Monopoly Endgame and Middle-Class Decline

Yesterday the NYT ran a very good piece on the rise in the long-term unemployed. One of the featured people is Jean Eisen, out of work for two years. A former comic, she's turned to Christianity because prary offers the kind of health insurance she can afford.

Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.

“We’re looking at the very real possibility of being homeless,” she said.

The piece states the clear implication:

Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

And also offers a more candid-than-usual explanation of why:

Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

Jobs used to grow at a 3.5% rate each year. After 1980, they grew during expansions at under 1% a year.  To make the point as directly as possible, U.S. economic leaders shifted the conditions of revenue growth so that they depended on the reduction of employment growth.  In other words, U.S. expansions become almost-jobless recoveries by design.   The actually jobless recovery after 2003 under George W. Bush was the holy grail of this economic policy.

The Obama Administration is doing what it can to draw a somewhat bent line from Bush to Hooverization.   Its money goes to big banks not small ones, who are not lending to the small businesses that produce the vast majority of new jobs in any recovery.  (See my Capitalist Pal on this crowding out.)  Small business is not recovering, and employment will recover that much more slowly.  Strategic sectors like green energy are on the ropes.  The federal stimulus will not rebuild enough of the crumbling country by in the process hire the hundred thousand a month required just to keep unemployment in place.   Instead, its unemployment bill will mushroom, as people are paid not to work on public projects but because they can't find work. Cash-starved governments will try to contain the mushrooming bill by throwing people off of "safety-net" programs that include welfare: "as of 2006, 44 states cut off anyone with a household income totaling 75 percent of the poverty level — then limited to $1,383 a month for a family of three."  The effect here obviously is to insure that welfare leads to paralyzing, unhealthy poverty.

It's all getting to be too much even for some of the Summers-Rubin Lexus worshipping fans of unhinged business.  Tom Friedman's column is titled "The Fat Lady Has Sung," and has the quip that sums up pretty much everything.

But now it feels as if we are entering a new era, "where the great task of government and of leadership is going to be about taking things away from people," said the Johns Hopkins University foreign policy expert Michael Mandelbaum. 

Ms. Eisen's life story is a history of So. Cal deindustrialization, as she energetically jumps from one industry to the next with a cheery entrepreneurial spirit, only to see that entire industry die or get sent abroad (aerospace, a travel agency, then beauty product sales . . .)

The worst comes nearly last.  Another successfully member of the middle class who hasn't been able to find a job in two years remarks, "“What is going to happen? . . .I worry about my kids. I just don’t want them to think I’m a failure.”  The worst is that many of those on the front lines of middle-class decline don't see the structural problems.  It's hard to imagine, given the incredibly low mental level of most US media, that they ever will.  But without a reason or a will to revolt against this dead-end system, all they can do is spiral wagewise to the bottom.

There's a direct connection between the U.S.'s monopoly-prone economy and wage / employment decline.  It won't change unless members of the ex-middle class start to realize the removing jobs has for thirty years been the U.S. economy's dominant recipie for revenue success.

Dismal Dems

Driving the point home about the failing Democrats, John Nichols blogs in the Nation that Obama and the Congressional Dims "continue to make the mistake of treating unemployment as an afterthought rather than the most serious issue facing the nation."  Writing about last week's Republican victories, he points out that " in New Jersey and especially in Virginia, where Republican candidates in high-profile races focused tightly on economic issues and job creation, they won." And Fr. Frank's Sunday sermon notes,

The system is going back to the way it was with a vengeance, against a backdrop of despair. As the unemployment rate crossed the 10 percent threshold at week’s end, we learned that bankers were helping themselves not just to bonuses as large as those at the bubble’s peak but to early allotments of H1N1 vaccine.  . . . both parties have their own delusions, not the least of which is the Republicans’ conviction that Tuesday was a referendum on what Obama has done so far. If anything, it was a judgment on just how much he has not.

England, Take a Permanent Vacation

Vacation was so great - same place as last year, and the year before - the Shire, version française, meaning the Morvan, and our friends Susan and Claude's old house in the village of Montarin. More of that later. I have to catch up with hundreds of emails on the university blog, but had to link to this story about the British Council replacing workers with Indian subsitutes that first follow the workers that they are going to replace around on the job.

As I said two years ago in the link above, France has it's problems - like its stupid banking laws that the big bonus-getters haven't fixed enough so that I can draw a check in one branch of HSBC-France from an account I opened in another branch. But France will not be voluntarily ripping up and destroying itself like those wankers to the north.

Think about it. Britain has a government council to promote its culture abroad decides to use that council to showcase the practice of outsourcing the jobs that promote that culture, and does this by creating international ties between the workers it fires and the workers who are replacing them. It gives me a real bad feeling: This country doesn't have any REAL self-respect, and it doesn't have a future. Unlike the Morvan!

Statehouse Clown Show

I've been avoiding comment on the California budget situation, which has gone from bad to ridiculous. But my native state is an object lesson in our topic of the last few days - well of this whole blog, really: replace social with market economics, watch everything fall apart. It's an object lesson in this blog's other topic: the failure of the political class worldwide.

The LA Times story today is "Legislature adjourns with no budget; governor prepares to lay off 10,000." The large Dim majority needs more or less one Republican to vote with them to beat the 2/3 limit for tax increases. The Republicans, unable to face the reality that on economics they are ALWAYS WRONG, have taken a no-tax pledge. The result will be the shutdown of every single public project in the state, and mass layoffs to add to the furlong.

Schwarzenegger now gets to star as Herbert Hoover in his own movie called "I, Arnold - Depression Governor." He was cast in the role by his own party, whose rank-and-file is also ignoring their own party leadership.

Here's the circle of geniuses that are holding 40 million people hostage with their ideological narcissism and general lack of a grip on reality.

That's GOP Sens. George Runner, Sam Aanestad, John Benoit and Bob Dutton, from left, and Dave Cox, seated.

Genius, you ask. Is my sarcasm a little harsh? Well here's swing vote holdout Abel Maldonado (R-Central Coast) in his own genius words:

Last week, I sent a letter to the Big 5 demanding that the funding be removed from the budget and allocated to other programs. But instead, the Big 5 ignored my request. If they were truly making a good-faith effort to show the people of California that they were serious about fixing this budget problem, the million dollars would have been re-appropriated to a vital program.

Etc. Seems that Genius Maldonado, self-described son of farmworkers, ran for the Republican nomination for Controller, was shut out by his own party for voting for a budget compromise in 2006, and is mad that the current Controller has $1 million for "office furniture," or whatever. Ergo, no state budget. Ergo, tens of thousands are out of work.

Maldonado to current farm workers (and every other kind): let them eat office furniture! Pure genius!