Wednesday, March 14, 2007

Back To Work

Waterboy thinks I should get back to work, so here goes...

From the pen of the Mighty MogamboSo why hasn't gold risen? If you are the kind of person who wisely gets clues from the soundtrack, then you have noticed that the background is filled with the sound of cackling and muted screams of pain and horror. Thus you are prepared when the honeyed voiceover says "Evil people are doing evil things with our economy and money. And manipulating the price of gold to keep it from rising alarmingly, which would provide stark testimony of their staggering incompetence, is just a relatively benign part of their nefarious activities!"

And by this I mean the infamous Plunge Protection Team, where the Treasury, the Federal Reserve, big banks and unnamed others all get together to bail us out of any market mishap by buying, buying, buying, using money created by the Federal Reserve expressly for the purpose.

And you can be sure that they are out there, right now, doing exactly that thing, in response the to recent market losses. And furthermore, the market will obediently go up as long as they keep buying, buying, buying and all the money floods into the economy, which will also, theoretically, benefit from this deluge of new spending, and thus, they think, mission accomplished, applause, applause, applause.

But whether or not they succeed this time or not, their efforts to prevent the collapse of such a preposterous economy will one day fail, and the dollar will fall to relative worthlessness, and money and wealth will be lost by the supertanker-full, and there will be misery and suffering to extents beyond your nightmares. This is the classical end to an eternally-classic situation; a government spent a country into bankruptcy.
Later in the article, Mogambo states "The economics profession has failed America." And ditto the egregious conduct of the schools, the governments and the media (who are supposed to be the public's watchdogs, but are now their willing lapdogs)."

Of which Dan Rather agrees by saying "In many ways," said Rather to loud applause, "what we in journalism need is a spine transplant." To longtime CBS broadcaster Dan Rather, American journalism in recent years "has in some ways lost its guts."

During his hour-long keynote address Monday at South by Southwest Interactive, Rather opined at length on the state of his profession, in which too many journalists have become lapdogs to power, rather than watchdogs.

"I do not exclude myself from this criticism... By and large, so many journalists--there are notable exceptions--have adopted the go-along-to-get-along (attitude)," he said.

So, because of this "access game," journalism has degenerated into a "very perilous state," he said in response to a question from his on-stage interviewer, writer Jane Hamsher.

Rather reiterated his feeling that many journalists today--and he repeated that he has fallen for this trap--are willing to get too cozy with people in positions of power, be it in government or corporate life.

"The nexus between powerful journalists and people in government and corporate power," he said, "has become far too close."

You can get so close to a source that you become part of the problem, he added. "Some people say that these powerful people use journalists, and they do. And they will use them to the fullest extent possible, right up until the point where the journalist says, 'Whoa, that's too far.'"

It is incumbent on journalists to be willing to risk their access to power to seek out the truth behind a story, he said. And they shouldn't be willing to water down the truth to protect their access to power.
Rather goes on to opine "media conglomerates get[ting] bigger" which of course often leads to layoffs. Here in Colorado Springs our local paper recently laid off some more of its force. In fact, despite a supposed 4.5% unemployment rate, there really aren't any jobs to be found. A local temp agency with whom I have a good relationship confided to me that in the past 2 weeks they haven't even seen anything come through. Meaning no new jobs.

Speaking of jobs, Paul Craig Roberts, Assistant Secretary of the Treasury under Reagan, writes "Job growth over the last five years is the weakest on record."
Over the past five years the US economy experienced a net job loss in goods producing activities. The entire job growth was in service-providing activities--primarily credit intermediation, health care and social assistance, waiters, waitresses and bartenders, and state and local government.

US manufacturing lost 2.9 million jobs, almost 17% of the manufacturing work force. The wipeout is across the board. Not a single manufacturing payroll classification created a single new job.

Communications equipment lost 43% of its workforce. Semiconductors and electronic components lost 37% of its workforce. The workforce in computers and electronic products declined 30%. Electrical equipment and appliances lost 25% of its employees. The workforce in motor vehicles and parts declined 12%. Furniture and related products lost 17% of its jobs. Apparel manufacturers lost almost half of the work force. Employment in textile mills declined 43%. Paper and paper products lost one-fifth of its jobs. The work force in plastics and rubber products declined by 15%. Even manufacturers of beverages and tobacco products experienced a 7% shrinkage in jobs.

The knowledge jobs that were supposed to take the place of lost manufacturing jobs in the globalized “new economy” never appeared. The information sector lost 17% of its jobs, with the telecommunications work force declining by 25%. Even wholesale and retail trade lost jobs. Despite massive new accounting burdens imposed by Sarbanes-Oxley, accounting and bookkeeping employment shrank by 4%. Computer systems design and related lost 9% of its jobs. Today there are 209,000 fewer managerial and supervisory jobs than 5 years ago.
Later in the article he writes "Economists who look beyond political press releases estimate the US unemployment rate to be between 7% and 8.5%." which corroborates the temp agency's experience.

Mr Roberts goes on to inform us that "Offshore outsourcing and offshore production have left the US awash with unemployment among the highly educated.

UC Berkeley, in a 2003 study, estimates that as many as 14.1 million jobs are in danger from outsourcing. Now this is in a country that only has 140 million jobs. But more precisely there are only 100 million actual jobs as 40 million of that total are government and are therefore no in any danger of being outsourced. That means 14% (nearly 1 in 6!) of actual jobs are in danger of being outsourced. Why? Because it is so much cheaper to pay someone in India.

Berkeley gives us an example of the pay differences.
    Telephone operator:
  • US: 12.57
  • India: Under $1
    Payroll clerk:
  • US: 15.17
  • India: 1.50-2.00
    Financial Researcher/Analyst:
  • US: 33.00-35.00
  • India: 6.00-15.00
Where does that leave us? Honestly, it leaves us with nothing. If we don't change what we do we are going to find ourselves destitute and dependent upon the kindness of other countries.

We need to make drastic changes in this country and we need to do it quickly. Of course we need to fix the monetary situation but that has been covered elsewhere. What I propose is that we focus on two areas, research and manufactories. We need to have an edge on the other countries in such a way as they and their people will want to purchase our high tech solutions in areas such as medical, energy, and software as well as low-tech goods that can be exported to willing consumers across the globe.

Countries that produce goods bring in wealth from other countries as well as keep the wealth of that country inside of it for use by its citizens. I am not suggesting that we isolate our economy, rather that we start using the global economy to start creating wealth. America has always been a contender in this global economy, not because of we have cheap wages, but because of our high productivity and our high quality. The American worker out-produces most every other worker across the globe. This is due to our work ethic (which is certainly flagging but I believe can be brought back) and our ability to innovate and implement new technologies and procedures. Ideally we would implement the research at our manufactories to create entirely new products, from simple and cheap to the complex and high-end.

America has long been able to compete against cheaper labor. In fact, for the past century there has been cheaper labor available, all attempting to compete with us not just here on our soil, but also globally. America has excelled in the past and we can again. But to do so is going to require these changes and more. The sooner we start, the less painful it is going to be.