Tuesday, July 7, 2009

It's All About the Productive Jobs

The basis of any and all economic activity is simple: productive jobs. Always keep in mind this basic law of economics: production must always preceed consumption. Part of the propaganda effort against the common citizen is the idea that consumption is all-important. Much propaganda is crafted trying to paint a rosy picture of the economy because of the importance of consumer confidence leading to greater spending. Along with allied stupidities like "we have to get credit flowing again" to "stimulate the economy".

Obviously, consumer confidence and available credit have their place in ramping up economic activity, but their effect is overshadowed by the far more important power of productive employment. Nothing elevates consumer confidence and loan applications like having a high paying and stable job. In fact, without a high paying and stable job, consumer confidence and credit applications are simply impossible, as people without jobs can't buy things or get loans.

These facts are so obviously plain, simple, and true, it is a marvel that anyone could ever support economic policies that aren't based on the fundamental importance of productive jobs. And yet, it seems we have built an entire generations worth of economic policy ignoring that fact. Even more unbelievably, our current economic policy, in the midst of a collapsing economy, is still operating in complete ignorance of the fundamental importance of productive jobs.

The official (and understated) unemployment rate is 9.5% and rising, the highest in 26 years. The United States now has fewer jobs than it did nine years ago, even though the work force has grown by 12.5 million people since then. It's the first time since the Great Depression that a recession has wiped out all the jobs created during the previous business cycle.

So, why was job growth from 2000 to 2007 so ephemaral and easily lost? They were in bubble jobs, unsustainable jobs. Most were parasite jobs (paper pushing finance jobs), and even the productive jobs (like construction) were often malinvested (into overbuilding). The debt-based bubble years of 2000-2007 have left us in worse condition than when we started, as now we are over-built and heavily burdened by debt.

Dr. Housing Bubble puts it eloquently in his recent analysis [here]:
"It is amazing how little focus has been given to job creation. If we spent half the amount of time as we did in bailing out the crony banks on job growth we’d be in much better shape. But as many of you now know the U.S. Treasury and Federal Reserve when push comes to shove, answer to their banking oligarchs first and then to whatever they have time for. That is why the unemployment situation is quickly falling apart. In fact, that is why we have seen no employment plan come out from either the last or current administration. No matter what tax break you give for buying a home, without a job it really doesn’t matter. That is something that really amazes me in this current economic crisis. Where are the jobs going to come from? If anything, I can stand behind a job plan more than I can stand behind a crony banking bailout. Yet all this time is devoted to saving Wall Street and banks. Now you know who the Fed serves and it isn’t the American citizen."

also, "It is amazing that the Federal Reserve, which in its mission talks about maintaining stability, has presided over: the Great Depression, multiple recessions, the 1987 Panic, the technology stock crash, and housing bubble. By this simple definition they have failed miserably. They operate as a cartel and when things are going well, it goes better for those connected here. When things hit the fan, they take care of their banking partners and take the average taxpayer out to dry."

Meanwhile, the productive economy continues to shed jobs because of high debt in a deflationary environment, which leads to both job destruction and constrained consumer spending. The fundamental solution to a debt deflation is cancellation of debt. Why is no one talking about this?


Allen Charles Report said...

The Quiet Coup

Is a very good explaination by an expert, and former official with the IMF. You might want to post parts of it to backup your what you were writing in your own article.

Justin said...

Thanks, AC!