Friday, May 4, 2012

U. S. Economy: The Price of NOT Blaming

The over-arching theme of this blog is personal accountability and the price we all pay for our excuses and misplaced blame. But there is also a cost to being deluded and not placing blame when and where circumstances require it.

In the last few months, this issue has been dramatically illustrated in political campaigning about the U.S. economy. Everyone is understandably eager to get the good news that we are emerging from the recession. I don't pretend to be an economist, but it is instructive to see how our hopes can blind us to reality.

Every month, the news media report Bureau of Labor Statistics. In the recent months, unemployment figures are moving down, from a high of 10% to the May 2012 announcement that it is down to 8.1%, the lowest in three years. Incumbent politicians and most of the news media hype these data as indicating we are coming out of the recession and that President Obama's federal stimulus and bailout of banks and auto-companies are turning the country around.

What is intentionally left out, except for a few news sources, is that the Bureau's data are also showing a progressive shrinkage of the labor market, which doesn't show up in unemployment data. That is, more and more people have dropped out of the labor market. Most telling, only 63.6% of adults now work for a living. Those that do work in private, non-farm, jobs work on average on 34.5 hours per week, meaning that the typical 40 hour work-week pay has shrunk. The job availability for young people is vastly worse. "So what?" you may ask, contending "lower unemployment is a good thing." Not necessarily.

We don't know how these millions of unemployed people support themselves. Many, no doubt, live off of welfare checks, food stamps, Medicaid, and other government entitlement programs.Many may be living off of relatives. But the bottom line is that these people are not ;paying income tax and not contributing to the economy. They are not stimulating the economy as consumers with jobs do. Shorter work weeks mean less worker productivity and less money in circulation. Young people out of work delay their growth in the marketable skills they would be getting if they had meaningful employment.

Then, there is the effect of near-term retirement of baby boomers. Not all of them will be replaced on the job, as it is common practice for employers to shrink their labor force through the relatively benign policy of attrition. But it is not benign in terms of the nation's gross national product. Retirees no longer produce goods and services, and they have less income than when on the job -- again, consumer spending will inevitably decrease, eventually causing even more job loss. As U.S. companies lose market share in the global marketplace, the increasing strength of foreign competitors will put even further strain on U.S. job availability.

So, there is a real problem here, one that demands that we start identifying where to place the blame. Things are likely to get worse, and soon. You may blame Democrats for stimulus spending that is not working and the Executive branch for too much regulation of business. Or you might want to blame Republicans for resisting more federal stimulus and for focusing on the job creators instead of the workers. Whatever, it is way past time to face the reality and make the right choices in the coming elections. Don't rely on your past political preferences. Instead of hearing what you want to hear, inform yourselves on both sides of the argument. The positions of the two parties are not compatible. One side has it wrong. We are all paying for it.

We must ask the question, "Are you better off now than you were four years ago?" And we must also ask"Who should we blame to make sure we will be better off four years from now?"



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