Wednesday, September 28, 2011

Money Doesn’t Care About Your Job.

For the country to get healthy, it’s all about jobs. Manufacturing jobs, education jobs, software and hardware development jobs, alternative energy jobs, health care jobs, construction jobs. Good paying jobs. But above all, jobs here in the United States. We are in the most anemic of recoveries, and it’s a jobless recovery. Private industry is barely creating enough jobs to keep up with population growth, and it is not making a dent in our 9.1% unemployment rate.

The Republican narrative is that we aren’t creating enough jobs because there is too much regulation, too much taxation, and too much government spending. If only we eliminated corporate taxation, greatly reduced burdensome regulations, then this happy circumstance would cause the owners of production to hire and make stuff. I believe these folks haven’t heard of the bar code, Walmart, or the “just-in-time” production system.

I have been asking my friend who works in the financial industry why it is that the captains of industry and finance have not manned the ramparts of job creation. Why are they not clambering for job creation programs if this is what’s needed to make America productive again? Two possibilities come to mind. The first is that they believe like John Boehner and Eric Cantor that government is the problem and has nothing to offer in job-creation. I rather discount this possibility because the captains of industry did not reach their perch because they are Dodo birds. A second possibility is that they don’t care. They don’t care whether we create jobs in the U.S., they don’t care whether the U.S. middle class is successful or not, just as long as growth occurs somewhere.

I listened to a couple of private bankers this evening share their investment outlook for the near and not so near term. Their mission is to preserve and grow wealth. From a wealth preservation standpoint, their goals make obvious sense: low taxation, small government, low inflation. This naturally pre-disposes bankers to the Republican agenda. “You are international consumers; you have to be international investors,” they said. I know what they meant. Money will care about world recession because this means there is no safe haven where it can productively grow. However, it will not care if there is 20 percent unemployment and no prospects for middle class jobs in the U.S., as long as there is growth somewhere. Money can be moved at a moment’s notice to be put to work in China, Brazil, India, anywhere where there is growth. Money does not care where this growth occurs. And in the era of bar codes and just-in-time manufacturing, the owners of the means of production don’t care either. They are all bankers now.  Access to capital is what matters. Factories can be built at a moment’s notice anywhere in the world, for delivery to wherever there is demand, as it occurs.

The median age of Japanese and Germans is 45 years. The median age in the U.S. and China is 36. The median age in India is 26 years old. There are 1.4 billion people in China; there are 1.2 billion people in India. This should tell us something about where growth will come from in the next 100 years. Money will not care about 20 percent unemployment or wealth disparity in the United States. If there are consumers to be found in India and China, Money will not care that there is no demand in the U.S. It will not care where the jobs are created. It will care only about low inflation and low taxation. Money will care about small government. If the rest of us want good paying jobs and low unemployment in the United States moving forward, we have to learn to leave the small-government-low taxation-bankers-and-captains-of-industry-know-best narrative behind.

Sunday, September 18, 2011

The Nattering Nabobs of Negativity

Three years into what we now popularly call the Great Rescession, or as Ken Rogoff would have it “The Second Great Contraction,” pessimism abounds. We are bombarded daily with negative stories about lost decades, American decline and Chinese hegemony, PIGS feeding on Germany’s trough, declining standards of living, a broken education system, infrastructure falling into decay, and a fatalistically self-destructive political environment. It’s enough to make sound bite addled journalists like Jonathan Alter call the last decade “the worst in 100 years.”

But every now and then it’s important to say “enough already, let’s get a grip.” The worst decade in a century? Worse than 1929-39? Really? Back then GDP dropped 47% and unemployment was 25%. We didn't have all those achievements in place that Alter boasts for the latter half of the 20th century.  Worse than 1939-45 and its 60 million dead, including close to half a million Americans? Fact is, things ain't so bad.

Here are a few things we have accomplished during the last ten years (give or take), and that we are working on:

1. Knowledge sharing: Google, Wi-Fi, IPhone, IPad, Wikipedia, social networking sites (facebook, myspace, linked-in, etc.), digital cameras, digital books; on-line newspapers and periodicals; research papers widely available on-line; blogs (today I can read Brad DeLong, Greg Mankiew, quality legal group blogs, Crooked Timber, Mondoweiss, and each one of us can have our individual list of quality blogs to follow), and storage of personal data in the cloud.

2. Medical advances: heart attack deaths are cut by 40 percent; AIDS has turned from deadly scourge to a manageable illness; stem cell research advances; big advances in breast cancer treatment and other cancer treatments; great progress in minimimally invasive robotic surgery techniques; advances in functional MRI's, etc.

3. 27 states have passed no-smoking laws.

4. Equality for gays is progressing. We have a continuing and strenghtening commitment to disability accessiblity.

5. Child safety: Between 2000 and 2009, non-fatal injuries for people under 21 decreased by 20 percent, according to the California Department of public health. The incidents of car related injuries for children has dropped by 40 percent. This is due to child seat safety laws, helmet laws, improved regulations for playgrounds and pools, etc. , and advances in technology.

6. Health insurance: We've passed significant legislation to drastically reduce the number of uninsured. Lot's of work to go here, but it's a start.

7. Progress has been made in reducing green-house gas emissions, and in developing alternative energy. LEED standards and other industry standards have been developed for the design and construction of energy efficient, and people friendly, buildings. We have made lots of progress in developing alternate energy: solar, wind, thermal, wave, etc.

8. There have been strong developments in harnessing computers in construction. Building Information Modeling (BIM) is leading to better designs, more efficient construction, and better more energy efficient buildings.

9. There has been lots of research and groundwork-laying for eventually moving beyond the internal combustion engine. Electric cars, electric batteries, high speed trains, etc. Progress has been made on all these fronts.

10. There has been much progress on the aviation front: drone technology is a symbol, but it extends to all manner of lighter, more efficient aircraft, from commercial liners to small private planes.

We all need to take a deep breath and get a grip on reality with both hands, as Brad DeLong says. Neither Obama nor Perry (and never mind Romney) is the Messiah.  We have lots to do, from adjusting the out of whack income and wealth inequality, creating jobs and getting productive, adapting education for this new century: let’s get to work, let’s study hard, let's work hard, let’s have some fun, and as Spiro Agnew might say, let’s not pay so much attention to the nattering nabobs of negativity in Congress and the press.