US Economy: The Glass is Only Half-Poisoned

Spengler ^ | August 22, 2011 | David P. Goldman

[decimon]

In fact, the glass is half full: the non-bubble parts of the US economy are functioning reasonably well. That suggests that the whole economy could function well, if the glass were not half-poisoned (if oppressive taxes and regulation did not hobble the great American startup machine).

I contrast America’s two economies in piece this morning at Asia Times Online:

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Item: Americans with no college-level education have an unemployment rate of 9.9% and (which is much more revealing) a labor-force participation rate of just 61%. Americans with some college education have an unemployment rate of 8.6% and a participation rate of 70%. And Americans with a bachelor’s degree or more have an unemployment rate of 5%, but a participation rate of 76%. Huge numbers of less-educated Americans, that is, don’t ”participate” in the labor force because there is nothing for them to do. But Americans with a college degree (as devalued as those degrees are) have little unemployment and a very high rate of ”participation.”

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[decimon]

Succinct article and I like that. Cherrypicked for reason of required excerpting.

[petercooper]

bttt

[Pessimist]

The author shouldn’t confuse correlation with causation.

Adjust for racial and pre-existing economic class differences, and I doubt that education plays that much of a part in the unemployment numbers.

In wages? Sure.

[CowboyJay]

The glass is only half poisoned because the largest firms have gamed the system to be so. A good deal of that economic red tape was lobbied for by them and they either benefit directly through regulatory capture, or indirectly by the barriers to entry compliance represents to potential new competitors.

There is a shrinking job pool for MOST of the workforce, because these companies decided they’d rather take advantage of cheaper labor and more lenient taxation regimes overseas, and gamed the system so that they’d be able to do that and sell back into the domestic market without having to pay into the infrastructure they use to sell into it.

[ngat]

Exactly. And the so-called free trade agreements are part of the system that they game.

[PGR88]

I doubt that education plays that much of a part in the unemployment numbers.

I feel you are incorrect on this. Wage levels and not-participating in the labor force likely have a very strong correlation.

Some Americans don't participate in the labor force because they can't find jobs, or, as I see, they are paid NOT to participate. Unemployment, Welfare, Soc. Sec, title 8, etc... - the value of these probably approach or surpass the earnings of a low-wage job. So why work? This definitely is the less-educated segment of the population.

[CowboyJay]

Heartily disagree. Education, or lack of it, absolutely has that big an impact on unemployment - even (or especially) for non-minorities.

Post-industrial USA has a huge glut of unskilled labor. We have the equivalent of the combined populations of NYC and LA actively looking for work, and NO JOBS FOR THEM. Unfortunately, we also have some of the highest costs-of-living factoring-in things like rents and healthcare, so our labor rates aren’t internationally competitive - and they won’t ever be.

We’d have to drop both our per-capita nominal gov’t spending and wages both near or below Chinese levels to underbid them for industrial and manufacturing contracts. Neither of those things are really desirable from a societal standpoint, so what to do?

[Pessimist]

I understand your thinking, but consider it from another angle for a second.

If lack of education causes unemployment, then:

A) If we educated all the unemployed, they would disapear?

B) There is no such thing as a job that does not require a college education? If not, what are all those illegals doing here?

[Pessimist]

Ooops! I meant to add this to my previous reply:

Isn’t it likely that those who - for whatever reason - have no intention of working would also not bother to get an education?

Hence would they not therefore be over represented in the unemployment figures?

[PGR88]

I think we agree. Those who don’t want to work are those who likely also were never motivated to get an education.

Moreover, the Gov’t now supports them in their indolence. Therefore, the US now has an uneducated and unproductive underclass that will forever be on the dole.

[Spengler]

The permanent oversupply of unskilled labor bothers me, especially after the British riots. The proliferation of “flash mobs” in the US is frightening.
Now, I hate government spending as much as the next hard-core conservative, but...suppose we set up a National Infrastructure Corps and hired people for $15 an hour to do jobs that government unions are doing for $40 an hour?

[bvw]

permanent oversupply of unskilled labor

That's FOUR major falsehoods all run together! Wholly socialist-Marxist economic-speak.

(1) Permanent     Nothing is permanent. These are temporary conditions due to regulatory and legal constraints on human FREEDOM. Release those constraints and within MONTHS the situation will rectify.

(2) Oversupply     That's a very inhumane way of speaking. Oversupply of what? "Unskilled labor", is that what you say? OF COURSE NOT. Every ONE of those FELLOW HUMANS can readily learn the skills needed in 90%+ of jobs circa 2011 GC (Gregorian Calender). When I say readily here I mean: in days. DAYS!

What holds them back? Fear and de-motivation. BOTH THOSE NEGATIVE EMOTIONAL FORCES are the coin and currency of Marxism and socialist policy.

(3) Unskilled     They are not unskilled, no human is unskilled. They are LABELED unskilled. Marxists love such labels. See (2).

(4) lABOR     That term is a pure Marxist invention. It is utterly dehumanizing.

THROW OFF THE CHAINS THAT BIND YOUR THINKING!

Start thinking of fellow humans as fellow humans. Refuse to use the terminology of Marxism and socialism. Talk FREEDOM AND LIBERTY. Talk true brotherhood. Never LABEL fellow humans.

[PGR88]

Now, I hate government spending as much as the next hard-core conservative, but...suppose we set up a National Infrastructure Corps and hired people for $15 an hour to do jobs that government unions are doing for $40 an hour?

Hard-core conservative? My spidey-sense is tingling.

Shall we also call it ACORN, appoint a White House Czar to oversee it all, and make all the NIC'ers are registered to vote properly?

OK, hang on a minute...