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.

[central_va]

You want to empower the government MORE and give it far greater power over our economic life. Bigger government is not the answer to anything. What is so hard to grasp about that simple idea?

A tariff is not enlarging govt. And if I had my druthers tariffs would be the only tax the FedGov™ should collect.

[algernonpj]

I’m for trade and tax policy that encourages producers to manufacture more in the USA and for buyers to buy more from America. The solution is not that difficult. Reward corporations that hire Americans and reward those that buy American.

Now when it comes to regulations, we simply need to do what the Chinese do to those who screw the country. Shoot them. Don’t waste money on bureaucrats to regulate; just put the industrialists who put us in danger in front of a firing squad, a wall and blind folded. Guaranteed other CEOs won’t ever feel the need to flaunt regulations that risk the safety of Americans again. All it will take is one sacrificing one CEO and the rest will never again endanger Americans.

Bravo!

[hedgetrimmer]

Businesses that do not do legal things for profit are not long in business

Like Wells Fargo bank laundering 1/2 trillion dollars in Mexican drug cartel money? Who got the business in Mexico when they lobbied via 'free trade' FTA to be allowed to do 'business' there?

You're full of lies.

And morality has everything to do with politics in a republic predicated on individual rights and self government.

[hedgetrimmer]

You want to empower the government MORE and give it far greater power over our economic life.

Of course those are your words. You speak like a corporation and not an individual. In other words, you're worried about controls on corporations, you want free reign to use slavery, make shoddy goods and poison the food supply because more money can be had when you don't have to add in the extra cost for quality.

You're not Foxconn, are you?

[hedgetrimmer]

Products are made where comparative advantage dictates maximum profit.

This is communist-speak.

Free trade fosters that innovative spirit which has driven America to the height of wealth and power.

The evidence is that 30 years 'free trade' has driven the American economy into extinction. That in addition to fomenting the Civil War which killed 600,000 Americans.

One of my political goals is to develop a society wherein individuals can maximize their potential to create wealth.

Your political goal, if you were a loyal American, should be protect individual rights so people can pursue their own happiness. Your stated goal is a collectivist social engineering goal that suits the globalist agenda, but not freedom and liberty of Americans to live without collectivist corporations molding people into unnatural things.

[algernonpj]

...We do not have true “free trade” and we never have. This is an economic concept/ideal which runs headlong into politics which require it to be modified ...

Interesting that you denigrate myself, hedgetrimmer, and apoliticalone based upon a definition of free trade that you admit never has existed because of politics. Your snide remarks are at best disingenuous.

We are looking at the reality of 'free trade' as is has been practiced (GATT, NATO, WTO ...), and its disastrous results.

Your ideal exists in a world devoid of the dark side of human nature or what Bastiat in the Law referred to as the common tendency of man to prosper at the expense of others.

This is the same trap that communists fall into - idealizing human nature. The mantra 'From each according to his ability and to each according to his need' is poetic but ignores human nature.

Because of human nature we need laws against murder, fraud, and treason. Because of human nature our Founding Fathers designed a constitution to split political power among the executive, judicial, and legislative branches, and among federal, state and local government.

We are looking at 'free trade as it exists, the destruction it has wroth, and how to reverse it. China, India, etc have declared an economic war upon the US, and our esteemed leaders have raised the white flag (no doubt as a quid pro quo for 'campaign contributions').

[hedgetrimmer]

You’re gross on top of everything else.

[hedgetrimmer]

You are the one urging government intrusion into the economy so you should not complain about that.

I don't know who taught you how to read, but you clearly have comprehension problems. Dianne Feinstein with her steel mills in China and kowtowing to the Chicoms, is a globalist traitor. Do you get that? Nothing you say is the truth, about 'free trade', or anything else.

[hedgetrimmer]

Free trade has never been involved with the EPA in any way.

The BS machine is working overtime.

I gave you a link to one, but for every FTA the EPA has been involved in defining the so-called environmental aspects of the trade agreements. Remember, the job of the EPA is to shut down US manufacturing to give the competitive advantage to the communist, dictator and slave labor nations so the transnational trash globalist corporations can claim they can't do business here any more so they just HAVE to have that sweet sweet slave labor to stay in business.

[hedgetrimmer]

Dianne Feinstein is so rank she prevailed in getting Chinese steel to be used on the new bay bridge in San Francisco. And Chinese cranes to build the bridge, and so forth. Its of course over budget, and all the welds have had to be redone by American welders the workmanship was so shoddy.

[hedgetrimmer]

You're correct! arrogantsob sounds like the communists at the fall of the Soviet Union saying," communism is still good! We just didn't to it 'right'. Give us another chance".

Well they're getting their chance using the 'free trade' tool, and it STILL doesn't work (unless you're the ones skimming off the top)

[algernonpj]

... Possibly, but I've never been able to see them even do that much thinking ...

Insults and ridicule are Alinksky tools used when one lacks facts to back up their assertion.

[arrogantsob]

So Alinsky invented Insults and ridicule? What a guy. Did he invent chocolate cake as well?

Those who do not make absurd comments don’t have to worry about being ridiculed or insulted very much.

[arrogantsob]

Yeah, I’m a “communist” while you want an even larger government to control international trade even more than it does. You should be a standup comedian.

[arrogantsob]

I am in favor of prohibition of advanced military technology being sold to most other nations such as Loral providing the Chinese with the means to make their missiles work better.

Once unions are gone something will have to be done about the excessive regulation of business. Almost all of it was put in place by liberals. Free traders do not stab the USA in the back. They do spread freedom across the world though which is really your beef.

[algernonpj]

... This is good, we all agree that tariffs are bad and cross-border trade is good because like Smith suggested we want to leave questions of industry support and security to the individual, not the government. Elsewhere in "The Wealth of Nations" (pp. 264-265 in my copy) Smith said: ...

First of all we didn't all come to any agreement! You know what is said about assuming.

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,.

Like your bud arrogantsob, you are conflating the 'ideal' of free trade which ignores human nature and free trade as it is practiced today.

In stead of writing about fantasy land, why don't you address the fact that free trade as practiced today is the reason 'Profits Are Booming and Jobs Aren't". It has resulted in:

[arrogantsob]

Tariffs don’t save industries. By protecting them from competition they weaken them and raise prices across the board. Protecting stagnant industries cannot improve the economy only make it less able to compete. A free economy is the best protection for our industry.

[arrogantsob]

Tariffs cannot support a modern military. It is impossible.
When Jefferson imposed an embargo on foreign trade our revenue collapsed. When the War of 1812 broke out international trade and our tariff revenues collapsed.

Tariffs are quaint economic tools used only by a third world economy. They are going the way of the dodo bird for good reason.

[central_va]

Yeah, I’m a “communist” while you want an even larger government to control international trade even more than it does. You should be a standup comedian.

Actually that is a legitimate role of government, when corporations do things to maximize profits at the expense of national security i.e. off shoring our entire manufacturing base. The govt. DOES need to step in. They are not because they have been bought and paid for. Any sane country would have had import tariffs 20 years ago.

Don't get me wrong I believe in totally free markets, competition and capitalism inside the USA between the states. When you start off shoring and out sourcing then it becomes political, as it should.

[algernonpj]

... Trying to protect the past should not lead to destroying the future. Capitalist development is a process of creative destruction wherein the old is destroyed in creating the new. ...

A statement worthy of good old Marx or Lenin!

... One of my political goals is to develop a society wherein individuals can maximize their potential to create wealth. ...

Will your credo be 'From each according to their ability, to each according to their need:?