No, its far worse than that. And frankly you can't give W a pass if he won't veto anything.
You're failing to see the forest for the trees in your little patch of the woods.
THIS is the forest:
Posted on 01/02/2006 4:19:44 AM PST by ventana
AP Middle-Class Job Losses Batter Workforce Sunday January 1, 8:53 pm ET By Kathy Barks Hoffman, Associated Press Writer Middle-Class Job Losses Batter Workforce As Companies Slash Payrolls, Send Jobs Overseas
LANSING, Mich. (AP) -- Thirty years ago, Dan Fairbanks looked at the jobs he could get with his college degree and what he could make working the line at General Motors Corp., and decided the GM job looked better.
He still thinks he made the right choice. But with GM planning to end production of the Chevrolet SSR and shut down the Lansing Craft Centre where he works sometime in mid-2006, Fairbanks faces an uncertain future.
"Back when I hired in at General Motors 30 years ago, it seemed like a good, secure job," said Fairbanks, president since June of UAW Local 1618. Since then, "I've seen good times and I've seen bad times. This qualifies as a bad time, in more ways than one."
Many of the country's manufacturing workers are caught in a worldwide economic shift that is forcing companies to slash payrolls or send jobs elsewhere, leaving workers to wonder if their way of life is disappearing.
The trend in the manufacturing sector toward lower pay, fewer benefits and fewer jobs is alarming many of them.
"They end up paying more of their health care and they end up with lousier pensions -- if they keep one at all," says Michigan AFL-CIO President Mark Gaffney. As wages and benefits drop, "it's the working class that's paying the price."
West Virginia steelworkers are all too familiar with the problem. The former Weirton Steel Corp., which 20 years ago had some 13,000 employees, today has just 1,300 union workers left on the job.
The steel mill has changed hands twice in two years, and just last month, Mittal Steel Co. told the Independent Steelworkers Union it would permanently cut the jobs of 800 people who'd been laid off since summer.
Larry Keister, 50, of Weirton, W.Va., has 31 years in the mill that his father and brothers all joined. His son tried, but got laid off quickly.
"I'm too old to go back to school. I've worked there all my life," says Keister, who drives a buggy in the tin mill. "I went there straight out of high school. It's all I know."
Though Keister is safe for now from layoffs, he wonders what will happen to the hundreds of friends and co-workers who will be jobless by the end of January.M
Gary Colflesh, 56, of Bloomingdale, Ohio, said there are few jobs in nearby Ohio or Pennsylvania for workers to move to.
"They're destroying the working class. Why can't people see this?" asked the 38-year veteran. "Anybody who works in manufacturing has no future in this country, unless you want to work for wages they get in China."
Abby Abdo, 52, of Weirton, said workers once believed that if they accepted pay cuts and shunned strikes, they would keep their jobs. Not anymore.
"Once they get what they want, they kick us to the curb," he said. "There's no guarantee anymore. No pensions. No health care. No job security. We have none of those things anymore."
Fairbanks of the Lansing GM plant said the changes are going to force a lot of people to retrench to deal with the new economic reality. For some, it will make it harder to send their children to college or be able to retire when they want. For others, it will mean giving up some of the trappings a comfortable income can bring.
"You're going to see lake property, you're going to see boats, you're going to see motorcycles hit the market," he said. "People get rid of the toys."
Economists agree the outlook is changing for workers who moved from high school to good-paying factory jobs two and three decades ago, or for those seeking that lifestyle now.
"It was possible for people with a high school education to get a job that paid $75,000 to $100,000 and six weeks of paid vacation. Those jobs are disappearing," says Patrick Anderson of Anderson Economic Group in East Lansing, Mich. "The ... low-skill, upper-middle-class way of life is in danger."
General Motors Corp. has announced that it plans to cut 30,000 hourly jobs by 2008. Ford Motor Co. is scheduled to announce plant closings and layoffs in January that could affect at least 15,000 workers in the United States and Mexico, analysts say, and is cutting thousands from its white-collar work force.
GM and Ford have won concessions from the United Auto Workers that will require active and retired workers to pick up more of their health care costs, and DaimlerChrysler AG is seeking similar concessions.
Thomas Klier, senior economist with the Federal Reserve Bank of Chicago, says the transition for manufacturers toward leaner, lower-cost operations has been going on for some time. But the bankruptcy of the nation's largest auto supplier, Delphi Corp., pushed the issue into the headlines.
Its 34,000 hourly U.S. workers could see their pay cut from $27 an hour to less than half of that, although the company is still trying to work out a compromise unions will support. Workers also could have to pay health care deductibles for the first time and lose their dental and vision care coverage.
Delphi worker Michael Balls of Saginaw, Mich., hears the argument that U.S. companies' costs are too high to compete with plants that pay workers less overseas, but he doesn't buy it.
"I think if Delphi wins, they lose," he says. "If I'm making $9 an hour, I'm not making enough to buy vehicles."
Unfortunately for workers like Balls, the old rules no longer apply in the new global economy, says John Austin, a senior fellow with the Washington-based Brookings Institute.
"We're in a different ball game now," Austin says. "We're going to be shedding a lot of the low-education manufacturing jobs."
Some of those workers are likely to try to move into the growing service sector, Austin says. But he says the transition can be tough, even if the jobs pay as well as the ones they had -- and many don't.
"Pointing out a medical technician job is available if they go back and get a certificate doesn't solve the issue today for those 45-year-olds who are losing their jobs at Delphi," he said.
Dick Posthumus, a partner in an office furniture system manufacturing company in Grand Rapids, Mich., says that "basic, unskilled manufacturing is going to be done in China, India, places like that because we are in a global world, and there's nothing anyone can do about that."
His company, Compatico Inc., buys much of its basic parts from South Korea, Taiwan, Canada and China, where Posthumus has toured plants he says rival modern manufacturing plants in the U.S. But the company still saves its sophisticated parts-making and assembly for its Michigan plant.
"The manufacturing of tomorrow is going to look somewhat different from the manufacturing of yesterday," Posthumus says. "It doesn't mean that we no longer manufacture ... (But) it's going to be a painful adjustment."
Associated Press Writer Vicki Smith in Morgantown, W.Va., contributed to this story.
They do suck, and I have no doubt they will move the business or let the contract go when it comes time to re-sign. As for whether it will come back to the US or not, I'd imagine that will be a matter of what happens in the near future.
As for whether I think the Company offshored to tick me off..
Are you kidding. They offshored for a number of reasons, none of which had to do with my personal feelings. On the other hand, EDS knew they'd screwed the pooch when they started reading about themselves associated with "The new slavery", and the like after they announced they were offshoring us. They knew it was wrong to begin with. Their morals came into play when they had to answer for what they'd done. And at least some of the people involved had consciences.. enough to verbalize a regret for not having let the contract go altogether instead of selling out their fellow countrymen in wartime.. They read that too, btw. Ross Perot did leave some ethics with the people he led at EDS. That's more than I can say for other companies. As soon as most get a corporate board and do away with the founders, they have an Ethics-ectomy and forget what treason is for the sake of shortsightedness and profit.
The one thing one can count on from an unethical person is that they will indulge in their unethical behaviour in the dark, only, at the start; but, the longer they do it, the more bold they get until they're screwing their girlfriend in front of the parents and think their parents untoward for saying anything about it, much less that it's wrong. That very boldness undoes people pretty regularly. And it has swelled quickly amongst republican ranks since they took power. They don't have a spine till it comes to their agendas, then they don't much care what anyone thinks any more than Clinton did. Then again, there are a lot of decent Republicans in Congress and a couple of decent dems..
ok One since Zell left.. But one wonders where they've been while we're sold out for globalism.. They sure as hell ain't listening to their constituents.
Which unions? Those in manufacturing that have a 12.5% participation rate or the firemen, policemn, teachers, municipal and transportation workers whose participation is around 50%?
Gee, you learned how to count all the way to fortyleven in high school???
I'm IMPRESSED!!!
But unlike your stale commentary about buggywhips, the economic warfare being waged against our domestic manufacturing sector has nothing to do with technological obsolescence.
Wanna bet?
They don't call it the Rust Belt for nothing.
I think you are making the point that free markets have always committed "creative destruction". Whenever one industry is destroyed, a new industry is born. Sorry folks, but this has always happened (ask the buggy whip makers) and always will in a free market economy.
I agree that 9 bucks will just cover a cheap apartment and not a car payment but there are some regional factors behind that $9. Starting wages at the car parts plant here (NW VA) is $10 with only HS diploma required. The plant is ISO certified and very efficient.
Thirty years ago, I graduated college with a degree in accounting. We were in the midst of stagflation, energy crisis, surrender around the world, and things looked pretty bleak. People were so frustrated by soaring crime that the most popular movies were The French Connection, Dirty Harry, and Death Wish. I suppose the past looks good through rose colored glasses.
There is no time that I'd rather be living in than the present, except maybe for the future. Even the poor have food, shelter, cars, and cell phones.
No. That is a con job. At a higher rate or a lower rate I was more productive. Sorry. PPD is discussed as an attempt to take the focus off the fact that the labor rates are cheaper. By using ppd, your terminology paints the picture for the average person that productivity is actually higher when it is not. So, no, I'll correct you and state factually that the competition is less productive but Cheaper.
You are intentionally skewing the definition of dumping.
No, I'm intentionally drawing a comparison that many don't like being made. Dumping is dumping whether you do it with cost of materials or cost of labor. But, when it's cost of labor, the treason lobby thinks they can get a pass and sell it to America as the 'new nature of the global economy.' It doesn't pass the sniff test with anyone out there.
Look at China, where wages are rising incredibly fast. If wages stayed low, the workers would not be able to afford products
Who do you think you're kidding! Wages in China are set by the Government. The people get paid, not by business through competition, They get paid by the government. And competition isn't a motivating factor for a communist dictatorship that can pay it's citizens .37 an hour while taking in a dollar an hour on their behalf. I was born at night; but, not last night..
Frankly, the Clinton and Bush economies are all a house of cards, disguised by data manipulation and propped up by federal deficit spending through the roof and a fleecing of our tangible national assets through domestic inflation and private debt...that is right under your nose, but you...and the government...fail to admit.* [See below]
The more objective evidence of how the economy is sliding is the trade deficit and the Federal deficit.
The old argument collapses, that the 'stronger economy, in a recovery, will tend to be led by import growth.' But NOT for 14 years of uninterrupted and accelerating trade deficit it won't. Further evidence that this 'argument' by the apologists was wrong was that the trade deficit ACCELERATED going into the recession that GWB inherited in 2001...and the growth of the deficit retreated only this last year...when the economy did actually start generating some new domestic production. Thus, the argument was never based on real causality, but has been previously been just an unusual set of coincidences that has no greater likelihood of repetition than the reverse result. Nothing in the 'new economy' has repealed the fundamental economic basics of the multiplier effect, or the
We are witnessing the ultimate economic betrayal of our country by those who sit at the top of the food chain, and are insulated from the devastation they either merely permit, advocate for or profit by.
There are already measurable adverse 'distributional' effects from the scam being run:
* Government Economic Data Statistical Wizardry and Manipulation (some call it 'economics on steroids, with no economic equivalent of an Olympic drugs testing agency') The same is happening to the ways we measure performance of our economy, compared to the past and compared to other nations. Words like 'great productivity' or 'lowest inflation ever', low unemployment, etc., etc., which sound good to some people, are actually most misleading, compared to the past.
I have followed developments of major changes in recent years being made regarding how key indicators are measured and reported - - such as for GDP, national income, inflation, productivity, savings, and other important economic items. Criteria changes in the 1990s have been most dramatic, and the truth about the validity of those changes is now coming out. Basically, many of today's economic measurement items have no relation to the past. Such gives a false sense of economic matters appearing better off than they actually are, when compared to the past. This causes many to make wrong decisions regarding current economic trends - - potentially a very dangerous situation.
There are laws requiring financial accountability that Congress routinely ignores, such as the Chief Financial Officers Act and the Government Performance and Results Act. For the past five years, the General Accounting Office has been unable to issue an opinion on the government's consolidated financial statements because of certain material weaknesses in internal control and accounting and reporting issues. "These conditions prevented us from being able to provide the Congress and American citizens an opinion as to whether the consolidated financial statements are fairly stated in conformity with U.S. generally accepted accounting principles," the report stated.
"As members of Congress make political hay with corporate America's accounting scandals, their own financial mismanagement continues to dwarf those companies they excoriate. While securities regulation and criminal justice bring corporate culprits to justice (raising the question of whether more laws are really necessary), Congress violates its own management rules and standards on a daily basis. Congress annually passes supplemental spending bills to circumvent budget caps, calls them "emergency" spending bills and says the expenditures do not count against the budget totals for the year. Over the past five years, lawmakers have spent a total of $142 billion above the levels in the corresponding budgets. That's more than 12 times the misstated figures from Enron, Xerox, and WorldCom combined." (Scripps Howard News Service - July 2002).
Six (6) articles regarding economic statistical wizardry follow - - and then one about trust funds - -
Article #1 - Government Manipulates Economic Data for Political Reasons
The following is Gillespie Research's "A Primer on Government Economic Reports -- Things You've Probably Suspected But Perhaps Were Afraid to Ask!" by By Walter J. "John" Williams - Aug. 24, 2004 - http://www.gillespieresearch.com/cgi-bin/s/article/id=264 )
An excerpt--- "As former Labor Secretary Bob Reich explained in his memoirs, the Clinton administration had found in its public polling that if the government inflated economic reporting, enough people would believe it to swing a close election. Accordingly, whatever integrity had survived in the economic reporting system disappeared during the Clinton years. Unemployment was redefined to eliminate five million discouraged workers and to lower the unemployment rate; methodologies were changed to reduce poverty reporting, to reduce reported CPI inflation, to inflate reported GDP growth, among others. The current Bush administration has expanded upon the Clinton era initiatives, particularly in setting the stage for the adoption of a new and lower-inflation CPI and in further redefining the GDP and the concept of seasonal adjustment."
"If the GDP methodology of 1980 were applied to today's data, the 2004 second quarter's annualized inflation-adjusted GDP growth of 3.0% would be roughly three percent lower (effectively netting to zero percent or below). In like manner, current annual CPI inflation is understated by about 2.7% against the pre-Clinton CPI methodology (would be about 5.7%), and the unemployment rate is understated by about seven percent against its original design and what many people would consider to be actual unemployment (would be about 12.5%)."
- end of article from Gillespie Research
Article #2 - Wizardry and Manipulation
The following is a very well-written article called 'Financial Storms - Statistical Wizardry and Manipulation' from Financial Sense Online, at http://www.financialsense.com/series2/gathering.htm
NOTE - - although this article is based on GDP for the year 2000 it is still relevant today as the same manipulative reporting practices continue. Included in this article is a relevant insert for third quarter 2003, intended to show that the same games continue.
The economic miracle which Wall Street and Washington herald to investors around the globe is a by-product of statistical wizardry. It has do with the way government statisticians measure the new economy. The most important figure is GDP. This is the figure that has captured the imagination of investors and headlines around the globe. Economic growth rates over the last few years have been short of being miraculous. They have averaged above 4% for the last few years and above 5 and 8% during the last half of 1999. During this year they are running over 5% despite repeated interest rate increases by the Fed.
Gross Domestic Product
(Percentage Change in Real U.S. GDP)
Element #1 GDP Deflator Dynamics
This high level of economic growth is a product of unique statistical factors, which diverge from norms practiced by other nations. The first element is the GDP Deflator, which has been conveniently lower, adding to GDP growth. To get a true picture of economic growth, which is the sum of the nation's economic activities, it is necessary to back out the effects of inflation. By backing out the impact of inflation, you arrive at the true level of economic activity. The lower the deflator, the less that is subtracted from the actual economic numbers. The GDP deflator has been averaging in the low 2% range for much of this decade. As the table below indicates, everything from housing prices, food, utilities, medical costs, gasoline, and retail goods have been rising at much higher rates. By understating inflation, government statisticians have been overstating GDP growth.
Many have questioned our inflation rates and how they are measured. Recently, the Bureau of Labor Statistics has admitted that consumer inflation has been slightly higher than officially reported. The Bureau attributes the lower inflation numbers to a "calculating glitch" and will be revising the CPI upward. The revision could boost consumer inflation rates by as much as 0.3% for the past 12 months. (iii)
For the 12-month period ending last month, consumer prices rose 3.4%, while the core CPI, which excludes energy and food items, rose 2.5%. Because of these lower reported inflation rates, the government has benefited by paying lower cost-of-living adjustments on social security and government pensions. Our government has also been the beneficiary of lower interest costs, especially on it's inflation-adjusted bonds known as TIPS. The soon to be announced higher inflation news is unlikely to be welcomed by the Fed or the financial markets. Higher inflation will mean higher interest rates and trouble for the stock market.
Element #2 Hypothetical Hocus-Pocus
The next GDP manipulation takes place through a measure called the Hedonic Price Index. This is a statistical maneuver employed by government statisticians to measure computer output and investment. It is meant to capture the increase of computer power in terms of speed and memory. The government takes the actual increase in spending on computer investment and applies a statistical wand which changes the actual number into a higher number reflecting the hypothetical benefits of soaring computer power.
Like corporations, which keep two sets of books, one for financial reporting and another set of books for taxes, the government also keeps two different sets of books. One set is the actual dollars spent on the output of goods and services and the other set is called chained dollars, which is derived after various statistical manipulations have been applied to the actual numbers. As this table shows, actual computer spending in actual dollars went from $86.3 billion during the fourth quarter of 1998 to $114.2 billion in the second quarter of this year. This represented an increase of $28 billion in actual dollars being spent during the last six quarters. (iv)
Investment in Computers & Peripheral Equipment
(Billions of Dollars)
1998 1999 2000
4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr Actual Dollars 86.3 88.1 92.8 97.6 98.9 104.3 114.2 Chained Dollars 171.3 186.1 208.5 230.9 243.9 264.1 298.5 Source: Department of Commerce: Survey of Current Business
However, after applying the hedonic deflator, that actual number is changed into $127 billion in chained dollars for the same six quarters. This technique magnifies the actual contribution of computer investment to GDP growth. This manipulated rise in GDP growth doesn't reflect actual increases to GDP growth. Instead, it reflects the increase in computer power that businesses are getting for their money. As the power of computers increases, so does the impact of the hedonic deflator. Effectually, this creates a statistical mirage, which magnifies modest sums of money spent in actual dollars into giant sums in chain-weighted dollars.
(2004 NOTE - - an early 2004 insert, showing the above example continues in late 2003. Official “annualized” GDP growth was claimed to be 8.2% for Q3 of 2003. A closer look at treatment of information technology business activity in Q3 is highly revealing. Chain-weighted figures show $93.1 billion in IT spending, of which only $11.5 billion occurred in real terms. The remaining $81.6 billion, over 87% of the ledger item in the GDP calculation, incredibly was attributed to adjustment for speed improvements, a treatment called “hedonic adjustment.” The practice is highly deceptive, totally fallacious, and not based in any reality known to mankind. That extra eighty billion in dollars flows nowhere, is available for business expansion nowhere, can be devoted to worker payrolls or benefits nowhere, and appears nowhere on any financial balance sheet. It is pure fiction, but serves a very valuable service in keeping the myth alive of above normal growth. Jan 2004. Jim Willie, CB, http://www.financialsense.com/fsu/editorials/willie/2004/0130.html)
Element #3 Software Shenanigans
Another element of statistical manipulation greatly magnifies the economic growth contribution of the technology sector. This new contrivance happened last year when government statisticians changed accounting procedures for booking computer software. Formerly, spending on software was considered to be a business expense. This acted to reduce corporate profits since expenses are subtracted from revenues. Business expense normally doesn't enter into GDP accounts. By changing expenditures for software from an expense to an investment, it is now added to GDP. This accomplishes two objectives. It increases GDP growth and it serves to increase corporate profits and government tax revenues since software can now be capitalized instead of expensed, thereby reducing profits.
Investment in Software (Billions of Chained 1996 Dollars) 1998 1999 2000 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr Software 167.3 173.3 181.1 192.5 205.3 215.0 227.5
Source: Department of Commerce: Survey of Current Business
Software spending has been running above $200 billion per year. The combination of inflating the dollars spent on computers, and including software spending as a capital asset, has artificially inflated GDP by a sum of over $500 billion. These statistical manipulations accounted for 32% of the reported GDP growth.
Over-stating U.S. Productivity
Accounting gimmicks also overstate U.S. productivity figures. Productivity is simply the increase in total output as measured by GDP, divided by the increase in total hours of labor used to create that output. Recently, those numbers have been remarkable. Tinkering with the GDP Deflator, and adding the Hedonic Deflator have artificially enhanced the actual GDP numbers. The larger the GDP number in relation to the total hours of labor, the higher the rate of productivity.
Exposing The Statistical Mirage
The results of these measures have produced an awe-inspiring statistical mirage that has camouflaged the inherent weaknesses and vulnerability of the U.S. economy. This unique way in which the U.S. measures and accounts for its GDP and productivity has captured the attention of international organizations such as the OECD. Other well-known writers from the Austrian school like Dr. Kurt Richebächer, and financial writer James Grant, a columnist for the Financial Times, have called attention to these statistical fallacies.
Writers in the mainstream press have attacked these truth-tellers. The mainstream press argues that increases in DRAM, hard drive capacity, and such things as DVDs, although not costing more today, add additional value to a computer that is not captured in its price. Nobody would argue that today's computer is faster and more powerful than the computers built back in 1996. However, computers have become a commodity that is subject to intense price competition. The price of computers has fallen as production has ramped up and competition has decreased their price as with any other commodity.
Hypothetical Results Creating False Weather Patterns
What matters most is actual dollars spent ¾ not hypothetical dollars produced. This statistical manipulation allows the U.S. to overstate economic growth and productivity, which gives way to the mythical concept of the "New Era" so widely promulgated on Wall Street and in Washington. These manipulations make our economy appear to be more robust than it actually is. It also makes comparisons to other economies difficult. The rest of the world uses apples accounting while we use oranges. It also serves to misallocate capital. Money gravitates to areas where it is most productive. The higher U.S. GDP growth and productivity figures along with above normal returns in our stock market have acted as a magnet for capital from around the globe. It has enabled the U.S. to finance its burgeoning trade deficits.
- end of article from Financial Sense Online
Article #3 - Yardsticks that blur the output picture
dated 16 October 2000, from Smithers & Co. LTD, a London firm providing advice to fund managers on international asset allocation, at http://www.smithers.co.uk/standard146.html
It is widely believed that the US has experienced a productivity miracle that has left the rest of the world behind. Reality may well be very different. The reason lies in the way that output is measured either side of the Atlantic.
In general, the US statisticians use what is known as 'hedonic' pricing and Europeans don't. The difference is startling. The Office for National Statistics has estimated that over the past four years the apparent rise in British industrial output would have been three times the previous estimate had the US system been in place.
Reality, of course, is not changed by the way it is measured, but perceptions certainly are, and US and European statistics give very different impressions about productivity and inflation as well as about output. Although central bankers are well aware of the problem, it is likely, nonetheless, to affect their policies. To those who don't know about it, the impression given is of US success and European failure.
Whether or not hedonic pricing is sound and sensible is the cause of heated arguments. What cannot be doubted is that the use of different systems makes nonsense of the relative measures of growth, productivity and inflation. Either the US is doing less well than the figures suggest or Europe is doing much better.
The US approach makes greater allowance for improvements in quality, but may overdo it. Just because a computer can do more things than before, or do them faster, does not mean people using them will wish to or be able to take advantage of this. Hedonic pricing of computers, which is the big issue, has been likened to saying that a car costing £15,000 which can go at 150 miles an hour has the same value as one costing £5000 with a maximum speed of 50 mph. But of course there is a vast difference between the speed at which cars can go and the one at which they do. What cannot be doubted is that the relative position of the US and Europe is distorted by the difference in measurement. - end of article by Smithers & Co., London
Article #4 - Are productivity data releases based on 'pump-up' number games?
Here's another article, from the Grandfather Productivity Report at http://mwhodges.home.att.net/product.htm
We often wondered how some could claim historic high productivity growth at the same time the economy was producing record high private sector debt ratios, record low savings and profits, and soaring international debts from historic high trade deficits. Now we know such productivity claims were bogus - - as they had to be. Following proves the point.
Recent government data releases make it seem that productivity growth picked up a bit in the last several years. Dr. Kurt Richebacher (former chief economist of the Dresdner Bank in Germany) of The Richebacher Letter (June 1999, and October 2000) points out reported productivity was substantially enhanced by way of downward revisions in the calculation of the inflation rate since 1995 - - (without cranking back the new method into data for prior years). Additionally - over the years 1996-98, U.S. GDP was reported to have increased about 4% annually. Of this total for 1998 38% of GDP growth accrued from investment in computer power (they now measure increased computer power instead of volume of computer production, although computer power has little to do with true productivity). Yet, the computer industry represents just 3-4% of national employment. Essentially, this implies a correspondingly disproportionate contribution of this small sector to the economy's overall productivity performance. Taking the computer component out of GDP accounting, the larger rest of the economy really had an annual GDP growth rate of just 2.5%, with the 1998 rate being just 2% - - all resulting in significantly less productivity growth than shown.
One of the Federal Reserve consultants, Professor Robert Gordon of Northwestern University, has done a most extensive study and argues that the entire increase in recorded productivity in the American economy over the last 5 years comes from one small sector, the manufacture of computers, which accounts for only 1.2% of GDP. He illustrates that non-durables show no improvement in productivity and durables ex computers actually show a decline. His study illustrates that there is no evidence of "benefits of computers and other electronic equipment spilling over to the sectors of the economy that have heavily invested in them." Furthermore, the productivity miracles wrought in the manufacture of computers themselves only show up because of the introduction of a new measurement, not used in any other sector of the economy, which seeks to measure the change in the utility provided by computers -- the "hedonic deflator". Essentially, this is a gauge economists seek to use in order to quantify the functional capacity of the computer, meaning measuring output in units of computational power or memory capacity.
And - - the latest Economic Report of the President to Congress dated 2/2001, table B-50, shows that in 2000 previously reported productivity rates for the 1990s were restated and increased by about .05% per year by some new measurement method - - as compared to the report for Feb. 2000 and before. (For example, the increase adjustment by year was 1999 +0.3%, 1998 +.5%, 1997 +.4%, 1995 +.5%, 1994 +.7%. - - these upward adjustments make currently reported productivity appear about 20% higher in the USA , making such unreliable to compare with historical rates in the USA, and to that of other nations today).
But NOW the chickens are coming out - - The Economist, 8/11/01, reported, "revised figures now show most of the past-reported acceleration in productivity has now vanished - - past gains were exaggerated." (for example: year 2000 was previously reported as 4+% productivity, which was 45% over-stated according to latest revisions by the Bureau of Labor Standards.)
September 4, 2001, dailyreckoning.com/ reported Dr. Kurt Richebacher said, ""At the end of July 2001, new information came out that completely demolished the myth of American prosperity. Productivity proved to be no better than it has always been. In fact, the number is still flattered by these hedonic adjustments that they make. The real number for productivity growth is probably zero. All this new technology has made no improvement in productivity."
NOTICE: just as we have recently seen reported downward revisions in past reported productivity and GDP growth, it is quite possible that the same will occur to the inflation rate's CPI since it, too, was significantly revised in the mid to late 1990s - - which will further depress reported productivity as shown on the chart.
As some could say - - if you want to increase home run production reduce the distance to the left field fence.
end of Article #3 - from Productivity Report at http://mwhodges.home.att.net/product.htm
As one commentator said. "since there is no economic equivalent of an Olympic drugs testing agency, which could sanction countries that resort to "economics by steroids". (HEDONIC INDEXING: NOW WE CAN ALL HAVE PRODUCTIVITY MIRACLES! 31 October 2000 By Marshall Auerback - http://216.46.231.211/Comm%20Archive/markcomm/i103100.htm)
Article #5 - Are inflation data releases based on 'pump-up' numbers?
An excerpt from the Grandfather Inflation Report at http://mwhodges.home.att.net/inflation.htm
Computer price impact is large: Another item to keep in mind is the impact on the total CPI of rapidly declining computer prices. From 1987 to 1993 computer prices tracked the CPI, but then computer prices dropped much faster than did the over-all CPI. In fact, if you look at the CPI excluding the computer component of the CPI, the non-computer CPI in 1997 was higher than in 1993 - 40% higher. To provide some numbers: in 1997 the CPI excluding computers was about 3.8%, or 1.5% above the total CPI for that year. So, huge declines in prices for computers, imported oil and other metals in the past 4 years effectively camouflaged the true underlying rate of inflation - - and, these price declines cannot forever mask core inflation.
Additional concern regarding late 1990s data: not only has the government changed how they measure inflation for the past several years to make recent rates appear less threatening, and thereafter invented the song that 'inflation is dead' for the late 1990s and that such, together with productivity, improved U.S. competitiveness - - then why has the trade deficit doubled in the past several years indicating we have become increasingly less competitive and thereby owe more and more to foreigners?
When someone says inflation is dead, ask them "compared to what?"
Watch it - CPI measuring criteria has changed: The short red line at the right of the chart for 1995-1999 reflects a new measurement method now in process, which lowered the historical method for 1995 of 3.1% to 2.8%, for 1996 from 3.4% to 3%, for 1997 from 2.8% to 2.3% for 1998 from 2.2% to 1.6%, for 1999 from 3.5% to 2.7%, and quarter 1 2000 at 4.7% vs. 3.9%. (the new changes are per Business Week, 10/4/97, pg. 30: 'Since the start of 1995, Labor Dept. statisticians have 'quietly' modified their treatment of rents, hospital prices, drugs, and altered other sampling methods. This has lowered the published rate of consumer inflation by 0.2 to 0.5 of a percentage point - and, a change of 0.63 points will be applied in 1998 and 0.75 in 1999. But, the govt. is not going back to fix historic data in the same way (so reviewing today's quoted inflation rates vs. the past must be with care to develop historic comparisons). Therefore, part of the apparent lower inflation rate numbers reporting today, compared to the past, is from changing the yardstick of measurement.' That's like moving in the baseball field fence and then declaring 'now our home-run performance will be better.'
Why did they do this? Answer: One could say if you don't like what you are paying then change the way you measure. In this light, the Clinton administration and some congressional leaders have decided to change how inflation is measured in order to reduce the annual cost-of-living adjustment pay-outs to recipients of social security and other programs, without saying that was their objective.
So - - when one hears on T-V certain inflation rates one needs to understand that much of the touted 'low inflation' recently is masked by computer and commodity prices, and also by the fact the criteria for measuring the CPI is being revised each year - - without historical perspective. Hopefully, the above chart and discussion provides some perspective.
For more on this 'changing the rules' in measuring inflation, the impact on social security recipients, and what makes up the CPI - see the Cost of Living Debate article from the Washington Post.
End of Article 4, from the Grandfather Inflation Report at http://mwhodges.home.att.net/inflation.htm
Article #6 - DO OFFICIAL JOBS NUMBERS GROSSLY UNDERSTATE UNEMPLOYMENT?
April 10, 2001 By JOHN CRUDELE - business news - - THE loss of 86,000 jobs in March 2001 was startling to America. But here's the part that's even more shocking - the number of jobs that disappeared from our economy last month was actually much larger.
Here's the official line. The Labor Department announced last Friday that 86,000 jobs disappeared last month and that the nation's unemployment rate rose 0.1 to 4.3 percent. That was, we were told by the government, the biggest decline in jobs since 129,000 positions were eliminated in November of 1991. Could that 86,000 number actually be correct? Didn't dozens of companies publicly announce job cuts last month that amounted to well over 86,000? And aren't there probably thousands of other companies - those that don't issue press releases - that cut back on the number of workers?
I'll tell you the punch line of this column right now: The government's employment numbers for March are nonsense. There were probably more than 220,000 jobs lost in March. What the government didn't tell people on Friday was that - even as its computers estimate a loss of 86,000 positions - it was still adding 145,000 fictitious jobs to its tally. Why? Because Washington assumes companies that it didn't reach in the survey are adding people to their workforce. Without those additional 145,000 jobs, the loss of positions in March would have been 231,000.
But the situation could actually be even worse than that. As I said, the 140,000 bias-factor jobs are added because Washington assumes small companies around the country that aren't surveyed are adding jobs. Now that the economy is slowing rapidly, perhaps those same invisible companies are laying off workers. What if the bias factor should be negative? What if 140,000 jobs were cut by these invisible small companies instead of added? Then the numbers would really add up. There would then be the 86,000 jobs that were officially reported lost. Plus, you wouldn't have the additional 140,000 jobs that the government assumes were created. And you'd have the 140,000 jobs that were cut by small companies out of the government's statistical reach. What's that: 86,000, plus 140,000, plus another 140,000. If you calculate the figures the less politically beneficial way you'd come up with a loss of 366,000 jobs in March alone. Is my figure accurate? It certainly feels right. And my guess about what small companies are doing is as good as the government's.
There's more. The unemployment rate only rose 0.1 percent. And the 4.3 percent rate is still amazingly low and a small rise is certainly nothing to worry about. That 4.3 percent, however, doesn't include people who are out of work and who have become too discouraged to keep looking for a job. If discouraged workers are counted as unemployed, the nation's jobless rate jumps to 7.6 percent.
If you've been out of work for a year and have given up looking you don't even show up in the 7.6 percent figure. If those long-term discouraged workers are counted, the nation's unemployment rate jumps to nearly 10 percent.
So is the real unemployment figure 4.3 percent or 10 percent? Is the economy just softening or is it turning to mush?
There's another government statistic that crosschecks the numbers I mentioned above. Each month the Labor Department surveys households to determine who is working. This survey shows a lot more weakness than the one that questions companies. In February this poll showed a loss of 184,000 jobs. And in March, households reported losing another 35,000. That's a total of 219,000 jobs lost in the past two months. That sounds more realistic, doesn't it?
end of Article #5 - from http://nypostonline.com/business/28327.htm - 4/10/01
Corporate Business Profit Data Manipulations & Wizardry - - Profits over-stated by Corporations via manipulations intended to mislead investors
(below is clear evidence - examples here recorded 2001- present)
Levy Institute Reports Earnings Falsification In October 2001, the prestigious Jerome Levy Institute, an economics research firm, contends that corporations have regularly overstated their profits by more than 10% for two decades. In fact according to the Levy Institute, companies have recently accelerated the trend in overstating earnings by 20%. The report infers that companies are lying to investors by deliberately falsifying their financial reports. The report documents abuses such as non-recurring charges, write-offs, and stock options to employees that understate labor expense and dilute shareholder value. The implication of the Levy report is that the stock market is much more overvalued than indicated. http://www.levy.org/
BBC News - 30 June 2002 by Graham Turner - "It was not so long ago that US companies were routinely reporting double-digit growth in their earnings as the stock markets soared repeatedly to new heights. The government's own profit figures detailed in the national accounts, showed that companies were never making the money that they claimed. During the last five years of the bull market, the companies that make up the S&P500 reported that profits had risen by 96.2% (19%/yr). By contrast, the government's own figures revealed that corporate sector profits had only risen by 36.1% (7%/yr). The figures implied that US companies could be overstating profits growth by more than 150%. But in truth, even then it was not difficult to see that US corporates were cooking their books. Investors did not have to look far to realize that the profit figures put out by many companies in the late 1990s were inflated. Of course, now we know that companies were indeed inflating their earnings."
Faz.net (Germany) reported 17 Jan. 2002: "The net operating profits of the 500 companies comprising America's Standard & Poor's index were some 70 percent higher than the results reported under U.S. GAAP rules (United States Generally Accepted Accounting Principles)." http://www.faz.com/IN/INtemplates/efaz/archive.asp?doc=%7BDDB66EBE-F041-4A5A-821C-CF1F2187BCF1%7D&width=800&height=572&agt=explorer&ver=4&svr=4
March 4, 2002 - 'One story on Bloomberg today highlighted the fact that corporate profitability in the 90's came from over-funded pension plans at companies such as IBM, GE, and GM. With rising stock prices during the decade, companies could contribute less to their pension plans for employee's retirement. Now with the S&P 500 down 25 percent since January of 2000, companies will be forced to contribute more to their pension plans to fund retirement benefits. This increases expenses and lowers profits. Maybe under our current system these expenses will be excluded from the bottom line as extra ordinary expenses and be excluded from pro forma numbers. The assumption will be that double-digit returns are the norm for pension plan investments. Therefore company pension expenses will now become an extra ordinary expense no longer counted as a real cost of doing business.
Economic numbers are even questionable since they are massaged by government statisticians. The positive GDP numbers of the fourth quarter were the product of government statistical manipulations through hedonic indexing of computer sales and government spending. The government inflated $1.9 billion in computer sales into an increase of $23.5 billion in sales. This higher number is complete fiction. The government is also making the GDP numbers larger by adjusting the CPI deflator for computing GDP. The real numbers for GDP during the fourth quarter were actually negative instead of positive as reported.' http://www.financialsense.com/
March 2003 - Pension Plan Games: General Electric's pension plan "gains" contributed $806 million to pretax profits in 2002, even though the company's pension actually LOST $5.25 billion last year - a staggering sum equivalent to 29% of GE's pretax income. GE's pension plan "profit" last year was little more than an accounting fiction. The company simply relied upon a legal - albeit deceptive - accounting practice that permitted the industrial giant to book a profit based upon its ESTIMATED pension gain of 8.5%, rather than its ACTUAL loss of 11.6%. Deceptive pension accounting is but one of the many fictions that helped perpetuate the late-1990s bull market. If, for example, the S&P 500 companies had included their actual pension plan losses in their 2001 earnings - instead of their fictional gains - earnings for the S&P 500 would have been about 69% lower than what the companies reported for 2001, according to Credit Suisse First Boston Corp. In other words, without fictional pension plan profits the S&P 500 would have reported earnings of $68.7 billion in 2001, rather than $219 billion. http://www.dailyreckoning.com/
"Many major corporations still play things straight, but a significant and growing number of otherwise high-grade managers - CEOs you would be happy to have as spouses for your children or trustees under your will - have come to the view that it's okay to manipulate earnings to satisfy what they believe are Wall Street's desires. Indeed, many CEOs think this kind of manipulation is not only okay, but actually their duty." Warren Buffett
October 2003 - According to the survey by U.S. Trust, 79 percent of the nation’s super-rich “question the reliability” of corporate financial statements and do not trust the recommendations of equity analysts. 67 percent said they do not trust corporate management, and 65 percent do not trust independent auditors. U.S. Trust is a unit of Charles Schwab & Co., the largest U.S. discount brokerage. http://www.msnbc.com/news/989734.asp?0si=-&cp1=1
April 2004 - Over-state Profits by Under-stating Employee Expenses - "Everyone already knows that a company can expense a project to upgrade technology over a three- to five-year period. But what few realize is that the costs of technology workers can also be amortized over the length of a project, even if they happen to be regular employees on a company's payroll. This part of accounting rule FASB 98 is in fact being interpreted as saying that a company doesn't have to start recording the expense for technology workers until after whatever is being developed comes online, according to my source. With this discretion, companies can decide whether to slow down or accelerate employee expenses, fine-tuning earnings to meet just about any target number Wall Street would like." Source: NY Post, 4/22/04, J. Crudele. This practice to manipulate investors would never have been even considered 25 years ago. The fact this practice supposedly is 'allowed' today shows Wall Street is in full control of US accounting rule-making, thereby providing further evidence that investors cannot trust financial statements and the US Dept. of Commerce allows such.
April 2004 - Inflated PE ratios drive stocks, not profits. Not only have profits been over-stated, as reported above, but those over-stated profits had little to do with higher stock prices and much to do with PE ratio inflation. In April 2004 The Wall Street Journal reported that the stock price to earning ratio (PE) expansion generated much of the gains in the Superbull market of the ‘80s and 90s. They quote Merrill Lynch economist David Rosenberg who estimated higher stock multiples accounted for 70% of the price appreciation in the S&P 500 from 1980-2000. Only 30% was delivered by earnings growth.
March 2005 - Huge $11 Billion Profit Manipulation and Fraudulent Activity by Fannie Mae. By Marcy Gordon, AP Business Writer - Fannie Mae Says to Miss Deadline for Filing 2004 Report; Regulators Find Falsified Signatures. Mortgage giant Fannie Mae, previously accused by regulators of manipulating earnings, disclosed Thursday that it will miss the regulatory deadline for filing its financial report for 2004 and may have to record an additional loss of some $2.4 billion. The discovery of falsified signatures raised the possibility of criminal activity by company employees. Fannie Mae, which is the largest U.S. buyer of home mortgages, recently was ordered by the Securities and Exchange Commission to restate its earnings back to 2001, a correction that could reach an estimated $8.4 billion. That would erase nearly one-third of the company's reported profit since 2001. The newly disclosed potential loss would bring the restatement to nearly $11 billion. In a filing with the SEC Thursday, the government-sponsored company said it would not be able to meet a March 31 deadline to file the annual report and was unable to provide "a reasonable estimate" of its earnings for 2003 and 2004. The company still hasn't filed its third-quarter 2004 report, which was due in November. Fannie Mae missed that deadline after its independent auditor KPMG refused to sign off on the report. The latest downturn in Fannie Mae's fortunes since its accounting crisis came to light last September came as news emerged that federal regulators had found cases of company employees falsifying signatures in ledgers and improperly altering database records. Fannie Mae and Freddie Mac, its smaller rival, were created by Congress to pump money into the $8 trillion home-mortgage market. They buy and guarantee repayment of billions of dollars of home loans each year from banks and other lenders, then bundle them into securities that are resold to investors worldwide. http://biz.yahoo.com/ap/050317/fannie_mae_7.html
March 2005 - Morgan, UBS Helped Parmalat Hide Costs - March 18 (Bloomberg) -- Morgan Stanley and UBS AG helped Parmalat Finanziaria SpA, Italy's largest foodmaker, hide the cost of selling 720 million euros ($962 million) of bonds six months before it collapsed in the country's biggest bankruptcy, according to a report prepared for Milan prosecutors. http://www.bloomberg.com/apps/news?pid=10000103&sid=aXPX0cYd5fbM&refer=us
March 2005 - $11 billion, Fraudulent Books and Largest securities-fraud settlement in U.S. history - JPMorgan to Pay $2 Bln to Settle WorldCom Fraud Suit - March 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank, agreed to pay $2 billion to settle claims by investors that the lender should have known WorldCom Inc.'s books were fraudulent when it helped sell $5 billion in company bonds. The settlement by JPMorgan is the second-largest following the $2.6 billion that Citigroup Inc. agreed to pay last year to resolve its WorldCom liability. The agreements by all 17 WorldCom underwriters total more than $6 billion, the largest securities- fraud settlement in U.S. history. WorldCom investors claimed the banks should have known that WorldCom's finances were fraudulent before they helped it sell securities. On March 10, Deutsche Bank, the third largest European bank, agreed to pay $325 million to settle its liability. Also that day, WestLB AG and Caboto Holding SIM SpA agreed to pay $112.5 million. On March 9, ABN Amro, Mitsubishi Securities International, BNP Paribas Securities Corp. and Mizuho International agreed to pay $428.4 million. On March 4, Lehman Brothers Holdings Inc., UBS AG, Goldman Sachs Group Inc. and Credit Suisse First Boston agreed to pay $100.3 million. On March 3, Bank of America Corp., the third-biggest U.S. bank, agreed to pay $460.5 million. WorldCom artificially reduced expenses in 2001 and 2002 to meet expectations of Wall Street analysts. On March 15, a jury in New York found former WorldCom chairman Bernard Ebbers guilty of conspiracy and securities fraud for his role in the crime - an $11 billion fraud that brought down the long-distance company, which filed the largest bankruptcy in U.S. history in July 2002. http://www.bloomberg.com/apps/news?pid=10000103&sid=aqz7AWiwm8.I&refer=us
April 2005 - Fifteen New York Stock Exchange specialists, the traders responsible for keeping an orderly market on the world's biggest stock exchange, were indicted for fraudulent and improper trading. The NYSE's seven specialist firms last year agreed to pay $247 million to settle allegations that they profited on trades at the expense of their customers. "To see criminal activity on the floor is really astounding,'' said Jacob Zamansky, a New York lawyer who represents investors in arbitrations against brokers." http://quote.bloomberg.com/apps/news?pid=10000103&sid=aD6h9N20doXg&refer=news_index
June 10, 2005 (Bloomberg) -- Citigroup Inc., the world's biggest bank, agreed to pay $2 billion to settle claims by Enron Corp. shareholders, the biggest payment from a lawsuit that accuses Wall Street firms of helping the energy trader to commit fraud. Investors seeking $30 billion in a class-action suit stemming from Enron's 2001 bankruptcy claimed that firms including Citigroup, Merrill Lynch & Co, Bank of America and JPMorgan Chase & Co. (and other banks) let the company hide billions of dollars in debt in off-the-books partnerships. The Enron settlement brings to more than $5 billion the amount Citigroup has spent in two years to resolve allegations that it aided in corporate frauds and money laundering and published biased research. http://quote.bloomberg.com/apps/news?pid=10000103&sid=a26pa2fDp36M&refer=news_index - (JPMorgan Chase & Co., the third-largest U.S. bank, agreed 14 June to pay $2.2 billion to settle a class-action lawsuit over its role in helping Enron Corp. engineer an accounting fraud that bilked investors out of billions of dollars.)
In addition to Education and Economic Indicator Data Revisionism we have public manipulation regarding trust funds - -
D. Government Surpluses & Trust Fund Wizardry and Manipulation Regarding Government Debt and Surpluses
The fact federal government debt continued to rise to new record highs each year (see Federal Govt. Debt Report), including last year, proves the misrepresentation that government ran a surplus in its general accounts while paying down debt in the latter 1990s. Since then deficits are purposely understated. Of course we know how that is done - - it's done by siphoning-off cash surpluses incoming to trust funds and using same to cover operational deficits of the general government - - and covering-up this theft by placing in the trust funds non-marketable IOUs with zero budget plan to pay off in cash or marketable securities.
This is another area of manipulation, not just with data but with hard cash intended to be saved for the future, yet squandered.
This government practice, such as siphoning-off social security trust fund surpluses and spending same on on stuff un-related to senior pensions, is a crime on the books in every state if such practice was done by private business with its pension plans.
They took Social Security and other trust fund money worth $189 billion in 1998 and $228 billion in 1999 to cover general government operational deficit spending. For 2000 and 2001, they siphoned-off another $463 billion from the various trust funds, of which $272 billion came from Social Security.
As of end of 2004, trust fund surpluses siphoned-off total $3.1 Trillion, of which $1.5 Trillion involved social security. This subject is fully documented in Trust Fund Surplus Report and Siphon-off Trust Fund articles
A Request
The author of this report requests inputs from others regarding the subject - - information to add, corrections to be made - - as we seek truth.
Lastly, it is requested that all government agencies which change measurement criteria of any major items be required to publish current, future and all historic data by both old and new methods - - for at least the first 5 years after changes - - in addition to more comprehensively revealing the rationale for making changes. Such must be done to assure more trustworthiness and creditability in both government and corporate America, so dangerously lacking.
Sounds like the kind of jobs that liberals fit right into. MAybe if they keep disappearing the liberals will disappear with them.
No, its far worse than that. And frankly you can't give W a pass if he won't veto anything.
You're failing to see the forest for the trees in your little patch of the woods.
THIS is the forest:
And there lies the problem. No matter how you cut it, working an assembly line does not require a great deal of skill or training. For an assembly line job to pay enough to attract college graduates means there is something very wrong in the pay scale. Perhaps the reason these jobs are being sent overseas is because the Unions have outpriced themselves.
And if we had never had those days to begin with we'd still be producing the best cars in the world, and selling them worldwide.
>>>One thing that we need to think of when purchasing products from China is that for every dime we spend on a Chinese product ... it will come back as a bullet in your son's or grandson's belly in an inevitable war we will have with them.<<<
Free Traitors can't see past their portfolio. They refuse to see that our nation was founded on the trade ideology of tariffs. They refuse to see that modern "Free Trade Conservatives" are, in fact, 1920-era Progressives disguised as conservatives.
Yes, it's almost as good as being a school administrator or working as a high-up at the United Way.
No cheers, unfortunately.
Companies seek the lowest cost or they don't survive. Take revenue and subtract cost. If someone costs less, they get the revenue.
The freest economy creates the most wealth AND JOBS. As was posted above, an arguement can be made that this economy is the best ever, right now. Not every profession/industry is healthy. Just the whole economy is in the best shape it has ever been in from a job and profit standpoint.
I agree that there is much fear and apparent danger in the job market. But the facts are that 5% unemployment is a "don't want to work rate." Walmart is the countries largest employer. That says quite a bit; maybe that's a bad thing.
Long ago I saved this post(forgot who to credit it to) because it concerns something we CAN fix that would help the average middle class person, the great American economic engine...
Most manufacturing has little to do with labor costs. The premise in all these anti free trade pitches is that the driving force of companies leaving the USA is labor.
That is a lie
Labor has not been a factor in mass produced goods for nearly a century. When Henry Ford Sr doubled his employees wages over 80 years ago people were certain that he would go broke. Just a few years earlier there had been 400 hours labor in making a car. And doubling wages would have nearly doubled the price of a car.
What the critics didn't know was that Fords assembly line had reduced the labor in a single new car from 400 hours to 4 hours. Back then wages were two dollars and fifty sents a day. Ford doubled them to five dollars a day. That meant he increased his cost per car by one dollar and twenty five cents. Cars cost 250 dollars back then. A static analysis showed it to be less than a half a percent cost increase. Actually workers were so happy with the raise and so afraid of loseing their jobs that production increased. Fords cost of labor per car went down when he doubled wages.
The only number that counts is the value added to the product for each dollar of labor spent. That number is great here in the USA. It is not better in other countries. How much it costs to make the product is the factor. What labor is getting paid is not a factor. The labor cost in each item produced is the important labor number. That number is very good in the USA.
The ratio today are even greater than it was in Fords time. Companies don't take jobs to foreign nations to save on labor. There are only very small if any savings in cheaper foreign labor. Usually transporting the stuff back to he US to sell costs more than the higher labor costs in the US. The reaon jobs leave here to go to foreign nations is the cost of government.
Politicans never tell you that. But it is the truth.
Labor costs are small as a percentage of total costs. But governemnt costs way over half of the profits in the USA. Government regulations and taxes and other government chrages cost way more than labor. So if the cost of taxes (government) and regulations (government) is very low in other nations, a company can put up with poor quality labor and higher unit labor costs of the lousy foreign workers. It actually costs more labor to make mass produced products in other nations. The only exceptions are labor intensive, hand made items. If it is hand made, the labor costs are cheaper outside the USA. But few items are hand made today. Most everything is mass produced.
If Cheap labor were the answer then the South with free slave labor would have out produced the North in the Civil War. The North while paying greatly inflated war wages out produced the South.
Africa has many nations that allow slave labor. Is any labor cheaper than slave labor? Why can't the Slave owners in Africa get work for their slaves. They can't even make stuff to sell in other slave holding nations.
Labor is cheap in the USA. Government is very expensive. >>>
Who are these people who can elect to drop out? I hear this all the time (well, since Clinton left office and the rosy numbers no longer suited the Left's purposes).
There are huge flaws in the calculating of unemployment figures, but as long as we're comparing apples to apples, we have a workable measure of unemployment trends.
But back to the original question: how can I become part of the "discouraged" group?
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