Lagging Indicator Nation
Sorry, it's been a while since I last posted. Just got into one of those short funks where too many things were swirling around. Before we get to it, a couple quick plugs:
- Check out What's the Matter with Kansas?, the movie (http://whatsthematterwithkansas.com/). Based on the book by Thomas Frank, one of the great liberal writers working in America today, this a great documentary that follows the lives of some regular Kansans. There are both conservatives and liberals, and we see them navigate the various waters of the culture war. It's not a heavy-handed film either; it lets the people speak for themselves. Very poignant, endlessly interesting. Check it out, and check out Frank's books and his column in the Wall Street Journal (yah, that's right, the Wall Street Journal -- they gave a token column to a fiery liberal).
- Also check out the Peak Oil documentary, Blind Spot. While I didn't find this quite as good as other films on the same subject, like Crude Awakening or The End of Suburbia, it's still a solid entry in the Peak Oil genre, well worth getting and passing on to others.
- Pick up a copy of Thom Hartmann's new book, Threshold. Hartmann is a prolific liberal author, and has written on many subjects ranging from ecology to corporate governance to constitutional history. He is also the host of a very popular syndicated radio program. He is one of the leading liberal voices out there. Check out his website at www.thomhartmann.com.
We have already talked quite a bit about the collapse of the American Algorithm. Specifically, I've put forth the idea that the social form of One Person-One Job/One Family-One Dwelling has been on the brink of inoperability for the last few decades, especially as it relates to the environment, to the general economy, and to the individual psyche. Since the mid-70s, the highwater mark of equal distribution of wealth in America, a series of broad developments in technology, legal structure, and finance have put increasing pressure on the individual and the family as the basic cultural and economic units of our nation. We have essentially tried to prop up the old myths of the American Dream (full employment, hard work equals success, success equals lots of nice things, gumption equals security, etc.) through unsustainable consumption, financed by excessive debt and serial economic bubbles.
When the bottom finally dropped out of this mirage economy, when there was nowhere else to shovel all of the slight-of-hand derivatives and toxic bundles of hyper-debt, America was left as a hollowed-out husk of its former self.
So what we have right now is a "recovering" economy that has only a fraction of its former need for actual human labor. Basically, all of the superfluous value that was created and propped up by inflated assets and hallucinatory financial instruments has been burned off, leaving a leaner, meaner US economy. Unfortunately, much of that superfluous value made up the actual substance of many people's lives: their careers, their retirement funds, and their homeowner "equity." So while corporations and banks are able to "wind out" their bad debt and burn off their excessive input costs, thus turning around their balance sheets and their prospects for the future, actual human beings and actual families are left behind, shattered and hopeless.
This is logic of the "jobless recovery" in which we are now mired. Our pundits and pols tell us that we are "back from the brink." We have avoided outright depression, thanks to the brave actions of the Obama administration and (to give him his due, in standard interpretations) the earlier bailouts of Dubya. We are told that employment is a "lagging indicator" anyway, so we shouldn't be alarmed if jobs continue to hemorrhage for a while. First, the balance sheets of banks and corporations must get some traction, then the credit markets will start flowing again, then borrowing and investment will pick up. After all that, firms will start hiring again, and the whole American project will be back on track, hopefully with hybrids replacing SUVs and wind turbines replacing coal plants. But once the system gets humming again, full employment and family-centered living and consumption patterns will be restored, albeit in a greener format.
Now, some prominent liberals, especially Paul Krugman and Robert Reich, are warning that this cycle is definitely not automatic, or even probable. They are advocating a much larger round of government spending, a huge new swath of stimulus to inject energy into the system. By their reasoning, too much demand has been destroyed in the current recession for private companies to really go out on a limb with new investment and hiring. Corporations and banks are going to remain rightfully cautious in the current economic climate, running stripped-down operations to ensure reliable, if smaller, returns. So the government must step in again with massive spending, a la the New Deal, to push overall activity up to pre-recession levels. The government must put people to work, even if it means running much larger deficits in the short term.
Infrastructure spending is especially important in the Krugman-Reich model, as it has excellent multiplier effects, rippling dollars through many industries. It would also set the stage for a general re-invigoration of actual physical sectors of employment for the future, a genre of skilled labor that has been neglected for a long time. We have let our physical systems crumble around us in our rush to turn everyone into an analyst, programmer, consultant or realtor. One major cultural side-effect of our speculative bubbles is that entire generations of young adults have grown up thinking that we can all be symbolic manipulators sitting at computers all day, while the physical infrastructure in which we live takes care of itself somehow.
Of course, the basic assumption behind both of these approaches (the self-correcting, laissez-faire recovery and the Krugman-style plea for massive government stimulus) is that the current recession is an aberration; a large one, to be sure, but nonetheless an anomaly. Once we overcome the present dead patch, and once we put the proper controls in place (i.e., financial regulation, appropriate tax policies, predatory lending protections, mortgage reforms), we can again recreate the glory days of the One Person-One Job/One Family-One Dwelling social form. Sure, we'll have greener jobs and greener products, and a stronger regulatory framework for finance and business. But the underlying living pattern will be the same, and no major cultural adjustments will be necessary.
Well, as you might have guessed, I think that this is not a tenable view of the future.
First, let's look at the most recent, gruesome employment numbers, the actual contours of this important "lagging indicator." In September 2009, we lost 263,000 more jobs, a larger number than analysts expected. That makes 21 straight months of job decline, the longest stretch since the 1930s. The official national unemployment rate is now 9.8%. Taking into consideration population growth, we would thus need to add 573,000 jobs per month for two years, just to return to pre-recession levels. When we add in people who have stopped looking for work, as well as those people who work only part-time but want full-time, we're looking at 26.6 million Americans who are unemployed or underemployed. This is 17%, or 1-in-6 of the working-age population. And there are no encouraging signs for the near future. Of the 15.1 million officially unemployed, 5.4 million have been out of work for more than six months. In two areas that usually signal turnaround in hiring practices, the outlook is not good: firms are not increasing the hiring of temporary workers, and they are not restoring the hours of existing employees that had them cut. (All figures taken from the excellent website of the Economic Policy Institute)
Obviously, without the recent stimulus spending, these numbers would be much worse (the EPI estimates that the September job losses would be doubled without the government stimulus). I think that these figures represent not an anomaly, but are actually a precursor of the permanent economic arrangements of the future. We're looking at a fundamental realignment of just how much labor is required to keep American consumer capitalism alive. Keep in mind that the US prison population is more than 2.3 million. So between the incarcerated, the unemployed, and the underemployed, we're looking at almost 29 million people who are essentially economically superfluous, about 10% of the entire US population. Ten percent -- and not just of the working-age population; we're talking 1-in-10 of the entire country is not needed to keep current arrangements afloat. And I would bet that this will get much worse as things continue to unravel.
It just doesn't take as much labor input to create a full array of economic products. And while there is certainly a lot of injustice in these numbers, much of the problem is technological and physical. The actual work done through the concentrated power of fossil fuels, the vicious logic of global trade (which itself rests on cheap oil), and the relentless de-skilling of computer technology simply render many older swaths of labor obsolete. In our serial economic bubbles, we were able to shove a lot of this obsolescence into the arenas of inflated assets, which papered over just how much of the labor force was unneeded. But now that the bubbles have burst, the naked truth of the new labor ratios is coming out.
So we're really at a crossroads. We can do everything possible to preserve the illusion that full employment is still our desired baseline, pumping all of our money into restoring old patterns of living and working and consuming (which themselves have devastating effects on the environment and the individual pysche). Or we can recognize that the old social form is gone, and the arrangements of the future will require a different fundamental home base, a collective one where more work and services are done internally, completely outside the money economy. This is, more than anything, a cultural shift, requiring a compete rethinking of what we mean by individual success, as well as what level of community is most "natural."
Posted by Jeremy Raymondjack at 9/30/2009 10:33 AM 
Categories: Politics and Economics, Culture and Society
Tags: jobless recovery unemployment economic recession long-term unemployment
Categories: Politics and Economics, Culture and Society
Tags: jobless recovery unemployment economic recession long-term unemployment
Well put JR. I agree with your sentiments - yet I also believe that America, in some respects has forgotten that we used to actually "make stuff." Now it's "Made in China or insert 3rd world country here." Americans have progressed to the point that factory work is beneath most, and therefore, has gone elsewhere, cheaper, so we can buy it at a lower cost. Often, better quality - look what is driving on America's roads today - Toyota, Honda, Subaru. America has outsourced itself to the point that has got us in this mess today. You cannot help the software engineer whose basic industry is now in India, and probably won't come back. Companies, enslaved to stock prices and shareholder value have sold out (Hyatt hotels). America no longer values itself or workmanship, rather, the greed factor has skewed everything. It's about profits, not life. Corporate America gave the jobs away.
Until there is a major shift in what American capitalists value, there will be no change. Those who have sold off America are hopefully looking at their unemployed children or grandchildren.
One possible idea is to remain competitive, build things here to sell elsewhere, at a profit, not the other way around. In other words, employ Americans again.
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