Obama Blows Out Hillary In Wis On Trade!
NAFTA CAFTA HAFTA FIND A JOB!
…Early exit polls also showed that the economy and trade were the key issues in this working-class state. Seven in 10 voters said international trade has caused job losses in Wisconsin, while less than one in five voters said it created more jobs than it has lost….
Barack Obama : NAFTA Trade /Jobs
Hillary Flip Flops on NAFTA Barack Obama Criticizes
I don’t know about David, John but I feel better that almost all the world is eating better. I want all the world to enjoy a high standard of living.
Why do you say slaves? They are traveling and visiting other countries, buying new homes, new cars, they have 1 and 1/2 as many cell phones as we do. Hundreds of thousands a week are opening up brokerage accounts. They are getting entrire new cities, new power plants, new factories, new stores. Walmart is building all over but there is another chain that dwarfs them.
They have malls now, brand new, that dwarf the largest mall we have in America. Mom and pop stores are springing up all over the nation.
David, we have been stagnant for a couple decades when you adjust for real inflation. And it is not an asset o have had to have women join their husbands in the workforce to maintain their standard of living.
Seniors would have to have a 50% benefit increase just to have the buying power of 20 years ago. Almost all of our “growth” has been fueled with debt that is now imploding back on us.
California is losing its wealthy and wealth. They said, last month they would be $14 billion short in tax revenues, already in just the last month that has been revised to $16 billion and may continue to rise.
I went to a political meeting here in Az. last night. While we only have a $1.2 billion shortfall, we are probably 1/10 of the economy of Cal, and our representatives said they expect ours to get worse and be worse next year and the year after.
However, there was one piece of good news. Illegals are leaving. Whether to other states or home, they don’t know. One large school district has seen 500 children pulled out of school they believe were children of illegals.
We are currently working on passing another law to fight illegal immigration where it will be illegal to gather along the right of way’s to solicit work.
Unemployment may stay relatively weak if they are going home as that will provide more jobs for our citizens losing other jobs.
Jan
All this on 2 bucks an hour?
John wrote in true marxist style — “Life is about balance!”
No, life is about liberty and the pursuit of happiness/prosperity.
Unions are about collectivism and the pursuit of balance which punishes those who strive for excellence in order to drag along the rest who just want to get by.
Watching the debate last night, it occured to me that both Barack and Hillary rely upon soundbites similar to those regurgitated by you John. It was scary how close your message of big nanny is to the dems. You should really consider getting an Obama bumper sticker.
Yup, all on 2 bucks and hour and more. When you have several hundred million people, it adds up but you miss the point.
That $2 an hour buys $10 worth of goods. Don’t you understand our “dollar” buys less and their “dollar” buys more? Buying power, not a dollar amount is what is important.
We did the same thing to the British Empire when we took power from them. We worked for 5 cents an hour, our children worked in factors. When I was in school most kids (rural area) had part time jobs, worked before and after school on farms or paper routes or in stores.
In 1913 when we created the Federal Reserve, a dollar, backed by gold bought a certain amount of goods. Now, that same dollar buys about a nickel’s worth of what it could. Of course we get 20 times the amount in pay, but it really doesn’t buy that much more of some basic goods.
That is why we can’t keep up with food and energy if we are on social security or low wages etc. At the same time that worker in China is paying 1/10 of what we pay for food. his energy is subsidized and many of the needs we have, like driving long distances to work, don’t exist there.
It is a totally different lifestyle that is more like we had in the early 1900’s when we rode bikes to work. But, they are moving up and we are moving down. That is what is important.
If they were “slaves” like you say, they wouldn’t be moving up in their standard of living. They wouldn’t be remodeling their homes and buying cars and motor bikes and computers and cell phones and cameras.
Kodak built there to sell to America. Now, China is their largest consumer of their products they are producing their.
However, look at that maintenance worker. He is “skilled.” The $1-2 an hour workers aren’t skilled. The $18,000 an hour worker is and that is where the shortages are. That is why China is rapidly educating their children to have skills that will get them that $18,000 which by the way, with their buying power, means he has the buying power of someone here making $80,000 or more.
Here, we depended on factories with “union wages,” instead of skills to raise our workers pay. They are doing it the right way. They are created an educated work force so that low skill jobs can be phased out over the years to other countries and they can move to higher skilled industries. Naturally, with 1.3 billion people that won’t be soon but it is being done in the right way, through education and development of skills that are in demand and get higher pay.
It isn’t the number of workers making $2 an hour but the number of workers making $18,000 a year and the number of mom and pop stores making thousands and the number of managers and investors and research scientists. They are graduating 350,000 engineers a year to our 60,000 and those engineers make enough to buy cars.
It is trends that you have to look at. Their trends are positive and ours in education, immigration, infrastructure, business policy, tax policy, compliance policy, etc. are bad.
Bart
The concept of pursuit of happiness/prosperity came from Adam Smith. And he was clear workers and owners must have equal rights in negotiating. That is why he was an abolitionist.
You just called the father (Adam Smith) of free economics a marxist!
If you want to talk about slave labor, how about our 20 million illegals? How about the wages being held down here by a surplus of workers? How about our workers paying 50% of what they make in taxes and compliance costs in the prices they pay? How about them paying 10 times more for food?
What kind of opportunity do our children have when it is more important they learn about condoms and alternate lifestyles than math and science and have high percentages of drop out rates in high school?
John you have no concept of “bargaining” apparently. The “equal right” in bargaining is not through unions that destroy market concepts of labor.
Bargaining for a wage is not using strikes but skills. The more people that can do a job, the less that skill is worth. Bargaining is based on “supply and demand.” If a million people have one skill and only 100 people have another skill and both are needed skills for a business who do you think should get the higher pay?
Why should unskilled assembly line workers get more pay than teachers, or store owners, or carpenters or x-ray technicians? I “bargained” for my pay by seeking the employer that needed my skills and that would pay for those skills at a fair wage rate. I increased my skills so I would get higher pay or promotions. I didn’t rely on some union to coerce my employer into paying more than I was worth.
Unions don’t bargain. They have blackmailed, coerced, used government power, and even at times, used force and vandalism to get their way.
That is not bargaining based on supply and demand for skills like Adam Smith would approve of.
You constantly use Ford as an example John
Quote:
Ford was able to market the Model T to the general public because of his advanced production technology. The Ford Motor Company’s plant in Highland Park, Michigan, Ford introduced the first assembly line in 1913, which drastically reduced production time. As a result, more automobiles were made available at a lower cost. Ford also instituted the $5.00/day minimum wage, which he claimed increased productivity.
However, not everyone was impressed with Ford’s business practices, and in 1917, he was sued by his stockholders for diverting profits into company expansion. Although the court ruled in favor of the stockholders, by 1920, Ford was able to buy them out. He built a huge plant in River Rouge, and the company became almost entirely self-sufficient.
snip——————–
He violently opposed labor organizations and actively worked against the United Auto Workers trying to unionize his plants.
===================
What he did was use “bargaining” to his advantage. He was competing for labor with dozens of car companies and he could fire any worker not producing enough and hire from those other companies experienced workers due to his higher wage. But, that higher wage was for higher productivity.
The fact he could fire any worker not up to standard was not “fair” according to union organizers. They also didn’t like his “productivity” demands and I am sure some were very demanding in hot factories not air conditioned and other poor working conditions.
His $5 a day pay, allowed him to keep a steady line of potential employees lined up outside his factory waiting for the next worker’s job that was fired. You tend to paint him as some kind of saint when the workers themselves, getting that high pay, didn’t think so much of him.
In a “market based society,” labor is paid based on demand. The more who have a skill the less that labor has value. The fewer people that have a skill, that is in demand, the more it is worth to that market. Who is that market? We, the consumers, ultimately.
Thus, the American consumer speaks every time he buys an import over a U.S. product. At times, he even buys a good that competes with the very product he makes, thus jeopardizing his own job. The “demand for goods” at prices he is willing to pay, even affects his purchases of things he makes. That is why, if you try to put the cost of government in prices of goods and services through taxes that are passed on to the consumer, consumers will opt for lower price imports that don’t have those costs in them.
And, if you try to put tariffs on those imports, the consumer who is also a voter, will demand you take them off or they will vote you out of office.
John, as we moved more and more to a service society, the people in those services, who don’t manufacture what they buy, became the majority. That majority said, give me lower prices. How do you give them lower prices if manufacturing here has 35% hidden tax and compliance costs in those prices. Simple. You import the goods and move those jobs overseas.
A service society has high paying jobs, middle class wages and low skill jobs too. But, for factory workers used to assembly line wages for low skill requirements, they aren’t prepared for a service society where high skill levels are required for even middle class wages.
That is why, a few decades ago as we started this trend, we said, “education will save our workers.” We said we would have a highly skilled work force that could be financial planners, college professors, engineers, scientists, etc.
But, we fell down in two ways. One, we didn’t provide the scientists, engineers and professionals we needed. 2nd, we didn’t reform the tax and compliance policies and even high tech and financial services and other high paying jobs are starting to move offshore to better business environments.
We didn’t realize how the “high tech age,” would allow people in Australia to read our MRI’s or a call center in India answer phones or a financial planner like Martin Weiss to live in Argentina and advice people here in the U.S. through the internet the video conferences.
Right now, in China, 850,000 workers are employed either directly or indirectly installing solar water heaters across the nation. In a nation that had a poor electrical infrastructure, like we may be headed for, this meant that even the most remote village could have electric hot water heaters. Eventually that “job” will die out as the demand is met. Those workers will have to find new skills if they want to keep the same rate of pay.
Do you think they should demand they get to keep their job or their rate of pay when demand for their services changes? China is demanding their workers get new skills when a sector fades or where, for example, they have privatize government industry and fewer workers are needed.
We have not done that here, as well. We, instead tend to view those workers as “victims” and want to supplement their income instead of demand they get new skills immediately are lose government assistance.
Fair? Of course not. It is not the job of government to make life fair. It is its job to help provide a secure environment where we are free to compete and acquire skills and bargain for a job or for employees against the competitors, etc. It is supposed to make sure we can provide a well rounded education to our children so they can have the skills that are currently in demand and for workers to get new skills when their current skills are no longer in as much demand.
But, it isn’t the job of government to tell anybody what a “fair wage” is. That is the job of markets and consumers.
Jan
Do you disagree with Adam Smith that workers and owners must have equal rights in negotiating?
I do agree. That is why unions have been bad. They distort the equality.
Supply and demand is the key factor. Both workers and employers should have to respond to market forces.
When there aren’t enough workers, employers must pay more to get enough workers.
When there are too many workers than they have to accept either lower wages or the need to get other skills that are in demand.
You agree with that, don’t you?
No worker in America is forced to work for somebody they don’t want to work for.
I never once, in my life was forced to work for an employer. Any time I didn’t like my job anymore, I quit and got a new job doing something I liked doing.
I shopped around, found jobs I like, pay I thought was fair and was close to where I lived or I moved to where I was close to my new job.
That is freedom and it is responding to market forces in labor.
By the way, because I was a below average student, most of my jobs were not high pay. For all of the 45 years in the labor market, for all but 10 years I made $15,000 or less (that was middle class wage, however). For ten years I made $30,000 to $40,000 (that too was middle class wage (late 80’s – 90’s)
With that wage I bought homes, saved, invested, and enjoyed all the jobs I had. I usually only worked 3-5 years at any job. When it became boring, I moved on to a new job where I could learn new skills and enjoy the job and life.
I paid for my own vacations, and in some cases, my own health care. I could do that because I saved and invested and had money that my co-workers, living in debt, didn’t have.
John,
Adam Smith also is credited with the idea of government schools…how’s that working out.
I by no means dispute Smith’s historical significance when it comes to economic theory…but he was not perfect.
I don’t know about David, John but I feel better that almost all the world is eating better. I want all the world to enjoy a high standard of living.
Hear, here! While Mr Konop keeps spouting his lies about slaves, the workers of the world are doing just fine, thank you very much.
= = = = =
Jan Paul,
“adjust for real inflation” . . . is that code for “double” ?
Sorry, I don’t buy it.
.
Look at the price of a PC today, and 20-25 years ago.
Compare quality and price.
Do the same for cars, TVs, home appliances . . . anything electric.
This has been some of the deepest, longest deflation in history.
.
And it is not an asset o have had to have women join their husbands in the workforce to maintain their standard of living.
—OK, call it a huge step forward in human rights, if that makes it more acceptable.
But, economically speaking, adding to the labor force is a great addition to productivity.
= = = = =
bb,
Government-funded mandatory education got us where we are today.
.
Now, are you going to bad-mouth America? Are you going to deride who we are today?
Are you?
David
Do you make 2 bucks an hour?
No, I got government-funded education. K-12, four years of excellent college and two years of world-class grad school (Berkeley has more Nobel prizes than any other university in the world).
.
How about you? $2/hr?
What can you buy with $2, John? What can a Chinese worker buy with $2 John? 4-5 times as much in some things and 10 times as much food.
David, inflation is much higher than reported and most economists agree on that. You used the computer as an example but, how many computers, TVs, cars, etc. do the lower wage and lower middle class buy? Currently about none, due to what has happened. Now they are paying about 20% on debt and 50% in lost buying power due to hidden taxes and compliance costs in prices, and a lot more for food and energy.
That is why they think we are in a recession already, possibly. If they continued to report inflation using the very same methods used for decades, it would be 4-6% higher inflation that what is reported.
Some economist say we have been in negative growth because of that under reporting for a most of if not all of Bush’s term based on the price of wheat, corn, oil, gold, copper, etc.
Knowing the changes they made to how they report, why do you not believe it is double what they report. Seeing the price increases of 60% and more in those items that all people have to buy because they are connected to food and energy, do you really believe it has been 2%? Knowing what M-3 was before they stopped reporting and what independent sources since then have reported M-3, why would you believe 2%?
With the debt load of citizens, and what they have had to borrow to maintain their standard of living, why would they have had to do that if inflation hadn’t been much higher than 2%?
While it is true that the items you mentioned are not that much of the problem, They don’t buy those thngs and when they did, they had to borrow to do it in many cases. What they do buy, food and energy and other basics affected by energy costs, has been much higher.
Why did they change how inflation was calculated if it worked for decades? Why did they make those changes when inflation was running so high if not to make it look like they were doing a good job in getting it under control?
There is, however, one thing you left out that really has hit them and I know you have read many articles on it. Health care costs have skyrocketed and our population is an “aging population.” One of the main cries by the candidates in this primary season has been the “inflation” of health care costs affecting all Americans. Yet, they say, 2%.
Jan Paul,
how many computers, TVs, cars, etc. do the lower wage and lower middle class buy?
1980: 0 computers, 0 TV, 1 car
2008: 1 computer, 2 TVs, 1 cars
Reason: Deflation (they can afford it).
Interest rate on mortgage debt—
1980: 20%
2008: 8%
.
Now, ask this: why are consumers in so much debt?
A. Easy credit allows them to buy way beyond their means to repay
B. Which means, their standards of living are higher than they should be
David, There is a report today on China and inflation
quote:
China Inflation A Serious Risk for the Regime
China’s inflation leapt to its highest level in more than 11 years in January after the worst snowstorms in 50 years disrupted supply and distribution.
Ensuing shortages drove the country’s consumer price index (CPI) up 7.1 percent.
Food prices — which comprise about one-third of the country’s CPI — skyrocketed 18.2 percent, causing concerns about future social unrest.
Some 300 million Chinese live in poverty. Inflation has traditionally preceded social instability there.
=================
It came in an email alert and will probably be on their site tomorrow.
http://moneynews.newsmax.com/
What are you seeing there in the news and if their is so much inflation in so many countries why is our so much lower than what other countries are experiencing, especially since we import so much of what lower wage and middle wage workers buy from Asia?
The reports are way over-blown. This is not a serious threat to the regime. Indeed, Premier Wen Jiabao won great praise for going directly to railroad and bus stations and telling people to calm down.
Prices are rising very fast because of one-off factors such as culling diseased pigs and the snow storm.
The base inflation rate is higher than before because of the greatest increase in standards of living, for the most people, of any time in human history.
.
It doesn’t really matter how you measure than prosparity, or how you define “most people.”
—–
Why is US inflation so much lower? Taxes.
Add $4 to a gallon of gas — like the rest of the world (it is $7/gal at the pump here) and watch what happens to the differential between US and ROW inflation.
quote:
Polk said the median age of cars on U.S. roads was 9.2 years in 2007. That ties the previous year’s record high. In 2007, 41.3 percent of all cars were 11 years or older, compared with 40.9 percent the year before.
===================
That just happened to come in a few minutes ago from Financial Armageddon. It points out what I was saying about how the “low inflation” items they count on so much for holding inflation down, aren’t being bought.
The “weight” they give to some items can distort inflation.
quote:
Bill Goss of PIMCO stated in October 2004, “The CPI as calculated is definitely a con job foisted on an unwitting public by government officials. The government says that if the quality of a product got better over the last 12 months that it didn’t really go up in price and in fact it may have actually gone down! In 1998 the methodology was adopted for computers – surely the biggest step backward in realistic inflation calculations. Since then, the BLS has expanded the concept to include audio equipment, video equipment, washers/dryers, DVDs, refrigerators, and of all things, college textbooks! (see poor quality textbooks). Today no less than 46% of the weight of the U.S. CPI comes from products subject to hedonic adjustments.
Source
Oh, lower taxes and also low import duties. Whack another 10% on everything you buy and watch that inflation rate climb.
So, why do cars stay on the road so much longer?
Because they are better.
No, don’t fall back on “My daddy’s Mustang ran great for 30 years.” That’s because Daddy was a mechanic.
Today’s cars are so far beyond what we drove in 1980 that it is amazing.
It is also deflation.
Thus, you have proved my point. The things that are keeping their reports on inflation down artificially are things not bought frequently and bought with debt because inflation has prevented them from maintaining the same standard of living without increasing debt to do so.
And you are 100% correct David. If John’s call for protectionism is implemented, inflation will soar higher and higher.
We have over 2 million dropping out of the labor pool but who won’t show up on unemployment because they were “contract workers” like real estate agents that in the case of real estate agents (1.5 million) are still agents. They just don’t make any money.
Another unseen factor is illegals going back home. In one school district here in Az, this year, we had 1,400 fewer students most of which the school district felt were the children of illegals. Whatever their wages, the loss of their spending will hurt the economy but, they won’t show up on unemployment roles. That lower “demand” should fuel “deflation” but they don’t believe it will because the food and energy inflation and other commodities is a global issue.
For seniors, which are 36 million strong, food and energy is a huge issue but health care costs are and even bigger one. Since social security checks would have to be 50% higher to have the buying power they had 20 years ago, they are going to be hit the hardest. They aren’t buying computers, cars, tvs or much else besides basic needs.
Jan Paul,
Very nice to be having a real time conversation, but it is soon time for lunch.
Final point of the day: If the price of a home falls 50% and I buy one home every 10 years and the price is equal to 5 years wages, the impact on my personal inflation is -25% a year.
It may be an uncommon purchase.
It may be that other things rise in price.
But, 25% a year is very hard to overcome.
I agree on your view of gasoline on a per gallon basis. But, Americans spend more on gasoline that their counter parts due to the distances they drive don’t they? Isn’t that why the consumption of oil by the U.S. even though it only has 300 million people is so much higher?
Most of the people around Phoenix drive 1/2 to 3.4 hour each way to work and home each day. How many miles do most Europeans drive to work? (I am asking, since I don’t have the stat but have heard it is much lower).
I do think from what I am hearing, people are starting to look for better mileage vehicles.
quote:
The Toyota Prius remained America’s most popular gasoline/electric vehicle even as sales of hybrids rose 35 percent in the first quarter of 2007 compared to last year, according to a new report from J.D. Power and Associates.
Sales of diesel-powered vehicles, already a larger portion of the market than hybrids, are expected to grow even faster.
—————————–
I think that trend will continue.
On the home, it all depends on the interest rate. Since they are purchased with debt and usually more house than they should buy, and pay 3 times or more the value of the home, almost all the payment is interest and little is principle for the first 10 years.
Thus, home prices aren’t as critical as interest rates which is why the ARMs hit home owners so bad.
Then add the most of them that did have equity borrowed it as well and often with high interest rates that were adjustable, and you see why we have 2 million homes in jeopardy. Inflation in homes the last year, especially has been huge in payments at the same time the value was dropping.
The other part of that is that when they added the home equity interest, they also cut their paycheck. They “inflated” expenses by a huge amount and while I don’t think that should be counted as “inflation,” it is why they stopped buying big ticket items when the housing bubble started to unwind and move to credit cards which were even worse at 18-30% interest.
That is why I say Federal debt is not the big issue. It is not the problem but rather, personal, city and state debt, all of which are in trouble now is what the Fed and Congress is in a panic to try and get a handle on so consumption takes off again.
The muni-bond auction failures are a serious problem and several states are scrambling to cut spending. Add, consumers, cities and states together, all slowing spending and you could have a major recession that lasts longer and deeper but, doesn’t control inflation in the very things seniors and low wage people spend almost all their paychecks on.
They need to redo the reporting of inflation and weight it toward the low to middle wage earner (majority of citizens) stop taking things out of the basket when they can’t afford them any more, and use a rolling average for food and energy if they do want to make an adjustment instead of removing them from the core rate.
Have a good lunch. It is off to bed for me. So far the stock market this year has been very good since I have been playing it for inflation and buying gold, silver, wheat, soybeans, oil and other things in commodity ETFs. Even though I don’t have much in the market, it is fun to watch it go up so fast when they keep saying inflation is so low. However, tomorrow it could all start going the other way. If so, then that would mean a global slowdown and deflation would be a real problem for the Fed, according to them.
David you mentioned another thing that concerns inflation. War.
Quote:
Furthermore, when governments print currency to fund a war or military action, that currency initially funds goods and services directly supporting that war or action. Unfortunately, wars are destructive and a large part of the goods and services purchased are destroyed. As this destruction occurs, the currency remains in circulation backed by no goods and services. The currency becomes inflationary.
——————-
That is another reason I believe inflation is higher than reported and has been for a long time, though better under Clinton and one reason he came close to a balanced budget (if you don’t count loans from the trust funds or off budget items).
The Bush wars have destroyed a lot of equipment and that money is still in circulation. But, much of that in circulation has been held in other nations. We have been passing our inflation on to others but, now it is starting to come back to us even in the methods they use to under report it.
John, there was an article today by somebody that does support your views.
Quote:
Half-Right Reich: Real Problems, Nitwit Solutions
William R. Hawkins
Tuesday, February 19
Here is where Reich goes off track: He writes, “The only way to keep the economy going over the long run is to increase the wages of the bottom two-thirds of Americans. The answer is not to protect jobs through trade protection. That would only drive up the prices of everything purchased from abroad.” Instead, he opts for a redistribution of income within our sluggish economy. “A larger earned-income tax credit, financed by a higher marginal income tax on top earners, is required,” according to Reich.
snip==============
What is Reich’s objection to solving the trade problem directly? Trade protection is what America and most other countries have done in the past when faced with this kind of problem – and, in fact, the course that most countries follow today. However, the tools they use are more subtle – currency manipulation, VAT systems of taxation, hidden subsidies, intellectual property theft, and the list goes on.
The United States became the world’s largest, most productive economy behind “protectionist” tariffs that focused on national economic development. Americans have long been the world’s highest paid workforce. Elevating the working class into the middle class is one of the great achievements of America. It dampened the class warfare that has thrown so many foreign lands into turmoil. However,
Being told that this success story must be abandoned to conform to the sophistry of academic “free trade” theory is nonsense. And, in fact, the economic theory underlying free trade is not in itself very convincing. (I know, having taught it for over a decade at the university level.) It is a cover behind which special interests lobby for their profit at the expense of society. That is what in reality free trade means – trade “free” from government intervention to protect the common good.
=======================
Just to be fair, John, I did want to admit that some support your views but, at this point in our nation’s economy, the transition, due to our having already lost so many manufacturing sectors that we purchase basic necessities in, it would create the kind of inflation David mentions.
Maybe, if your solutions are “right,” than the timing is wrong. The time for them would have been before those sectors left the U.S. over the last few decades. It might have been workable if we didn’t depend on foreign loans and foreign oil and foreign wars for our economy.
Maybe it will be possible again some day after we have to start rebuilding our economy from the ground up.
David, here is a good site that covers a lot of the manipulation of numbers.
quote:
Williams starts by discussing the headline economic data: “Real unemployment right now — figured the way that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression — is running about 12%. Real CPI right now is running at about 8%. And the real GDP probably is in contraction.” (By “real,” he means calculating the data the way they used to be calculated, not as inflation-adjusted.)
He then explains how the employment data are compiled, noting that 5 million chronically unemployed people are not included in the statistics. In fact, there are seven or eight different employment statistics. One called U-3 is the official one. The broadest one, U-6, currently shows unemployment as running around 8.4%. As he explains, the one that’s the most historically consistent is running around 12%.
Contrarian Chronicles
The numbers behind the lies
Another that deals more with inflation computation.
How the official inflation rate
is manipulated
There are in fact many ways in which the government manipulates economic information to keep the CPI artificially low:
Jan Paul,
Americans buy more gas – but spend far, far less for it – due to very poor mass transit, poorly performing gas guzzlers and terrible driving habits.
US vs. Europe: With roughly the same population, Europe is far more densely packed. According to the BP data (lovely stuff; look at the “Historical” section in the middle of the page: http://www.bp.com/productlanding.do?categoryId=6848&contentId=7033471), Europe uses more middle distillates than we do. That’s automotive diesel; America is addicted to light distillates such as gasoline and jet fuel to the tune of 3 times European consumption.
I don’t know of William R Hawkins, but the first thing that jumped off the page at me was your own comment “What is Reich’s objection to solving the trade problem directly?”
If you define it as a trade problem, we will never agree on anything. I think of it as a standard of living problem: Americans have not earned the standard of living we enjoy. We aren’t productive enough, we aren’t motivated enough and we don’t have the strong family, community and work ethics that would support this standard of living.
Of course, anyone advocating lowering the American standard of living isn’t going to get elected to anything, ever. Much easier to define it as “the other guy,” or a “trade problem.”
- - – - -
I’m no statistician, but I do believe that refining the way things are calculated is a step in the right direction. What we did in the 1930s cannot possibly be a better way to measure unemployment, CPI, GDP or anything.
That wasn’t my statement, that was Hawkins. I disagree with both of them but, Hawkins is along the lines of what John believes we need.
I do admit that John’s views has many supporters, just as Reich does. I don’t think trade restrictions are the solution but apparently we may get some based on what the Democrats are saying.
The only thing that will get this nation back on track is total reform of our tax, compliance and business policies.
Regarding the changes in measurement, you have to look at why they did it. They didn’t do it to make it better but to cover up what they were trying to hide. Look at unemployment and what they did to that.
quote:
He then explains how the employment data are compiled, noting that 5 million chronically unemployed people are not included in the statistics. In fact, there are seven or eight different employment statistics. One called U-3 is the official one. The broadest one, U-6, currently shows unemployment as running around 8.4%. As he explains, the one that’s the most historically consistent is running around 12%.
==================
Keep in mind that reporting the total unemployed doesn’t stop them from saying they will only use some portion of the total for estimating what they need to do. But, reporting the total number would not only tell the American people what the full picture is, it would help restore faith because the people can see that something isn’t right in what they do report.
Same with inflation. They can continue to report full inflation in a way that low wage and seniors can see why they are losing buying power, and just say they won’t use that number but an “adjusted” one and explain how it is adjusted. That way, people could see that GDP is actually not as good as they report if they use real inflation.
The people have seen so much distortion that they have lost faith in anything the government puts out. It is like telling the people it won’t report M-3 anymore and then seeing other people report the increase in M-3 in the news.
We have economists on the news every day, telling the people how the government statistics aren’t reliable. Not only telling them why they aren’t how they arrived at that conclusion and why that distortion is showing up in this way or that, in the economy.
You have politicians telling the people that the government is in terrible shape and the economy is in bad shape that that the GDP and other economic indicators are not accurate. They refer to declining wages and buying power for the seniors and middle class.
You even had the Fed chairman admit in Congress that “real wages” weren’t keeping up with “total inflation.” Is it any wonder the people don’t trust Congress or the President?
Regarding fuel. I agree with some of what you say but, remember that when autos were becoming popular, the U.S. was this huge spread out nation. Even our “big cities” were nothing compared to Europe. When I lived in Spain and used mass transit, it was convenient and popular and affordable. I noticed that the people also, had little choice since most of them couldn’t afford cars, let alone fueling and maintaining them.
We had no mass transit to speak up because we were so spread out and thus, the car became our “mass transit.” Then later when we should have moved more to mass transit as our urban areas grew, we wouldn’t spend the money on the taxes it took to build the systems. We preferred our cars and we pumped our own oil and it was cheap.
Then in 1970’s that all changed but, our nation was already entrenched in a “car culture” where voters wouldn’t support the mass transit systems. We just had a major battle to get one started in Phoenix and the use of it will be so low, as long as the people have enough money to buy gas, that it won’t probably justify the tax dollars it will take to maintain it. Nor will it be used enough to curb the pollution from autos we have here.
The American people are very entrenched in some beliefs that virtually no other place on earth has. In Spain, I saw the streets filled with people walking and visiting and dining and shopping and hardly a car in sight on the side streets.
I think if all Americans had to spend two years in a foreign country upon leaving high school, they would have an entirely different view of many things.
Hi – just wanted to say good design and blog – cu
If someone redefines the accepted way of looking at the world, the first questions should be – must be – does it help? I seem to recall that “revenues don’t matter” didn’t help us understand the dot.com boom . . .
Broadening the pool of unemployed to include anyone not working is fine, provided that we don’t expect the old measures, such as 8%, to be valid any longer. “Currently running at 8.4%” and “historically consistent 12%” suggests that the conclusion – that unemployment is worse – is all wrong, doesn’t it?
Simplest way of measuring unemployment is to subtract total employment from total population and then divide by total population. Surprisingly, that won’t get you a single digit number.
It won’t even get you below 50%.
Historic trend:
1960s – 68.5%
1970s – 63.4%
1980s – 59.3%
1990s – 56.0%
2000s – 54.6%
The above are the share of people not employed, for whatever reason.
That isn’t a problem, is it? Then you subtract those who don’t want to ever be in the workforce, like the parent 9that stays home during child rearing years. You subtract the percent in school and those with part time jobs. Publish all the numbers since we track them anyway. We have the means now to track those numbers since they are reported and recorded in each city, county and state.
The trend, not the actual number is what is important regardless of how you compute it as long as you include all people who want to be in the work force either working for some one or for themselves.
Why? Because, knowing the full number helps you see where tax revenues are going, consumption is going, growth is going, where education needs to target education more on, as during the tech boom where we added many classes in high tech areas in many colleges, etc.
The more data we have on real inflation also helps us adjust social security benefits, welfare payments, health care payments in Medicare, etc. Only by having accurate picture do we budget enough so we know ahead how much we will have to borrow.
Only with real inflation reported do we really track growth in GDP. Also, regarding GDP, we need to publish each month, when GDP is reported, how much is tied to government spending and government employment at all levels of government to see what the real burden is on the 124 million full time employees.
Voters might understand more about why tax cuts are or aren’t needed in some areas if we are gong to keep this massive tax code we have to govern behavior by taxing less those things we want to encourage and tax more the things we want to discourage, like smoking, alcohol, some businesses.
What is wrong with those numbers you listed? Simple, it shows that more and more of the population is having to work to keep GDP above water. Your numbers reveal much more than the numbers we get currently. Your numbers indicate a nation in decline when you use that trend and compare it to our decaying infrastructure, declining buying power, and failing health care and education systems.
Jan Paul,
First you want to revise how numbers are calculated.
OK, we did that and the numbers still say more people are working.
Now, you want to go back and use the proven methodology – discounting volunteer stay-at-home Moms, for example – as a means of proving . . . what?
You can’t have it both ways. Either the methodology works, and unemployment is running at about 5%, or it doesn’t, and unemployment is running at 54.6%.
Here we go again:
Standard unemployment rates (average)
1950s – 4.51%
1960s – 4.78%
1970s – 6.21%
1980s – 7.28%
1990s – 5.76%
2000s – 5.04%
Now, what was it you were trying to argue?
We already discount all those people. What are you talking about? I am talking about counting the people who want to work and can’t find work. I am talking about the contract workers who no longer have a job or the part time workers who want full time work but can’t find it.
There is nothing wrong with starting with all people not working as you used any more than starting from a “base” and adding the people who want work. As long as you arrive at the correct total from either end, you can then see the trends.
For example. we added 900,000 real estate agents during the boom. That brought unemployment down as they left jobs that were counted, and entered jobs not counted. Then as the housing bubble burst, they became either unemployed like in the hundreds here in the Phoenix area where agencies closed their doors, or underemployed but, because of the nature of the job, aren’t counted as “unemployed.” That applies to many truck drivers that are “independent owner/operators,” or landscapers, painters, carpenters, etc. that act as contract employees.
Quote:
“Real unemployment right now — figured the way that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression — is running about 12%…….
employment data are compiled, noting that 5 million chronically unemployed people are not included in the statistics. In fact, there are seven or eight different employment statistics. One called U-3 is the official one. The broadest one, U-6, currently shows unemployment as running around 8.4%. As he explains, the one that’s the most historically consistent is running around 12%.
Source
As you notice, they do have the data. They do know what it is. They just don’t report the numbers they don’t like. They use the number that makes them look better instead of reporting it, and all the other numbers tied to employment.
Report all the numbers, not just some. They do that with inflation on the BLS site, for inflation, but, then tell the public a couple of number that don’t really reflect the true picture plus, use methods of calculation in some of the numbers they do report that distort the true picture of them.
Now I get it !
You’re not talking about unemployed at all!
Why didn’t you say that?
What you’re pointing to is called underemployed.
Whole different category.
- – - – - – - – - – - – - – -
Here we go:
Number of people not in the labor force, 2007: 78.743 million
–Because do not want a job: 72.040 million
Remainder = 4.703 million
Did not search for work in previous year: 2.748 million
(Sorry. If you fall in this category, you don’t want work.)
Remainder = 1.955 million (which, if fully added to actual unemployed, would raise the level to be 5.9% unemployed)
—Of which:
Available for work now: 1.395 million ( = 5.5% unemployment rate)
—Of which:
Not currently working because
(a) discourage: 0.369 mn (contributed 0.67% of that 5.5% figure)
(b) Family / school / health: 0.454 mn (contributed 0.61%)
(c) Other: 0.572 mn (contributed 0.54%)
.
Bottom line: there is no valid 12% figure
DAVID
READ THIS REAL SLOW!
…Early exit polls also showed that the economy and trade were the key issues in this working-class state. Seven in 10 voters said international trade has caused job losses in Wisconsin, while less than one in five voters said it created more jobs than it has lost….
Why aren’t you counting those who don’t want to work or haven’t searched in a year? What difference does it make if you include or don’t include them as long as you identify them?
You were able to detail the job market so why aren’t those figures published when they make the job report on the media. That is the point. All they have to do is give all the totals when they make a public announcement.
Why do you want to hide the complete picture from the public if you are a politician that is supposed to be representing “all” the people, whether employed or not. Why did they use to report things differently and then change and not at least keep reporting who they were no longer including in the final total.
As you know, they usually only make changes that make them or the economy or the job market or inflation or spending or debt if it makes them look better and easier to be re-elected. The “professional politician” is only interested in “the truth” if it helps him get re-elected in his district.
Look at why the under report inflation
quote:
WHY COUNTRIES MANIPULATE ECONOMIC STATISTICS
The imperative to produce favorable economic figures (strong growth with low inflation) gives politicians a huge incentive to misrepresent, spin, fudge, readjust and manipulate the inflation rate as well as many other economic statistics produced by the government’s economics bureaus.
Incentive #1-If your economic statistics are good, you pay lower interest rates on your borrowing.
Incentive #2- If your inflation rate is low, you pay less on government retirement programs, other debt or on contracts which are tied to inflation adjusted payments.
Incentive #3- If your economic growth rate is good and your inflation rate is low, you avoid the psychological damage caused by a rapidly rising cost of living to your electorate. For example, once an inflationary psychology is developed consumers and businesses hoard inventory goods and services.
Incentive #4- Good economic statistics help create an interest among foreigners to invest in your economy and create jobs and wealth for your people. Foreign investment also creates many other ancillary benefits.
THE UNITED STATES ANNOUNCED A 2.1% INFLATION RATE.
IN REALITY IT WAS MUCH HIGHER.
As measured by the Consumer Price Index or CPI, the Bureau of Labor Statistics places the rate of inflation at 4.3% and the core CPI at 2.1%. This is simply inaccurate. The fact that this figure is so out of touch with the reality on the ground begs several questions.
WHY DOES INFLATION TROUBLE
ELECTED OFFICIALS?
by Monty Guild
Right now, they are saying that “avoiding a recession” is more important than inflation and they will “quickly raise rates once the economy is rolling again. Hmmm? last time they did that, they killed the economy. The time before that, they killed the economy.
Doesn’t sound like much of a plan to many. Some are saying keep the rates where they are, let us have a corrective recession and let the market, not stimulus packages bring the economy back. Why not? Probably because the fear is it won’t come back for years if they do that. Japan has been languishing for 17 years after their real estate bubble bust.
But, is the average Japanese really that bad off?
The U.S. has to “correct” sooner or later. I believe they are only trying to delay this until the Democrats are in office. Then they WILL say inflation is a problem and rapidly raise rates. The economy will crash and the GOP will say, “we told you so. You need to reelect us in 2012.”
The LIBOR rate will climb, the Plunge Protection Team will let the stock market fall, and other things will take place that undermine the democrats from balancing the budget.
Currently the call from the states is to spend so much on infrastructure that this year’s deficit may climb to $800 billion and stay at that range for years. That will also undermine the Democrats as each year, interest alone will eat more and more of any tax revenues increases they get.
If the interest rate rises, as many believe it will for government loans from foreign sources, interest could rise $60 to $100 million a year which would put interest alone at $1 trillion in a few years. This will be occurring at the same time 78 million are ending their payment of pay roll taxes into the trust funds that loan their surplus to the general fund increasing foreign borrowing even faster.
So, why do this. Simple. It causes an economic collapse where the people surrender even more power to the Federal government and they are willing to let the Federal government make all kinds of reforms to end the misery.
Thus, social security and Medicare are declared insolvent and they start over or turn the programs back to the states to decide how to deal with it. They drop spending on many other programs, create a capitalist system that is dynamic and putting millions back to work who are glad to have a job at any wage.
Don’t get me wrong. I am not saying what they will do will be bad because I don’t know if it will or not. But, given the people who control the parties, corporation and banking system, I don’t think it will be socialism like many in the Democratic party hope for.
Planned crisis are easy for anybody that can control money supply and since this is a banking “cartel” that has many nation’s bank working together some increasing some holding steady and some dropping rates, they “believe” they can “control” events. What if they are wrong and they can’t. What if market forces are stronger than they believe or what if the “new power brokers” have more power that they thought and won’t “play along?”
At least, it makes for interesting news and watching the President get on TV and tell us everything is fine, makes good comedy.
John Konop
Get someone to read this to you:
If 7 out of 10 people think the sky is blue, we can deduce that 7 out of 10 people think the sky is blue.
Science may tell us that the color is a reflection, or the absorbtion of all other colors, but we know for sure, 100% with no question possible that 7 out of 10 people think the sky is blue.
.
PS There still is no valid 12% figure.
David
Did the job walk away?
I was trying to find something that I read a long time ago but, couldn’t find it. Instead, I found a more recent article on the subject of how the unemployment number is distorted or can be distorted
quote:
You may ask why the employment figures seem worse than reported. The fact is your perceptions are closer to the truth than the reported figures. The reasons are several. First, service jobs in restaurants and checkout lanes in grocery stores have the same weight as manufacturing and construction jobs, which pay much more. Second, once unemployment benefits run out, those persons fall off the statistical survey. Another possible reason is that the length of unemployment between jobs is growing. And finally, the CES Birth/Death model has been applied in the past to provide “statistical smoothing” of the (un)employment figures, in order to give the appearance of incrementally smaller changes.
Source
This isn’t nearly as important, however, as is the manipulation of inflation reports.
Jan. 2008 Unemployment report
http://www.bls.gov/webapps/legacy/cpsatab12.htm
U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)
5.4%
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
1.7%
U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force 3.0%
U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers 5.7%
U-5 Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers
6.4%
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers 9.9%
===================================
This is more like what the report presented to the public should be like. It is exactly as they show on the BLS website. There is no reason not to present all the figures.
Now, if the author of the site still thinks some of those number are manipulated by the manner of the survey conducted, he may or may not be right. However, I believe his point is valid that the public have a distorted picture presented to them.
By the way David, Here is a link to the Chart on the Yuan’s rise to the dollar
http://finance.yahoo.com/currency/convert?from=USD&to=CNY&amt=1&t=2y
I look at it and to me, it looks like a gain in confidence in what they are doing, the more the let the Yuan rise. I have heard they may let it go another 7% this year but, I was wondering if you thought they might do as much as 10% as they continue to see the benefits to their move?
Slow and steady.
No reason to hurry.
“Cross the stream by feeling the stones with your feet.”