IMHO, it's all really quite simple, as we're reminded of what Joe Biden told Main Street on Friday: "Hang In There." So, scores of millions on Main Street are waiting. Somehow...they're hanging in there.
But, until Americans--particularly Democratic Americans--understand that what's best for big business and our too-big-to-fail (TBTF) banks is not what's best for our country, as a whole, we will continue to wait, at least as far as our economy's improvement anytime soon is concerned. Compounding the corporate kleptocracy's total disregard for the well-being of Main Street we have our own government's employment projections all but ignoring the budget crises that are playing out in many of our 50 states.
As noted in John Bougearel's post over at Naked Capitalism on Sunday morning, "
John Bougearel: Claims the Job Market Will Boom Are Entirely Unsubstantiated," perhaps nothing is more indicative of our society's inherent misdirection than our government's long-term employment projections, both in the early 2000's, and even now (h/t to Kossack
theunreasonableHUman)...
John Bougearel: Claims the Job Market Will Boom Are Entirely Unsubstantiated
Naked Capitalism
Sunday, January 30, 2011 4:47AM
By John Bougearel, author of Riding the Storm Out and Director of Financial and Equity Research for Structural Logic
A decade ago, the Bureau of Labor Statistics predicted that the U.S. economy would create nearly 22 million net jobs in the 2000s.
These government forecasts for 2010 were particularly off. When the job market peaked in 2008 on the eve of the financial crisis, the manufacturing sector had already shed 5 million workers since the decade began, with more layoffs to come in the Great Recession. The forecasters said that the economy would create 22 million jobs over the next 10 years. At the decade's economic peak, though, that number stood at only 7 million. Job growth in the 2000s was the lowest of any decade ever recorded by the federal government, stretching back to the 1940s.
Bougearel points out that, in 2009, we were told the US economy would create three million jobs the following year. The reality was 1.12 million jobs were created last year, with many of those being low-paying and/or part-time jobs in the hospitality and temporary services sectors. And, this was before the benchmark revisions to those numbers were determined, which will occur sometime in the next month, give or take.
The Congressional Budget Office, as Bougearel reminds us, is projecting that 2.5 million jobs per year will be created between 2011 and 2016.
He also refers us to the inconvenient, and quite conflicting, reality that our nation's housing market is at worse-than-Great-Depression levels, already. So, with just the excess supply of homes taking until 2013 for the market to absorb, this is virtually impossible (this is according to Bougearel's reference to JPMorgan Chase). That, alone, rules out the 2.5 million job-creation meme (per annum) for the next 24 months.
All one has to do is read Monday's lengthy NY Times editorial, "Within Our Means," about what's happening to government budgets, statewide in New York, to realize that our federal government is making employment projections that many of our largest states, simply, cannot meet.
Within Our Means
Editorial
New York Times
January 31, 2011
In the next two months, Gov. Andrew Cuomo and the Legislature will have to make very difficult decisions about how to close a $10 billion budget deficit -- which state offices to shutter, which services and aid to cut, which employees to lay off and which taxes to raise. There are no easy fixes left...
The editorial continues on to note that Governor Cuomo will have to cut the state's $92.3 billion operating budget by more than 10% to fulfill his "no-new-taxes" pledge.
The Times' editors tell us...
...So the state's most vulnerable citizens -- the poor, the sick, the elderly and schoolchildren -- will inevitably bear the largest burden...
Meanwhile, on Wall Street--which moved its focus over to the World Economic Forum in Davos, Switzerland this past week, at least until Egypt imploded--Princeton Nobel Prize-winner Paul Krugman, in "A Cross of Rubber," and M.I.T. economics professor and former top economist at the International Monetary Fund (IMF) Simon Johnson, in "Davos: Two Worlds, Ready Or Not," tell us that the world's top CEOs and bankers, totally immersed in their bottom lines and general self-interest, as usual, really couldn't give a rat's ass about what effect their piggish policies will have down on Main Street. (I noted, in a diary on Friday, that French President Nicolas Sarkozy publicly reamed JPMorgan Chase CEO Jamie Dimon a new one at Davos.)
Davos: Two Worlds, Ready Or Not
By Simon Johnson
Baseline Scenario
January 29, 2011
...Many of the people who control the world's largest corporations are quite comfortable with the status quo post-financial crisis. This makes sense for them - and poses a major problem for the rest of us.The thinking here is fairly obvious. The CEOs who provide the bedrock of financial support for Davos have mostly done well in the past few years. For the nonfinancial sector, there was a major scare in 2008-09; the disruption of credit was a big shock and dire consequences were feared. And for leaders of the financial sector this was more than an awkward moment - they stood accused, including by fellow CEOs at Davos in previous years, of incompetence, greed, and excessively capturing the state.
But all of this, from a CEO perspective, is now behind them. Profits are good - this is the best bounce back on average in the post-war period; given that so many small companies are struggling, it is reasonable to infer that the big companies have done disproportionately well (perhaps because their smaller would-be competitors are still having more trouble accessing credit). Executive compensation at the largest firms will no doubt reflect this in the months and years ahead.
In terms of public policy, the big players in the financial sector have prevailed - no responsible European, for example, can imagine a major bank being allowed to fail (in the sense of defaulting on any debt). And this government support for banks has translated into easier credit conditions for the major global corporations represented at Davos.
The public policy issue of the day, from the point of view of such CEOs, is simple. There needs to be sufficient fiscal austerity to strengthen public balance sheets - so that states can more effectively stand behind their banks in the future, and to keep currencies from moving too much. Leading bankers, in particular, insisted on the paramount importance of providing unlimited government support to their sector during 2008-09; now they insist with equal or greater vigor that support to all other parts of society be curtailed.
This is where cognitive dissonance creeps in...
Bold type is diarist's emphasis.
In addition to austerity, Krugman notes--now that Wall Street's sucked the world dry for their own bailout--that what the bankers are really seeking is higher interest rates...
A Cross of Rubber
By PAUL KRUGMAN
New York Times (Op-ed)
January 31, 2011
...the bankers...had a more substantive demand: they want higher interest rates, despite the persistence of very high unemployment in the United States and Europe, because they say that low rates are feeding inflation. And what worries me is the possibility that policy makers might actually take their advice.
To understand the issues, you need to know that we're in the midst of what the International Monetary Fund calls a "two speed" recovery, in which some countries are speeding ahead, but others -- including the United States -- have yet to get out of first gear.
The U.S. economy fell into recession at the end of 2007; the rest of the world followed a few months later. And advanced nations -- the United States, Europe, Japan -- have barely begun to recover. It's true that these economies have been growing since the summer of 2009, but the growth has been too slow to produce large numbers of jobs. To raise interest rates under these conditions would be to undermine any chance of doing better; it would mean, in effect, accepting mass unemployment as a permanent fact of life...
...
...Ben Bernanke clearly understands that raising rates now would be a huge mistake. But Jean-Claude Trichet, his European counterpart, is making hawkish noises -- and both the Fed and the European Central Bank are under a lot of external pressure to do the wrong thing.
They need to resist this pressure...
So, we have rising commodities prices, a push for higher interest rates by the international banking community, draconian cuts to basic social services here in many of our largest States, and a jobless rate which is going nowhere fast...back to Bougearel...
...V-spikes in job growth no longer accompany economic recoveries in the US. The jobs were and are being "disappeared" to automation and foreign companies.
Exporting jobs overseas was sold to Americans as the path to cheaper goods and disinflationary trends in the US economy. Unfortunately, research has shown that the savings accrued to consumers from the cost of goods sold from overseas are negligible. Outsourcing jobs and companies overseas benefits corporate America, but the benefits have not passed through to Main Street. Main Street, once again is William Graham Sumner's Forgotten Man. To cite a case in point over the past decade:
A recent paper by researchers at the Asian Development Bank Institute concluded that the iPhone, one of the United States' top innovations of the past decade, actually contributes nearly $2 billion to our trade deficit because it is almost entirely produced and assembled in Asia. The paper also raises a conundrum for lawmakers and business leaders alike: If Apple moved its assembly line to the United States and created domestic jobs but didn't raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold.
Substantial changes in free trade agreements and the tax codes since the 1980s have incentivized companies to export jobs overseas. And the outsourcing trend is still alive and well. Howard Rosen, a labor economist at the Peterson Institute observed "US companies are investing in plants and equipment, just not in our borders...They are privatizing the gains of globalization." US companies are "returning the spoils of globalization and technology" to new projects overseas...
Another more recent case in point:
Recently, [mid 2009] ATI [an Indiana company} made $30 million worth of investments to buy, convert, and modernize a shuttered factory in economically ravaged Michigan so the company could provide more [wind-turbine] parts to GE as the green economy expands with federal stimulus funding. But a Chinese firm underbid ATI, and the factory faced having to lay off 302 union workers and shutter the plant. In an aggressive bid to keep the factory open, ATI offered to match the price of the Chinese producers. GE once again said they would prefer to buy from China. The ATI plant is now closed, the jobs gone.
Bougearel closes with references to The Hackett Group's research, where we're told that: "'...2.8 million jobs were lost between 2000 and 2010 in finance, IT, HR and procurement.' And, they're projecting another '...million will disappear by 2014 in North America and Europe. By 2014 nearly half of the back office jobs that existed in 2000 will have disappeared or moved overseas. According to the Hackett report and IMF data, the job loss rate due to offshore outsourcing has accelerated since troughing in 2004.'"
Per Hackett...
"Our experience in the trenches of strategic transformation in finance, IT, HR and procurement is entirely consistent with the picture of a jobless recovery painted in this research.... There's no end in sight for the jobless recovery in business functions, such as IT and corporate finance, in large part due to the accelerated movement of work to India and other offshore locations... Realistically, we have to discover ways to create jobs in other industries and in other ways," said Michel Janssen, chief research officer at Hackett.
...
BAR GRAPH: Net G&A job losses (in millions) at companies with over $1 billion in revenue, by G&A function (Source: IMF data and The Hackett Group)
Bougearel: "The forward-looking realities of the US jobs market are not as encouraging as the CBO, BLS, and Obama administration would like us to believe."
# # #
So, while the President spoke of innovation as he brought his "Win The Future" message to Manitowoc, Wisconsin, last Wednesday, just down the road (as I noted in my diaries, here and here), "Unions Yield on Pay Scales To Keep Jobs" at companies like Harley-Davidson, Mercury Marine and Kohler, and workers are just biding their time, "hanging in there," settling for much less than they earned just months earlier--if they're lucky enough to hold onto some semblance of their old job--as they await better paydays.
Indeed, for many of the scores of millions on Main Street without work and/or dealing with record-breaking, long-term joblessness, underwater in their mortgages in an economy where home prices have dropped more than they did during our Great Depression, and witnessing income inequality unlike anything since at least our nation's Gilded Age, they're just "hanging in there," and "waiting for good dough," too.