Our young have been screwed. If only the knew how badly they have been ripped off. The fact is that what’s being ripped off isn’t just money, it’s dreams. It’s the ability to have the life their parent have, homes, cars and families. But bit by bit that dream has sort of gone away. I suspect that it seems so far away for so many. Why dream for things, that more than likely you won’t be able to have.
This article is optimistic. Unfortunately I think that it depends on a reality that’s been nearly destroyed. You can’t buy a house if you don’t make enough money to pay for it. Job growth is at best anemic and hasn’t kept up with the needs of the kids for jobs.
If the current administration has any legacy, it will be that they cratered the middle class and it’s dreams. I don’t think that those fools in Washington really care what the “fundamental transformation’s” consequences would be for the rest of us. Bill Clinton, in this rather candid comment, gets it.
But, here’s the deal.
So why is it such a wacky election? Because, millions and millions and millions and millions of people look at that pretty picture of America he painted and they cannot find themselves in it to save their lives.
That explains everything. That explains a lot of intensity in our party, and what looks to the outside observer like a grade school playground fight in the other debates, in the other party.
People are upset, frankly, they’re anxiety-ridden, they’re disoriented, because they don’t seem themselves in that picture.
The big problem for the elites is that you can’t pay for their programs with money that doesn’t exist. To use George Gilder’s terms you need high entropy money to pay for low entropy programs that don’t; return on the investment. That high entropy money, the result of creativity and genius pays for all the goodies of the welfare state.
The problem is that if you bleed genius and creativity with high taxes, if you bind the geese that lay golden eggs with regulations and overhead the geese atrophy and eventually die. Innovation and creativity does not happen in a vacuum. The social environment needs to be the kind that fosters it. That means things like overregulation, high taxes and arbitrary law enforcement work against the very things that the country needs to flourish.
This is especially true when growth has to come from the new technologies and ways of doing things that don’t yet exist. This happens when the old ways of doing business just don’t produce the returns that they used to. When you need the innovation that comes from 100,000 garages. When it’s that time the worst thing you can do is tie those garages up in endless piles of red tape. Yet that is exactly what the current administration has done.
Seemingly that’s what the Democrats want to continue to do. Apparently as long as the rents and robberies continue and the status quo is maintained, they are fine with low growth. There are, of course huge problems with that. I’m not sure that Hillary understands the world that she might be dropping her granddaughter into.
“Amid all the accusations that Hillary Clinton is not an honest or authentic politician, that she’s an endless shape-shifter who says whatever works to get her to the next primary, it’s important not to lose sight of the one truth she’s been telling, and will continue to tell, the voters: things will not get better. Ever. At first, I thought this was just an electoral ploy against Sanders: don’t listen to the guy promising the moon. No such thing as a free lunch and all that. But it goes deeper. The American ruling class has been trying to figure out for years, if not decades, how to manage decline, how to get Americans to get used to diminished expectations, how to adapt to the notion that life for the next generation will be worse than for the previous generation, and now, how to accept (as Alex Gourevitch reminded me tonight) low to zero growth rates as the new economic normal. Clinton’s campaign message isn’t just for Bernie voters; it’s for everyone. Expect little, deserve less, ask for nothing. When the leading candidate of the more left of the two parties is saying that – and getting the majority of its voters to embrace that message – the work of the American ruling class is done.”
In Germany after WWI, austerity imposed by outsiders created the conditions for fascism to grow. We knew this. We were even taught this in school. And we certainly know just how good that is for women and minorities.
But in America (and Britain), that austerity is being imposed by our own leaders, and most effectively by leaders of the Democratic Party (and Labour Party) — the supposed “left” party, the party that was understood to support working people.
Clinton, like all of the DLC, talks like this “new economy” of decline is something that just happened, like it’s a natural force. They do not admit that it was a political decision to break the power of ordinary working people and put it back into the hands of the aristocracy. They pat us on the head and tell us they will try not to make it as bad as the Republicans will, but it will happen and there is nothing to be done about it.
A key part of any recovery is flexibility. People need to be able to try new things, start new kinds of businesses. If that’s rendered more difficult by the state those new businesses will either never exist, only be the kind of businesses that are state approved or be run under the table and illegally. In any case the recovery never comes.
We’ve reached the point of the truly ridiculous. When police are shutting down lemonade stands, what kind of message are we sending to kids? How quickly have we reached a level of bureaucratic intolerance that even innocent activities like lemonade stands are under attack. Followed up when the obvious questions are asked by excuses about licenses and health regulations. For a LEMONADE STAND in the FRONT YARD!!! How stupid do these people think we are.
Maybe it’s more important how stupid they are. When everything is just sliding along and there’s all sorts of economic activity then this sort of rule creation just might be tolerable. As long as the creation of wealth is ongoing nobody really notices being bled by the parasites. The problem is that like every biological entity, parasites grow. As do bureaucracies. And like parasites, if bureaucracies gain too much growth and power eventually they kill the culture.
Then there’s the problem of having to deal with the produce of the bureaucracy. Hercules might have been able to deal with the Augean stables, but even he would run from dealing with the crap that companies and small employers deal with even if he had a Cat D8 to handle it.
Small businesses though, don’t really have a choice. It doesn’t help that the large companies have offices on K street to look after their interests and large compliance staffs well versed in making sure that the right backs get patted and the right papers sent out to the right people.
The small businessman has become the new kulak, only instead of having his property confiscated and being shot, like the old Soviet Union, he get the slow bleed of ever higher regulation and taxes while his property gets sold to pay the taxes or taken in eminent domain. Even if the business survives, each day is a constant struggle to staunch the bleeding of resources of time and money trying to stay afloat.
The problem is exacerbated when the government uses tax money to “incentivize” business. With their staff and connections, it’s all too easy for the well connected and large businesses to grab the tax money taken from the small businesses that pay the high taxes the incentives come from. Rather than helping small businesses, the programs turn out to actually hurt the people that they were supposed to help.
This a common problem with government programs. It’s what the people who go so far to criticize the 1980’s and Reagan don’t seem to understand. There were lots of programs to help the economy in the 1970’s from the Nixon, Ford and Carter administrations. All of which had the same results, little or nothing. Government can’t pick the winners and every time the government tries they just make matters worse.
In contrast to the 1970’s we had the 1980’s. The magic of the 1980’s wasn’t the Wall St guy with his phone, ala “Bonfire of The Vanities.” The symbol of the 1980’s was the small innovator who made it big. By reducing the tax and regulatory load the Reagan administration created an environment where a million flowers could bloom and they did. The computer I’m writing on this on is proof of that.
I’ve written previously about what happens to small innovative companies now. While in the 1980’s companies like Makerbot, would have been able to get financing and stay independent, now, it’s all too easy to sell out and be absorbed by the larger companies. How different would things have been if Apple, rather than staying independent had been bought by one of the big office supply companies like Wang, DEC or Xerox. Would the Mac have happened?
The last thirty years is full of stories about how people came to the US and made good, or started out modestly and created great enterprises. This has changed though. Now the enterprising are going elsewhere. For good reason. Things have gotten so difficult for the enterprising that it’s almost impossible to create a business in just about any part of the economy.
That makes sense for the big companies like Mattel who can buy creativity at a discount. For the creative and innovative, not so much. It’s all too easy for the big companies to suppress competitive ideas in all sorts of ways. When you have a culture of more and more regulation it becomes far more easy to just sue rather than compete.
What this does is create a culture where it becomes all too easy to exploit people. It’s not the new gig economy like Uber and such that’s exploiting people. Everybody who’s an Uber driver is doing it because they want to. It’s an economy sort of like that in the 19th Century without all the regulations surrounding employment. Of course the powers that be don’t like that very much. Free people interacting freely interchanging on their own volition is too chaotic for some people.
The problem with central planning and attempts to manage economy is that the economy will inevitably reach for the lowest rather than the highest point. instead of people being able to grow they are trapped where they are, which has rather significant social and even biological consequences. People who have no hope don’t do very well.
Of course people to work around the blockages, like bloodflow tries to work around a clot. That increases the economic pressure. Which makes it harder for people to have the same lifestyle for the work that they used to perform. The problem with a gig economy is that the individual has to work harder to overcome the time that he is not working and never has the steady income to afford things like his own house.
Which creates a whole new set of economic conditions for people. The problem with the new gig economy is that it has to carry the parasitical burden of the corporate state on it’s back. and the people who are facing a downward plunge in their standard of living can’t afford it.
Because the pay scales in the gig economy are low and the liabilities for the people participating are high, the social costs are going to be enormous. But the gig economy may be the only place in the new order where jobs can be had. Just today, I had a rather desperate call from my Toyota dealer trying to buy back my car and sell me a new one so that I could drive for Uber. Now that would bring me employment, but considering the thousands of hours of time developing my skills as an engineer that may not be the best way that my human capital can be utilized.
So what’s happened in corporate America that’s created this mess. Well first of all there’s the very high penalty for actually doing anything that actually makes real money. then there’s the easy credit to do things like pump up the company’s apparent value by buying back ever more shares of stock.
It’s gotten to the point that the big institutions are noticing. And asking questions. I’m not sure if they understand what is really happening, or that it may already be too late.
I think that when you have only one set of ideas coming from one group of places that your tool kit for solving problems can have built in errors.
It isn’t that that capitalism is breaking down, it’s the fact that far too much of the economy is in the hands of people who aren’t capitalists. They spend their entire live up to the beginning of their careers actually being silverspooned everything, building social capital and force fed Socialist pap as an education. Is it any surprise that far too many institutions act like little Socialist states these days.
That includes demanding more and more resources from employees without giving anything back in compensation.
The forty-hour work week our parents knew has come and gone. Most employees that do not punch a clock are expected to put in a fifty- to sixty-hour week, be available after hours and on weekends, and ‘do whatever it takes’ to make the company successful.
A Gallup survey last summer found that the average work week for full-time salaried employees was 47 hours, almost the equivalent of an extra business day in a five day work week. Workers admit they feel pressured to do this and fear they are perceived as slackers if they don’t.
So with the additional hours, employers seem to be on the winning end of this deal—or are they? Decades of research support the belief that too many hours at work actually make an employee less productive, less creative and less healthy, not to mention the strain it places on partners and families.
A few extra hours here and there won’t push anyone over the top, and productivity will reflect the boost from employees going the extra mile for a project or program. But when sixty becomes the new forty people and programs are at risk and invoke the law of diminished return. Burning out is bad for employers, employees and their families, and really bad for business.
Still while suffering of the America worker goes on the Administration continues it’s war on the economy. At least we were warned.
Are there any critical industries that are highly dependent on energy costs. How about Aluminum? A lot of Aluminum smelters are shutting down while China ramps up.
The people in charge don’t really seem to care very much about growth. They seem to believe that you can control and manage everything and that as long as there are no “gaps in the regulations” everything will be fine.
Yet by 2002 Fannie and Freddie had acquired $1.2 trillion in subprime and other weak mortgages. By the time he became Fed chairman, they’d racked up $3.4 trillion. By 2008, apparently unknown to the Fed or Mr. Bernanke, 31 million loans—more than half of all U.S. mortgages—were subprime or otherwise weak, and 76% of those sat on the books of government agencies, principally Fannie and Freddie. This shows, beyond question, where the demand for these subprime and risky loans originated.
So it came as no surprise, given his limited knowledge, that he and Hank Paulson, then-Treasury secretary, were, as Mr. Bernanke put it, “eager to focus Congress on the gaps in financial regulation” when they testified before the House Financial Services Committee in July 2008. After that, the Democratic-controlled Congress, working with the Obama administration, produced the overreaching Dodd-Frank Act, signed into law in 2010 and named after the two strongest congressional proponents of affordable-housing goals, former Rep. Barney Frank and Sen. Chris Dodd.
It is thanks to Dodd-Frank that the five-year growth rate has averaged about 2.2%. Dodd-Frank has had this effect primarily because of the new regulatory costs and lending standards it imposed on financial firms, particularly small banks. New regulations from the Consumer Financial Protection Bureau and other Dodd-Frank inventions have forced many small banks out of business, forced others to merge with larger competitors, and reduced the rate of new bank formation from an average of 100 a year before 2010 to only three afterward.
The regulations and restrictions on small banks have most acutely affected small businesses, particularly startups. Though most new employment in the U.S. economy comes from small business, entrepreneurial startups provide most small-business employment growth. A 2013 study published in the Review of Economics and Statistics shows that over time firms aged 0-5 years account for 20% of total job creation in the U.S.
This part of the economy has been hit hardest by Dodd-Frank rules that have driven up costs for small banks, reduced their number and applied large bank lending standards to the small outfits that have always met their communities’ needs with the flexible standards startups require.
A 2015 Goldman Sachs study shows that large firms—500 employees or more—have grown at a pace consistent with past recoveries, but small businesses have remained stagnant. The study concludes that, since Dodd-Frank, small businesses—which rely largely on small banks—have been unable to find the credit necessary for growth, while large firms have access to credit through the capital markets.
If Mr. Bernanke had used his academic skills and the Fed’s data to determine what actually caused the crisis, he might not have pushed Congress to fill “the gaps in financial regulation.” Had he advocated instead changing destructive housing policies, Dodd-Frank might never have happened and the economic recovery would have been far more robust.
Of course if you are antigrowth, maybe that’s what you want. But there are huge problems with that. What the people in charge don’t seem to see is that there are huge bills coming up. Bills that need to be paid and if growth doesn’t happen there won’t be any way to pay them. Do the Democrats and the rest of the people really believe that they will remain in power when Social Security collapses?
The word that we hear the most from the government economic reports is “unexpectedly.” I’m not sure that the numbers are unexpected. They may be exactly what the powers that be want.
It’s time that we the people need to separate the rhetoric from the results. The Administration has talked a good game, but when it came time to generate growth driven policies is nowhere to be found. Instead we get ever more executive orders to regulate, more economic suppression and increased poverty.
I think that the Millennials are starting to realize just how screwed they are. Some parts of this are incoherent, such as equating tax cuts with expenditures, but I get the feeling that he understands who’s going to get stuck with the bill.
The nine graphs of doom.
What is the 1%’s problem with cheap energy, free markets and economic growth? Let’s look at that for a minute. The real question to ask is what’s in it for a 1%er to have ecomic growth and free markets? Do they gain anything very much? What would they get except negatives. The competition for luxury goods would increase. More people would be intruding on their space. For a 1%er economic growth is a losing proposition.
The problem is that things that are not a problem for the 1%ers is a big problem for the rest of us. The rest of us are given very hard choices. What impact this will have on the average person’s ability to save for their future will be felt in the future.
As bad as a 70% marginal tax rate sounds, it’s far from the worst-case scenario under ObamaCare for working-class households. The drop-off in both kinds of subsidies largely explains why only a small fraction of those earning modestly above 200% of the poverty level who are eligible for exchange subsidies have signed up. The combination of high after-subsidy premiums and large deductibles may leave many people questioning whether they’re better off paying the individual mandate penalty. For those who elect to forgo subsidies and pay a fine as their least-bad option, earning more than 200% of the poverty level would, in effect, send their marginal tax rate soaring well north of 100%.
The thing is that we can’t give up. There are upsides in spite of all the negatives the powers that be have created. Americans are the most industrious and creative people ever and we need to remember that.
With all the negative pressure on the economy is it any wonder that people are going Galt one way or another. We shouldn’t give up though. what can’t go on won’t and I don’t think that the status quo can last for very much longer. The waiter and taxi driver economy can’t fund the welfare state and when the people in charge realize that, economic growth will be one of their main concerns. That is if they don’t want to face the wrath of their constituents.
The problem is that the powers that be have run out of money. Borrowing has reached the point of diminishing returns, there’s nobody to beg from and they’ve already passed the point of maximum tax revenue without causing an asset value crash which would be the one thing that would REALLY hurt the 1%ers more than the rest of us.
Is the American dream over? No. We as a people though, are going to have to make changes to get things going again. The status quo will not work. We need to count more on ourselves and less on a deep state that just feeds on our prosperity. We are also going to stop listening to those who want to frighten us into giving up our liberties and prosperity and accepting a lower standard of living so that they won’t be bothered by us. We are Americans. We are the best, we will have the best and we will be the best and whinies can go to hell.
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