Chomsky - Jobs aren't coming back
salon.com
salon.com
See this: http://research.stlouisfed.org/fred2/series/OUTMS
And a prior discussion of the topic.
http://news.ycombinator.com/item?id=3803022
Anybody who starts a discussion decrying the death of manufacturing in America is selling you something, and it's not a manufacturing job.
Sidebar: This quote!
"The workforce and the union offered to buy it, take it over, and run it themselves. The multinational decided to close it down instead, probably for reasons of class-consciousness."
Aside from the fact that this story is clearly made-up, the idea that a profit-seeking corporation would favor "shutting down" an asset rather than selling it because it fears an uprising of the working class is just about the stupidest fucking thing I've ever heard.
Profit-seeking corporations aren't immune to stupidity and pettiness. Another reason not to sell it is to prevent the emergence of a competitor.
You know why? Robots.
Doesn't make the employment picture look any more rosy, in light of that increased output, does it?
Chomsky's pretty ideological and I'd always take him with a grain of salt, but the manufacturing output doesn't really rebut his main point about industrialists no longer needing workers as much as they used to.
output is consistently increasing, profits are consistently increasing - the only thing that is NOT increasing, is employment numbers. A big chunk of it is because of robots and automated systems.
huge population + huge unemployment = disaster
It depends whether you count robots and computers as part of America, doesn't it?
I'm not sure how any of these qualify the man as someone to be listened on the topics of economics or manufacturing.
asset rather than selling it because it fears an uprising of the working class is just about the stupidest fucking thing I've ever heard.
It does tell us that Chomsky has an especially stupid view of the world.
Maybe because neither economics, nor manufacturing nor any other field, are fields to be left to the "experts", to the exclusion of the citizenry in general (economics especially, as a soft science that leaches on Math and thrives on state power, is full of idiotic experts, with Phds and Nobels to match, whose aggregate predictive performance is closer to a coin toss, if not negative).
Not to mention that arguments are to be judged in themselves, not based on the expertise of who's making them.
If I'm sick, I want a doctor. If I want to know how to shoot pie-sized targets at 500 meters, I'll find a Marine.
Life in the 21st century is complicated, seeking opinions from people in a given field is required if one is to know one's [redacted] from a hole in the ground.
arguments are to be judged in themselves, not based on the expertise of who's making them.
Arguments are context-free? Okay.
Skimming the linked article I found the arguments themselves to be less than persuasive.
Too many things wrong with your argument.
For one, employment in that sector (as well as overall) is still down, because fewer people are needed to produce the same things.
Second, that the US produces, say, "more than it did 1985" is meaningless. A better metric would be what share of the domestic and international sold goods it produces, over time.
Third, an ever better measure would be the trade (import/export) deficit over time.
"Made up"? Those kinds of stories play out all the time. Study a little international labour history.
On another note, I don't remember Salon being this cheesy the last time I visited the site. The sidebar with links to other fascinating Salon articles includes pieces on gay porn, "Girls" sex, naked models, big butts, and more porn. That's five out of seven about porn and body parts. Not that there's anything wrong with that, but it seems pretty desperate.
I think more than anything what's changed is our access to information. Before people never really knew how corrupt companies and politicians can be and they never had 24/7 access to the opinions of every person in the English-speaking world to reinforce their pessimism.
The U.S. is losing manufacturing jobs, but that could be remedied by a number of changes- import tariffs, a reduction or freeze on minimum wage, an unforeseen economic boost from a new industry (such as auto manufacturing in the 50's or the internet boom of the 90's).
One place where I wholly disagree with Chomsky is the unimportance of the deficit. That is a major, major problem. It is true that creating jobs would help shrink the deficit, but I think there is a lot of rampant spending by the U.S. government that does absolutely nothing to grow or maintain the economy or jobs and should be abolished.
Take a step back and note that you don't actually point out or argue how the deficit is supposedly a problem.
So there are spending programs by the government that you disagree with. Fair enough, I'm sure everybody has some government program that they disagree with. [1] That's what politics is about: disagreement about what the extent of government should be, and in which areas it should be active.
What that doesn't give you is an argument that the deficit is bad. If you genuinely think certain government programs are undesirable and should be cut, then it makes sense to simultaneously cut taxes somewhere so that the deficit remains the same. Otherwise you would effectively be squeezing the private sector by reducing the government deficit.
[1] Though it seems weird that you would only support government spending that grows or maintains the economy or jobs. What about national parks as an example of a pretty obvious good that has no economic benefit?
Everybody agrees that running a deficit is harmful. Most disagreement centers around which, if any, cuts in the budget should be made, and how much those cuts will hinder a recovery while the economy is still weak. The U.S. dollar is the worlds' reserve currency, and for that reason alone the U.S. is able to ignore a deficit for some time. But it is a huge mistake to get used to free money and not try to get finances in order. Greece made that mistake for many years and is now paying a huge price (along with the entire European Union).
National Parks are fine. They've been around a long time and that accounts for a rounding error of the federal budget. The greatest areas of concern are Social Security and Medicare/Medicaid. Of course the defense budget is up there too, and I believe defense spending should be cut. The bottom line is that the Federal Government has grown by leaps and bounds over the past few decades and its addiction to rampant spending is making the country poor. You can debate about what should be cut but no increase in taxes is going to pay for this spending spree we are involved in right now. Greece was forced into draconian austerity measures when there were no other options on the table. I sure hope the U.S. learns something from that fiasco before it travels down the same road.
The reason behind that is actually fairly simple and comes from the sectoral balances, which state that the balances of all sectors in the economy have to add up to zero. So if the non-government sector has a surplus, the government sector must have a deficit, and vice versa.
Private actors like to hold monetary assets, i.e. savings, bonds, and so on. This means that somebody else must hold corresponding liabilities. Will the desire to hold liabilities balance the desire to hold assets within the private sector? This is unlikely at best. If there is no outside source of monetary assets, then those private actors who are successful at accumulating assets will force less successful private actors to go into debt until this debt is no longer sustainable.
The logical way out is for the government sector to provide the required monetary assets, which is only possible via a government deficit.
Even more so, given that nominal GDP will continue to rise by inflation + real growth of the economy, there must be a nominal government deficit. Otherwise, the value of private sector net assets must necessarily decrease over time relative to GDP, i.e. the private sector is squeezed out of its asset position. This wealth-squeezing is certainly going to be contractionary. [3]
Under the current institutional arrangement, an ongoing government deficit means increasing government debt [1]. However, unlike for private actors, there is no sustainability problem for a monetarily sovereign government (this is where your comparison with Greece breaks down - Greece is not monetarily sovereign).
If you are genuinely interested in the topic, you may want to read Bill Mitchell's Fiscal Sustainability 101 series, starting here: http://bilbo.economicoutlook.net/blog/?p=2905. His writing is not the most polished, but it's still probably the best analysis on the internet of what fiscal sustainability even means for a monetarily sovereign government.
[1] Alternative arrangements are possible, but unfortunately, they seem to be one of the taboos in our contemporary society.
[2] http://www.slideshare.net/MitchGreen/mmt-basics-you-cannot-c...
[3] The only way I see to reduce private sector assets without contractionary effects is to go to those assets directly, i.e. tax the wealthy. That does make sense for other reasons as well, such as the accumulation of wealth leading to accumulation of power mentioned in the article. However, taxing the wealthy is not something you can deduce from economics alone - there is always a choice.
> The reason behind that is actually fairly simple and comes from the sectoral balances, which state that the balances of all sectors in the economy have to add up to zero. So if the non-government sector has a surplus, the government sector must have a deficit, and vice versa.
This is completely false. There have been many instances throughout U.S. history that the U.S. has run surpluses and the economy has boomed. In fact, the better private industry is doing, the lower the deficit should be. That's because more money is being made, and more taxes are collected. If spending maintains a constant level, then the deficit will shrink. The problem is that the government never keeps spending constant. The more money they get, the more they spend. It used to be that deficits were kept in check, though. The difference between the past and present is that now the deficit is larger than it has ever been in U.S. history, by a very wide margin.
> Private actors like to hold monetary assets, i.e. savings, bonds, and so on. This means that somebody else must hold corresponding liabilities.
Again, wrong. There are assets that equal liabilities, such as bonds or accounts receivable. But as a class, assets do not equal liabilities. If I own a factory worth $50 million, then I have equity worth $50 million. Nobody owes me $50 million for my factory.
> The logical way out is for the government sector to provide the required monetary assets, which is only possible via a government deficit.
Ugh. No. IF a government needed to provide monetary assets such as quantitative easing, there is absolutely no requirement to run a deficit to do so. The government can spend out of its surplus budget (if it has one). Again, a deficit means you are spending more than you are taking in. Keep in mind that most countries can't run deficits in perpetuity. If a country like Brazil had a deficit the size of the U.S. they would go bankrupt. It is only because the U.S. dollar is the world's reserve currency that this kind of irresponsibility is allowed for some time.
> Under the current institutional arrangement, an ongoing government deficit means increasing government debt [1]. However, unlike for private actors, there is no sustainability problem for a monetarily sovereign government (this is where your comparison with Greece breaks down - Greece is not monetarily sovereign).
Being monetarily sovereign has nothing to do with it. There are a lot of sovereign countries, Canada, Japan, Korea, that could not run budget deficits in perpetuity. Again, the U.S. is a special case. They hold the world's reserve currency. The moment that changes, then interest rates will spike and inflation will explode. Nobody will want to hold the dollar, so everybody will sell it. That will cause the value to plummet. In fact, the fact that Greece is not monetarily sovereign is precisely why they were able to borrow so much money in the first place. They borrowed from U.S. banks for years. You know why U.S. banks lent to them? Because they hold the same currency as Germany, Italy, and the rest of the EU. If they were still using the Drachma, they couldn't get a loan to buy a used car.
Do you understand that there is no necessary connection between the U.S. printing money and GDP? You seem to believe that somehow the federal government knows how much money to create and this balances perfectly with private industry. That is wrong. The U.S. government, and only the U.S. government can freely print its own money to pay its debts. This has led to an enormous spike in the deficit in the past ten years as politicians have shown no desire to cut spending. They prefer to kick the can down the road. But eventually debts have to be paid. If there is not an unforeseen increase in GDP to pay for the deficit, then it is going to come to a head at some point.
In fact, the better private industry is doing, the lower the deficit should be. That's because more money is being made, and more taxes are collected.
That's true, but the causality only runs in one direction. People seem to believe that if the US government attempts to cut its deficit now, that private industry will be doing better as a result. That notion is ridiculous. The causality works only in the other direction.
The difference between the past and present is that now the deficit is larger than it has ever been in U.S. history, by a very wide margin.
So you get big numbers. Big deal. Big numbers alone do not inherently indicate a problem.
It does make sense to investigate them. However, if there is a problem, then the big numbers themselves are very unlikely to be the root cause. If you stop at the high budget deficit and say "we need to reduce that number, no matter what", you are very likely to make a mistake because your analysis of the situation is incomplete. And no, hand-waving and pointing at incompetent politicians is not a complete analysis of the situation.
There are assets that equal liabilities, such as bonds or accounts receivable. But as a class, assets do not equal liabilities. If I own a factory worth $50 million, then I have equity worth $50 million. Nobody owes me $50 million for my factory.
This is why I used the adjective "monetary" in monetary assets.
IF a government needed to provide monetary assets such as quantitative easing, there is absolutely no requirement to run a deficit to do so.
You are confusing purely monetary operations with fiscal operations. Quantitative easing is purely an asset swap, it does not change the net asset position of the private sector. The only way for the government to provide an increase in net assets to the private sector is by spending more than it taxes. That's a simple mathematical fact from accounting.
Keep in mind that most countries can't run deficits in perpetuity. If a country like Brazil had a deficit the size of the U.S. they would go bankrupt.
A monetarily sovereign government cannot go bankrupt even when it runs a sustained deficit. It may cause inflation, and it may cause the country to run excessive net imports, which would cause their currency will drop relative to other currencies. But that's not bankruptcy.
Japan (which you mentioned later) is actually a good example of all this. Their government debt is beyond 200% of GDP, without any signs of financial trouble even at the distant horizon. The exchange rate of the Yen does not drop. The reason for this is simple: despite the persistent government deficits, Japan is not a net importing country.
In general, I have the impression that your thinking is a bit muddled. For example, you write: The U.S. government, and only the U.S. government can freely print its own money to pay its debts. ... But eventually debts have to be paid.
Yes. By printing money. The US government always "pays its debts" by "printing money". In fact, both US treasuries and US dollar bills are just different types of debts of the government. They differ in maturity and coupon. So the US government "pays its debt" by exchanging one type of debt against another type of debt. Big deal.
If you really thought things through, you would realize that the solvency of the government is not the issue. If there is an issue, then it lies in the potential of inflation that is caused by the accumulation of large amounts of assets in the private sector. If there are large amounts of non-moving financial assets, then there is the potential of a (non-sustained) burst of inflation if/when those assets suddenly start moving simultaneously.
But that is not a function of the size of government debt - it's a function of the size of those assets. If you are truly worried about this issue, then the correct reaction would be to look for ways to eliminate those assets, and cutting government budget spending certainly isn't going to help there. You'd have to tax those assets away, or preempt the inflation by creating inflation yourself, for example using additional government spending that ends up in the pockets of people that do not have large accumulation of assets.
You can also just do nothing. Inflation by a sudden movement of existing private sector assets is a very rare event (think end of the Second World War), and in any case, it is a one-off event. Some people will be unhappy, sure, but at the same time, the burst of spending is good for the economy, will create jobs, etc., so I think the danger tends to be exaggerated by the people likely to lose the most (the rentier class and those who believe they are in it).
Second, I am not suggesting that the US federal government should fight to maintain its budget deficit. It's just that given the current state of things, a budget deficit is a natural and healthy outcome if you want a healthy economy.
Seems like there is something for everyone to love and hate in this one. Probably the one thing everyone can agree on is the concentration of wealth and stratification of society isn't a good thing.
Like a lot of these analyses, it is often hard to sort out cause/effect, I'm not so sure that this article didn't make some wrong conclusions in this regard.
I do have to say his contention that OWS is the first push-back against the concentration & corruption of power in the U.S. is sort of naive. There are plenty of people and movements that have been railing about this at least since the early 90's - I'm not going to mention specific ones because I don't want to seem like I'm touting them.
http://www.motherjones.com/politics/2011/06/speedup-american...
I also feel like we, as a country (Canada), are going to lose a lot of expertise to outsourcing and multi-national job movement, ie. pay for the cheaper outsourcing in other ways later.
That said I am trying to do something about it by getting involved in the local startup community and try to create my own job, but that is quite difficult.
It's because we've been pacified through handouts and the welfare state. There's no longer a need to think about working hard and getting out of the unemployment morass we're in. Government will take care of you!
Food stamp spending is at all-time record levels. Millions more people have gone on "disability" since 2007. The number of people in the work force continues to decline. Participation rate in the workforce is at multi-decade lows. The government-created housing bubble has made job mobility much more difficult, and of course both personal and public debt levels have reached saturation.
So, why not get unlimited student loans, get food stamps, get yourself declared to have a disability, and then gorge on all the benefits of being "poor" like a free cellphone, and reduced cost internet.
We've turned into a nation of dependents!
And come to think of it, even if food stamp spending is at an all time high, isn't that consistent with the idea that the economy is fucked and suddenly there are a lot more families dependent on food stamps because of the inability of the labor market to bring down unemployment?
Two Charts Exposing America's Record Shadow Welfare State - Disability going up dramatically: http://www.zerohedge.com/news/two-charts-exposing-americas-r...
Oh, and I never said I support gigantic amounts of defense spending. I'm talking about dependence, not federal spending or budgeting. You've diverted what I said to another topic.
Maybe some numbers and a source?
Frankly, it's just another welfare scheme. Defense spending is largely a waste.
And, AGAIN, where do I blame the people on food stamps? The system is the problem, not the people who take advantage of it.
Of course, "least benefit" is a value judgement, but the system, as you describe it, is actually concerned with maintaining the military and the financial industries much more than any idea of the country having its legs knocked out from under it by poor people. This is a fact, and is supportable by actual numbers, unlike your kicking of people while they're down.
Source: http://en.wikipedia.org/wiki/United_States_federal_budget (look at first graph)
I really don't know where you are getting your ideas from. (you were asking for this :)
The entitlement programs are run off of their own separate taxes and are legally "off-budget" compared to discretionary spending. Their budget isn't voted on, it's basically "automatic", coming from the legislation that created them. Same with debt repayment (which, coincidentally, represents defense spending in previous years, neat that it doesn't count that way on your pie chart though).
So that's where he's getting his ideas from. The federal budget that gets voted on by congress every year (in a good year) is over 50% defense, and more like 65% defense if you include Homeland Security, Dept of State, Veteran Affairs, etc in the defense column instead of domestic.
Here's a more useful graphic: http://www.deathandtaxesposter.com/
He wasn't talking about the sum of money, just that it had gone up -- and he wasn't talking about how to finance it, just that it had caused more people to become dependent on assistance _even as more people are getting a job_. Meaning that it is not because there is no jobs.
Yes, we was talking BS.
It makes one feel very superior and active, to believe that poor people, black, hispanic, etc choose to live on food stamps (as "dependents") ignoring all those fabulous job opportunities available to them.
That self-worth-boost is one of the main reasons people perpetuate this crap. Go talk to actual persons living on food stamps to get a real idea of what it's like and what chances the have to escape it.
Estimates I've seen range from 20-40% depending on what you count as "defense". See for example: http://en.wikipedia.org/wiki/Military_budget_of_the_United_S...
And I don't listen to talk radio.
I'm blaming the excessive amount of debt in the system, both personal and public. It's crushing. Each additional dollar of public debt is having a negative real effect on the economy. Of course, the crushing level of bureaucracy and costs of running a small business are a big part of the problem as well. The economy is paralyzed by debt and regulatory uncertainty.
If Japan can manage as a majority-services economy, we can too. Manufacturing doesn't make the world suddenly better.
I call BS. As far as welfare states go, the US has one of the smallest and less pervasive of any modern western country. Actually, it's like in that field you're living in the medieval ages.
A "welfare state" with your health system, close to a million people in the streets and tens of millions eating with coupons, is not a welfare state, it's a joke.
Nobody in his right mind would call your "food stamps" a welfare support that makes people "dependents".
We would actually think of it as an incompetent, half-arsed mockery of a welfare system... more like charity than welfare.