Profits Are Booming. Why Aren’t Jobs?

New York Times ^ | January 8, 2011 | Michael Powell

[khnyny]

To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.

Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.

And therein lies the enduring mystery of this Great Recession and Not So Great Recovery: Why have corporate profits (and that market thermometer, the Dow) spiked even as 15 million Americans remain mired in unemployment, a number without precedent since the Great Depression? Employment tends to lag a touch behind profit growth, but history offers few parallels to what is happening today.

“Usually the business cycle is a rising-and-falling, all-boats-together phenomenon,” noted J. Bradford DeLong, an economics professor at the University of California, Berkeley, and a deputy assistant secretary for economic policy in the Clinton Treasury Department. “It’s quite a puzzle when you have this disjunction between profits on the one hand and unemployment.”

A search for answers leads in several directions. The bulls’ explanation, heard with more frequency these days, has the virtue of being straightforward: corporate profits are the economy’s pressure cooker, building and building toward an explosive burst that will lead to much hiring next year.

The December jobs numbers suggest that that moment has yet to arrive, as the nation added just 103,000 jobs, or less than the number needed to keep pace with population growth. The leisure industry and hospitals accounted for 83,000 jobs; large corporations added a tiny fraction.

[hedgetrimmer]

Banks, of course, have little to do with free trade

An idiotic statement. Who steals the money from taxpayers to fund global development, so India can have electricity for their call centers, for example?

[arrogantsob]

Free trade steals from no one. It creates wealth not take it.

[hedgetrimmer]

Free trade steals from no one. It creates wealth not take it.

'free trade' has redistributed the wealth(communism) of the United States to China and other third world slave running dictatorships.

The evidence is overwhelming.

[algernonpj]

... Free trade is clearly not the issue, a Marxist president is. ...

So are you saying 1. we currently have free trade and 2. our current trade policies have nothing to do with our current economic disaster?

[algernonpj]

... Free trade is clearly not the issue, a Marxist president is. ...

So are you saying 1. we currently have free trade and/or 2. our current trade policies have nothing to do with our current economic disaster and/or 3. free trade as described by smith and ricardo is the way to go?

[expat_panama]

Because Smith did not exclude foreign trade, does not indicate that Smith favored wide open borders and 'free trade' as it exists today. Smith favored 'domestic industry and preferring the support of domestic to that of foreign industry...

lol  --Al, there're places where Smith's flat out pro-tariff for heaven sake, I've been waiting for you to post those ones! 

Seriously, Smith had to be balanced because he was a 'real-life' person and not a political hack.  He understood just like we do that sometimes tariffs are needed and sometimes they aren't.  We also both know only a complete moron would think that there really are wide-open-border-traitors around on these threads.

[arrogantsob]

I have said repeatedly that government negotiated trade is NOT and NEVER has been “free trade”.

Our current trade policies are far less important in producing this depression than the policies of the Democrats and Urkel. International trade is a small portion of our total economy and has NOTHING to do with the collapse of the housing market which is at the heart of the overall economic collapse.

[arrogantsob]

Utter BS. Where has there been anyone forcing you to buy Chinese made goods?

The “evidence” only exists in your fevered imagination.

[hedgetrimmer]

Another globalist playbook canned remark.

[algernonpj]

""Because Smith did not exclude foreign trade, does not indicate that Smith favored wide open borders and 'free trade' as it exists today. Smith favored 'domestic industry and preferring the support of domestic to that of foreign industry..""

lol --Al, there're places where Smith's flat out pro-tariff for heaven sake, I've been waiting for you to post those ones!
Seriously, Smith had to be balanced because he was a 'real-life' person and not a political hack. He understood just like we do that sometimes tariffs are needed and sometimes they aren't. We also both know only a complete moron would think that there really are wide-open-border-traitors around on these threads.

LOL ... So as not to disappoint, here it goes about Smith and tariffs. Part 1 of 2 about The Never Ending Story. I have tried to cc those who might be interested in portions of this or the next post.

Adam Smith in the Wealth of Nations was for tariffs in the following situations:

1. When a nation to whom one exports, imposes a tariff on one’s exports. "The case in which it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods, is when some foreign nation restrains, by high duties or prohibitions, the importation of some of our manufactures into their country. Revenge, in this case, naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours. Nations, accordingly, seldom fail to retaliate in this manner ... The recovery of a great foreign market will generally more than compensate the transitory inconveniency of paying dearer during a short time for some sorts of goods." [Book IV Chapter II]

2. When the industry is necessary for national defense. Smith uses the example of shipping.
"There seem, however, to be two cases, in which it will generally be advantageous to lay some burden upon foreign, for the encouragement of domestic industry.
The first is, when some particular sort of industry is necessary for the defence of the country. The defence of Great Britain, for example, depends very much upon the number of its sailors and shipping."[Chapter IV Book 2]

3. When domestic production is subject to an internal tax which makes it more difficult to sell domestic products compared to foreign products.
"The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, is when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former" [Chapter IV Book 2]

Smith also argued that when tariffs are repealed, it should be done slowly.
"Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market, as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very considerable."[Book IV Chapter II]

[central_va]

Once unions are gone something will have to be done about the excessive regulation of business.

I know you don't speak for all free traitors but would you mind posting the list of things that would have to happen before we could have a sane trade policy that included tariffs? So after unions are gone and the restrictive govt. regulations are gone what's next?

I mean it you free traitors are UFB dangerous.

[central_va]

A free economy is the best protection for our industry.

LOL, So how is it that steel and aluminum industries are thriving BECAUSE of free trade?

"we had to kill the domestic industry with free trade in order to save it"

                   --arrogantsob

[anglian]

The Steel “Crisis”
and the Costs of Protectionism April 16, 1999 The 8 million
employees in steelusing
industries
dwarf the fewer
than 200,000
steelworkers by a
ratio of more than
40 to 1. Worldwide economic developments have
combined to produce conditions that unfavorable for U.S. steel producers and favorable for American steel users. In this situation it is not the business of the U.S. government
to intervene in the marketplace and favor
one U.S. industry at the expense of other U.S.
industries. http://www.cato.org/pubs/tbp/tbp-004.pdf

[central_va]

Yeah who needs steel production anyway It is only a key ingredient in almost everything the Army and Navy needs in a full blown war. WHo needs tanks and airplanes. Everyone knows MAJOR wars are obsolete and can never happen - again. If China starts something and starts a major war we’ll just have to nuke them since we cannot keep up production like they can.. Great.

[algernonpj]

Yeah who needs steel production anyway It is only a key ingredient in almost everything the Army and Navy needs in a full blown war. ...

ROFL.

[algernonpj]

"we had to kill the domestic industry with free trade in order to save it"
--arrogantsob

another ROFL

[arrogantsob]

Wow, my expectation of a great REVELATION and this is the best you can do?

1 While the typical expectation to impose a counter tariff appears to satisfy the goal of revenge, it has been shown that this actually costs the revenging nation more than just carrying on absorbing the other nation’s tariff. However, the economic response will be swamped by the political demand for retaliation.

2 I have mentioned the exception for national defense industries. This, however, is an overriding political response.

3 If there is an unjust or unnecessary domestic tax or regulation then free trade can be adjusted if the domestic interference cannot be removed.

4 Repealing tariffs over time appeals to my sense of justice and would be appropriate.

[arrogantsob]

Where do you buy that “globalist playbook” The Nutcases of the World Unite Bookstore?

[arrogantsob]

The only one who has spoken in favor of traitors in this thread is you. The Traitors who brought on the RAT Rebellion of 1861 are close to your heart. The word “treason” should burn your mouth.

Your belief a “sane” trade policy will include tariffs shows you have no understanding of sanity OR treason.

I am very dangerous - to stupidity.

[dalereed]

Profit and jobs have no relation to each other!

If you can automate a process and improve profit by firing someone you do it!!

No one hires anyone to give them a job except government!