Monday, June 10, 2013

A Pessimistic Perspective, Youth Unemployment and a Moving Tribute from Sid

A Pessimistic Report on the Economy

We have a problem, and it is about getting money into the hands of American workers, money which can be spent on consumption, which supposedly will bring about greater demand and nourish job creation.   This is only possible if the workers have income producing jobs, however!   Business is recovering but the money it is making is either being distributed to shareholders or squirreled away for a rainy day.  Banks are content to sit on such deposits.  It is not being spent for consumption.  The one place that profits are not being directed is into new jobs and increased pay and benefits for employees! 

Hence, the amount of money available to spend on what workers’ families consume is not increasing.  How then are businesses doing so well?  To a great extent, they are saving money by utilizing low labor costs overseas, using robotic technology in their plants here and selling a significant part of their products to consumers other than American workers.   

Meanwhile, the real pay of American workers continues to spiral downward until it will stabilize at the pay level of Asian workers, which is simultaneously spiraling upward.  This is not a pleasant prospect for neither the workers involved nor the entire American economy.  Without consumer spending, it cannot recover.

Chinese Workers

American Workers

The President proposed a “Jobs Act” some time ago, but Republican obstructionism is dedicated to denying him anything which will improve the economy, and thereby place the onus of its problems on him. 
The real solution is to give the President a stronger majority in the Senate in 2014 and a majority in the House!  Sadly, that probably will not happen, and in fact, a Republican resurgence in 2014 and a G.O.P. President in 2016 are distinct possibilities.

This will give the Republicans the opportunity to emasculate government further. One of their gurus has long suggested, in referring to government, that the best thing to do would be to “drown the beast.”  Many Republicans are no more than a gang of anarchists, masquerading as respectable Americans, with the ultimate agenda of taking away the government’s power to tax those with the greatest share of the nation’s wealth.  When some of them mumble about abolishing the IRS and instituting a “flat tax,” that is what they are planning to do. 
As for solutions to the economic problems, including job creation here, Republicans have none.  They are content to look for scandals and things to criticize.  The comfortable decade of G.O.P. Presidents running from Harding through Coolidge and Hoover brought the nation to the brink of disaster, and resulted in the New Deal of Franklin Delano Roosevelt, with its Keynesian dependence on government pump priming.  Could it be that we may have to go through that experience again?  It is not only Republicans who never learn.  It is the American people, who, ignorant of history, will be forced to relive it.  I hope that the reaction this time will be a peaceful one, as was the New Deal, and not something more violent.
Jack Lippman


World Wide Youth Unemployment

And jobs are not just a problem in the United States.  Bloomberg Business Week recently reported that as of March, 56% of Spaniards, 59% of Greeks and 38% if Italians and Portuguese between the ages of 16 and 24 were unemployed.  The German Finance Minister called this a “catastrophe” for the European Union.
These young people aren’t going to be quietly sent off to war to get them out of the job market, and keeping them in school indefinitely, as the United States seems to try to do, is not a solution either. They can’t get on a boat or plane and emigrate to another part of the world in any great numbers either.  Sooner or later, these unemployed, idle young people will respond to someone who offers them a way to a brighter future.  Fascism and communism have played this role in the past, as have other totalitarian systems.

Historically, war, famine and disease have played roles in solving these problems.   We have to come up with something better.  In previous blogs, I have suggested mandatory early retirement and shortened work weeks as possible solutions, coupled with increased government benefits.  Can you come up with a better idea?  

Early Retirement on the Beach

Korean Update

The latest headlines indicate that the North and South Koreans, after a few months of North Korean bellicosity, are talking again about reopening the Kaesong Industrial Complex, where South Korean manufacturers, headed by Hyundai which manages the place, utilize dirt-cheap North Korean labor to aid in the manufacture of South Korean goods.  See my earlier postings on this topic.  I anticipate Kaesong will be back in business, once again undercutting Chinese labor costs, within a few months. 

Sid's Corner


Her name is Gloria
Comes from Barbados
Dark skinned, thin, and very petite

Bright and articulate
Exuding happiness and good cheer
Waits tables at a local delicatessen

So what?
Why write of her?
Who cares?

I should, you should
She’s a selfless giver
A true human being, a mensch

As she waited on us
I learned her story from my friend
Mesmerized by her sheer joy of being

On Sunday, her day off
She prepares meals in her home in Broward
And brings them to a street corner near the library

Feeding close to one hundred homeless people
Lined up to receive her gifts of compassion
Financed by just her and auto-mechanic hubby

Her largesse extends beyond the food
Like buying a tent for a man living under a bridge
Using their personal, meager wages

Without judgments
Without conditions
Without strings

Sid Bolotin


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