U.S. unemployment numbers in Q4 '07 vs Q4 '09, broken down by income range

[MJinZ]

Pretty much, but there are shades of grey. You can have what we have here for many goods sold. Take milk for example. Provided by business, but regulated by government. It keeps the prices low and prevents gouging and collusion.

Business only ran doesn't work, and so far government only doesn't work to well either. At least those are the opinions of America. So since we can't do option three on your list, we do a hybrid of 1 and 2 to varying degrees. How much of a degree we should do is based upon the political compass of the person you are speaking to. Your average repub wants less government regulation of business provided goods or none at all, and your average democrat wants a fair system, and if that takes more regulation so be it.

The funny thing I find when it comes to Repubs and regulation is they have no problem with the government regulating the price of milk and produce for example. But they get pissy when it comes to new regulation where none existed previously even if it may help a faulty system. They fail to see collusion for example. Now, if it ain't broke, don't fix it is my philosophy, but if it is, don't ignore it either is also my philosophy.

I am going to use an arbitrary anecdote as an example. Let's take Starbuck style coffee as a business model. The goods sold are cups of coffee. Coffee by itself costs pennies to make, no matter what goes in it really. Go back before the land of latte's and you get your coffee from diners for cheap. Like a quarter a cup and unlimited refills from some place like Denny's. It was one good of many sold at a place selling fresh coffee. Someone comes up with a way to make coffee new, exciting, great tasting, and creates a business selling almost exclusively this new tasting coffee. The problem is, they can't go off the old model of selling coffee for a quarter a cup with refills. No business could survive. Since this is a new idea, and it has a startling amount of demand, the new business starts out charging an unheard of price. Instead of a quarter a cup, it's $4 with no free refills. However, with the demand, the market bears the price. The business is BOOMING, as now a cup of coffee that takes little investment and material costs to make is being sold for tens of thousands of a percent of markup profit. Here's the catcher though. Someone else is going to see this business model and also want to catch in. Now we have competition. With competition comes slightly better products we hope and reduced costs. The more competition, the lower the costs. Mainly because supply is now higher than demand with new competition.

If one would logically think about it, eventually the price of this new starbuck style coffees should eventually reach a low point as to not sustain ridiculously high margin prices. However, they still continue until today. Why? Eventually business realize that if competition ends up becoming to great, they will all lose out. No one wants to lose. So they all collude, either by expressed agreement or not. They space themselves out. They keep a floating low price point that none of them ever charges less for regardless. They eventually instead of competing on price, they compete on other things like flavor varieties instead.

Now if coffee was a necessity, this type of collusion would NOT be in the best interest for consumers. Without government intervention and regulation, prices would remain artificially high to the detriment of consumers.

Take note, I am not advocating the government intervention of Starbucks coffee in anyway at all. I was using it as an example as it was the first to come to mind of how artificial pricing via collusion ends up skewing supply versus demand. Coffee is a luxury and really luxuries are priced artificially because they can. Such as diamonds.

However, when collusion on some goods DOES start to hurt consumers and the economy, then government needs to see where it can step in to fix the problem in my opinion. I don't want them ham handedly messing up things and making it worse, which has happened before. They need to apply pressure gently and incrementally until the problem is solved.

Nice thought, except Starbucks is failing nationwide, Dunkin gives you twice as much coffee for nearly half the cost, and McDOnalds give you a large cup for $1. I get free coffee at work

$1 today is exactly how much coffee used to cost, 50-75 cents.

 

[MJinZ]

This is a symptom, not a problem.

The underlying problem is this: "Why is US labor so much more expensive, and why are we too good to work for the same amount someone in India/China works for?"

I've mentioned it before: US workers need to have a fundamental shift in their attitudes before we will ever see blue collar work here on a large scale again. And the government and unions need to stay the hell out of it.

Workers have never been the problem.

Every time our Economy is on the brinks of disaster, the cause has always been rooted in money pushers, bankers, and unscrupulous consumers.

You can blame Detroit's failings on the Unions and Workers. Well, that would be OK, except Detroit has made SHIT for cars for a long period of time. So who's really to blame here?

Blue collar workers are not exactly what the US wants to keep here. We promote education, not to put in nuts and bolts at a factory, but to innovate and produce intellectual property. The goal of any Economy/society is maximizing and increasing resources. Actual resources will always be limited, but ingenuity can create an exponential ratio of resources available to each person.

However, we are not talking about blue collar workers. We are talking about all the rest of the educated workforce who comprise the majority of the middle-class. Yet, the middle-class has stagnated, while the rich gets government handouts and the poor get government handouts.

 

[HumblePie]

Nice thought, except Starbucks is failing nationwide, Dunkin gives you twice as much coffee for nearly half the cost, and McDOnalds give you a large cup for $1.

$1 today is exactly how much coffee used to cost, 50-75 cents.

Yah, it is finally failing, due to it being a true luxury item especially when the economy is collapsing. Luxury items are the last things to be purchased and can no longer be a staple good sold by a business. There finally was a market pressure that changed the pricing, but it was not done by the standard supply versus demand dynamic until people have less money to spend on luxury. Once that happens and no one buys luxury, they have to come down in price to be sold at all. Any business relying on inflated prices is going to be hurt badly when that happens.

Again, I was using that as an example of business collusion, of course during better times, to illustrate my point. That the basic supply and demand scheme is just the beginning of how to do business.

 

[Jaskalas]

Tell me what this admin has done to stop "job creators" from "creating jobs"

It is spending their money.

 

[blackangst1]

This is a symptom, not a problem.

The underlying problem is this: "Why is US labor so much more expensive, and why are we too good to work for the same amount someone in India/China works for?"

Because the standard of living is higher here. Sure, someone in a factory in Manila makes $200/mo US, but there, its a decent wage. Converslely, someone making minimum wage here could live very nicely in Manila. Cant really compare the two, although many people like to.

 

[ebaycj]

There are plenty of very rich Liberals like Warren Buffet and Bill Gates, but you would hard pressed to find many Poor Conservatives.

I submit the entire state of West Virginia as evidence to the contrary.

 

[ebaycj]

And yet the 'blue states' are far wealthier (overall, and per capita) than the 'red states'. Moreover, there's a roughly equal concentration of liberals over 75k income and conservatives over 75k income (and both are roughly the same as independents/moderates over 75k income).

That's fascinating. Where are you getting that data from, I'd be interested in taking a look.

What that tells me is that educated people (most people over 75k are educated, whether by the education system or by world experience), are pretty nearly equally split:

Over 75k
33.3% - Conservative
33.3% - Independent
33.3% - Liberal

Under 75k
xx% - Conservative
yy% - Independent
zz% - Liberal

I would bet that xx is approximately 48 and zz is approximately 48 and yy is significantly smaller at 04. But that's why I'd be interested in seeing the data.

 

[ebaycj]

Everything in life is bottom up, not top down. Everything.

Sig Worthy.

 

[ebaycj]

Because we see things the way we do, we naturally form our hierarchies to have few people at the 'top' manage many people underneath.

.. And this is where Moonbeam's self-hate theory comes in.

It is the lens through which "the people at the top are smarter/more attractive/better/more important than me, the peon at the bottom", looks to be a normal world view.

Through the wide propogation of that false world view, many people are controlled, for a large portion of their lives.

Being the guy at the top doesn't make you a better person. In fact, it's often the opposite. The only thing we can definitively say is that being the guy at the top almost always makes you a wealthier person.

 

[PrinceofWands]

That's fascinating. Where are you getting that data from, I'd be interested in taking a look.

A great number of sources, some of which are listed below. I don't have time to look for free sources on all of them, but if you have academic database access you should have no problems.

The short answer is: if you live in a wealthy state, you're more likely democrat (rich or poor). If you live in a poor state, the wealthy are republicans and the poor are democrats. In reality it's much more complex, with the largest block of citizens now not identifying with either party. While there used to be a strong association between social class and party identification, it has almost totally neutralized.

-----------------------

Weakliem, David. and Biggert, Robert. "What's the Matter with the Middle Class? Education, Income, and Party in the American States" Paper presented at the annual meeting of the American Sociological Association, TBA, New York, New York City, Aug 11, 2007

Flannigan, William and Zingale, Nancy. "Political Behavior of the American Electorate" CQ Press, Washington DC, 2006.

Rosenstone, Steven and Hansen, John. "Mobilization, Participation, and Democracy in America" Pearson Education Inc, 2003.

Gelman, Andrew. "Red state, blue state, rich state, poor state". Princeton Univ Pr, 2008.

The National Election Study, available at http://www.electionstudies.org/

Any number of google available news sources when search for obvious keywords. There were about 5 particularly that I referenced when writing my original post, but I'll be damned if I remember exactly what they were or how I came across them. They're out there if you look.

 

[1prophet]

This is a symptom, not a problem.

The underlying problem is this: "Why is US labor so much more expensive, and why are we too good to work for the same amount someone in India/China works for?"

I've mentioned it before: US workers need to have a fundamental shift in their attitudes before we will ever see blue collar work here on a large scale again. And the government and unions need to stay the hell out of it.

Those attitudes have been instituted in Americans by the corporations who on one hand want to have these high wage Americans buy their expensive products and services ad infinitum but then turn around and ship those same jobs overseas and then cry that few are buying and it is hurting their sales of products and services.

Cheap is dear and dear is cheap, I see alot of people thinking their neighbor is making too much and should be competative with the 3rd world but few if any are willing to sell their products and services at 3rd world prices to that same neighbor when they can't get a job and in turn blame them for their lack of sales.

 

[WhipperSnapper]

Any way you look at it, it's going to benefit more Americans. If the employer outsources, we get a less expensive product, by which consumers save money. If he doesn't outsource, he creates jobs for Americans.

The outsourcing brings our nation less value than what we lose; our trade deficit is a nice measure of this. When you add up all of the invisible back-end costs of foreign outsourcing and of global labor arbitrage in general (which also includes H-1B and L-1 visas and mass immigration) you will see that the small front-end costs savings for consumers are dwarfed the large back-end costs. Another way of putting it might be, if the prices of goods and services decrease by 15% but purchasing power decreases by 20% then you'd be better off without a price decrease and without a purchasing power decrease.

 

[Robor]

This is a symptom, not a problem.

The underlying problem is this: "Why is US labor so much more expensive, and why are we too good to work for the same amount someone in India/China works for?"

I've mentioned it before: US workers need to have a fundamental shift in their attitudes before we will ever see blue collar work here on a large scale again. And the government and unions need to stay the hell out of it.

Stupidest question ever?

 

[WhipperSnapper]

How many people in the US have zero income and zero money? Unemployed doesn't mean utterly destitute.

It's about purchasing power. If prices decrease by 20% and in your income decreases by 40%, you're worse off than you were before.

Another negative aspect is that we are not exchanging our goods and services for goods and services produced in other countries. Rather, we are trading our capital--real estate and business ownership--for ephemeral short-term goods. (I recommend reading Warren Buffet's excellent essay, Squanderville.)

Then, no disrespect, I think your fighting a losing battle. I think at every turn the government will be frustrated by the sheer elusiveness of some of our country's more crafty entrepreneurs.

I'm sure they could be dealt with if we really wanted to address it. Suppose that the people elected politicians with real integrity who were dedicated to reviving the nation's economy and to returning any unfairly-acquired money back to the people. Taxes can be loopholed if they get too heavy.

I think if the government ever achieved such a level of enforcement, you would not see employers quietly comply, but rather throw up their hands and quit in exasperation, or move their business (and with it their resources) elsewhere, assuming they were allowed to do so.

I suppose they could "go on strike" and relocate to their own private Atlantis if they wanted to. The government could raise trade barriers, forbidding foreign outsourcing and global labor arbitrage, meaning that anyone who wants to do business in the U.S. must produce their goods and services in the U.S. or at least pay import credits to maintain a zero dollar trade deficit.

If all of our businessmen overestimated their importance and value to society and went on strike against evil socialism and disappeared, I'm sure that millions of hard-working, intelligent, well-educated Americans, other "men of the mind", would happily take their place (and probably for much less money than the businessmen were earning before). We don't have a shortage of highly-educated, intelligent people in this country; many are unemployed or underemployed right now.

I mean, it seems intuitive to me to think of it from their perspective. These are, we assume, smart people. They bring their mental prowess to the table and create something of value, which makes them money.

Yeah, but they are not like athletes, or at least the talent difference between them and the next tier below them is not as great as that between professional athletes. I think that this notion that these people are amazingly-talented and unique is a dogma that was spread by capitalist dogmatists, perhaps by hard-core fans of Atlas Shrugged.

If all of our nation's CEOs and executives suddenly fled to Atlantis, I'm sure that there would be hundreds of thousands if not millions of very talented and often well-educated people with MBAs and JDs who would be happy to work their jobs for a mere $500,000/year. These people are not irreplaceable. Perhaps they are 1% or 2% better than the people who might replace them at their jobs. Many of them actually suck at what they do and drive their companies into the ground.

If they succeed well enough, they will benefit other people by employing them (which in turn increases the owners wealth). In return for this, the government acts as a deadening hand to his progress. I think I'd say to myself, "If they're so hell bent on slowing me down, when I'm doing more for their citizens than they are, I'll go elsewhere and employ others for cheaper."

Go! Please go! You will be replaced and your loss will go unnoticed. Keep in mind that in a nation of 300 million people, 15 million of those people have the top 5% of all IQs.

It's also very possible that many brilliant and even more talented and productive people might step up to take those jobs for less compensation. One of the dogmatic notions that you have latched onto is that all of those CEOs really are in fact the best people for the job--as opposed to being the best networkers and socializers. What makes you think that all of them are Hank Rearden and not James Taggart? What if a great many Hank Reardens and John Galts were never able to find jobs in those fields because they suck at interviewing or weren't born into wealthy families and thus didn't have the proper connections, etc.? Might the loss of lots of James Taggarts and Orren Boyles result in having more John Galts and Hank Reardens in their place?

It's thus quite possible that if every CEO in the nation went on strike and ran off to Atlantis in the middle of the night that we might find their jobs being filled by even better people.

I think a basic difference between the conservative and liberal worldview is this. Liberals see the wealthy as greedy. Conservatives see them as resourceful, and contributive; people we need more of.

It must be very difficult to think about these issues when you see the world in black-and-white and without greater context. It's easy to just dismiss your opponents as being irrational excrement-grubbing Kant-loving evil socialists rather than to actually contemplate the merits of their positions and the shortfalls of one's own position.

I suspect that many liberals regard good and resourceful CEOs as being resourceful and contributive and that many conservatives would regard bad CEOs as being wasteful and destructive and greedy. I doubt it's as clear-cut as you say it is.

 

[WhipperSnapper]

There are plenty of very rich Liberals like Warren Buffet and Bill Gates, but you would hard pressed to find many Poor Conservatives.

I wouldn't be so sure of that. There are probably a great many stupid conservatives who staunchly oppose things like gay marriage and abortion. There also many free market dogmatists who might be merely middle class or even lower-middle class who support them and keep the faith.

 

[WhipperSnapper]

I seen a similar trend on unemployment figures by education level. I forgot the exact numbers, but those with college degrees were significantly under the national average unemployment rate, meaning those without must have very high unemployment.

Let me point out that the possession of college education may not be causal in those regards because going to college selects for the kind of people who are unlikely to be unemployed in the first place. If far fewer people had college degrees, those people who would have otherwise gone to college would probably still have lower unemployment rates than the current crop of people who hadn't gone to college.

 

[WhipperSnapper]

It is not that difficult. Stop playing games with the people that create jobs. So far this admin had done pretty much everything to keep the job creators from creating jobs.

Our nation's problem is not that our economy doesn't create jobs. Our problem is that the jobs created happen to be in China, India, and Mexico or are being filled by foreigners in the U.S. Until we address that problem we aren't going to see much job creation in the U.S. for Americans.

 

[WhipperSnapper]

The underlying problem is this: "Why is US labor so much more expensive, and why are we too good to work for the same amount someone in India/China works for?"

Are you actually advocating that Americans abandon their middle class standard of living and try to have the quality of life that people have in the third world?!?

Are you saying, "I think it would be good if Americans were poorer and had more pollution and fewer labor standards?"

I've mentioned it before: US workers need to have a fundamental shift in their attitudes before we will ever see blue collar work here on a large scale again. And the government and unions need to stay the hell out of it.

What if, instead, a law were passed saying that manufactured goods and services could not be imported into the United States, or at least that any imported manufactured goods and services must be offset by an equal value of exported goods or services?

 

[WhipperSnapper]

Blue collar workers are not exactly what the US wants to keep here.

We promote education, not to put in nuts and bolts at a factory, but to innovate and produce intellectual property.

...And what we are discovering is that manufacturing is in fact an important part of the economy and that a nation with such a huge population cannot survive by merely producing intellectual property and abstract work product. Our politicians' and our economists' conclusion that we didn't need manufacturing, both high- and low-end, has proven to be disastrous. We've discovered that running a trade deficit means that we become increasingly impoverished over time as we exchange land and capital assets for ephemeral goods and services.

Also, this notion that only Americans can engage in innovation and engineering and science research is racist and false. Americans do not have a monopoly on that. There's no reason why the Chinese people cannot innovate and produce intellectual property. In fact, because necessity is the mother of invention, much innovation tends to occur in the location or close to the location where the goods and services are being produced. Eventually Chinese engineers will solve the manufacturing problems that arise at the Chinese factories.

The goal of any Economy/society is maximizing and increasing resources. Actual resources will always be limited, but ingenuity can create an exponential ratio of resources available to each person.

In other words, "the mind is the ultimate resource". This is true to some extent, but the value of physical resources is extremely important and the ability to engage in innovation will not save us from population explosion nor will it magically solve our nation's economic problems. It will not act as substitute for good economic policies.

For example, Next Big Thing technology might be discovered in the U.S., but the jobs to produce the goods and services for Next Big Thing technology will be performed outside of the U.S. in lower-wage countries.

 

[WhipperSnapper]

Cheap is dear and dear is cheap, I see alot of people thinking their neighbor is making too much and should be competative with the 3rd world but few if any are willing to sell their products and services at 3rd world prices to that same neighbor when they can't get a job and in turn blame them for their lack of sales.

This is an excellent point. Many people think that, "Other people are being overpaid, but not me; I work hard and add value to the world." It's basically another manifestation of the, "I've got mine, F-you!" mentality.

 

[werepossum]

This is a symptom, not a problem.

The underlying problem is this: "Why is US labor so much more expensive, and why are we too good to work for the same amount someone in India/China works for?"

I've mentioned it before: US workers need to have a fundamental shift in their attitudes before we will ever see blue collar work here on a large scale again. And the government and unions need to stay the hell out of it.

This is self-limiting. The reason we want manufacturing is to produce the most prosperous country possible. Right now we are hanging on to our high standard of living using borrowed money, which is unsustainable in the mid to long term. Declining to a real wage equivalent of Indian and Chinese labor would return manufacturing to our country, but our standard of living would be equivalent to that of India and China. We are not measurably smarter and harder-working than the rest of the world (unless you consider chronically malnourished areas like sub-Saharan Africa.) Also, with that average level of wealth production there is little room for concentration of capitol (the driving force of progress) without reducing some to near-starvation. There is no point in such a strategy as it would simply make things worse across the board - we would simply be a small (therefore less powerful) China or India.