Elliott's Singer On America's "Insidious And Life-Draining" Dependency Culture

Tyler Durden's picture

Given our previous discussion of the "born-again" jobs scam, the growing use of robots, and shift in technology, and the increasing disincentivization (via benefits) of the US labor force, Paul Singer's detailed discussion below of the"serious dysfunction" in the US employment markets is crucial to comprehending why the Fed is just making things worse.


Via Elliott Management's Paul Singer,

The employment situation in America is in a state of serious dysfunction. The problems existed before the 2008 crisis, to be sure, but they are getting worse, and the current Administration’s job-related policies are seriously deficient. Most parts of the developed world are facing similar challenges, but our focus in this section will be on the U.S., where the labor participation rate has reached a 40-year low. This is a nasty statistic, one that reveals the published unemployment figures to be a deception. In reality, five years after the crash, unemployment remains at recession levels. The fall in the labor participation rate reflects the perils of long-term unemployment, which turns millions of workers into unemployables as their skill sets rust with disuse and their attractiveness to employers diminishes.

One element in the long-term jobs picture is the march of technology. The technologies that are chewing up jobs are actually accelerating in their efficiency and their ability to perform tasks previously done by people. The fear that technology will make workers obsolete predates the industrial revolution, but the future will likely prove that this is only partially true. Technological advances may not be the death of employment, but they will require seriously creative policies to counteract their negative effects on jobs without impeding overall growth. We believe that this can and must be achieved.

These advances, of course, include the Internet, robotics, 3D printing, GPS, cheap shipping and nanotechnology, among others. Entire industries are being revolutionized and their profitability models altered or destroyed. There is no “solution” to this problem from the standpoint of workers who are displaced or displaceable. There is only adaption, education, retraining and moving workers in both developed and developing countries to jobs that are created by such technological advances. Where some manufacturing and service jobs are destroyed by technology, others are created. The job of government leaders (which is currently being done incredibly poorly) is to make sure their educational systems are as high-quality as possible, including a good amount of vocational training, and that their employment policies are as flexible as possible in order to avoid employer flight. Sovereigns must become platforms for, and remove impediments to, entrepreneurship, innovation and start-ups. It is not a solution to the employment challenge for policymakers to behave like Luddites or protectionists.

A related problem in America is benefits policies that encourage dependency. This is insidious and life-draining, because a balance must be struck between helping those truly in need and providing harmful incentives for able-bodied people not to work. If the government makes it less economically attractive to work than to receive a check, the predictable result will be an increase in handouts and a drain on the productive sectors of the economy. This is a self-reinforcing trend if it is practiced by politicians buying votes by promising benefits. Benefits can come only from other citizens, and this form of corruption is terrible policy with dreadful results: a cycle of dependency, class warfare, declining productivity, slower growth, fewer opportunities and unmet hopes and dreams.

A third employment-related problem in America and other countries in the developed world is competition from emerging markets, where goods and services are increasingly being produced with comparable or better efficiency, quality, range and sophistication. It is a great and wonderful human development that the opportunity for prosperity is spreading throughout the world. We should all be in favor of policies aimed at helping people and countries all over the world develop tools and methods for educating their people and providing new foundations for entrepreneurship, higher education, creativity, innovation and work at the highest possible level.

The difficulty that developed countries face from this surge in developing-world capability stems from the developed countries’ tendency to coast on past glories and to have uncompetitive wage and cost structures, in addition to an aversion to working harder/smarter/better to stay in the game. The best and only sustainable growth is that which emanates from the human mind – from smarter and more creative efforts and better organizations. “Growth” from policies that depend on beggaring thy neighbor by depreciating one’s currency, erecting trade barriers or cutting wage rates is often chimerical, and such policies are ultimately likely to backfire.

None of the aforementioned headwinds to full employment is disputable. One could assert that the developed countries are doing all they can with the best possible policies, or that nothing can be done about education, labor policy, training, free trade and other important levers for generating good jobs in a tough environment because of internal or external politics. These assertions would be false. While admittedly the cures may be politically difficult, they are there for the taking for leaders and people of courage and vision. Increasing the rigidity of labor policies, combined with protectionism, is not the answer.

In the absence of serious reforms and more effective leadership in the developed countries, their workforces and their economies are probably headed for a spiral of dependency, strife, poverty, inflation and political unrest. Although the long-term budget curves provide some clues about the outer boundaries of timing, the exact moment when we will reach a tipping point is uncertain. However, if that point is reached, which could happen sooner rather than later, it won’t be pretty.

Of course, for any given set of technological changes, policies and conditions related to jobs and the labor force, a stronger rate of economic growth makes things easier and better. Unfortunately, current government policies in the developed countries are no more conducive to providing the conditions for and removing the impediments to stronger economic growth than they are at intelligently helping the work forces in these countries manage the challenges of technological change.

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LetThemEatRand's picture

How many trillions do the banks have to receive from us before they are called Welfare Queens?

Incubus's picture

thems be gud capitallists werkers fer shur.


red team yeeaauuhh!

Anusocracy's picture

1) Make Detroit a completely government-free economic zone.

2) See what happens.

3) Apply what works throughout the rest of the US.

Incubus's picture

Still in the midnset that our dear leaders have any interest in "saving" this country.


They'll sell the clothes off of our backs and we'll love them for it.  Such is the way of the slave class.


What, any of you even believe for a moment that America would ever remain some kind of experiment in freedom while you let policymakers "decide for you" while you spent your lives on a couch, chair, stadium seat, and car seat and gave your freedoms away for the sake of a cozy paycheck and "security?"


Well, you've got your security and your lame duck population.

GeorgeHayduke's picture

You've hit the nail on the head.

From what I've observed my entire adult life (since the Reagan administration) the main objective of our so-called leaders is to do anything and everything to further enable the parasite "upper classes" to feed off everyone else. Sure they throw welfare crumbs to the poor, and everyone bitches and moans endlessly about it. But the real welfare queens drive Bentleys not Cadillacs.

I also agree with you that the folks waiting for Washington to "fix" things don't understand that they already have fixed things just the way they want it, with the wealth rushing upward to their owners. It'll reach it's climax when their owners buy all of our foreclosed houses and farms for cents on the dollar and we all become serfs and peons.

bunzbunzbunz's picture

The Bentley driving welfare queens you speak of started with the founding of the colonies and the eventual United States. Land runs - the greatest form of welfare were the initial distribution of wealth. Every asset of every citizen was derived from the land (un)fairly aquired by their ancestors. So how can you rationally say one's wealth is more unjust than another? Do you know how much land his ancestors aquired for free? Did your ancestors aquire more? Are you truly the welfare queen with the greatest (un)fair advantage - be it squandered by latter ancestors or not?

Serfdom. What a joke of a propaganda tool. The rich, especially the grotesquely rich, are accustomed to greater things, more things, bigger things, and better things. Without a content, working, producing class of people, these things would not exist. Serfs don't make new Iphones. Serfs plow dirt. Serfs eat potatoes. Serfs plant potatoes. The rich do not want potatoes or old Iphones. 

The only way a capitalist (crony or not) nation such as the US reverts to feudalism is a lack of exploitable resources. We havent depleted our states and we certainly haven't depleted Mexico or Canada yet. 

James_Cole's picture

Paul Singer's 'business' only relies about 99.9999999999% on .gov, so i guess he's a good spokesperson for .gov dependency.

TheRedScourge's picture

This dependency culture used to have another name before 1865: Slavery. Yes, back then in the good old days, almost every African American was provided with food, shelter, clothing, health care, and a job.

However, greedy selfish corporate-backed white Republican men saw it as wrong on principle and put an end to that, despite heavy protestations from the left, and claims that the entire economy would come unravelled if they did it. Of course it didn't happen, but the Democrats have been working to slowly bring it all back ever since, under the guise of equality, security, all sorts of brand new made up rights, etc, but this time, it's back with a vengeance because it's no longer limited to any one race; that's right; we're all just as free to be owned by the elite.

Incubus's picture

My dear boy, we've always been owned.

Different between America and the world before America is that we're cage free livestock.


SunRise's picture

Evidently, you don't own it unless you successfully defend it.

cj51's picture

GeorgeHayduke: (since the Reagan administration) the main objective of our so-called leaders ... further enable the parasite "upper classes". Exactly. "The Hunger Games", here we come.

Paul Singer is quite full of himself isn't he? "None of the aforementioned headwinds to full employment is disputable".  Singer is so infallible (not).
"A related problem in America is benefits policies that encourage dependency". Spoken like a true super rich hedge fund manager. No Paul, people don't ike being on welfare or using food stamps, such as the many "white" veterans of Iraq and Afgahanistan do. People use assistance to try to avoid being hungry and homeless. More Sinnger: "While admittedly the cures may be politically difficult, they are there for the taking for leaders and people of courage and vision". How ironic, coming from a guy is so obviously lacking any vision.



carbon's picture

i miss them damn obama - phone storys.

NoDebt's picture

Don't know.  When they stop giving them trillions we'll sit down over a few beers and tally it up.  I suspect we'll both be wearing Japanese-style Depends Undergarments before that day comes.

Things that go bump's picture

An optimist - you think they'll let you live that long! Good for you.

nmewn's picture

I've been calling them that for years...along with monarchs & bureaucrats.

And roundly pilloried by my brothers who actually work for their living in the process ;-)

GeorgeHayduke's picture

I've always been perplexed at how vehemently slaves will defend their masters. I think the reasoning is they believe that if they too work hard that they will become a slave owner themselves and they would want their own slaves to defend them with conviction too. Well, either something like that or willing ignorance.

Landrew's picture

Yes of course it's all the workers fault. It's always best to provide tax breaks to companies shipping jobs overseas along with allowing them to pay taxes in Ireland. Thanks Apple, Microsoft, Google, IBM, etc.

Prairie Dog's picture

Are you a communist? Do you not like Freedom?

Carl Popper's picture

There is plenty of moral hazard everywhere. Let's disincentivize all the welfare whores, corporate and individual.

"Everybody works. Nobody quits. If you quit I will kill you myself."

RaceToTheBottom's picture

Part of the problem is the timing and the reality.

It is hard now to tell the welfare cheat that their breaking the rules is bad when Jamie Dimon's is being given billions....

Tall Tom's picture

Sieg Heil Herr Popper. That is the National Socialist model.


I cannot believe that National Socialism is promoted on this Comment Board and that there are others whom are in agreement.

NoDebt's picture

Fatal flaw in most articles like this:  the presupposition that those in a position to change the course of a nation for the long-term betterment of all want to do so.  I have precious little evidence to support they think in such ways.  Far easier for them to grab a larger share of a shrinking pie than to tackle the much more daunting task of growing the pie.

Small number or rich.  Large number of poor.  Just enough middle class to service the rich.  As it has been in most societies throughout most of human history.  Arguably, and sadly, the the most stable of all societal structures ever devised, regarless what name you put on it.

Anusocracy's picture

Stable Societies? Didn't Iceland go about three centuries basically without government?

Then Norway gave them the gift that keeps on stealing and destroying.

JamesBond's picture

ahhhh…. you're 60 years too fucking late with this essay.  try again.




kito's picture

Singer doesn't get it. The country is in its end stage. The benefits given are not the cause but rather one of the symptoms of a failing state. It's the governments desperate attempt to keep the ship afloat. Take away all the benefits and the depression rears its ugly head in the most overt of manners. And spare me the bullshit on technology solving the problems of this country. The u.s. is in a permanent state of decline, as all empires go through. 3d printing isn't saving the day. These fund mangers like singer think they have all the answers to societal ills. They have it all figured out because they run hedge funds.

gjp's picture

+1 Kito, 'singing' from his cat-bird seat, telling everyone how to fix their problems while he and his cronies plunder away - it's all bread and circuses, and this guy is a particularly well-paid clown

kiwidor's picture

Correct.  Benefits are a form of backchannel revenue.    print X billion dollars, it will be multiplied Xfold depending on your local banking reserve limits.  result: whilst the 'money' remains in circulation a portion is returned to the govt in the form of income tax, state tax, sales tax, indirect taxes such as motor vehicle registrations, passports, blah blah blah. Defence projects and spying projects are no different.  Here in kiwiland i'd estimate the return to govt from govt spending to be 3 bucks for every 1 buck spent.  

Rather than bailing out banks, most western economies have reached the point where their efficacy is compromised by *not* increasing benefits to non-participants.  increase the welfare payouts tenfold and tax the super-corporations tenfold and you'll see a return to a stable middle class with surplus for 'kulchah'.  Dammit, we might even see live bands playing on the streets for fun.  May even see some art or decent literature too.




kiwidor's picture

erratum:  i have since had confirmed by a treasury boffin that the ratio is about 1:1.   the nz government does not lose if it prints money into existence.

Thisson's picture

Rather than taxing the rich, I'll settle for requiring the assets (debt) they hold to be written down to their actual value (zero).

kaiserhoff's picture

Good piece, but nothing new in it.  Politics, in the broadest sense, is most of the problem.

When governments, and government protected monopolies like health care are half of GDP, it becomes really difficult and quite discouraging to try to improve anything.

A Lunatic's picture

We all know by now what the problems are. The question is, what are we going to do about it? Obama came upon the scene promising many of the right fixes, but delivered a big pile of the same old shit.  It should be obvious to all of the adults in the room that the last thing we need is more fucking reform (bullshit promises) from Washington as all it ever does is exacerbate the very problems everyone is bitching about. Cut Washington off at the knees, cut the purse strings, clean fucking house down to the last statist "public servant", throw out the lobbyists, end the occupations of all foreign lands, reinstate the fucking Constitution..........or keep pissing and moaning, hoping for a brave political savior and his faithful unicorn steed to ride out from under the rainbow of hope to save the fucking day........

Cabreado's picture

Someone appears to be afraid that while he was kicking and not paying attention, all the sand got kicked out of his sandbox.

youngman's picture

All that free stuff..buys votes..and that is the game winner....at least for the short run..but it will all fall apart someday..as our dollar will become trash...and so will our people..

Platinum's picture

The dumbing down of the American people, has actually backfired on TPTB, as they still need people to run the smoke and mirrors show, and those people are increasingly incompetent. The internet has been instrumental in helping to expose it to people who are smart enough to comprehend it, but wouldn't have gone looking for the truth otherwise. The FED is the perfect example of this.

The entitlement mentality of a large section of the population, will anchor them to the big cities, where they will be rounded up when the time comes. That is the price they pay for their continuing meal ticket. Sure it will technically be voluntary, but what choice will they have?

Just another part of the plan...

Wilcox1's picture

What do you mean by rounded up?  

Carl Popper's picture

In my field I see a lot of poor people. They all have become experts in benefits and entitlements. That is what they spend their days focused on, trudging one kid after another to the social security office, filling out food stamp forms, etc. Once they get their HUD housing and every conceivable benefit then they just vegetate in front of the tv. There is no incentive to better themselves. No carrots and no sticks. However if they do try to better themselves they quickly learn that having an official job just screws them out of their bennies. Their kids grow up seeing this kind of thinking and it becomes generational.

Producers eventually decide to quit being chumps and we get a system reset i hope.

RaceToTheBottom's picture

Data was available with Pavlov's dogs.

We would be better off by having dog trainers instead of welfare assistance workers. 

Before you racist my ass, I believe business regulators should be of the same ilk.  Dog training methods would apply to Banksters as well as welfare cheats.  Instead we have incentivised our bankster CEOs to promote criminal activity.

From what I have seen in the last few years, humans are worse than the worst animal and barely worthy of animal training methods....

RaceToTheBottom's picture

And in true Cesar (or Seezar) fashion, he would spend most if not all of his time, training the humans, where the intelligence is lacking.

Notarocketscientist's picture

Doesn't matter what we do - the global economy grew only because we had new frontiers and resources to exploit.  That is over - growth is over

Binko's picture

Growth may be over in the sense that there won't be ever increasing mountains of consumer goods and ever bigger houses and cars for everybody.

But if we can shift our focus to where growth is seen as improvements in quality rather than quantity we can still grow in the more meaningful sense. Wouldn't it be a nice if people were happy with small houses built with craftmanship rather than immense McMansions. We can replace giant computer systems with handheld tablets. There are thousands of other ways to live simpler and happier with less quantity of goods.

This is the form that "growth" will take in the future for those wise enough to see it. Unfortunately the vast majority of the American pubic is so stupified by junk food, hip hop music, gladitorial sports spectacles and endless video games that they really aren't capable of seeing much of anything clearly.

Calmyourself's picture

Did Rip Van Winkle just get up or what??  This singer fellow seems to be late to every party, yes, munies are going bankrupt, yep QE will have a bad ending and dependancy has been used to train the American sheep for statism..  Welcome to the party now try to dredge up an original thought...

kiwidor's picture

The whole idea of full employment is flawed beyond comprehension. for functional social lives, less workers are better. the only question is how to divvy up the work.

I would suggest *extra* rewards and rebalancing of rates for workers based on
1) real risk to life or body
2) complexity of work
3) productive output

That rules out most government workers.

That would mean >$150 hour for the mechanic who wrecks his shoulders , hands, back working on machines...and about $40 to $75 / hour for the lawyer whose real risks result from inactivity.

Similar rebalancing for food producers, factory workers vs. bankers.

Then we have the question of sharing the load, so people have a sense of participation. Suggestions please? With things as they are, full employment of everyone for 3 to 4 months of the year and having the same 'lifestyle' is possible. And there is still surplus for the incapable or unwilling.

We have the technology and capability already; bullshit jobs are the current paradigm. When google get their a into g they'll release "google government" or "government in a box" . a few shipping containers full of hardware and a click-configure revenue *circulation* scheme which allows free dental, medical care for everyone, easy to get forms/documents of identity, universal-ish income. no more buildings full of people having meetings to discuss their strategy to planning the approach to talking about doing something maybe.
massive decentralisation will result (cities with populations of 9 million don't make sense economic sense) and finally, the great problem of "what am i gonna do today?" maybe sit in the sun ? maybe play the guitar? look after the kids. go for a walk?

What we have today is the most egregious waste of human talent and potential that has ever existed, and the least capable are the most rewarded. The sooner this is recognised the less bloody the revolution will be.

Screw full employment!

p.s. some have commented that the producers will eventually give up. no...they won't because they like to produce. producers need to be the political shakers and movers...instead of mere production, become experts at systems that allow the most recreation, learning, pottering around, and socialising. the box-tickers and pedants will eventually die out as they realise their fundamental uselessness to all.

Tall Tom's picture

Planned wages? A planned economy? LMAO.


Another true visionary...NOT.


Socialism is what got us into this mess in the first place. So just what makes you believe that MOAR Socialism will free us?




There is no plan that can "save us" from ourselves.


What can save you is Liberty and Freedom from Socialist tyranny.


For what reason is there Socialists innundating the Comments Section? There has recently been a flurry of them encroaching recently. Has ZH become too much of a threat to TPTB?

kiwidor's picture

i'm no socialist.  every political spectrum test i've ever done says something along the lines of moderate liberal.

socialism was an outgrowth of the industrial revolution.  what i'm saying is beyond mere political alignment and relates to our capability for automated production, automated administration.  that means we, collectively,  don't have enough to 'do' in the sense of jobbing.  feel free to make a better suggestion instead of the usual 'wah wah he's a socialist ' nonsense.

socialism, communism, capitalism ; all these rely on a presumption of scarcity which no longer exists.




Thisson's picture

Your model doesn't work.  This is Ludwig von Mises' economic calculation problem.  To achieve production of the goods and services that people actually want most, how much they want it has to be measured by what they are willing to give up to obtain it.  You need a market to perform this function.  When you have some politburo "guess" the correct value of something, whether it is wages for a particular job, or what interest rate to set, you will never guess the correct value: you will always choose a value that is too high or too low and you will get either an overallocation or underallocation of resources.

Constitutional Republic's picture

You get a 'dependency culture' when you allow a central bank to make money out of nothing and charge interest on it which means that the country depends on ever expanding debt, promoted by littler banks and liked by littler people.

This is plain bleedin' obvious.

All the fancy words and programs beloved of politicians and banks merely enriches themselves.

FunkyOldGeezer's picture

FFS turn the whole argument on its head.

If there were decent paying jobs readily available, who would want to live on subsistence level benefits (because that's what benefits are meant to be)?

There simply aren't the good paying jobs available.

Its so simple to blame the have-nots for a innovation-free, greedy, morally bankrupt, commercial sector, that has got hgh on excess profits made on the backs of the have-nots the world over, by squeezing their wages until there's virtually nowhere else to go.

If the commercial sector were doing its job properly, masses of well paid jobs would be created and the masses would be only too happy to fill them.