June 20, 2011

I Have No Idea What To Do

Category: Economy — Cranky @

There’s kind of a schizophrenic attitude going around the United States right now. The Republican party is beating the drum on drastic cuts in spending, and across the nation people are nodding their heads. “Yes! Cut spending now, lest the debt grow out of control! And let’s focus on job creation. Cut spending, create jobs!”

The problem is that drastic cuts in spending by the government means an immediate rise in unemployment. As in, right away. The government will shed workers as it shuts down programs. Businesses that provided services and supplies to those programs will shed additional ones. Subsidiary businesses like restaurants near those businesses will shed workers. Trickle-down economics might not work, but trickle-down unemployment absolutely does.

Withdrawing trillions in spending will hurt the citizens of the United States. The debt is already out of control, too. Even if the Republicans get all of the cuts they’re demanding, it’s still not enough. Not even close. Behind closed doors, I’m sure they all know it. The question is no longer, “How do we bring our debt back into stability?” It has become, “How long can we stave off complete collapse?”

In the litany of mistakes being made because they’re stuck in denial, some stand out significantly. Education should be funded until money stops being money, otherwise they are trading their future away in order to delay the collapse for a very tiny period of time. The same goes for research funding. They should be focused almost exclusively on tearing down government by rooting out mandate overlaps, unnecessary layers, and duplicated services. Only then should they start large-scale cuts to entire services, like Planned Parenthood.

Also, the idea that construction workers can draw unemployment benefits when there is infrastructure work to be done mystifies me. If you have to pay him, put him to work, whether it’s filling potholes or fixing bridges. Get something for that money. That’s the thing people forget about some of that spending – sometimes it’s not just an expense. If the government creates a make-work project to build a needed bridge, at the end of it all they have debt… but they also have a bridge. So cut unnecessary government before you cut the bridge.

So while the U.S. continues to hemorrhage money, and the policy-makers fight over the debt ceiling (which only matters in the short term), I’m now wondering, is it finally in sight?

In December of 2007 I wrote, “I thought that a recession was coming. Now I think it’s much, much worse… I don’t see the crash decades away. I don’t even put it years out. I think the crash will begin in earnest in 2008.” Not a bad short-term prediction for a guy who is clearly not an economist.

In May of 2008 I wrote, “This is it, folks. The massive reset has begun. In a few years things will improve, but the artificially inflated lifestyle of the American will never return.” Well, I botched that prediction. It’s been three years. It’s taking far longer than I expected for this to all play out, and the global scale of it all was a complete surprise to me.

My problem is I have absolutely no idea what to do about any of it. I can’t advise anybody. What if I’m wrong, and the government pulls the U.S. out of its tailspin? Just because I don’t see an out doesn’t mean there isn’t one. What if things are simply not as bad as I’m assuming? I could be looking at reality through my own jaded little glasses, seeing an economic apocalypse where there is none.

Bah. It’s all so damned complicated. That’s the problem.

Cranky

March 28, 2011

Rethinking Power

Category: Economy — Cranky @

As the Japanese nuclear crisis continues to unfold, all over the world countries are rethinking nuclear power. A majority of Americans favor a moratorium, according to the International Business Times. I’m not sure I understand the logic. It’s a 40 year old design that’s having problems after an unprecedented earthquake and tsunami, so the answer is to stop building new, safer nuclear plants that don’t have those issues, and keep running the old ones?

The rallying cry is, “You must consider the worst case scenario! Nuclear reactors can melt down!”

I embrace their logic, wholeheartedly! By all means, let’s consider the worst possible outcomes.

We’ll start with nuclear. I think it’s fair to say that Chernobyl is the worst case scenario. The World Health Organization says 4000 deaths could be attributed to it. 31 died at the scene. Now, that’s bad, but it also represents the vast majority of deaths ever attributed to nuclear power.

By comparison, deaths due to coal emissions don’t need a worst case scenario. They’re an ongoing nightmare – worldwide there are a million or more deaths (250 Chernobyls) each and every year. It’s not necessary to mention the impact of coal-fired plants on the global climate. Yes, some plants are much cleaner than others… but most are not.

Hydroelectric, on the other hand, has a clear worst case scenario. Indeed, the worst catastrophe related to power generation occurred in China in 1975 when the Banqiao dam burst. 26,000 people died during the flooding, and 145,000 more died in the subsequent famine and outbreaks of disease. Dams in general are an environmental nightmare, but that’s a different issue.

The logic is inescapable. After looking at the worst case scenarios, it’s vitally important that we stop making coal plants and dams. More than that, we must close down the ones we already have. They’re incredibly dangerous.

Cranky

November 30, 2010

Jobs

Category: Economy — Cranky @

Yesterday I was at the supermarket contemplating the addition of self-checkout stands. These inventions allow a single attendant to service up to 10 stations at once. The stands were busy, with a small lineup waiting. That struck me as odd, because several traditional checkout stands were attended, but idle. One of the waiting checkout girls was looking at the new stands, and she wasn’t smiling.

I could practically hear her thoughts. Where was she going to work?

North America is learning efficiency in this crisis. We’re doing more with fewer people. When the economy rises from the dust, these leaner, more efficient companies are not going to go back to their former headcount. So sayeth some pretty big names in industry.

Now, some technologies make sense to develop. A competitive edge is a precious thing indeed, and any technology that improves your product is a good thing to have. But what do these self-checkout stands really offer? On the face of it, they would offer speedy checkout. That, however, is reduced by consumers being slow and clumsy with the system, and by false weighing issues that lead to “unexpected item in bagging area” delays. If the store simply manned all of the standard checkout stands they had built, checkout would be just as speedy.

Their best advantage is to the retailer. They can reduce headcount. But, again, where are all these people going to work? They can’t build these machines – they’re mostly built in Asia after the technology was sold to NCR and Fujitsu. A small number can learn to fix the machines, but most will have to move on.

I think a lot of people don’t realize just how many of those lost jobs aren’t equivalent to layoffs. They aren’t coming back – probably not ever. But what are these people to do?

Quite a few economists in the U.S. have concluded that unemployment might remain at 10% for up to 10 years. While 10% is clearly an understatement (or an outright lie), it might surprise you that I actually believe these economists to be correct. That’s worrisome, because the U.S. can’t afford to have even 10% of the workforce producing nothing, but consuming unemployment benefits or welfare for a decade.

Globalization is helping North America to create a massive lower class. It began when we started outsourcing our manufacturing. In my little isolated corner of the world we’re feeling the effects less radically. Our economy is heavily industrial in nature, and while demand for tradesmen ebbs and flows, it never really dies. We can afford the benefits for those who need them. We’re not the world at large, though, and I worry about all the people who work hard, but who are being “right-sized” out of a job.

Those checkout attendants work much harder than I do. Taking that job away is unfair, and counterproductive for society as a whole.

Cranky