Show-Stoppers “1″
Good Morning all you thinkers out there; your King of Simple News is on the air.
Over the past couple of years we have enjoyed some great conversation on this blog. The exchange of information and personal feelings is valuable to understanding why we are currently residing in the worst recession since the years of the Great Depression.
In short, we are in protracted recession, not due to a lack of knowledge, but rather due to not using our past knowledge for planning not to be in recession. “Our ignorance is not so vast as our failure to use what we know.” ― M. King Hubbert, American Geophysicist
We could spend every day batting around this or that, but in reality, all that ails us stems from the human race violating the physical limitations of a finite planet.
Not so long ago I sat down and attempted to compile a list of the more serious violations and titled that list “Show-Stoppers.” Each subject on my list is unilaterally capable of bringing our ill founded growth model to a screeching halt.
Today, I will start running my Show-Stoppers by introducing one subject per day. At the end of the list, I will post the entire Show-Stopper series on a separate area of this site.
Show-Stoppers!
By Mike Folkerth
© 2009
The United States is in serious economic trouble, of that there is little argument. There is however a roaring perpetual debate focused on the differing opinions of just how much trouble we are in and just how long it may take to right the good ship. And then, there are people like myself who question whether the good ship can be righted at all without the American people undergoing a massive paradigm shift (a 180 degree shift in the way that we view our economic future).
That paradigm shift will require abandoning the holy grail of our economic underpinnings; that of exponential growth. How can I quickly convince the reader that exponential growth is the cornerstone of America’s economy? I challenge you to try and remember the last political candidate that did not promise economic growth beyond that of his or her predecessor.
GOVERNMENT GROWTH:
Much of that promised growth has been in the form of lopsided growth of government as compared to that of the actual economy. This fact can be witnessed in this graph provided by Michael Hodges in his excellent Grandfather Economic Report. http://mwhodges.home.att.net/
I now challenge you to name the last president who grew the real economy at a greater rate than the growth of debt over that same period. If you said Bill Clinton, you would be very much mistaken. This writing in not about Republican or Democrat trickery; it’s about real hardcore math and sustainability.
Growth of government as a substitute for a real economy is not limited to our Federal employee’s; local and state government has grown at an amazing rate as can be witnessed in this next chart, again, from Michael Hodges.
Continual growth is most definitely the plan and I will attempt to explain why such a plan is physically impossible; and always was. The exact sciences of physics and math are never wrong. The manmade political/social sciences are rarely correct.
The purpose of this writing is to produce arguments that are logical, vivid, provable, powerful, and that will serve as solid anchors for which to debase any counter argument that suggests our current economic model can continue without resulting in severe consequences to America’s Middle Class.
My long stated opinion is that the U.S. will not and cannot return to our past heyday of unchecked lending and consumption as the basis of continual growth. The past housing bubble has stripped the last remaining wealth from the American Middle Class.
The United States economy reached its optimum level many years ago. This fact is apparent when the accompanying (and facilitating) private and federal debt accumulation that began in earnest in 1970 is given proper consideration. We must now deal with the harsh realities that eventually plague all exponential growth based societies.
No problem can be solved until the basis of that problem is known.
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News of the day: WASHINGTON (AP) — Unemployment rates rose in all the largest U.S. metropolitan areas for the fifth straight month in May.
The Labor Department said Tuesday that jobless rates in May rose from a year earlier in all 372 metropolitan area it tracks.
The unemployment rate in Kokomo, Ind., jumped to 18.8 percent, up 11.7 percentage points from a year ago, the largest increase of all metro areas. The second-highest increase occurred in Indiana’s Elkhart-Goshen, where the rate rose to 17.5 percent. That’s up 11.4 percentage points from a year earlier.
El Centro California has joblessness of 26.8% and Yuma Arizona rang in at 23.3%. These numbers equal the height of the Great Depression!!
Come on Mr. Obama, show us your promised stuff. Campaign promises are fading like the buffalo. I’m thinkin’ that McCain is cherishing his loss more every day; otherwise he would be the one on the same hot seat. Those physical laws are tough characters; huh guys?
I think we see a central theme here.. Government.. The problem may be economic, but the cause is government..
You hint at the cause in a later paragraph, when you refer to “resulting in severe consequences to America’s Middle Class”..
I think people have to realize, that the middle class does not select who gets political power.. The rich, and empowered gets to select who gets political power.. And, our government works for those who put em in office..
The center of the problem is the best government money can buy.. Only after we solve that problem is there any chance for middle class relief..
I don’t believe we can start to solve our political problems until everybody unites, and solves our biased media problem.. That is one problem that shud be able to unite all the protest groups.. We need to get them to all work for one common goal.. The people only have power when they are united.. We are not united.. We protest a thousand wrongs, and they deal with us one at a time, and nothing is ever accomplished.. We win a small battle while we lose the war..
Tnx.. WmA..
I heard Ben Stein, economist / writer, on a radio interview yesterday referring to our current unemployment situation as FUNemployment. Stating that people are lounging around and enjoying the extended unemployment checks. No one is hungry or without a roof over their heads. He sees job openings everywhere. He stated that people just don’t want to work.
Wma,
No doubt, you correctly point out the flaws in our government and political arenas.
But I want to point out the MILLIONS of Americans who devote time, raise millions of $$$, and campaign for months to promote either the Dems or the Repubs.
Legions file to the poles and rather than vote for a third party, they vote for more of the same! Therefore, the Middle Class is not blameless.
That aside, I wrote the Show-Stoppers to help people understand that there are physical elements at play that will bring our country to a halt regardless of ones political leanings.
We will come together when there are no longer jobs available to get in the way of our free time.
Thanks for the comments.
Les, Thanks for your comment and I mean no disrespect toward you in this but the last time Ben Stein was right about anything, bell bottom pants were still in style.
I would love for Ben to give his speech in Elkhart, Indiana. They would have to give that idiot combat pay. We have thousands upon thousands of people living in tents who have lost their jobs and homes and Ben thinks they are on an extended family camp-out toasting marshmellows!
Once more, I realize that you are passing on what you heard Uncle Ben say, but he has coveted a high position on my list of grossly overpaid fools for years.
Home prices are off almost 33 percent from its peak in the second quarter of 2006. http://finance.yahoo.com/news/US-home-prices-down-181-apf-801285894.html?x=0&.v=1
Homeowners at least two months behind or in foreclosure continued to climb in the first quarter Q1 2009, from the previous quarter Q4 2008. A Treasury Department report stated; Much of the increase came from borrowers who had good credit!!
US stocks move sharply lower on last day of 2Q after unexpected dip in consumer confidence. UNEXPECTED! What ivory tower do these people live in. Unexpected my foot.
http://finance.yahoo.com/news/Stocks-down-on-dip-in-apf-2000317367.html?x=0
Spending from consumers accounts for more than two-thirds of U.S. economic activity. How can an economy like this be sustainable? Shouldn’t it be based on two-thirds production? At least 51% production? Anyone?????
It doesn’t sound like a recipe for economic recovery to me. Nor like much fun.
George,
There is no such thing as a service economy; at least not for long. The same goes for a “shopping” economy where consumer spending on foreign made products becomes the basis.
The statistics that you posted above will remain unchanged until such times that real jobs are available.
Mike,
It’s jut one big Jacked Up Mess!
Uncle Sam, you should be ashamed of yourself! Selling off all your niece’s and nephew’s futures into oblivion.
Ben Stein is funny.. Not right, but funny..
I doubt there are good jobs going wanting for somebody to fill them.. More, I hear of hundreds of people lined up for mediocre, or worse jobs..
Many people working hard for poor pay, and worse benefits.. Economic slaves where the options are to take the job offered, or starve in the street.. I doubt those homeless are just camping..
WmA..
Mike, I am assuming that your unemployment figures are “official” government numbers. If so, the actual unemployment rate is twice that. This would but the number in the 30-40% range in some cities.
As for “real employment”, that can’t come back until our current economy is largely gone. The high price of energy and the extreme level of complexity of our society have made everything unaffordable and unsustainable.
A “fun” exercise the next time you go to the grocery store, try and list all of the jobs, products, services and conditions that need to be present before you can buy a can of beer.
However long the list you or I come up with, other readers will identify things that were missed and are essential for that can of beer; or anything else, to make it to the store shelf.
All of this complexity is expensive and is only possible because of cheap fossil fuels. Problem is that oil is no longer cheap.
Game, Set and Match to geology and Malthus.
Not 30 miles from my house, one of the largest and most successful automobile dealers in the nation is personally appearing on TV looking for at least 5 sales persons, a finance person and several mechanics. These are good jobs in a union shop, and are NOT temporary. He is 80+ years old and goes to work every day and said last night that he just can’t understand the lack of interest in working for a living these days.
The only qualifying characteristic he mentioned in his talk was that applicants who were 50+ would get preference. They understand working better.
Wma,
That’s right, Ben Stein is an entertainer who has given financial advice that if followed would make Bernie Madoff’s scheme appear to be chump change.
Greg,
Your example of the complexity of our society is one of many that has led me to constantly end these posts with “Live Simple, Live Free and Live Well.”
Clyde,
When Wal-Mart opens a new store, they are currently getting around 11,000 applicants for an average of 330 jobs available, or on average, 30-1 apply.
Wal-Mart pays full time employee’s an average of $10.83 in 2009.
Between GM, Chrysler, and Ford, they have in the past few years, or have scheduled, the closure of some 3,000 dealers. This frees up thousands of people who had years of experience.
One of my friends recently told me that he gets more inquiries for jobs each week than he does people who want to buy cars.
I don’t doubt what you are saying is true for that one dealer, but there are more circumstances involved than those being reported.
Here is an excellent synopsis from Pete Murphy on the Cap and Trade issue.
http://petemurphy.wordpress.com/2009/06/30/cap-and-trade-trading-one-problem-for-another/#comment-1814
Mike,
I should clarify. I live in the Inland Empire. Unemployment is 13%+ and many business are barely making it. I don’t back Ben Stein’s comment. I’ve seen him and other economists make plenty of stupid statements on CNBC. The point I’m trying to make is that Economists are out of touch with reality.
Most Economists completely missed the real estate bubble, didn’t predict a recession, and are predicting “green shoots”. On top of that, I find it incredulous that anyone will state that 10% of Americans are “Funemployed”.
If there is anyone who deserves to be “funemployed” is Ben Stein and most Economists. The fact that these guys have so much influence on govt and business is scary.
Mike, your article does a good job showing the increase the “hierarchical specialization” and the decrease in marginal returns of bureaucracies. Even if resources were not finite, I don’t think we could sustain such a large government for long.
Les, I’m sure there are many people who are not yet ready to take a job at Walmart or Mcdonalds because they get more money from unemployment. However, even these low paying jobs are getting harder and harder to get.
ClydeB, if I just got laid off from a long term job or career, a job in auto sales would be one of the last jobs I would take. Without government subsidies and an artificially low interest rate all of the auto companies would be going bankrupt, yes even the Japanese companies. Toyota already had to get a loan from the government of Japan ( http://www.bloomberg.com/apps/news?pid=20601101&sid=aPEi5UEXZbPA ). I would try to find a job that is more likely to be around in a few years.
Here is another statistic to show how unlikely it is that our economy will every turn around. According to the Labor Department, almost two thirds of those who are laid off end up accepting a job that paid less than the job they were laid off from. Wages are on there way down for good and the middle class is on its last leg.
Les said, (when referring to Ben Stein) “I find it incredulous that anyone will state that 10% of Americans are “Funemployed”. I’ll second that Les.
It’s sooooo easy to suggest that the unfortunate ordeals that others are going through is somehow their own fault! Stein sees himself as an elitist and above the fray of the common man.
Hotrod said, “almost two thirds of those who are laid off end up accepting a job that paid less than the job they were laid off from.”
The above is a staggering number that should garner everyone’s undivided attention but they are more concerned about Michael Jackson.
I agree Rod, our Middle Class is on our last legs. You also stated, “Even if resources were not finite, I don’t think we could sustain such a large government for long.” And that is why I have included the excessive growth of government as a show stopper.