Lesser Depression
Read My Lips: No New Jobs [New]
As has been reported virtually everywhere, the Bureau of Labor Statistics’s August jobs report is out. It sucks:
Nonfarm payroll employment was unchanged (0) in August, and the unemployment rate held at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major industries changed little over the month. Health care continued to add jobs, and a decline in information employment reflected a strike. Government employment continued to trend down, despite the return of workers from a partial government shutdown in Minnesota.
Also:
The number of long-term unemployed (those jobless for 27 weeks and over) was about unchanged at 6.0 million in August and accounted for 42.9 percent of the unemployed.
Even more fun:
In August, average hourly earnings for all employees on private nonfarm payrolls decreased by 3 cents, or 0.1 percent, to $23.09. This decline followed an 11-cent gain in July. Over the past 12 months, average hourly earnings have increased by 1.9 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees decreased by 2 cents, or 0.1 percent, to $19.47.
This in a time when, via the Center for Economic and Policy Research, “the the U.S. economy is currently short about 10 million jobs (14 million using a less conservative estimate).”
The relevant post on the White House blog by Katharine Abraham led with, “Today’s employment report shows that private sector payrolls increased by 17,000 and overall payroll employment was flat in August.”
See that? They picked the figure that increased, put it first, and rendered it numerically. For the real number, they described it in terms of an abstract metaphor.
The White House blog post finishes:
The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.
Yeah, those figures do tend to get revised. Downward.
This isn’t a big deal or anything, but I take it as symptomatic of a larger underlying condition. You remember how the Obama campaign used to be the group that spoke the truth? How Obama himself was able to say in public that in times of hardship, when people got bitter, they “cling to guns or religion”?
No more of that. He and his advisors have certainly acclimated to their new environment. “To our most valiant brother,” says Shakespeare’s Claudius, “So much for him.” Insert your own Obama-Hamlet comparison at your leisure.
The employed work multiple jobs to stay afloat (slightly less in 2010 than 2009, but I do not know what the figures are/will be for 2011), and businesses try to only hire the employed or recently unemployed. The result is to create a class of long-term unemployed with few prospects.
The Downward Spiral blog summarizes the current state of the Lesser Depression succinctly:
Now it is finally conformed: the recession that began in 2008 never ended. Trillions of dollars were borrowed and spent by the federal government that merely bought us a couple of years of stabilization before the crash resumed. Don’t give me any guff about how it’s not “officially” a recession unless we experience two consecutive quarters of negative GDP. First of all, as I’ve written before, without the insane levels of federal deficit spending, GDP levels would still be deeply in the red. Secondly, all of that nonsense about a “jobless recovery,” was just that–nonsense. Without jobs, people don’t earn money, hence they cannot go to the mall and spend, hence our consumer based economy cannot grow. It’s as simple as that.
No telling what next month’s figures will be, of course. But given that reports of consumer spending’s health in July were somewhat exaggerated, and worldwide industry is taking a sharp turn for the down, my general belief is that, perhaps, the market cannot continue to go up indefinitely.
Here we go again?
[Original.]
Marx Is Right Because He Is Wrong [New]
A few days back, economist Nouriel Roubini made the offhand comment that:
Karl Marx had it right. At some point, capitalism can destroy itself. You cannot keep on shifting income from labor to capital without having an excess capacity and a lack of aggregate demand.
As has been noted before, nothing Roubini said was at all – ahem – revolutionary. In fact, there’s really no dispute that his analysis was founded on “well-proven conventional modern macroeconomics.” Much of it didn’t even go beyond Economics 101.
In an article on Project Syndicate which describes the difficulties besetting solutions reliant on fiscal policy, monetary policy, and inflationary measures, Roubini further writes:
Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increases inequality and reduces final demand.
Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China – and soon enough in other advanced economies and emerging markets – are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness. Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.
Of course, Roubini is playing fast and loose with the definition of “socialism.” Stalinist Russia – that is to say, the Soviet Union after Lenin’s more or less capitalist New Economic Policy was replaced – (and its numerous imitators) was an experiment in nationalized state capitalism on an underdeveloped, pseudo-feudal society.
Socialism as such was not and has never been tried. You can certainly criticize Marxist ideas (I do), but you can’t say that “socialism failed” if you don’t even pretend to follow the manual.