The Economic Un-Recovery: A Novel Perspective

Tyler Durden's picture

The last three recessions have all had mediocre recoveries of both output and employment. In this noteworthy clip, UCLA's Ed Leamer explains that changes in the manufacturing sector have changed the pattern of layoffs, recalls and hiring during recessions and recoveries. His point is that fiscal and monetary policy will not solve this problem as technological change has meant it is all output gains (productivity) with no input gains (hours worked or wages earned). Any task that is mundane, codifiable, or quantifiable, will be replaced by faraway foreigners, robots, or microprocessors with the implication that we need a workforce suited to the reality of the 21st century - an educational system that doesn't produce the human-equivalent of robots but creative problem-solving analytical thinkers. He concludes, "for those who do not directly compete with microprocessors, the standard of living has improved; for those relatively-unskilled, they're terribly struggling, with very few prospects." It's a sad situation.


Direct links:

1) Why the last three recessions all look different (1:44)
2) Employment growth for last eight recessions (4:12)
3) Why have the last three recessions been so different? (6:13)
4) The jobs cycle in manufacturing (8:52)
5) Excess capacity in construction has created a lag (10:33)
6) Manufacturing output versus manufacturing employment (11:14)
7) What's the solution to the downturn? (12:20)

1. Real GDP Growth From Peak to Peak Charts:
FRED -- "Real Gross Domestic Product, 3 Decimal ( Note: Calculated using (X1-X0)/(X0), where X0 -- recession peak quarter

2. Manufacturing Employment Chart:
FRED -- "All Employees: Manufacturing"(

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Rustysilver's picture

OT or maybe not.

"North Korea says it is scrapping all non-aggression pacts with South Korea, closing its hotline with Seoul and closing the crossing point between the two countries." (from BBC)

Fkin' Dennis Radman.

q99x2's picture

We're surrounded. FEDs in D.C. Banksters in NY and globalists everywhere.

WayBehind's picture

Who needs a job when you have a Fed with magic printer? We can all get welfare and collect cash and foodstamps from the GOV. Hell yeah bitchez, problem solved! 

AldousHuxley's picture

manufacturing has been replaced with Fed money -> US government -> welfare


unemployed americans live better than chinese factory slaves.

q99x2's picture

Pay the average person more money not to revolt. Hope one day the matrix will be so kind.

GMadScientist's picture

Or teach them how to maintain and repair robots.

tickhound's picture

Why?  There's robots to do that.  And robots to teach other robots to do that.  From Vacuum tubes to DOS to Windows to 3-D printing and nano-tech in no time.  Human "labor" is becoming only Human "thinking" "creativity" "imagination."  Plug it into a mainframe to logically and unbiasly discern.  We could ALL constantly contribute.   

I like u GMADsb.  You're a bright cookie so I'm sure you'll poke holes.  And we can chat on 2k years of "money" when we're both in the mood.  But are we all to be scientists and technicians?

Humanity is stuck.  It WANTS to justify human "earning." 

I may respond.  I'm toasted tonight.  



medium giraffe's picture

Yay! I scored top marks!


NB: The NSA is watching everyone...

Ms. Erable's picture

I was confused by the question about Krugman; there was no answer that said 'lying, cock-sucking, father-fucking pile of fucktarded fucking dogshit'.

e_goldstein's picture

The correct answer is: the bearded lady.

ebworthen's picture


Love it.

I scored 51, all "e" except for the tin foil hat - much better for slow cooking a brisket.

I haven't lost any money, and the "e" responses were the longest and the most creative, which means that the author is a closet ZH'er.

Too Late To Cancel's picture

Hey! I scored a 59! I answered 'f. all of the above' on the China question, thus gaining all nine points. 

Crash Overide's picture

More charts with arrows pointing down... something about writing on a wall.

disabledvet's picture

we shall see but this so called "recession" looks more and more like a Depression every day now. whether or not we were in a bubble during the Bush years we sure have had a massive speculative blow off in commodities (huge double tops in oil and gold) with "the mother of all blow jobs going on in real estate." sorry but..."it's really not moving me." we shall see what tomorrow brings...obviously i am hopelessly optimistic as i have to live and eat as well...but i think people are going to suddenly wake up to the fact that the bulk of Governments in the West have not only failed to prevent the collapse but have in fact foisted on them even greater amounts of unpayable debts which now must be purged the way debt has always been purged...namely through default and bankruptcy. we shall see. this is still an outlier call...but if i'm right then you'll some type of market correction (a healthy thing in my view) with a ferocious rally in treasuries and an alarming drop in yields. I don't think the President is having Republicans over at the White House because "he thought they might be hungry." I'm thinking he already knows "Houston...we have a problem."

lickspitler's picture

you gotta read Cassandra does tokyo "Take the Zero-Hedge Test"  the best description of ZH ers ever .  Just perfect, now thats funny


lickspitler's picture

you gotta read Cassandra does tokyo "Take the Zero-Hedge Test"  the best description of ZH ers ever .  Just perfect, now thats funny


vjmali's picture

We need anather war. Gives good return to attract investments from the Job Creators and takes care of unemployment too. Kids gamble with their lives for prospect of college education, but thats the American spirit of risk taking only seen in poor communties, but then what else do they have to risk?        

GMadScientist's picture

Dumbest use of capital ever, bar none. Those resources don't come back.

 Classifying poor kids joining the military as conscious risk-taking (as opposed to braindead jingoism or involuntary altogether) is downright stupid.

babylon15's picture

This analysis is wrong and a perfect counterexample to the author's point is the pharmaceutical industry.  The pharmaceutical industry is one of the most research intensive industries; if they don't do research, they go out of business.  They need to come up with new drugs.  Computers and robots are not very good at this; it is a human job.  Yet 300,000 pharmaceutical jobs have been lost.  There are people with 20 years of published research in organic chemistry that cannot get jobs.


Right now, the pharmaceutical CEOs are saying there is no incentive to do research anymore; the day of blockbuster drugs like Lipitor is over.  Burning $300 million every year on research and development only to come up with zero products is not a sustainable business model.  And churning out over 100,000 college graduates each year with degrees in chemistry and biology for jobs that don't exist is not a sustainable business model either.


Some solutions can be easily impleneted like changing patent laws to make the research worthwhile.  If patents lasted for eternity, I'm pretty sure blockbuster drugs would magically appear.  Eternity is probably a bad idea.  But 10 years, 15 years, maybe then the $300 million R&D investment provides a 10% annual return.  These are the kind of solutions they should pursue, at least for now.

NoDebt's picture

Pharma isn't "manufacturing".  It's IP.  So that's not a great example.  And yes, the drugs are produced (not invented) by robots.  More so now than ever in the past.  The basic principle of the article applies to pharma still.  Manufacturing the drug after inventing it costs peanuts.

The real issue with pharma is that the first company that "cures" anything goes out of business.  To be a sustainable business model you have to invent a daily pill to keep the symptoms at bay, and no more.  That ain't easy when the current pills do a good job at that and the government will pay for them indefinitely.  There's no REASON to improve.  The name of the game has, understandably, shifted to altering the current drugs in nearly-imperceptible ways in order to get a new patent.

Much easier to lobby and manipulate the government than it is to actually figure out how to invent something truly new and better.  Big pharma is just as much a leech as as big banks are.


Radical Marijuana's picture

I liked your comments and replies about this NoDebt!

Progress in technology is wiping out jobs for human beings! Those kinds of jobs are never coming back, and therefore, something radical must be done to cope with that situation. In my opinion, the plans that the ruling classes have for these kinds of problems are to start more genocidal wars, along with democidal martial law, so that there are conditional excuses to wipe out those people who are deemed no longer useful. Furthermore, my opinion is that the fundamentals remain the same, with the only ideal resolutions to do what the ruling classes are planning to do, only in better ways than they are planning on.

The real test will continue to be how badly the vast majority of people continue to act like political idiots, or the Zombie Sheeple that were routinely fleeced and fleeced, while they were being set up to be slaughtered??? I like the theory of higher consciousness, through a greater use of information, applied within the context of the combined money/murder system, so that the debt controls are backed up by death controls in ways that have more of informed consent of citizens involved in those overall decisions.

What I would ideally like to see is that the change in education becomes profoundly radical, to have the goal of producing better citizens, rather than bullshit consumers who will be destroyed when they no longer have a role left to produce anything.

My view is that the political economy is always inside of the human ecology. That is even more vital to appreciate when the runaway progress in science and technology is apparently creating a whole new kingdom of life, in the forms of computer/machine entities, that will evolve their own ecologies! Right now, everything along those lines is headed towards developing the worst science fiction nightmares, to become the probable facts in the future.

I WISH I could believe that the vast majority of the Zombie Sheeple Americans, as well as in other countries, could wake up enough, and go through sufficient paradigm shifts in political science, especially with respect to militarism, or the murder systems, so that we could evolve a higher consciousness, or a greater use of information set of solutions, about these runaway problems. However, that seems extremely improbable at the present time, since the Vicious Wolves, the ruling classes, depend on keeping other people too incompetent to change the established systems, and instead, appear to be systematically soft killing the Zombie Sheeple, with a slated increase to much more hard kills apparently on the horizon of history.

Those soft kill strategies seem to more and more include the pharmaceutical industry, as those are directed by the big banksters and their buddies. My points with respect to those eventualities are ALWAYS that the only realistic solutions are to accomplish those soft kill strategies in even better ways than the current ruling elites are dong, and that that ideally requires more people to understand basic human ecology, and therefore, cooperate as citizens with better policies, which amount to the ways that the combined money/murder systems end up operating, as the debt controls on economic developments are directed by the death controls that back them up ... Of course, so far, those goals appear to be ridiculously naive and optimistic, compared to what is actually happening in the real world!

The ideal of NoDebt seems similar to the ideal of NoDeath, and as about as realistic, given how taxes and death are two of the most certain events. The only realistic set of goals is better debts, with better deaths. However, implementing such a set of realistic goals is extremely problematic, since the vast majority of people will disagree with that, and probably not even admit that to be the case, but rather, the actual final outcomes will be the result of the overall chaos of people fighting each other, because they can not agree, and thus ending up with things that nobody wanted or intended ... whatever the hell that may be ...

tickhound's picture

The reality is all this technology and "research" has the primary goal of PROFIT.  So much so that the amount of proprietary shit out there... you almost can't quantify it.

Remove profit from technology and it has an entirely different face.  We even FEAR it because it doesn't entirely support our models... luddites are symptomatic.

Questions change from "can we afford it?"  to "do we have the resources?"  SOOOO MANY LAWS would become irrelevant and erased.  Politicians have LESS TO DO, less to POLICE. 

Technology should be used to solve problems.  Not to innovative new ways to profit from them. 

With technology in place of bureaucrats, we KNOW what growth models can be sustained and which ones can't.  We KNOW what NEEDS can be met and which ones can't... we learn the truth as to WHY they can or can't be sustained... TRUE alternatives can be determined.  Volunteer-ism happens as debt slavery erases the time spent chasing.  Things are built to actually be efficient... built to LAST. 

Goals would change.  Everything would freaking change. 

The REAL money, outside our model, is technology... and its use to either benefit or control... for abundance or scarcity.  And its true capability and our understanding of it should be as free as a conversation.  Just like all information sharing....and therefore education.  Its the "degree" we artificially fit into a profit model.  What you actually may KNOW is secondary.

Currently, technology in all its propreitary and international patent protected and squashed for a later and more profitable date glory, is in the hands of the wrong people.

This is the ultimate battle whether we slip into the Dark Ages again or not.   


Acet's picture

The price of most of our technological gadgets is a thin layer of technological design and development, a thin layer of manufacturing and a huge big fat layer of worthless parasitic sludge, from marketting to high-paid upper-management including all sorts of middlemen in between the manufacturing and the end-user plus all the Finance Industry toll costs, paid for any financial transaction between two trading parties where the financial industry managed to squeeze themselves inbetween.

Look at technological change the same way as one looks at undamaged windows in the Broken Window Falacy: those that are not doing mindless drone jobs because that work is now done by technology (i.e. those not fixing the broken windows) are available to do more productive tasks.

All that technology should've increased productivity which in turn should've decreased prices since more can be done for the same man-hours, yet the later has barelly happened.

So why is this not happening?

I think the reasons for this are:

  • The Free Market is not really that free, so all those competitors which would drive prices down didn't really materialized in large numbers. Amongst other things, given the importance of Technology, I would say a lot of this is due to IP laws (think about this: a Patent is a counter-natura government given monopoly)
  • Monetary policy, especially fiat money and it's associated neverending inflation. With increased productivity what we should be seeing is deflation as the same products could be done cheaper, not inflation. With lower prices, people would've been able to make do with less, which would mean they would be willing to work in lower paying jobs (or maybe part-time) while having the same quality of life. However, artificial inflation precludes that.
  • People take time to adjust to a new reality and most have to be forced to change. The modern welfare system (for all it's great sides) and the proliferation of debt has decreased the pressures and hence delayed the change.
  • An increasingly uneven distribution of the worlds Capital means that there is less capital available to bid for products. Essentially those in whose hands most of the capital has accumulated have not increased material needs in a proportional way (for example: they have 100x more capital but consume only 1.5x more), while in the other extreme, those who have lost in the race to accumulate capital have reduced their consumption. The end result is that the slight increase in consumption by the very few at the top is far, far from sufficient to offset the decrease in consumption at the bottom. (PS: the reason we see a chronical pumping-up of asset bubbles is exactly because there is less capital going into consumption).

[I think there are a couple more, but this is enough for now]

Ghordius's picture

there are a couple more, but those you've brought are excellent

"a Patent is a counter-natura government given monopoly"

I dislike the counter-natura part and I would state instead

a Patent is a badly managed government given monopoly

the simplest and imo most liberal way to handle patents would be to allow complete freedom of copy (and so take the monopoly part away) coupled with a duty to declare what you have copied, and fix the payment of royalties through a VAT-like fixed percentage payment in a royalties fund

let the lawyers than fight over that fund, meanwhile production is not hampered by it and who knows, this might even give small inventors some buck, instead as the way it is now - it would at least give them instant recognition

Acet's picture

Well, patents are certainly not natural: there is no such thing in nature as an inability to copy ideas or methods. Quite the contrary, many animals are wired to share knowledge (think a predator teaching its cubs to hunt) and wired to learn from others (usually by observation, human transcended that with language).

Working in a very fast changing area which is overwelming about knowledge (IT) and having some background in Science, I have seen just how much against the grain of the natural evolution of ideas patents are and just how much of a break on progress they have become.

It used to be we could freely "Sit on the shoulders of giants" and become the giants of the next generation ourselves. Thanks to patents it's not so anymore.

GMadScientist's picture

Money spent on research: 5%

Money spent on marketing: 95%


kurt's picture

We need to go "back" and eliminate pharmaceutical advertising period. "Ask your doctor if _______ is right for you." It's bullshit. Furthermore, it makes us all hypochondriacal. Night after night, evening news, conscious and subconcious needling by the pscyho-freaks, feeling off kilter, feeling worse, oh my God, i'm sick. I may need a dick pill or Boniva!

NoDebt's picture

Best 16 minutes I've spent in a long time.  I'm a recovering economist, so you'll have to forgive me to loving this rather dry, boring shit, but this is GOOD shit, if your brain is wired to this kind of stuff.  It ain't good news, but it's a good explanation.

three chord sloth's picture

Identify the problem: B

Identify solution: F

I am tired of the same old "education be the answer! education be powerful... fix everything" punt job. It's lazy, and it's a fraud.

The plain truth is relatively few people are wired to work (productively) in "creative" endeavors. For most folks, being a competent cog doing routine work in an organization designed and run by others is the best path to an acceptable life they can ever hope for. Giving all of the routine, rote, and repetitive work to machines and foreigners will leave those folks with nothing but a descent into poverty and a downscaled future... and rejiggering the schools to emphasize "creativity" will only make their kids illiterate, scattered and unemployable, not creative.

Speaking of illiteracy; did any of you catch the story about 80% of NYC HS graduates being illiterate? That's exactly what we get when we emphasize "creativity" instead of basics.


NoDebt's picture

He knew the "solution" he presented was a horseshit cop-out.  What he said was code for what you just stated overtly- "THOSE PEOPLE ARE FUCKED AND WILL NEVER GET UN-FUCKED.  THEY SERVE NO PURPOSE IN THIS ECONOMY."

You get an up-arrow.  But try to read between the lines where the lines were meant to be read between from here out.  He didn't miss it.  You just thought he did.  Nobody who can think that straight a line believes people are suddently going to sprout the intellectual equivalent of wings.  He knows, dude.  He knows.


Acet's picture

As I pointed up above, higher productivity should've translated in proportionally lower prices.

Simply put: Fewer people to make the same => You can make more with the same people => There is more available for all => Each unit of product costs less.

Yet this has not happened.

So either production is being bound by natural factors other than available man-hours OR it's being bound by artifcial man-made factors (such as: legislation, manipulation of the representation of wealth - i.e. money - misallocation of capital, removal of competitive pressures).

I believe it's a bit of the former and a lot of the later.

So I reckon part of the solution lies not in expection everybody to become a brainiac, instead the transmission mechanism that means that higher productivity lead to less income required needs to be fixed.

I can conceive of a future where a lot of people actually work in creating individualized versions of mass-produced devices (the modern equivalent of all those hand-made reliefs carved in the stone walls of some houses of the ancient) and art is available to all, but this can only happen if such occupations can provide for a good quality of life (and trust me, from what I now know about theatre actors, at the moment they don't).

Seer's picture

I agree with the basics of what you say, but I'm afraid that it's a MUCH deeper issue.  Is it really any solution if everyone became so creative as to work for Apple building iCrap?  How smart are you if you design your own form of chains?

I think that the larger issue lies with our deceiving ourselves as to what "creative" means.  In the long-run it'll be about one thing and one thing only- sustainability: that's what nature is all about- how long you can stay in the game.  There is Zilch in iCrap that speaks to this.

Joel Salatin says that the universities are taking away the smart kids that are desperately needed to re-engineer farming.  Here is where I see creativity being real.  Schools and corporations don't teach this...

GMadScientist's picture

Why should I have to pay more so people without skills have the luxury of remaining unskilled?

The creativity he talks about isn't the kind that makes you a great's cognitive ability above and beyond that of your average lathe operator; the antithesis of illiteracy and unemployability.

Step up or stay poor.

jay28elle's picture

It's the design in order to have obedient workers.

Bobportlandor's picture

I understand his point, but his solution is ridiculous. Till this day I can see Bill Clinton and George Walker Bush up on stage saying "shipping jobs over seas is good" My thought at the time, you're out of your fn mind.

And computer chips how could you not see it coming.

The only way this country or any country is going to survive is by limiting a person to one business with limited size.  Allowing as many as possible to compete. Local Radio and TV stations should be individually owned. Gas stations, restaurants, movie theaters as well as every other chain down the line.

But trying make a silk purse out of a sow's ear, just ridiculous. I can see it now 300 million people sitting around with their knuckles under their chin thinking. Have you thought of anything Joe? No, how about you Mary?

A persons main goal is to survive. Water, food, clothing, shelter and medical access. these things are already in the grasp of people if left alone. So I submit the government better get their finger out of their ass before the populas come lookin' to kick that ass.

GMadScientist's picture

Because people who couldn't even get it together to train for a decent job are gonna be all kinds of capable at guerilla warfare?


ebworthen's picture

The video is spot on.

Since 1981, off-shoring of production, parasitization of the populace in insurance, health care, tuition, banking, taxes.

We are being bled and slaughtered for the sake of the corporatocracy, the plutocrats, the kleptocrats, the money-changers, the bankers, the lawyers, the politicians - all of the mammon lusting leeches, ticks, fleas, lampreys, and tapeworms of society.

I can't wait for the collapse and I only hope and pray that the greedy assholes who have led us here die a horrible death and go straight to HELL and that some of the decent survive to rebuild.

Fuck Wall Street and Washington.

Too Late To Cancel's picture

Ed was on a roll until the question of government fiscal and monetary policy efficacy came up (13:22 is where the thread begins).  It's one thing to say the government is impotent to promote growth/recovery, but to miss the destructive aspects of government interference in the markets is a defect.

Spastica Rex's picture

"An education system that doesn't produce robots."

But that's exactly what federally sponsored education reform including "common core standards" is doing. Our future education system is moving towards publically funded, privately managed, standardized McSchools.