Guest Post: The Country Is Over

Tyler Durden's picture




 

Originally posted at Monty Pelerin's World blog,

Data are hard to deal with when your vision is on the wrong side of it. Those wanting to claim there is a recovery underway are having just this problem. These people either have no understanding of economics or they believe falsely that they can inflate “animal spirits” with their hyped reports and that will initiate a recovery.

There will not be an economic recovery given the economic policies of this country. A recovery is not unlikely, I would argue it is closer to impossible if not impossible. The reasons for this position are not complicated. In short, the nation has become an out-of-control welfare state that is rapidly destroying the incentives to work or create jobs. Government policies appear designed toward this end. One doesn’t need a high IQ or  an advanced degree in economics to understand the problems.

There are innumerable factors responsible for the decline of the US. Only three important ones will convey why the economy is dying:

1. The rule of law and property rights are under attack.

 cyprusbankrobbery(2)

What do you really own? The depositors in Cyprus believed they owned what was in their bank accounts. They found out otherwise. Bondholders of General Motors believed they were protected by bankruptcy laws when GM was bankrupted by the government. They found out otherwise. Do you own your pension plans and IRAs. Well you always believed you did except now there is talk about confiscating a portion or all of these funds.

How much of your income do you own? For those doing well, let’s say 60%. But that portion is under attack with the “need” for higher taxes and “fair share” gobbledegook. What about Social Security? Although the government sold it as a retirement policy and told you it is yours, the government says in fine print it is not. That is their excuse for not treating it as a liability on their balance sheet.

The fact is that the rules are being changed at will by the side who has lots of guns. The number of rules and laws that have been changed or ignored in the past several years makes one wonder what laws will remain. We are  approaching the point where there are no rules which means there can be no society. Without cooperation, markets will cease to function efficiently or perhaps at all. Millions of people will starve to death under such conditions.

2. Obamacare has raised costs

The costs associated with Obamacare are still not known or calculable. The rules are still being written. Already there are thousands of pages. Even though we passed it as Speaker Pelosi suggested as a means to find out what was in it, we still don’t know as the rules are still being made up.

For sure the program is driving up the costs of medical care and driving down the quality. That is exactly the opposite of what was promised. Business firms face great uncertainty as to what this mandate will do to their costs and operating procedures. Obamacare is rising the cost of employees. When you penalize something, you get less of it. That is a prime reason why there is no employment recovery in this country.

Employers have frozen their hiring until clarity develops. The development of clarity is no assurance that they will change their behavior. If the costs are too high (and they appear to be for many smaller businesses who create the most jobs), then hiring will not return.

The effect on hiring is only one negative. Full-time workers are being made part-time in order that they be exempted from the Obamacare mandate. These steps are not something business wants to do, it is something they must do in order to survive.

3. Government policies have made the dole more lucrative than work

As we make it easier to get unemployment benefits for longer time periods, more people take advantage of the system. So too with food stamps and disability. All programs are at or near record levels in what is supposed to be four years into an economic recovery. For many, the benefits of becoming a government dependent exceed what they can earn. One study reported that a family of four, collecting all the benefits for which they were entitled, would have to earn $65,000 per annum to have the same after-tax purchasing power.

If you are a product of the government schools and are legal to work (i.e., have skills enough that you are affordable at the minimum wage or higher), at what point do you realize that there is no need to go through the hassle of actual work. You can live pretty well by staying home and taking advantage of the entitlements available to you. That is exactly what a larger and larger percentage of the population are realizing. In many cases, it is economically irrational to work.

This behavior creates a social pathology that only worsens over time. Kids learn from their parents that work is not necessary and the many ways to game the system. In this regard, look for this problem to become worse over time unless these programs are cut back.

There Can Be No Recovery

Despite all you hear coming from the government’s media megaphone, there is no economic recovery underway, nor can there be one. The policies in place ensure that one will not happen. Economics is not a top-down science as Keynesians and politicians want you to believe. You can throw as many Fed dollars into the system or devise innumerable government stimulus programs. These are all top-down. Economics is a bottom-up process that starts with individual decisions and behavior. Individuals respond to available choices and incentives. They act in their own self-interest not in the manner in which some government planner wants them to act. Top-down programs do not affect the incentives of the individual decision-makers.

We raise the costs on those who work (higher taxes) and the businessmen who provide the jobs. One of the basic laws of human nature is that when you penalize something or make it less pleasant, people will want less of it. It is not a mystery why business is not hiring and the number of workers is declining. The return to both is declining as a result of government policies.

We raise the rewards for not working. Another basic law of human behavior is that when you increase rewards for a particular kind of behavior, you will get more of it. It is not a mystery why more people are choosing the dole than ever before. Government has encouraged them to do by providing higher rewards.

Add in the regime uncertainty associated with unstable or unpredictable laws and regulations and you have the perfect storm. There is no incentive to hire. Business hunkers down not knowing what is coming their way next. They understand they are targets of this Administration. It is unlikely that there will be any improvement on this fron while Obama remains in office. This behavior has nothing to do with politics. Even businesses headed by Democrats are behaving in this fashion. It is self-interest as in the desire to survive that motivates this behavior.

Why The Economy is Dying

As government grows the private sector shrinks. As the private sector shrinks there are fewer goods and services produced (government produces no goods and few services). I believe it was Dick Armey who described this situation with the wagon analogy: there are more people riding in the wagon and fewer pulling the wagon. As the wagon becomes heavier, the remaining pullers must work harder to move it.

The pullers must support the riders. Government does not support the riders or anyone else for that matter. Whatever government has it has taken from the pullers. Whatever it doles out it must get from taxes, borrowing or printing new money. Regardless of which means it uses, it is all coming from the pullers. They pay the borrowing back. They have less as a result of higher taxes. They are made poorer by the rising prices from the printing of money.

As the burdens increase on the pullers and the benefits increase for the riders, more pullers decide to ride. The truly creative and talented can always make enough money to continue to work rather than ride. However, when their efforts can be expended in other countries that penalize them less, at some point they no longer pull the wagon. They leave the country to climes where they are treated better.

Each increase in government spending means requires more money from the private sector. That means greater distortions in the incentive-disincentive calculus that produces fewer people pulling the wagon. Now fewer people must support more non-producers. Every time someone gets in the wagon, the burden on the productive sector increases. More must be extracted from a smaller group to serve the increasing riders.

That is what is happening in this country. If it is not reversed, the economy will stagnate and eventually implode. This conclusion is dependent upon nothing more than simple arithmetic. How bad is the imbalance today? Tyler Durden provides some information (my emboldening in red added):

The punchline: 110 million privately employed workers; 88 million welfare recipients and government workers and rising rapidly.

And since nothing has changed in the past two years, and in fact the situation has gotten progressively (pardon the pun) worse, here is our conclusion on this topic from two years ago:

We have been writing for over a year, how the very top of America’s social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn’t, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.

But for now, just stick head in sand, and pretend all is good. Self-deception is now the only thing left for the entire insolvent entitlement-addicted world.

Mr. Durden’s article is worthwhile and informative. I encourage you to read it in its entirety, including the PDF attached.

 

Is The Decline Inevitable?

lawrence

Of course not. As Lawrence of Arabia stated: “Nothing is written.”

The Economic Solution

The solution to solving the problem is quite simple for an economist. Merely reverse the process. Make it attractive for people to jump out of the wagon and begin pulling. For businesses, make it attractive for them to hire. Make it unattractive to be on the dole. Reverse the growth of government and you increase the size of the private sector. More capital is made available for productive activities rather than being squandered by government. Talent stops leaving the country when they are treated more favorably here, whether this be via lower taxes or less onerous regulatory burdens. Then, get government out of the way and let markets solve the problem.

The Political Barrier

For the political class, the solution borders on the impossible. Politicians have bribed the citizenry with goodies for votes. They have sold the notion that government is responsible for all good things. The economic solution runs counter to everything that politicians have peddled. Further it reduces their power and ability to retain office, at least in a manner in which they are accustomed. It shrinks their perquisites. It shrinks their vote-buying ability. In short, it is virtually impossible for them to go along with such a solution.

What politicians thrive on is what created the current problems. Reversing this behavior is alien to them. They would not know how to behave under such conditions. Yet the economic solution is the only solution!

Do I expect politicians to change and save the country? No! Is it possible they could? Probably not, but “nothing is written.”

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Sun, 04/07/2013 - 13:16 | 3418691 Mototard at Large
Mototard at Large's picture

It looks like TD Bank/Keybank  and others are being hacked by the Qassam fighters of Iran. Also have solid reports of multipcle Dutch banks DDOSed on Friday - but no indication of who is responsible.  This is part of a larger problem which could get serious if payments and settlement servers continue to get hit as well. http://tinyurl.com/ct68dtm

Sun, 04/07/2013 - 13:19 | 3418702 Pinto Currency
Pinto Currency's picture

This article is a distraction.

Yes government is too big.

However, there is a worldwide debt bubble in collapse that has hobbled the economy and the economy will not recover until the debt edifice, along with bubble creating fiat currency, which are crushing the economy are removed.

Sun, 04/07/2013 - 13:30 | 3418736 kaiserhoff
kaiserhoff's picture

Great piece.

Our self-appointed leaders believe that propaganda is more important than incentives and disincentives.  They will have their asses handed to them.

I would only add that I meet more people every day who are white hot over the high treason of illegal immigration.

Civil wars have been fought over less..., a lot less.

Sun, 04/07/2013 - 13:38 | 3418757 James_Cole
James_Cole's picture

Only three important ones will convey why the economy is dying:

And lists the same brain-dead approved talking points regurgitated every time a discussion of why the economy is in trouble comes up. 

Each talking point incidentally having very little to do with why the economy is in trouble. 

But rage on!

Sun, 04/07/2013 - 13:48 | 3418777 Rusticus
Rusticus's picture

Agreed ! The article reads like Mitt Romney's teleprompter.

Sun, 04/07/2013 - 14:12 | 3418801 Landotfree
Landotfree's picture

Man has no ability to make Law, they can only make rules which they claim are Laws.   Billions of walking unfunded liabilities will have to be liquidated as a result of Man ignoring the Law of God or the Universe.  Although I would prefer limited government, whether or not you have a big or small government has nothing to do with what you are going to witness.   

The end result of using the equation is liquidation, it has been like that for 1000s of years on this floating rock.

What is even funnier is the statement, "the rules of law".   It's admitting there is no law and only a rule of law, rules were meant to be broken.

The author means well but is a retard.   Once Man started using the equation the end result was known, like when you add 1 + 1.... the outcome is always the same. 

Sun, 04/07/2013 - 14:56 | 3418983 aint no fortuna...
aint no fortunate son's picture

Say there, who is that Tyler Durden fellow the authior quotes? Sounds like a rabble rouser whose hair is on fire no doubt, altho I must say the chap has a point. He should start his own fringe blog, might get a few hundred people to follow him.

Sun, 04/07/2013 - 15:01 | 3419010 Pinto Currency
Pinto Currency's picture

 

You cannot have central planning and big government, with all the associated destructive consequences, without centrally planned fiat money.  You can't have one without the other.  Take away centrally planned fiat money and you rid yourself of big government.  All else is a distraction.

Sun, 04/07/2013 - 16:13 | 3419235 markmotive
markmotive's picture

Money is debt, gold is money...add one more to that: government-banking cartel is fiat.

http://www.planbeconomics.com/2013/03/money-is-debt-gold-is-money.html

Sun, 04/07/2013 - 17:54 | 3419627 BoNeSxxx
BoNeSxxx's picture

The only times in history that true personal liberty existed is the brief period when the citizens were equally gunned as the goobermint...

In the US, that stopped somewhere between 1913 and 1942.

Mon, 04/08/2013 - 03:40 | 3420997 Boris Alatovkrap
Boris Alatovkrap's picture

Strange to coincide with Amendment XVI and simultaneous of Federal Reserve Bank Act. Strange to coincide in 1917 with Bolshevik Revolution fund by Schiff Gold Train. Was Amerika actual target of Russian Revolution?

Sun, 04/07/2013 - 15:37 | 3419125 Errol
Errol's picture

LandofFree,

You are quite right about the need for billions of walking unfunded liabilites to be liquidated.  The bedrock reason is that all the easy oil and coal are gone; all that is left is hard-to-get low quality energy that requires an increasing fraction of its contained energy to extract it.

The whole debt ponzi kicked into high gear *coincidentally* in 1971 when US oil production peaked and Nixon closed the gold window.  Reagan gave the debt can a mighty kick down the road, and that can is now approaching the goalposts.

Sun, 04/07/2013 - 19:59 | 3420084 akarc
akarc's picture

 

"Agreed ! The article reads like Mitt Romney's teleprompter."

Amen and yet you get downed 42 for stating the obvious. The article is transparent sounding like something from the mouths of the Koch Brothers and the comments indicative of an invasion of zero hedge comments by the top 10%  trying to re-affirm the big lie. That we can blame it all on a mexican lettuce picker (sarc).

Any article stating the the economic problems of today can be boiled down to the three reasons mentioned is sophmoric at best in it's attempt to raise worn out Tea party rhetoric from the likes of Dick Armey a Koch/COCK beneficiary from the gutter to the dumpster.

It ignores completely the wealth and job destruction caused by the banks gambling with derivatives, the governments use of taxpayer dollars to bail out the likes of General Motors, the offshoring of US jobs by traitorous corporations to profit off communist country slavery and abuses of child labor laws while keeping profits offshore and enabling the likes of GE to pay zero income taxes.

Money transferred by the fed from the now nonexistent worker to the banks under the guise of some sort of retro trickle down theory w/ washington prostitutes beating the drums of lies that the top two percent are the "Job Creators".

This article talks about the "the rule of law" which has been rendered impotent by the government police agencies as they proclaim they can not or will not prosecute the true criminals, i.e. banksters, for fear of the consequences. 

Yet at the same time plays on the Obama hatred, A person who appoints Jeffery Immelt job czar, surrounds himself with wall street types and has continued the the legacy of George Bushs war on civil liberties. Obama can talk about gun control all he wants because he knows it will not happen and does not have to happen when the government purchases all the ammunition and the pussies that say they need their guns to protect themselves from the government show their true colors by leaving them in the closet long past the time of their greatest need.

Obama is the conservative hate mongers greatest friend and the rednecks are to stupid to realize it because he is black and unfortunately not Jew or they could hate him twice as much.. His own justice department has not convicted one banker or corporation of the high crimes and treason committed. And of course it was Obama that destroyed the country while an obstructionist congress with such luminaries as Cantor and the big Dick, "Boner" continue to spout that which their masters pay them to spout. 

It speaks of thousands of dollars of welfare dolled out to many in need because of the government/corporate allaince destruction of the economy and mentions not the BILLIONS paid out to corporations for waste. To Defense corporations producing armament that will never be used because the armed forces never asked for it and in fact asked, "please don't make us take it!"

It makes no mention of the fact that absolutely none of the current state of affairs could have accured without wholesale corruption from the top down to the lowest municipality clerk in a Florida town that will try to seize your home if you refuse to pay an illegal red light ticket. Which of course is now legal thanks to the help of Goldman Sachs (google it).

Obamacare was passed by both Republicans and Democrats who never read the bill, yet the people re-elect the same negligent assholes and will blame any consequences on anything but their own failure to work hard enough to rise above their ignorance and lack of balls to throw the bastarts out.  

Innumerable articles have been posted on this site re the wealth gap it's causes, Bank crimes and government malfeasance. Yet let somebody post an article blaming the cause of our problems on 3 items, one of which is helping to support the poverty stricken many of whom did not elect to be so and zero hedge commenters ejaculate in joy. 

It as if Schizophrenia has spread through the Zero Hedge community. Formerly intelligent, critical thinking, thought provoking,people of reason reduced to Jew/mexican/liberal/poor people hating misanthropes who believe the answer to all things is gold.

yeah there are some folk out there that are abusing the welfare disability system. So lets hold them all accountable. Equal justice under the law. I am in total agreement. We should start with the most egregious violators first, i.e. BANKERS!    


 

Sun, 04/07/2013 - 20:47 | 3420249 Totentänzerlied
Totentänzerlied's picture

Gee I wonder what you're selling. /sarc

Sun, 04/07/2013 - 22:07 | 3420494 Henry Hub
Henry Hub's picture

Sounds to me like he's selling the truth.

Sun, 04/07/2013 - 22:31 | 3420565 Hive Raid
Hive Raid's picture

The offshoring of a nation's economic infrastructure causes a huge population of unemployed, who either have to be paid for by the remaining workers or left to die off. Feeding them with a welfare state is the most stable option. Hence, we have what we see today.

Global population is multiples above sustainable carrying capacity, so a die off is in the cards, but it will only come at a breaking point when all other options are exhausted.

However, it is absolutely the Jew who designed and executed this destruction of our civilization. And the Jew has used the third world hordes--especially Mexicans--as a mass biological weapon to genocide the American people. The Jew gutted the culture and changed the laws to this end, then let economic forces carry their army in like the tides. "Corporations" simply played the economic logic as was defined for them by the Jew.

You are apparently a hyphenated American, meaning not an American at all, so your opinions on the matter are irrelevant.

 

Sun, 04/07/2013 - 23:12 | 3420640 HardAssets
HardAssets's picture

Lets see . . . the banksters have stolen the value of people's money by devaluing it by around 96% over the last 100 years that the Fed has existed. Money created out of thin air can be used to buy off politicians, spread propaganda, and control the political process. Wars are being fought and bases are occupied by the New Roman Empire throughout the world. The cost of that is horrendous.

Yeah . . . the main problem is 'bums' not working <sarc>

Sun, 04/07/2013 - 14:05 | 3418822 Jack Burton
Jack Burton's picture

Hey James_Cole. As a "James Cole" of long standing on other blogs, I use Jack Burton on ZH, so you are welcome to the "James_Cole" tag from "12 Monkeys".

While I can agree government is too big in many areas, I also find the above article just more Neo-Liberal talking points that ignore vast economic problems. While the claim is that work does not pay, that the rich are taxed to death and nobody in the private sector can make money, the facts are not always so clear. Corporate Profits are at record levels. FACT!  The incomes of the top 1% have never been so high in both real and percentage terms. FACT!  The amount of real taxes the well off pay after their tax lawyers and tax havens are taken into account, are at record lows. FACT!  The real tax rates on high income earners are lower than the 1920's capitalist free for all. FACT!

The ability of corporate America to influence the congress by legal bribery has never been so high. FACT!  The laws and tax laws have never, ever favored the off shoring of US jobs more than they do now. FACT.

I could continue, but the point is made. I agree, Government is becoming an out of control police state. But if you think America's poor are prospering at the expense of the high income earners you must be MAD! Facts do not support this.

The above article is right about some things, but ingnores the rest of the story. Just look back 30 years, the American Middle CLass had much more of the income going to them, now they see falling and stagnant wages, poverty spikes. Anyone who thinks you can just live off of welfare and have it good has NEVER tried  it. If you have never tried it, how can you claim to know?

Corporate America has record profits, they have never had it so good. The Fed. acts to debase the currency in order to juice stocks for the benefit of stock owners, NOT the bottom 50% for sure.

Too many talking points above. Just another Neo-Liberal excuse to lower taxes for the wealthy and to hand more power to corporations. Those who make the claims above are only partly right. Why not give us the rest of the story!

Sun, 04/07/2013 - 14:17 | 3418861 Arrowflinger
Arrowflinger's picture

Beat me to it.

I have been meaning to say "Hi" to Bay of Pigs.

Sun, 04/07/2013 - 14:19 | 3418869 Arrowflinger
Arrowflinger's picture

Yep....you use the same beautiful women av's...... I liked Frida Lyngstad way back over on Mish.

Sun, 04/07/2013 - 15:02 | 3419009 Jack Burton
Jack Burton's picture

Yes, we had a great crew over at Mish's site for some years. Actually the best comments section I have ever encountered for perrhaps a two year period. As usual though, the best comments sections seem to collapse over time. It is a mere shadow of it's former self.

Yes, I loved putting up beautiful women from the popular culture of my lifetime.

Oh, I am still posting as "James Cole" over at Mish's, just not very often.

Sun, 04/07/2013 - 15:28 | 3419051 James_Cole
James_Cole's picture

Oh, I am still posting as "James Cole" over at Mish's, just not very often.

It's funny someone on here once flipped out at me going off on how I was secretly posting in multiple accounts etc., turns out they had confused you and I... I mean that they thought I was posting as both + other sites. 

Sun, 04/07/2013 - 15:51 | 3419176 Harbanger
Harbanger's picture

Your talk about each others comments on other sites like you're meeting up with the guys from work.  Of course people may think you're posting multiple accounts on ZH.

Sun, 04/07/2013 - 17:14 | 3419418 duo
duo's picture

for a couple of years Mish's comments section couldn't be beat.  I was Optics guy back then.,

Sun, 04/07/2013 - 17:27 | 3419485 akak
akak's picture

But I have read that Mish was and is not above editing and even censoring comments that challenge his deflationary thesis, or that refute some of his 'facts' or arguments, even if Mish does not engage in such behavior as egregiously as Karl HerrForumFuhrer Denninger, who will brook not the slightest bit of dissent in his gulag/mockery of a forum.

Sun, 04/07/2013 - 20:29 | 3420190 kito
kito's picture

i am mish....hear me roar!!!!!!!!!!!!!!!!!!!

Sun, 04/07/2013 - 14:30 | 3418890 tickhound
tickhound's picture

Whether it's Republicans bashing the "Affordable" Care Act (amazing we still call it that) or someone from the left rushing to "Tax the Wealthy" ...

What is IGNORED in the article and every comment so far on this board is the FACT that the Roy Rogers and McD's in my town are Kiosk and Automated... they make due with fewer employees and this has little to do with government policy and more to do cost-cutting and the very simple idea that EVERYONE seems afraid to criticize..... PROFIT SEEKING!

Check-in for a flight a decade ago involved over a half-dozen "tellers" in the American Airline Terminal alone.  Last week I saw 2.... and a SHITLOAD of kiosks.  I used the KIOSK. 

This trend will continue... Ray Charles can see it, but not us for some stupid reason.

Those on the dole will increase no matter what policies are in place... Barring an all out BAN on the use of machines to replace labor. 

"Creating Jobs" for the sake of "Creating Jobs" is no solution.  We invent so many as it is just to justify the outdated labor-consumption model.

To solve this problem will require change of the SYSTEMIC type. 

Those of you still blaming policy makers are as short-sighted as you are close-minded.

WTF zher's, I say.

 

Sun, 04/07/2013 - 14:33 | 3418908 Fedaykinx
Fedaykinx's picture

bullshit.  regulation on the federal, state, and local level is choking the life out of small business, it's been an ongoing trend for decades.

Sun, 04/07/2013 - 14:50 | 3418958 tickhound
tickhound's picture

Bullshit?  Another fucking luddite?  What do you live in a freaking cave?

So you WANT to be rid of automation?  You WANT technology thwarted?  Small biz is getting choked, no doubt.... but I got news for you if you think any "chasing cheap labor" is bullshit.....

You could de-regulate till your bright RED FACE turns GOP BONER BURNT... and it won't stop anything I previously mentioned.

Sun, 04/07/2013 - 14:54 | 3418979 James_Cole
James_Cole's picture

Bullshit?  Another fucking luddite?  What do you live in a freaking cave?

Take it easy... Fedaykinx is right, you're both right. Just arguing different points. 

Small business is often over-regulated over-taxed for the benefit of big business. 

Just look at banking, it's a joke. 

Sun, 04/07/2013 - 15:09 | 3419028 tickhound
tickhound's picture

Oh please.  I brought up an OBVIOUS trend the article conveniently omitted and he called it BULLSHIT.  He defended it with an argument everyone here knows.  You know, that perma echo ringing in our ears.

Sun, 04/07/2013 - 16:17 | 3419251 zerozulu
zerozulu's picture

"The solution to solving the problem is quite simple"

I do agree. Hang three to four hundred bankers to the lamp post at the same time. of course keep in mind the time zone.

Sun, 04/07/2013 - 18:34 | 3419821 BigJim
BigJim's picture

Chum, the cheif driver for expending capital on automation IS employee costs.

The more the government raise the cost of having living employees, the more automation will be seen as a viable alternative... actually, as a necessary alternative, because the cost base of the business may not support hiring people any more.

Sun, 04/07/2013 - 19:07 | 3419918 James_Cole
James_Cole's picture

Chum, the cheif driver for expending capital on automation IS employee costs.

And employee inefficiencies.

If Bangladesh employees increasingly can't compete with automation on a cost basis, good luck for employees in the USA.

Sun, 04/07/2013 - 22:21 | 3420533 Henry Hub
Henry Hub's picture

***cost base of the business may not support hiring people any more.***

Of course this all works until there is not enought people employed who can afford to purchase the goods and services produced. Then we hit a wall! We're not there yet, but I can see the wall from here. It's not going to be pretty.

Sun, 04/07/2013 - 21:10 | 3420309 Fedaykinx
Fedaykinx's picture

while they certainly don't help, automation and outsourcing are not what is ultimately keeping us from having a real, organic, bottom-up recovery.  small business under ~500 employees or so has traditionally led the way in job growth, but that is not happening this time.  people are scared out of their fucking minds... for starters, they have NO IDEA how much labor is going to cost in the next several years, these assholes in washington haven't even finished writing the goddamned affordable care act yet and that's just the cherry on top of the entire stinking shit sundae that's been piling on for decades.  if you don't think that's not an albatross around the neck of virtually every single job creator in the country that's not a publicly traded company, i don't know what to tell you.

i know a lot of small business types who see their employees as enormously dangerous liabilities and are desperately trying to figure out how they're going to get below the employee threshold or even the hours worked threshold to get the exemption that's been handed out to all of the administration's buddies, so many of them, i might add, that they stopped making all of them public.  there are so many disencentives to job growth on the ground right now it's mind numbing, and you're worried about factories that we don't even have in this country any more becoming more efficient?  fuck that shit.  break up these zombie banks and get the government jackboot off the necks of the PEOPLE and this economy would BOOM with entrepreneurship down to the smallest microeconomic level.  that shit is obvious.

i'm not holding my breath for that to happen though.  there will probably be a lot of blood and death involved instead.

molon labe motherfuckers.

Sun, 04/07/2013 - 15:15 | 3419046 Harbanger
Harbanger's picture

The only ones under-regulated are the Bankers, WS and Politicians.  Everyone else gets regulated up the wazzu including yourself, if you haven't noticed.  So when people say we need less regulation, it's NOT for the already unregulated class.  But low information people can't distinguish, so the left plays the "we can't deregulate" meme to all the usefull idiots.  

Sun, 04/07/2013 - 16:22 | 3419220 tickhound
tickhound's picture

You take the very simple systemically implicit notion of a company cutting labor cost to increase profit, and what you get is the two same idiots arguing as to why it shouldn't happen in the first place.

Regulate!  Deregulate!

If I can rid the burden of sick days, health insurance, employee tardiness, employee mistakes, pension funds, and the always present potential LITIGATION over the firing of an employee.... All in the effort to remain competitive and increase market share... WHY IN THE HELL WOULDN'T I DO IT?  The system rewards me for doing this.  There is an INHERENT incentive to do this.  This is the rub. 

And, ultimately, this places burden on the consumption side of the equation... the wage slave is necessary.  These idiots want to justify the wage slave.  Ironic.

Cuz, cuz....

Who will drive the SUV to work?  Buy the gas?  Crash into a fence?  Get a ticket for speeding?  Buy STARBUCKS coffee?

OMFG!!! 

Sun, 04/07/2013 - 16:52 | 3419355 Harbanger
Harbanger's picture

So, what's the rub? That in a free market a private business exists to make profit? If not a profit then what are they working for? Govt credits? Yeah you buy a car, run out of gas, get some gas, get a flat, fix the flat, crash into the fence, fix the fence, it's OK. Besides, most gas, tire and fence guys don't work for the company, but they do work for a profit. Somewhere along the line you were programmed into believing that Govt can make things fair and regulate all your problems away. It's too bad you still haven't figured out by now that this same old idea has never worked. 

Sun, 04/07/2013 - 17:06 | 3419395 James_Cole
James_Cole's picture

So, what's the rub? That in a free market a private business exists to make profit? If not a profit then what are they working for?

You're not understanding the point being made. Regulate more or less - it's an irrelevant argument in terms of employment. 

People have simply become unnecessary on a large scale, something that will increase dramatically in the next decade. Economically this has interesting implications. Existentially even more so. 

Sun, 04/07/2013 - 18:40 | 3419835 BigJim
BigJim's picture

Sigh. More 'lump of labour' idiocy.

Regulate more or less - it's an irrelevant argument in terms of employment.

No, moron, the more expensive it is to hire a person, because of increasing regulation, the more reason an employer has to replace him/her with a machine. Machines are usually more expensive initially, but the lower running costs make them cheaper than hiring a person that the government has made increasingly expensive.

Sun, 04/07/2013 - 19:04 | 3419911 James_Cole
James_Cole's picture

No, moron, the more expensive it is to hire a person, because of increasing regulation, the more reason an employer has to replace him/her with a machine. Machines are usually more expensive initially, but the lower running costs make them cheaper than hiring a person that the government has made increasingly expensive.

Laughable.... is Foxconn moving to fully automate their production lines because of increased costs due to regulation??

Automation has been a constant since the invention of the wheel, the rate has simply exploded recently. Whether from software or hardware based solutions, human jobs are being replaced at a rapid clip. Even traditionally white collar jobs are being obliterated by sophisticated software. 

Sun, 04/07/2013 - 17:12 | 3419408 tickhound
tickhound's picture

Why would they work?  The theme here, idiot, is that they increasingly WON'T be working.  Automation will increasingly prove cheaper and more cost-effective.

Gov't?  Humanity needs to look to technicians and scientists for problem solving.  Not politicians.  Not lawmakers.  Programmed for regulation?  Regulation can only "regulate" the (what should be) FREEDOM to exchange information and technology. 

So when it takes fewer and fewer humans with smart robotics and technology to feed more and more.... I GUARANTEE you'll be one of the first in line to criticize why all those former "laborers" are now welfare recipients.  You want the status quo, you just don't know it.

You see the future full of International Patent Protection.  Not me.  You need the bureaucrats. 

 

Sun, 04/07/2013 - 17:29 | 3419500 James_Cole
James_Cole's picture

Gov't?  Humanity needs to look to technicians and scientists for problem solving. 

Don't need to 'look to' anyone except ourselves. People just need access, you see something like the raspberry pi or the experiment MIT did with Ehtiopia and it's clear democratization of technology and power are the answer to the problems humanity collectively faces atm. 

http://www.dvice.com/archives/2012/10/ethiopian-kids.php

Sun, 04/07/2013 - 18:30 | 3419812 HurricaneSeason
HurricaneSeason's picture

The Chinese want to add 25 million jobs a year to their economy.  Some of those jobs will come from the U.S. for the foreseeable future.

Sun, 04/07/2013 - 19:11 | 3419931 Harbanger
Harbanger's picture

Yes, Automation will increasingly make things cheaper and more cost-effective.  Which means a less expensive product to the end users, all of us.  So what's wrong with that?  We don't need to work for the sake of work. We need productive work that earns sound money so we can have a good standard of living.  The former factory laborer will find a new niche in the economy and they will also benefit from the lower costs of all products, including food. What's important is the value of your work.  We don't have high unemployment and a stagnant economy because of automation, but because the oversized welfare states are stealing the wealth of every individual in the 99% to maintain itself. There is no welfare for the former factory laborers of any broke State.

Sun, 04/07/2013 - 19:40 | 3420024 James_Cole
James_Cole's picture

Yes, Automation will increasingly make things cheaper and more cost-effective.  Which means a less expensive product to the end users, all of us.  So what's wrong with that?  We don't need to work for the sake of work. 

Nothing wrong with it, it's a very good thing. I wish most products I bought were manufactured 100% by machine. 

The former factory laborer will find a new niche in the economy and they will also benefit from the lower costs of all products, including food. 

That's a pipe dream, most people who have lost their jobs from technological advancement in the past 10 yrs will not be finding new work at anywhere near comparable wages, if they find new work at all. This isn't the 1930s. 

Within 20 yrs only a sliver of people will be required to produce the same amount of goods. It requires rethinking economy. 

Sun, 04/07/2013 - 20:51 | 3420201 Harbanger
Harbanger's picture

Most people who lost their job didn't because of technological advancements.  That's a strawman that never happened, so lets look at the facts.  Factories closed in the US for many reasons, biggest of which is the increasing cost of doing business here.  So new businesses open elsewhere and take those jobs elsewhere.   Automation is but a tiny fraction of the jobs lost.  Look how computers have changed the present work environment, everyone is more productive, even personally and everyone benefits.  Sure some people lost their jobs like filing clerks, spell checkers and bookeepers, but many new jobs were also created from the innovation and new products that this technology produced

Sun, 04/07/2013 - 21:31 | 3420375 Fedaykinx
Fedaykinx's picture

yup you get it. +juan

Mon, 04/08/2013 - 01:13 | 3420859 James_Cole
James_Cole's picture

Most people who lost their job didn't because of technological advancements.  That's a strawman that never happened, so lets look at the facts.  

It is true to some extent that the majority of people didn't lose their jobs in 2008 directly to technological advancement over the past decade, however, technological advancement ensures that those jobs will never return. 

Automation is but a tiny fraction of the jobs lost.  Look how computers have changed the present work environment, everyone is more productive, even personally and everyone benefits.

There's a tipping point with productivity - when you can replace a whole team with one person and a computer you start to have major impact on the job market. The level of advancement also means that increasingly the jobs offered are more and more specialized. With the current version of this program http://www.solidworks.com/ you can do more in a day individually than was possible in weeks if not months for a team ten years ago.

And the product design can also easily incorporate supply chain considerations leading to efficiencies across the spectrum.  It's paradigm shifting stuff but people are very slow to understand it. I could give you countless examples. 

Generally people outside of the science and engineering industries seem mostly oblivious to this trend, but I think when the self-driving car really takes over industry it'll be a huge wake up call. 

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