I have a different view of the economy than the rose-colored glass narrative now dominating our political discourse
You can see from the Bureau of Labor Statistics that the United States had 13,725,000 manufacturing jobs as of January 2008. Currently we have 12,785,000 manufacturing jobs. So simple math shows we have 1,000,000 less manufacturing jobs than 11 years ago. How does that jive with the narrative that “our economy has never been better?”
It doesn’t. It has never been better for the most wealthy due to their extraordinary gains in the stock market but for the average man/gal the economy is mostly a hard grind of survival.
But it is really worse. Since the above graph is just comparing the last 11 years. Please look at this graph
You can see the United States at the height of its domestic manufacturing output almost employed 20,000,000 people in the sector. So we have lost approximately 7,500,000 manufacturing jobs due to outsourcing/free trade.
In 1979, we had close to 20,000,000 manufacturing jobs with a population of 227,000,000. As of today we have 12,750,000 manufacturing jobs with a population of 327,000,000. The United states has added 100,000,000 million more people while our manufacturing base declined 40%. The math just doesn’t add up for a Goldilocks economy.
Neoclassical economists will argue all kinds of nonsense such as a service-based economy. Tell that to the Rust Belt that was hollowed out. Manufacturing jobs support service jobs. It’s that simple. When a community loses their manufacturing base the community declines swiftly. Leading to drug abuse, crime, despair, suicide, public services declining like the water supply in Flint, Michigan. It’s so obvious that I no longer see economist being interviewed by the press arguing the benefits of outsourcing or what they call “Free Trade”.
Who has won? Anybody with substantial assets in stocks has won. The huge increase in the Stock Market has come at the direct cost to the working man. Overseas production where there are no environmental regulations, low pay, no social security, medicare, etc has led to substantial profits for Wall Street. In the short term this works. But a day will come when the desperate will had enough and even the rich will not be protected behind their gated communities. This on top of the huge manipulation that has been occurring with Central Banks of the World due to record printing money out of thin air and buying stock.
There has been huge manipulation by the Central Banks of the World via an unprecedented purchase of common stock via their printing press. I believe in the role of Central Banks unlike most libertarians. I see nothing nefarious in their institutional mandate. In the United States that is Full Employment. The Central Banks of the World play an integral part of our economy and their performance during the 2008 Financial Crisis was admirable. But the buying of common stock is a bridge too far. It destroys the pricing mechanism of the market. How much is a stock worth if there is an unlimited supply of money behind it such as a Nation’s Central Bank? What makes that different from China manipulating their stock market? Does anybody believe or better would anybody reading this blog be comfortable investing in a Chinese stock listed on a Chinese exchange.
If you look closely at the individual stocks there are some seriousness signs of a reckoning. GE for example.
FANG – Facebook, Amazon, Netflix, and Google has been behind this meteorically rise in the indexes. In reality, these stocks are cannibalizing other sectors of the economy. Netflix picking up the customers who have canceled cable because they can’t or chose not to pay a high cable bill. Amazon at the expense of all retailers. Google advertising destroying advertising in the local newspaper. Facebook, well Facebook is unique. Millions of narcissist wasting their time everyday with cliche after cliche. I imagine an afterlife hell would be sentenced to facebook for eternity. However, these stocks have accounted for the vast majority of the SP500 index rising. For the top 20% of America this has been very good but to the extreme detriment of the bottom 80%.
Here is an article from my local newspaper on how the United States government manipulates economic statistics to make the elite look like they are leading us to the “Land of Plenty.”
Read further down and you will see my community of Dalton, GA. The Carpet Capital of the World. Without manufacturing carpet there would be no blue collar jobs here. Carpet has lost market share and a book could be written about it but this is not the point.
According to the article “To the south in metro Dalton, Georgia, unemployment fell by two tenths of a percentage point in September to 4 percent — the lowest rate since since May 2007 and less than a third of the peak unemployment rate reached in Dalton during the depths of the Great Recession when unemployment reached 13.6 percent at the start of 2011, according to the U.S. Bureau of Labor Statistics.”
“But while employers in Dalton have added nearly 5,000 jobs in the past five years, employment in the metro Dalton area still remains 10.5 percent, or 6,897 jobs, below the all-time employment peak reached at the end of 2006 before the Great Recession.”
So my community has 4% unemployment rate but 7,000 less jobs than 2006. An Economist simply performs this trick by disappearing people. Either via suicide by despair, mass incarceration, or their favorite no longer in the workforce. No longer in the workforce is the American definition of homeless.
President Trump is trying to do the right thing but he is fighting policies and consequences of the last 30 years. Manufacturing will not move back to the United States. They are already relocating to other areas of southeast asia outside of China. There is plenty of people in the world who are desperate for jobs outside of China. Corporate America will not make capital investments in the United States without the certainty that his ideology of protectionism will survive more than his current presidential term. They are guilty of short-termism but even they are not that impatient. Trump’s ideology is his alone and not of a political party. He is right But it is too little too late in my opinion.
GM is just one symptom of this rot. 15,000 manufacturing jobs to be eliminated in the US. The reason GM’s Chevrolet Cruze sedan sales have fallen dramatically the last couple of years from a high of 300,000 to a little over 100,000 currently is not that they made a bad car. The Cruze is still a piece of junk like always. The reason their sales dramatically fell because GM was approving anybody who could breath for credit during the years of 2012 – 2017 at their in house finance unit. Guess what? A lot of those buyers have defaulted on their auto loan. The average FICO score was around 530 if that tells you anything. People with poor credit talk and if you wanted a car you went to GM and bought a sedan from 2012 – 2017. Once the subprime auto loan default rate shot up inevitably the loans dried up. In 2014 GM sold 273,000 Chevrolet Cruze and this year they will be lucky to sell 125,000. Wallstreet performance at its best.
20 years ago I could rent a decent apartment for $500. Now it would cost $1000. Many or most current University students are simply being led to the debt gallows. I could go on and on. Our healthcare system is still a disaster for many if not most. Illegal immigration continues to poor into the country leading to turning wealthy communities such as the State of California into dystopian hellholes. You get the picture.