# What U.S. Economic Recovery? Five Destructive Myths

by rhody
Tags: destructive, economic, myths, recovery
P: 21,634
This is a bit dated, but -

Why has the US economy stalled? (July 29)
 The US government has released its latest set of economic growth figures - which includes a set of revisions going back all the way to 2003. The figures show that the recession - in 2008 and 2009 - was actually much worse than thought. . . . .
P: 1,123
 Quote by Astronuc This is a bit dated, but - Why has the US economy stalled? (July 29) http://www.bbc.co.uk/news/business-14348710
I like their analysis of "chicken and egg" - and the 70% of the economy being consumer driven statement is startling.

My guess is that even if the unemployment rate begins to drop - economic growth will be slower than expected. The reason is tightened credit. In the 2000's credit was loose and spending was wild - the high unemployment is coupled with massive credit default and bankruptcies. Folks who previously had $5,000 to$25,000 credit limits (or even much greater) may now find themselves carrying a pre-paid card or a $300 to$500 credit re-builder card.
PF Gold
P: 765
Oh, yeah one more thing... feeling like speedup is haunting you on your job, well, maybe it is...

U.S. workers are the victims of a speedup
 That's true for some. But in the big picture, the data show a more insidious pattern. After a sharp dip in 2008 and '09, U.S. economic output quickly recovered to near pre-recession levels. The United States did better than most of its fellow G-7 economies. But U.S. workers didn't see the benefit: During the recession far more people here lost their jobs than anywhere else, and far fewer were hired back once the recovery began. And who knows what will happen now that the economy has made another downward turn?
and
 Workforce down, output up: No wonder corporate profits are up 22% since 2007, according to a new report by the Economic Policy Institute. To repeat: Up. Twenty-two. Percent.
I would like to see corroborating studies on this, not just from EPI, anybody know where to find them ?

Rhody...
P: 1,123
 Quote by rhody Oh, yeah one more thing... feeling like speedup is haunting you on your job, well, maybe it is... U.S. workers are the victims of a speedup and I would like to see corroborating studies on this, not just from EPI, anybody know where to find them ? Rhody...
I'd also like to see some support on this. I'm familiar with quite a few manufacturers that run short (full employment) production cycles then shut down until (completed) inventory is depleted. If the inventory sells in a month - they open the factory and make more - if it takes a year to sell out - the factory sits idle until needed again.
PF Gold
P: 765
Generation Vexed: Young Americans rein in their dreams
 "There's a generation here being formed under the crucible of unemployment, debt and lack of economic chances," said Conway, who was chief of staff at the Labor Department during the George W. Bush administration. "They're just seeking an opportunity to get in the game."
When I was growing up, we could afford to dream, sadly for many young people (20 somethings), this is not the case anymore. The long term issue is, what will happen if this continues for another 5 to 10 years, and what, if anything are you (young people following this thread) prepared to do about it ?

Rhody...
P: 41
 Quote by rhody I would like to see corroborating studies on this, not just from EPI, anybody know where to find them ?
MotherJones magazine has interesting charts on this topic (overwork,productivity,speedup etc.). The good thing is that they cite their sources (mostly from Bureau of Labour Statistics)
http://motherjones.com/politics/2011...-harder-charts
PF Gold
P: 765
More signs, reliable ones that indicate that bear markets are looming on our horizion:

Indicator a harbinger of bear markets
 Here’s how the nine major sectors have performed since recent highs: Financials -25.2% Industrials -18.3% Energy -16.3% Materials -15.4% Consumer Discretionary -13.7% Health Care -13.5% Technology -10.3% Consumer Staples -8.9% Utilities -7.6% For today, multiple death crosses in major indexes and sectors would indicate the potential for danger ahead.
Rhody...
PF Gold
P: 765
One more warning sign, this time, from the elite International Monetary Fund.
 Listen to that hissing: The fuse is rapidly burning, warning us. Wake up before the rage explodes in your face. This firestorm is endangering America’s future. From forces outside, yes. But far more deadly, from deep within our collective psyche. We have lost our moral compass. We are self-destructing. Crackpot warning? No. This warning comes from the elite International Monetary Fund. A recent IMF report looked at “the causes of the two major U.S. economic crises over the past 100 years, the Great Depression of 1929 and the Great Recession of 2007,” writes Rana Foroohar, an economics editor at Time magazine. “There are two remarkable similarities in the eras that preceded these crises. Both saw a sharp increase in income inequality and household-debt-to-income ratios.” And in each case, “as the poor and middle-class were squeezed, they tried to cope by borrowing to maintain their standard of living.” But the rich “got richer, by lending, and looked for more places to invest, bidding up securities that eventually exploded in everyone’s face. In both eras, financial deregulation and loose monetary policies played roles in creating the bubble. But inequality itself — and the political pressure not to reverse it, but to hide it — was a crucial factor in the meltdown. The shrinking middle isn’t a symptom of the downturn. It’s the source of it.” Today the consequences of the meltdown still haunt us — there’s more to come.
Rhody...
 P: 446 Just watched a video about South Korea. The student interviewed said she attends school from 7am to 11pm. I have consulted at TSMC in Taiwan they work from 9am to 11pm. Global competition means we will have to work more for less.
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 Quote by edpell Just watched a video about South Korea. The student interviewed said she attends school from 7am to 11pm. I have consulted at TSMC in Taiwan they work from 9am to 11pm. Global competition means we will have to work more for less.
Hmmm - maybe sending union leaders there IS a good idea?
P: 251
From the quotation in the OP:
 If and when these young people return to work, they'll earn 20% less over the next 15 to 20 years than peers who were employed.
I'm not sure what information this reporter was trying to convey when adding this sentence in during a discussion about youth unemployment. Those unemployed are unemployed partly because they're the most undesirable to the labour market (on average) in apposition to their competition. Of course their income expectation is going to be significantly less.
PF Gold
P: 765
From the Guardian UK:

We've been warned: the system is ready to blow
 A crisis that has been four decades in the making will not be solved overnight. It will be difficult to recast the global monetary system to ensure that the next few years see gradual recovery rather than depression. Wall Street and the City will resist all attempts at clipping their wings. There is strong ideological resistance to the policies that make decent wages in a full employment economy feasible: capital controls, allowing strong trade unions, wage subsidies, and protectionism. But this is a fork in the road. History suggests there is no iron law of progress and there have been periods when things have got worse not better. Together, the global imbalances, the manic-depressive behaviour of stock markets, the venality of the financial sector, the growing gulf between rich and poor, the high levels of unemployment, the naked consumerism and the riots are telling us something. This is a system in deep trouble and it is waiting to blow.
Rhody...
P: 1,123
Back to the OP with regards repatriation of capital and low wages. In order for a business to succeed in the long term a comprehensive plan must be developed. If labor agreements guarantee too much - it might force the business to make cuts in other areas or reduce the number of jobs. This is one of the reasons salespeople are typically commissioned - they are typically paid more than the average hourly worker - but it's performance based.

Using this model and including a base pay - perhaps using minimum wage as a baseline - labor negotiators would be wise to request a percentage of earnings to both increase the number of people employed and maximize the long term earnings potential.

IMO - a tax policy that favored companies who repatriate capital for start-ups and structure a base plus profit participation compensation plan would be highly attractive to business. However, if the Government tries to dictate the type of manufacturing or specify a specific group of people to hire, or require union participation, or over-regulate with EPA (etc.) - it would not be a widely successful incentive. Again IMO - they best hope in the future of above average workers wages in the US is pay for performance.
 P: 1,123 Also IMO - I don't think President Obama understands that cutting the "payroll taxes" for workers doesn't help create jobs. While the $10 per week boost in the paycheck may help offset$4.00/gal gasoline - it (MIGHT save a job or 2 but) doesn't create new jobs. If you want to create jobs with a payroll tax reduction - lower the matching tax rate that businesses pay and raise the workers contribution to offset the revenue loss. Unfortunately, that would be difficult for him to explain. The minimum wage increases have also hurt small and micro businesses that were struggling before the recession. Everyone seems to forget all of the existing businesses you see in the strip plazas and malls are still paying pre-recession rents based on pre-recession market prices. An example - a free standing building with a $1Million value is typically priced at 10% or$100,000 per year - if the value fell to $500,000 during the recession - the lease is still priced at$100K and has probably increased by a few percentage points per year - maybe to $110,000 now. If the small business owner pledged their house on a 10 year lease - a boost in minimum wage coupled with lower revenues (and higher utilities) means less employees (at minimum). Employees/labor and marketing are usually the first variable costs to be cut. btw- Yes, some are on base plus percentage leases in the malls - many of those have annual increases and minimum volume requirements as well. PF Gold P: 7,367  Quote by ParticleGrl Admittedly, this depends on what you count as a middle-class job. I'm bartending, and make enough to be in the top half of households. One of my nieces moved to California about 20 years ago, established residency, and worked as a bartender until she had gotten enough of a nest-egg to go to school mostly full-time and keep bartending on weekends. She got by nicely on tips, though that was probably a function of her attractiveness as much as her skill as a bartender. She was featured in the SuperBowl kick-off of Chevrolet's "Real Cars for Real People" ad campaign and kept getting royalty checks as long as GM ran the ads she was featured in. She now has a very comfortable job as a dental hygienist, though her husband (an electrician in the manufacturing field) has struggled to stay employed as more and more manufacturing jobs are moved off-shore. It's hard to out-source a job like hers, and very easy to out-source her husband's job. Emeritus Sci Advisor PF Gold P: 12,493  Quote by WhoWee Also IMO - I don't think President Obama understands that cutting the "payroll taxes" for workers doesn't help create jobs. While the$10 per week boost in the paycheck may help offset \$4.00/gal gasoline - it (MIGHT save a job or 2 but) doesn't create new jobs.
The goal is to stimulate consumer spending - the heart of any recovery. Increased consumer spending in turn creates new jobs. And that ten dollars per week almost all goes to consumer spending.

The price of fuel is what it is no matter what the payroll taxes may be. If that ten dollars goes to fuel, then another ten is being spent elsewhere that wouldn't be; that would go to fuel instead.
PF Gold
P: 7,367
 Quote by Ivan Seeking The goal is to stimulate consumer spending - the heart of any recovery. Increased consumer spending in turns creates new jobs. And that ten dollars per week almost all goes to consumer spending.
That's something that goes all but un-noticed in the political wrangling. Consumer spending is by far the biggest driver of our economy. Giving tax-breaks for specific industries, or bailing out parts of our national economy have nowhere near the immediacy or the strength of the effect that putting extra dollars in consumers' pockets can have. Driving wealth toward the bottom tier of wage-earners would result in spending NOW because the least affluent of us tend to spend all their disposable income, and they tend to stimulate their local economies by doing so. The "Main Street" effects of local spending have been blunted somewhat by the invasion of the big-box stores into rural and suburban America, but consumer spending is still a powerful influence on local economies.
Emeritus