Archive for December, 2012

Huckabee, and Other Nonsense

December 19, 2012

Mr Huckabee thinks the murders in Connecticut are because schools are schools, not churches. Make that Christian fundamentalist churches; no others will serve. Oh, and don’t allow any gays or such in. That’s sinful too. And his version of God is against sin, whatever Huckabee decides that sin is.
Good thing God’s got Mike to help him, right?
Makes you want to believe in reincarnation. Really; can’t you just imagine High Priest Huckabee standing on top of a pyramid in Mexico and bellowing “This disaster is because you haven’t provided ENOUGH HUMAN SACRIFICES!”

That made me think about this. A fairly obscure Middle Eastern sect was the one who realized just how mighty and all-powerful their God Yahweh was. Yep, this same all-powerful God didn’t have any prophets in the Americas. Maybe he didn’t speak Aztec or Mayan. No prophets in Asia. Or in Europe. At least, not then. There were probably a few later. You know, after a human priest told them about it? Meantime, they got along with Druids, and High-Lord-Heart-Cutter-Outer. And Odin up in the mountains somewhere, amusing himself by tossing lightning bolts, and bunches of Greek Gods who played flutes and drank wine and fornicated with human women and the odd animal or two. A God of War, and one for the oceans, even. And in Asia, probably someone who claimed to speak for the Wind God, for all I know. Pity the Japanese; they couldn’t think of imaginary beings, so they had to make do with their ancestors and the current Emperor.

I don’t expect anything better from Huckabee, or even Santorum. But the news reporters are supposed to be educated and be able to think. I suppose that there are some who think Huckabee is more than a man with early-onset dementia.

Which, now that I think about it, might well describe most of the ancient prophets.

Gun Control, and Why You’re Not Likely To See It.

December 19, 2012

To all my progressive friends: I regret having to throw cold water on your efforts to enact gun control legislation.
What are you willing to give up in order to get that?
The same political figures that constitute the ‘opposition’, the ones who oppose government programs that protect the poor and support the middle class, are the ones who will spinelessly roll over for the NRA.
So if you’re a young Mexican, brought here illegally by parents when you were a small child, are you willing to trade any immigration reform for better gun laws?
If you depend on Social Security or expect to do so when you retire, are you willing to give that up?
Health care? Would you want to go back to pre-Obamacare conditions?
Unemployment, even in a recession? How about SNAP, the food stamp program?
Tax hikes on the wealthy? Tax reform that will perhaps force huge corporations and very rich people to begin paying a fair share of taxes? Or would you let them continue to profit obscenely as the middle class shrinks and the only jobs available are working in fast food or perhaps a temporary job at Walmart?
ALL of these are things that Republicans support. And we’re watching the politics continue even as I write this. The President, who ran on a campaign pledge to raise taxes on those with incomes above $250 000 and to not cut Social Security benefits, has already signaled agreement to trade those things away, and the deal isn’t done yet. He may yet trade even more. And the people who LOST the election are still in the driver’s seat. I’m disappointed; even after winning his last election, he’s apparently not able to break out of the community-organizer mold. Or in other words, cooperation at any cost. Even when the cost is to be borne by the people who elected him.
Don’t expect much to happen. And that’s a shame.
We needed a Lyndon Johnson or a Harry Truman. We didn’t get one.

Management, labor, unions; influences on the economic transition.

December 11, 2012

Economic cycles see management (owners, in earlier times; management in the modern age) vying with production for profits. Go back to the beginnings of the industrial age and you’ll find management firmly in control. Political moves and periodic shortages of labor provided changes that weakened the near-absolute control of management. The long term trend has seen empowerment of labor and a diminishment of the control exerted by management. The relationship between the two was changed in the past by such things as disease and war and famine; more recent changes have been based on the rise of labor organizations such as unions.

Let there be no doubt: labor unions came into being as a counter to the power and exploitation of workers by management. We’re seeing some of that again where long-term employees are tossed out with no regard for the years they’ve spent building up a company by their work. Management feels free to make such decisions because once again power has shifted to the management half of the equation.

Unions began as a way to protect workers against the excesses of management. But unions then joined together into large aggregations which were capable of exerting national political influence. What was necessary in the beginning became something that had to demand ever more in benefits for workers in order to maintain power and relevance. A single powerful union could, and frequently did, demand more for employees. Under the umbrella of cross-union agreements, where one union would refuse to cross the picket lines of another, a single union could shut down not only a company but even an industry. In some cases they demonstrated the ability to shut down the national economy by strikes that closed ports or shut down rail services. Military personnel were sometimes used to break strikes. On one occasion, President Reagan acted to destroy a union; he fired all the air traffic controllers who’d gone on strike, and made it stick.

Meantime, unions had exerted a ratcheting effect on the economy. Autoworkers would begin negotiating a new contract for more wages and benefits. During the 20th Century wages were subject to taxation and unions worked to increase benefits such as health care insurance and retirement policies. Such benefits, being not taxed, became popular. The negotiations were between a company, say Ford or perhaps GM, and the Autoworkers Union.  Negotiations  were backed by threat of a strike, and inevitably workers received more in wages and benefits and prices of the product would rise to reflect the new cost structure. Prices would go up on autos, and steelworkers and other unions producing the materials that supported auto manufacturing would also see price raises as their unions demanded more in wages and benefits. And soon it would result in a slight but recognizable rise in prices and compensation across the national economy.  At some point even the national minimum wage would rise.

Unions needed to always demand more. By the late 20th Century, unions had the status of medium-sized corporations. They paid their top leadership salaries in the hundreds of thousands and donated millions to political campaigns. Dues paying members expected that the union would always provide raises in the next series of contract negotiations as well as protection from arbitrary decisions by management. A citation is appropriate here: Largest unions pay leaders well, give extensively to Democrats. The citation is from the Wall Street Journal, March 30, 2011.

A long term trend thus came to fruition. Management used their money and influence to gain power in politics; labor gained influence and power through money and the ability of union management to influence the voting patterns of members.

The economic result of the union vs management contest was to slowly raise prices in the US. The American national economy thus became considerably higher in nominal value, compared to Asian economies and even the economies of Eastern Europe. Foreign governments often resisted raising their own monetary system to true parity, because the differences acted to encourage export versus imports in their domestic economy.  The result of this was to effectively price many American products out of world markets.

Still, the American market was the largest in the world. As American products became more expensive, Asian and European products became relatively cheaper and so gained a long-term competitive advantage in the American market. At the same time, transportation costs were dropping worldwide. Larger ships, fewer crewmen, containerized shipments, computer routing, ever more efficient (and thus cheaper) ports…add this to low labor costs and a new paradigm became possible.

Management regained the advantage. Managers now had the option of evading union demands by simply bypassing the union. A number of strategies were employed in this effort. Outsourcing was one of the easiest; a company could avoid paying higher union wages to janitors and maintenance workers, for example, by laying off employees and contracting with another company to provide the services. There would no longer be any requirement to provide benefits, and usually even labor costs would be reduced. This was a win for management; but those well paid janitors and maintenance workers no longer got salaries that put them in the middle class. They had less disposable income and sometimes not even enough income to sustain mortgage payments or buy items such as new cars. Or even send their children to college. The prospective student thus needed loans to finance education, and paying back those loans in time removed the student from the consumer society for long periods. What went to banks and lending institutions wasn’t available for a house or a new car, or for health insurance or savings.

Offshoring was another option for management. While Boeing was working to move a plant from Washington (a state with union work rules) to South Carolina (a ‘right-to-work’ state, where union power was much reduced), other plants simply closed. Workers lost jobs. The products that had formerly been made by American workers were now being made offshore by workers in various countries: Ireland for a time, then Eastern Europe, and finally in Asia. American companies changed from manufacturers to importers. The goods still came in, but now profits were higher than ever and there was no need to share them with production employees. There was no need to worry about the well-being of foreign workers or rules regarding pollution of the environment. That was the problem of the manufacturing company and the government of the nation where the plants were located.

And management had no reason to consider that they were effectively destroying the American economy that their prosperity depended on. Profits to management was up; the middle class that drove the consumer market shrank. Upper middle class was forced down, and lower middle class became part of a swelling impoverished class.

And unemployment began to rise. As economies contracted, unemployment rose above 10% (and in some Western nations such as Spain and Greece, it went above 25%; Depression levels, in other words). Unemployed workers couldn’t buy; management sequestered much of their swollen income in investments which effectively removed their money from circulation.  Sales dropped across the board.  Bank foreclosures began to rise. Financialization, a major trend in the late 20th and early 21st Centuries, even took a hit as subprime loans were exposed as the junk they’d always been. Banks lost billions.

Unions now began to recognize that they were in a weakened position. New contracts were for less money, fewer benefits. And the negotiations were no longer under threat of a strike, but were driven instead by the threat of closure of the plant and loss of all jobs.

The Economy: changes and predictions.

December 10, 2012

It may be that the US, along with all the other developed nations, will never again achieve full employment in peacetime. I have concluded that we are in a transition phase between a period when manufacturing required human labor and a period when most labor is done by machines. In such an environment, workers get laid off. For a while, there will be a need for humans to supervise the work of the machines (robots) and maintain them. But as the machines become more sophisticated, even that is likely to vanish. Design of new products is likely to remain a human endeavor for the foreseeable future. Design is after all the process of examining human needs and attempting to meet them with products that humans will find necessary or at least appealing.

Much of what I’ve described in the paragraph above is already happening. Programmers instruct computers about what movements are to be made and when, the robots do those things, and somewhere down the line a human inspects the work. If the robot begins producing substandard work, a human stops the process and a maintenance worker comes in and fixes the robot. In some cases, the robots can self-diagnose. A controller is plugged in, an error message appears to “Replace module C”, and so the maintenance worker does that. It’s very like what happens to your car when you take it into the shop. There’s an error message, a device that will read this, and then a human to replace the defective item. The process is relentless. Every new iteration of robots features new self-diagnostic features. Numbers of human workers are reduced.

But how are those human workers to buy the products that the robots make? That’s the unanswered question. Government is supposed to answer such. Political leaders are expected to see what’s happening now and predict what is likely to happen in the future; certainly company leaders don’t do this. They try to forecast new trends, but the larger picture of the economy doesn’t really concern them.
And governments aren’t very good at this. Like military leaders, they study what has happened before and try to prepare for it to happen again.

History, and lessons from history:

There was a time when major disruptions in economies happened fairly often. Industries came into being, some disappeared. Those who once manufactured buggy whips went out of business, and street cleaners didn’t scoop up manure and take it to a dump. Needs changed. Jobs reflected the new needs.

An example is what happened to farmworkers as mechanization came to the farms. Farmhands got laid off and found that looking for a job at the next farm wouldn’t work, because the farmhands there had also been laid off. Cowboys became obsolete in most areas. Open range gave way to fenced pastures and barns and central feeding points. The displaced labor could move into urban areas and get jobs in manufacturing, and that’s what happened. Soon, with far less human labor but with huge machines to do what human labor had done before, farms and ranches became more profitable and much more efficient.

Even the few remaining farmworkers are likely to see further reductions. Tractors and combines now can be programmed to follow a GPS-directed course, leaving the ‘driver’ to simply look on occasionally to ensure that nothing has gone wrong. In the future the GPS course can be set by radio link, and the machines will drive themselves to the field and begin work. With a position indicator reporting back to the central communication and control device, drivers won’t be needed.

If you doubt this, large tractors and combines already have the GPS control system. All they lack is the ability to receive input and transmit information back via radio link. And the technology that allows a few cars and light trucks to drive themselves over various courses is already in development. Drones are becoming more autonomous all the time. The technology will spread inevitably to farms and to manufacturing.

So where are the excess workers to go this time? As farmhands find themselves unemployed, they’ll be joining the unemployed factory workers.

We in the US have already gone from a society based on middle class prosperity to one of underclass semi-poverty. That middle class was based on workers who possessed the skills to work in manufacturing. The service society doesn’t need such, and pays accordingly. So the middle class is squeezed and overall income drops. A few at the top manage to maintain their income or even see it rise; but this is temporary, I think. Even mid-level workers in the financial and office occupations are facing layoffs and the prospect that they will need to take jobs of less social standing which will also pay less.

That in turn means that people who sold houses and cars and other goods to middle class customers won’t have a market for their goods. The employees of the service economy won’t be able to pay for expensive things. There will be a need for cheaper housing and cheaper cars. Those who provide for these needs will be more likely to do well than those who continue to market to a middle class that is vanishing.

It is a fact that most, if not all, developed nations do not need all of their manpower. As an example, consider Spain. Spanish unemployment currently stands about 25%, and it’s closer to 50% among younger Spaniards. France has much the same; even well-educated French and Spanish citizens now face the prospect of leaving their nations to find work. The question is where to go; all of Europe faces this glut of labor, as does the USA and Canada. With a quarter of Spaniards not working, there is still no shortage of goods or services for Spanish consumers. And some Spaniards, like Americans, are ‘underemployed’; they have only part-time or temporary jobs.

More history: as labor became surplus to domestic needs, it was possible to employ the surplus workers in manufacturing for export. That worked for a while. It’s not likely to soak up all that labor now, though. The markets for exported goods have shrunk as those nations mechanized their own factories. Even cheap-labor nations such as China, which relied on that cheap labor to gain economic advantage, have now seen their cheap labor supplanted by even-cheaper robots and machines.

There is still an opportunity for export, but it must be based on quality rather than price. If something is among the best of its type in the world, people will always want it. Mercedes, Volvo, Lexus, BMW, Porsche; Nikon, Canon, Hasselblad, Leica; Italian leather goods; French fashions and perfumes and brandies. Such products are more expensive, but still find a ready market because they’re superior to domestic products.

There is a revival of craftsmanship and craftsman-made products. Furniture, wooden goods, beers and wines and specialty liquors, art objects all find a ready market. And all command premium prices. People pay the premium prices because the objects are based on quality rather than mass-production.

Economic Madness

December 7, 2012

Written in response to Paul Krugman’s column in today’s NY Times, Dec 7, 2012:

“The danger is that the deficit will come down too much, too fast. And the reasons that might happen are purely political; we may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff.

Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.

Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.

Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.”

‘Investment’, above, means by private industry. They’re collectively sitting on some $2 trillion that they won’t ‘invest’ because there’s no immediate guarantee of profit. And by doing so, they guarantee that there won’t be customers for their goods.  It’s madness; but it’s understandable.  That’s what over-emphasis on private economic activity instead of a balance between private and government economic activity gets you.

Only government investment, in the form of stimulus directly to job seekers, can do what private industry won’t. For that matter, if you forced the banks to forgive the debt of all those who are paying back loans, you’d see immediate recovery of the economy.  There is some slight activity, enough to keep unemployment under 10% (I suspect the official numbers aren’t really reflective of those who can’t find jobs, and who have given up for the moment) and underemployment at much higher levels.  But a lot of this economic activity doesn’t go to purchases of goods.  It goes to bankers.  People are paying off existing loans on homes, even when many of those are underwater.  They are paying off credit card balances that they acquired back when credit was easy and people had jobs.  And many are paying off student loans.

Whatever money is being paid to banks and financiers isn’t buying new cars, or new homes, or new clothing, or better food.  It’s not paying for vacations or any number of other things.  And until that debt is paid off, those debtors won’t be consumers.  And they won’t be stimulating the marketing economy through purchases.  We are no longer a manufacturing economy, we’re a service economy; and people who work in service economies don’t make enough to pay off loans very quickly or in many cases pay them off at all.  And unless that changes, we’re on the path to becoming a third world nation.

We’re not, yet; but when we’ve become a nation where most of our citizens work for minimum wage in a store or restaurant or office, do you think we can really afford to pretend that we’re still a nation of wealth and power?

Madness?   Just gave everyone a hundred thousand to spend.  Or just print the bleeping money, hire people to paint lampposts and sweep streets and build a national system of water collection and distribution that would move it from where it’s in excess (floods, such as occurred after Sandy and Katrina and spring snowmelts) to where it’s short, where wildfires and catastrophic drought endangers the nation’s food supply.

Put money not into the hands of banks that won’t lend it, but directly into the hands of middle class people who would spend it and thus revive the economy. They wouldn’t be willing to go work for Walmart or Amazon or McDonald’s at minimum wage, so wages for those place would have to go up. Maybe the executives wages might come down, or at least they’d get skinnier bonuses.  Give money to the spenders instead of the gamblers.  Or in other words, revive the consumer market.

Put ME in charge of the bleepin’ Treasury. I’d print the money, hand it to the government directly (no DEBT! For that matter, here’s an extra trillion, go pay off the Chinese), fund food stamps and employment of teachers and firemen and first responders and hospitals. If private industry wants to compete in those areas, then compete on the basis of quality; provide BETTER services than are available through basic public services.

While you’re chuckling at that concept, think about this: would it be any worse than what the clowns in Washington and New York are currently doing?