'm going to have to compromise (ie give up) on the anchovies, and with another group, the meat, and with yet another the veggies. Still! even with all the compromises I enjoy the outing.

Jack

Pradeep! Re your latest pessimistic blues and "shorting" America! And dang! you may have something there as I've NOT been giving Jobs his due. Here I am, still wringing fair value out of Win XP on this aging computer having a clock speed only two digit multiples of speed of our state of the art broadband. I have been trying to convince myself of the dire need for an Iphone or Pad but even were I to do so...... it seems most of the outlay goes to stodgy old American T&T which really has "re-invented itself" after relying on copper FAR too long.

Anyway, even if I really bought in big time, it seems that the bill for electronics and service would fall well below plain old fashioned housing, utility and tax bills, food, including dining regularly in nearby cantinas, the care and feeding of my, largely, American/Canadian built car/insurance etc the occasional whimsical vacation and so on.

And you're right! I have noticed the price of commodities rising.. oil gouging and a poor decision to try to fuel our gashogs with tortillas and all. But then? all these imported chips and electronics? they just keep falling in price, eh? Geez remember when the decision to buy an underpowered computer cost as much as brunching at IHOP for the entire year? Now even with the rising prices just a month's worth?

Still it seems a good biz...... as they approach being handed out like handheld calculators perhaps the market will expand to all 7 billion souls of the world, who will, of course, spend many multiples on locally produced housing, food, H/C and the like.

And lastly? Is part of your blues refrain meant to suggest that in our highly productive economy that produces most of what .......... can be sold, with but 85% of our work force that we should "try harder?" ......... for less? While I've opted not to subscribe to an Iphone out of disinterest, I DO know lots of folks who would, were their current budgets not so tight. Have you, thus far, ever wondered what happens to the frivolous gadget market if guys like you are successful in continuing to pound down US wages? While crafty oil manipulators take their chunk? and out of control H/C costs rip off much of what might be left?

Could it be that you should add a verse or two on lowering our GINI co-efficient, that the relatively poor might be added to your market? (So far I've NOT met any wealthy folks who had multiple Iphones and Ipads "just because they could")

Well, Cheers and best, with hopes that I've conveyed the fact of Kansas beef and Imperial Valley produce being a lot higher percentage of our GDP than the electronic toys of most homes.

an observer

Last week Judge Posner lied on this blog, saying that it was a mystery what republicans were about.

This morning we now have all the facts spread before us.

Posner, personally, is a racist, jealous that Obama another Harvard Law grad and a black man is President while Posner has never even made the Supremes. Posner, a sociopath, will say and do anything, of which lying only scratches the surface.

He is BS, the "Chicago School" is bs. He is a fellow traveler and UNAMERICAN with the right wing wackos who are out to destroy this country.

THIS BLOG IS A ECONOMIC BLOG THAT HAS A SUFFICIENT FOLLOWING THAT POSNER AND BECKER OUGHT TO BE USING IT TO PUT THE BIZZARO WACK JOBS IN THERE PLACE.

WHO THOUGHT THAT JOHN MCCAIN,OF ALL PEOPLE, WOULD SPEAK THE TRUTH. THESE PEOPLE ARE BIZZARO WACK JOBS AND POSNER AND BECKER ARE UNAMERICAN FELLOW TRAVELERS

THEY WRITE SUCH CRAP---UNCERTAINTY---OBAMA HAS NOT BEEN THE SOURCE OF UNCERTAINTY IN OUR COUNTRY. EVERYONE HAS KNOWN SINCE THE BACKLASH AGAINST TARP THAT THE WACKO RIGHT WAS GOING TO TRY TO DESTROY THE COUNTRY. EVERYONE HAS KNOWN SINCE THE ELECTION THAT THE PRESENT EVENTS WOULD UNFOLD.

WE HAVE DESTROYED SPAIN AND ITALY, PERHAPS EUROPEAN UNITY ITSELF, AND WE ARE JUST GETTING STARTED.

WE HAVE CAUSED THE ECONOMY TO SLOW AND HOW MANY THOUSANDS OF CANCELLED INTERVIEWS AND HIRES, THE LIST IS ENDLESS.

an observer

How a real mind works, a mind without an agenda, that believes that gov't must be effective, that understands Economics and people.

Warren Buffett, in a recent interview with CNBC, offers one of the best quotes I’ve heard in all this drama about the debt ceiling:

“I could end the deficit in 5 minutes,” he told CNBC. “You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”

an observer

http://www.ritholtz.com/blog/2011/07/richard-koo-a-balance-sheet-recession/

a real economist, Richard Koo

NEH

Jack, As for that "Gang of Forty", are we talking the tyranny of a minority over the majority? John Boehner and the Nation clearly has problems. Are we witness to the death throes of the Republican Party? Because if they torpedo the Government and the Economy, their days are numbered...

Jack

Teabagger List:

Todd Akin (MO-2)
Rodney Alexander (LA-5)
Michele Bachmann (MN-6)
Joe Barton (TX-6)
Roscoe Bartlett (MD-6)
Gus Bilirakis (FL-9)
Rob Bishop (UT-1)
Michael Burgess (TX-26)
Paul Broun (GA-10)
Dan Burton (IN-5)
John Carter (TX-31)
Howard Coble (NC-6)
Mike Coffman (CO-6)
Ander Crenshaw (FL-4)
John Culberson (TX-7)
John Fleming (LA-4)
Trent Franks (AZ-2)
Phil Gingrey (GA-11)
Louie Gohmert (TX-1)
Tom Graves (GA-9)
Ralph Hall (TX-4)
Gregg Harper (MS-3)
Wally Herger (CA-2)
Pete Hoekstra (MI-2)
Lynn Jenkins (KS-2)
Steve King (IA-5)
Doug Lamborn (CO-5)
Blaine Luetkemeyer (MO-9)
Cynthia Lummis (WY)
Kenny Marchant (TX-24)
Tom McClintock (CA-4)
Gary Miller (CA-42)
Jerry Moran (KS-1)
Sue Myrick (NC-9)
Randy Neugebauer (TX-19)
Mike Pence (IN-6)
Ted Poe (TX-2)
Tom Price (GA-6)
Denny Rehberg (MT)
Phil Roe (TN-1)
Ed Royce (CA-40)
Steve Scalise (LA-1)
Pete Sessions (TX-32)
John Shadegg (AZ-3)
Adrian Smith (NE-3)
Lamar Smith (TX-21)
Cliff Stearns (FL-6)
Todd Tiahrt (KS-4)
Zach Wamp (TN-3)
Lynn Westmoreland (GA-3)
Joe Wilson (SC-2)

Pretty narrow constituency eh? And with few exceptions they "rep" districts in states that receive far more back from the Feds than they pay in Fed taxes. Most "rep" rural districts of their states..... where they are almost certain to derive more benefits from the Feds than they pay for. Typically it's ONLY the urban areas of the South and Midwest that pay their way.

In rural OK and Tx I've met a number of folks whose families are "holding it together" with the head of household at McD's or Burger King, food stamps, housing assistance, Medicaid, VA or "free ER" medical care. There is NO chance of those low income folks being wrung out for higher copays or to help those booted off Medicaid.

No one talking 'bout McD's, Walmart, or Burger King paying anything akin to a living wage though.

NEH. Ha! hard to say! You may have seen the title "What's wrong with Kansas" in which the author explores the poorest country in KS that turned out 75% or more for the Bushies. Puzzling.

Observer? Did Buffet really say something that dumb? It would be a first for me to hear anything dumb from him. But do you suppose our 'baggers DO favor preventing the open purse funding of wars ginned up by some cowboy or another?

BTW it wouldn't be a "law" but a VERY dangerous amendment to a fundamental tenant of our Constitution which purposely put few limitations on who could run for office. I've never been able to run small operations on auto-pilot and strongly suspect it wouldn't work well for the US either.


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