Hillary Clinton’s exaggerated claims about the health of the U.S. labor market and economy, and lauding of a jobless recovery benefiting only the rich, are the primary reasons Democrats lost an election they should have run away with.
The wealthy candidate might as well have said “let them eat cake,” by claiming all was well at a time of widespread economic distress, suicide and joblessness. Hillary’s privileged cheerleading was reminiscent of Marie Antoinette, the French queen who allegedly coined the phrase in 1789 upon being told her subjects were starving.
The French chopped off their clueless queen’s lovely strawberry blonde head a few years later. Ending her political career with much the same finality U.S. voters just visited upon the former First Lady.
Hillary’s unlikely loss to Donald Trump – arguably the worst presidential candidate in U.S. history – should be a wake-up call for a political establishment which has become increasingly insulated from the people they’re supposed to represent. Its privileged members now inhabit a cloistered world of plenty as removed from reality as Europe’s royal courts in the run-up to World War I.
The U.S. Congress has begun to resemble Great Britain’s House of Lords in recent years in the absence of terms limit. Its members are widely believed to be laundering bribe money by accepting it in the guise of speaking fees, junkets abroad, overseas real estate, donations to their familial charities, and stock tips. They’re able to use those tips to improperly enrich themselves thanks to a Star Chamber-style exemption to insider trading prohibitions.
It is quite literally the best of times for these pampered federal lawmakers and their friends in the 1 Percent, and the worst of times for the faltering middle class. That’s why Congress has amassed the lowest approval ratings in the 42-year history of the survey by The Gallup Organization since the alleged “end” of The Great Recession, which is now very much a Depression for the poor and middle class.
Federal lawmakers enjoy free healthcare and generous pensions – unlike the general populace. They’ve insulated themselves from the suffering they’ve created behind the walls of wealthy country clubs and gated communities. Sending their children to exclusive private schools instead of the public schools they oversee, while concealing their wealth in their spouses’ names.
This privileged existence has blinded them to escalating rates of joblessness and suicide, which now rival those of The Great Depression.
The labor force participation rate – the percentage of Americans with jobs or actively seeking them – has fallen to its lowest level since 1978, when there were fewer working women. The employment-to-population ratio, a measure of all Americans with jobs – is in the lowest range since the early 1980s.
The percentage of Americans committing suicide is the highest since 1986. Many more are drinking and drugging themselves into oblivion, rather than facing a degrading workplace of diminished opportunities for all but the most shameless lackeys.
Hillary seemed blissfully unaware of those disastrous metrics when she lauded President Barack Obama’s economic stewardship, as presidential candidates are wont to do when their party already controls the White House. However, she could not have found a better way to alienate the poor and faltering middle class than by repeatedly citing a jobless recovery which has completely missed so many of them.
How do I know?
I used to cover our nation’s economic indicators. Some of them suggest our present labor market is in much the same state as during The Great Depression.
I covered 22 different indicators when I worked for Bloomberg News in Washington, D.C. They included job creation, unemployment, initial jobless claims, gross domestic product (GDP), and housing gauges such as new home sales.
I attended “lockups” at The U.S. Labor Department and U.S. Department of Commerce, where small groups of journalists are given early access to market moving economic indicator reports. They’re held in rooms coated with a special paint to block cellphone and radio signals. Had to pass a CIA background check for access to Treasury data.
So, these reports are neither a mystery to me nor something I need to pretend to sort of know. That’s why I’m 100 percent sure our labor market is a disaster and our society is coming apart at the seams. Rather than enmeshed in a normal economic cycle of ups and downs.
Lawmakers try to maintain this facade of normality by cherry-picking the economic indicator reports which suggest all is well, and downplaying the rest. They embrace the fiction that the economic gauges which represent the gains of the 1 Percent best – such as average household wealth and productivity – actually represent the entire population with equal accuracy. While ignoring those indicators which expose the reasons many Americans have lost hope in their leaders, like the dismal labor force participation rate.
The mainstream news media is complicit in this charade. Its political reporters don’t want to cover economics and its economic reporters don’t want to cover politics, leaving the critical intersection of the two beats vulnerable to the kind of systemic misrepresentation which now rules in Washington, D.C.
The painful truth is that our society is circling the proverbial drain and its decline is only going to worsen under the incoming Trump Administration thanks to the increasing pressure of unregulated corporate profit growth, surging global debt, automation, and the rise of a global economy with no labor protections whatsoever. The underlying driver is the myth that these economic tsunamis of change are being responsibly managed by our elected officials and the neutered regulators they oversee.
That knowing lie is just as misleading as the term “jobless recovery.”
We live in a time of an increasingly unstable global economy; a shrinking middle class; a breakdown in the traditional relationships between the economy and the economic indicators for labor and housing; and a dysfunctional United States, which bears a striking resemblance to the fading Austro-Hungrarian Empire prior to World War I.
A generation of hedge fund and private equity financiers and professional politicians is capitalizing on this instability to establish themselves as the modern equivalent of the hereditary royals of old.
They wear their wealth, power and influence much like the crowns of those former Kings and Queens. Mixing business with pleasure in overpriced country clubs, golf courses, and exclusive vacation communities much as princes, dukes, and barons once frolicked in the royal courts of old.
Most people think of Britain’s charming Prince William and dashing Prince Harry when they think of royalty. However, they’re powerless figureheads in comparison to the global economy’s new financial royals and the economic apartheid they’ve created by so fully insulating themselves from the suffering of their fellow Americans.
What’s good for these modern economic royals is often bad for the rest of us. Case in point, job destroying trade deals like the North American Free Trade Agreement and the proposed Trans-Pacific Partnership. The deals boost corporate profits by reducing labor costs. However, economic journalists almost never tell their readers that cutting those “costs” means reducing the paychecks and medical benefits working parents use to feed, clothe and shelter their children.
The new royals are taking their game to the next level under the leadership of President-Elect Donald Trump, incoming Treasury Secretary Steven Mnuchin, and incoming Commerce Secretary Wilbur Ross. Mnuchin is a former Goldman Sachs partner who made his fortune in the hedge fund industry by foreclosing on the homes of old ladies who accepted his reverse mortgages. Ross is a former banker at Rothschild Inc., who let Trump retain control of his three failing casinos in Atlantic City in 1990 after falling more than $3 billion in debt.
They’re beneficiaries of the uneven playing which now restricts opportunity in the U.S.
Most Americans suspect they’ve been systematically lied to for years about the true state of the American economy and our nation’s “representative democracy. Here are 20 ways in which it’s true. Especially with regard to the floundering U.S. labor and housing markets.
If self preservation is an instinct you possess you had best read them, while you still can.
Painful Truth No. 1: a jobless recovery is not a recovery for the middle class.
It’s a true economic recovery strictly for the 1 Percent.
We’re in the midst of a jobless recovery. One which is so weak our economy almost dipped back into a formal recession twice under President Barack Obama.
Yes, Obama inherited an economic situation which was worse in many ways from his Republican predecessor.
Yes, the economy would have been far worse without his sober leadership.
No, the labor market has not turned any kind of corner.
The Great Recession and its aftermath feels like a Depression for the faltering middle class. Because it is for us.
Depressions are not as precise as recessions, which are based on specific mathematics. The dire term is reserved for a period of elevated joblessness, bank failures and suicides; falling wages and access to capital; and deflation. The painful truth is that we’ve had all that since the collapse of the U.S. housing bubble.
Some of it is pretty obvious, such as joblessness and suicides. Some of it is less obvious, such as lower wages and deflation. But it’s all there.
Wages are not the same as take-home pay. When an employer makes their workers pay more for healthcare insurance it reduces their take home pay. This has been happening across the country for more than 20 years now.
It doesn’t show up as a decline in wages, but it is.
Meanwhile, deaths among working age whites from suicide and drug abuse are up more than 20 percent since 1999. Approximately 22 military veterans are now taking their lives every day versus a daily death rate of just 0.8 during combat operations in Iraq and Afghanistan.
Struggling American workers are literally killing themselves in despair. Both because they’ve given up hope and because they’ve been led to believe they’re “losers” by the irresponsible economic cheerleading of the mainstream news media.
The suicide rate rose to 15.4 per 100,000 Americans the decade after The Great Depression, after averaging 12 before it. Those levels are comparable with the rates we’re now seeing.
Claiming political credit for a jobless recovery in an election year is “not only improper but terminally stupid,” to repurpose a classic line from former Enron managing director Vince Kaminski. He used it to warn his crooked superiors about the downside of their knowing lies at the defunct energy company which manufactured the California Energy Crisis in 2000-2001.
The line works just as well for Obama, Clinton, Trump and their fellow Country Club elites in the American political, financial and media establishment.
Painful truth No. 2: Our unemployment rate doesn’t measure joblessness.
Our official unemployment rate is ridiculously optimistic and misleadingly named. It doesn’t really measure joblessness so much as short-term turnover among those who have worked in the past six months.
The U.S. “Unemployment” Rate was 4.9 percent in October. However, the true jobless rate among our nation’s most likely workers is closer to 22 percent.
In normal times, 4 percent would be indicative of full employment. Sadly, these are not normal times.
To understand employment indicators you have to know what goes into something called “the Civilian Labor Force.”
Officially, it’s made up of people with jobs and those without them who are actively looking for work each week. However, in practice that really means those with jobs and those collecting weekly “unemployment” checks. AKA Turnover Checks.
These recently idled workers can’t get paid without legally certifying they actively looked for work each week. Even if they didn’t.
Once an idled worker exhausts their six months of “unemployment” benefits, most of them stop looking for work every week.
Human nature being what it is, they fix the roof one week, then send out a flurry of job applications the next. They drive to Atlanta to visit their mom one week, then apply for work the next.
In the official bullshit “unemployment rate,” those people are invisible. Which is why it’s 4.9 percent and why I say it really measures short-term turnover. Rather than joblessness.
It’s hard to compare joblessness today with that of The Great Depression, which began in 1929. Mostly because the statistical methodologies and social mores were so different.
However, Economist John Williams of Shadow Stats estimates that if we calculated unemployment with the same metrics used back then we’d be in exactly the same 20-25 percent range of joblessness as The Great Depression. His Alternate Unemployment Rate for October 2016 was 22.9 percent.
The government tries to bolster its “unemployment” data with a phone survey, but the survey is garbage. It’s a symbolic fig-leaf which exists solely to deter this type of criticism.
Because telephone surveys and polls don’t work any more. That’s why Trump’s win was such a surprise.
People are simply too busy and too wary.
Painful Truth No. 3: The labor force participation rate is dismal
The best measure of joblessness is something called the “labor force participation rate.” It’s a measure of the percentage of the U.S. population which is either working or actively looking for work.
They accounted for just 62.8 percent of the population in October. The other 37.2 Percent was neither employed nor seeking work every week.
The labor force participation rate has actually gotten worse since the start of The Great Recession began in December 2007. Even under Obama.
It was 67.2 percent in October 1998 and 66 percent in October 2008.
It has dropped steadily during Obama’s eight years to the lowest level in nearly 40 years. And the lowest point since women entered the labor market and stopped being stay-at-home wives.
What’s it all mean?
You’re not imagining that there are fewer happy people with decent jobs in your social circle. There are.
Painful Truth No. 4: The employment-to-population ratio is also dismal
The purest measure of the real percentage of Americans without a job is something called the “employment-to-population ratio.” It says the true jobless rate was 40.3 percent in October, 36 percent in October 2007 and 41.8 in October 2009.
I’m no fan of Trump – I’m actually a big fan of Obama – but the president elect got that 40 percent figure right during the campaign.
All of which means Obama hasn’t reduced true unemployment nearly as much as we’ve been led to believe. The employment-to-population ratio improved slightly during his administration, but the new jobs have lousy pay and benefits.
The problem with the employment-to-population ratio is that it catches too much. It includes babies, retirees, prison inmates and people who are so badly disabled they can’t work.
However, there is a subset of this data which works quite well. It focuses solely on the most likely workers, who are ages 25 to 54.
An astonishing 21.8 percent of this age cohort was out of work in October. A figure which is smack dab in the middle of the jobless readings recorded during The Great Depression.
This dire reading is probably closer to the true jobless rate than anything else. It’s certainly a far cry from 4.9 percent.
We’ve been locked in a range of 20 percent to 25 percent true unemployment for the 25-54 cohort since The Great Recession began in 2009. This range represents the worst labor market since women stopped being stay-at-home moms and entered the workforce in big numbers in the late 1970s and early 1980s.
It’s also the primary reason Hillary Clinton got housed by one of the most unelectable candidates in U.S. history.
Painful Truth No. 5: Initial jobless claims are bullshit.
Specifically, the notion that a low level of initial jobless claims is always good. That’s the knowing lie most economic journalists and economists were pushing in November when the level of initial claims fell to a 43-year-low of 235,000 for the week ended Nov. 17.
So what’s an initial jobless claim?
When you get fired or laid off and you apply for unemployment benefits, that’s an initial jobless claim.
A normal level of churn is desirable and healthy for the labor market, as people leave one job for another. That’s why a level of 300,000 to 330,000 initial jobless claims each week is considered ideal.
However, so many people have been laid off in recent years that lower levels of initial jobless claims are no longer either desirable or indicative of an improving labor market.
Because there’s just no fat left in most corporate headcounts for CEOs to cut when they need to juice their quarterly profits.
Let me put it another way…
If every one of the 121 million full-time workers in the U.S. had been fired on Election Day, there wouldn’t be anyone left to fire the next week and no one to do the firing. So, initial jobless claims would be zero for that week.
In that context the decline to zero would not be indicative of an improving labor market. Except in the fatally flawed economic stories being churned out by Bloomberg News, Reuters, The New York Times, and The Wall Street Journal.
The same is true of the 235,000 initial claims filed during the week ended Nov. 17.
Once you get below 270,000 initial claims, less stops being a signal of something positive in the labor market and starts being a signal of something toxic. Like a giant MRSA sore full of pus.
It’s an indication that workers are too frightened to change jobs with the same frequency as before and employers are too short-staffed to lay people off to juice their quarterly profits.
The number of people in the U.S. with full-time jobs is about 121 million now, just as it was in 2007. Our population grew to 322 million from 301 million during the same time span. The difference is about equal to the combined populations of Sweden, Denmark and Finland.
Those 21 million additional Americans should have generated about 12 million more workers. The fact they didn’t suggests corporations are running extra lean staffs, which translates into less hiring and less firing.
None of which is good for the U.S. labor market.
In fact, it’s the labor market equivalent of a starving child who is big bellied due to malnutrition. In this context, the big belly doesn’t signal that the kid is either healthy or well fed.
This theory is also supported by mass layoff data.
A mass layoff is any event in which more than 50 workers are fired by the same employer. Because of this size requirement, they’re almost always done by big publicly traded corporations with stock tickers. Like Wells Fargo.
Layoffs were unpopular with investors before 1999 or so. They viewed them as a sign of weakness.
Chainsaw Al Dunlap changed that mindset around during his disastrous tenure as CEO of Sunbeam. He demonstrated that a management team could use mass layoffs to signal their ruthless commitment to profit growth to investors.
The U.S. averaged 1.581 million mass layoffs from 1996 to 1999, before Dunlap. It averaged 2.1 million a year from 2008-2012, in the post-Dunlap era.
The pace dropped off to about 1.4 million in 2013. It’s a safe bet mass layoffs have continued to decline, even though the Bureau of Labor Statistics no longer releases the data to the public on a monthly basis.
It’s not because publicly traded corporations suddenly developed a moral compass. It’s because they overdid it. So much so that there are now fewer opportunities for them to juice their quarterly profits by cutting labor costs.
That kind of decline is neither indicative of a robust labor market nor the kind of full employment called for by the dual mandate of the Federal Reserve Banking System.
It is indicative of a total bipartisan failure by federal lawmakers to manage the U.S. economy to advance the greater good. A failure whose roots goes all the way back to the early 1980s.
Painful Truth No. 6: Our monthly job creation data is exaggerated
The break-even point for monthly job creation is generally considered to be 100,000 to 130,000 by most economists. That’s the amount of jobs which must be created to accommodate the flow of new workers into the civilian labor force seeking employment for the first time.
This flow is one of the unintended consequences of rapid population growth.
Most economic reporters don’t tell you that. Instead, they embrace the knowing lie that zero is zero for monthly job creation. They did it for former President George W. Bush too.
This painful truth means the Dems’ much ballyhooed string of 73 months of positive job creation actually represents just five months of consecutive net gains.
It also means that the 8.5 million jobs officially destroyed during the 19 months of The Great Recession were really more along the lines of between 10 million and 11.75 million.
The Great Recession ran from December 2007 to June 2009.
Painful Truth No. 7: The national economy does not represent the middle class.
Maybe it once did, say back in 1976 or so, but it doesn’t any more. Today the term “economy” really means Wall Street and the 1 Percent. Not you and me. We’re more like a rounding error.
Because our nation’s wealth in concentrated in far fewer hands today. One of the best measures of U.S. wealth concentration is the annual Forbes list of the 400 wealthiest Americans. Its average wealth surged more than 10-fold from $230 million in 1982 to $5.8 trillion in 2015. After being adjusted for inflation.
“The risk of a drift toward oligarchy is real and gives little reason for optimism,” said economist Thomas Piketty, who exposed this alarming shift in national wealth.
Gross domestic product, or GDP, is another term for our national economy. One which reflects the value of all goods and services in the U.S. and is often erroneously used to represent the financial condition of the entire nation.
When corporate profits are high GDP rises with them. Even as the middle class is being hollowed out by wage cuts, predatory lending, foreclosure fraud, healthcare inflation, unpaid overtime and job destruction.
Workers are in desperate need of higher wages. However, workers often wind up suffering even when the economy is booming because struggling publicly traded corporations use lower labor costs and layoffs to create the illusion of profit growth.
That’s why the news about the economy and the labor market no longer matches up with most Americans’ personal experiences. When news organizations tell you “the economy grew 2.9 percent in the third quarter,” what they really mean is that corporate profits grew. Often at your expense as a worker.
That’s why most Americans see boarded up stores and people living with relatives and friends when they look around for signs of this mythical recovery.
Telling the faltering middle class this recovery is real is akin to bashing a younger sibling with their own fist while admonishing them to “stop hitting yourself.”
Painful Truth No. 8: Wall Street is no longer American
Markets are led by multinational corporations now, with no loyalty to any nation.
Used to be when the news media talked about balancing “Wall Street and Main Street” we were talking about U.S. cities and rural areas.
That’s no longer the case. Now, we’re talking about the global monied interests and the faltering middle class here in the U.S.
What’s good for one is usually bad for the other.
Because these multinationals are led by CEOs who view themselves as citizens of the world and put profit growth ahead of being a good American. That means engaging in unnecessary layoffs to boost profits, which is akin to burning your furniture to stay warm in the winter.
It means concealing profits overseas to avoid paying taxes on them. And it means gambling on big growth for young companies, instead of allowing them to gradually mature into stable economic engines and employment hubs.
That’s why fast-growing companies like Sports Authority, Circuit City, Borders, Quicksilver, Enron, and Boston Market keep going out of business.
Once publicly traded companies begin laying off their own people, trimming portion sizes and raising prices whenever organic growth comes up short, they have to keep upping those doses. Just like the crackheads, methheads and heroin addicts who now stagger through American cities and towns like zombies.
Publicly traded companies have to keep hitting the self destructive profit growth pipe right up to the day consumers finally realize they’re paying $15 for a meal the size of an airline lunch, $25 for a pair of socks, or $40 for a computer cable and abandon them.
The CEOs of publicly traded companies engage in this reckless behavior because they’re legally required to goose profits by something called their “fiduciary duty” to shareholders. This is the trigger for needless layoffs.
Former President Jimmy Carter summarized the present situation best in 1976, when he said that “any system of economics is bankrupt if it sees either value or virtue in unemployment.”
A public company like Apple issues stock anyone can purchase and has a ticker like AAPL. CEO pay is connected to the performance of that stock. They need to grow earnings by at least 8 percent a year to qualify as a growth company in the eyes of investors.
Many companies just cannot maintain the breakneck pace without cheating.
Which is why they try to lower their labor costs by either offshoring jobs to low-wage nations or bringing docile workers from those low-wage nations here.
Painful Truth No. 9: The U.S. Chamber of Commerce is no longer American
You may not be aware of it, but the U.S. Chamber of Commerce has been a proud and active supporter of illegal immigration for decades. They think our borders should be wide open to workers from other nations who are wiling to work for peanuts and be treated like slaves.
The Chamber, which has been allowing foreign monied interests and corporations to join it for several years, is U.S. in name only now. Its powerful lobbyists are also the reason U.S. employers don’t face meaningful punishment for employing people with fake green cards, or advertising in Mexico to draw them North.
The illegal immigrants we’re being programmed to demonize by news outlets like Faux News are being invited up here by our own corporations. People who make $8 a day in Baja Mexico are not journeying up here in the hope of work. They’re coming because they’ve been led to believe good jobs await them.
They’re not the enemy.
Painful Truth No. 10: The president doesn’t really control the economy.
Any more than a quarterback is solely responsible for wins and losses in football. Both positions are influential, but they’re part of a team.
A president like Obama, whose political rivals control both houses of Congress, has even less control.
Nevertheless, we have a longstanding political tradition in which the president is solely credited for good times and held responsible for bad times. Our economic indicators are being politicized because of it.
This is why Democrats told voters the labor market was doing great in 2016 and took credit for that fictional event on the basis of their control of The White House.
Nothing could be further from the truth. Or more revealing of the degree to which the political class has insulated itself from the real world by establishing its members and patrons as first class citizens and relegating the rest of us to coach.
Trump was just as blind to the true level of suffering in working class America as the rest of the Country Club World. However, as a Republican it was his job to reflexively criticize the outgoing Democratic administration. Just like an ornage-haired orangutan throwing feces at the walls of their cage.
No one was more surprised than Trump when some of it stuck.
Painful Truth No. 11: Life for many workers got worse after The Great Recession ended
People think the word “recession” means hard times. It doesn’t.
A recession occurs whenever GDP contracts for at least six consecutive months. No easy feat in a nation whose fast-growing population makes its economic indicators look like they’re improving when they’re not.
A recession is akin to you seeing your take-home pay fall steadily over a six month period as your employer pays you for fewer hours of overtime with each passing month. You’re still working the same hours. You’re just being paid for less and less of them.
When you’re no longer being paid for any overtime at all the recession ends on paper, but the hard times continue for you in the absence of that additional income.
The painful truth is that many of the more than 8 million breadwinners who lost their jobs during The Great Recession are in worse financial shape now for very similar reasons. Eight years later.
You can’t replace a $50,000 a year job with one at Wal-Mart paying $25,000. Except on paper, where both jobs appear to be the same for job creation record-keeping purposes.
What workers do instead is tap their finite savings, retirement accounts and credit to make up the difference. Especially those with kids.
A typical family in this situation might have had $20,000 in the bank when they lost their good job in December 2008 and be $20,000 in debt today with the crappy job which replaced it. Every year without a decent job is a further drain on their financial resources, regardless of whether it occurs during an official recession.
People can only hold their breath for so long financially. It’s been eight years now for many of those laid off during The Great Recession. Their financial situations have gotten worse with each passing year without the surge in good jobs needed for a true recovery.
That’s also why so many new college grads are now working in coffee shops, and trying and failing to pay off $200,000 in college debt at $12 an hour. There’s a good chance they’ll be in debt for the rest of their lives if our nation’s political hookers continue to allow Wall Street to ship U.S. jobs to low-wage economies.
Because while for-profit colleges like the despicable Trump University are free to seek bankruptcy protection from their creditors, the gullible young students they con out of their Pell grants and college loans are not.
Painful Truth No. 12: Governments no longer control the currency printing presses
One of the signs of a failing society is the kind of hyperinflation that comes from printing new currency like it’s going out of style. As the Weimar Republic did in Germany in the 1920s.
The U.S. hasn’t seen seen that kind of inflation. However, we have seen a huge increase in total global debt, which may be a better measure of fiscal irresponsibility given the multinational nature of today’s big banks.
Since 2000, total global debt has surged 164 percent to $230 trillion.
Does that sound sustainable to you?
How about on a planet with a total wealth of just $74 trillion?
I think not.
The driving factor in this increase in global debt is the rise of synthetic trading vehicles, such as the credit default swaps which nearly destroyed the global financial system in 2007. These are essentially bets backed by nothing.
They should have no value, but the big banks have decided they do. They acquired the power to manufacture wealth from thin air in this era of failed regulatory oversight and crooked elected leaders. Just like a sovereign nation.
When a bank can assign a $4 billion value to a worthless bet they don’t need to print paper currency to undermine the global economy.
Thirty five years ago anyone in the private sector who manufactured currency was a criminal called a “counterfeiter.” And any lender charging more than 11 percent annual interest – the cap mandated by most state usury laws – was a criminal called a “loanshark.”
The big banks have put both groups out of business since their political hookers undermined state usury laws in 1983 and upended the Glass Steagall Act in 1999.
A Democratic president and Republican Congress worked together to end Glass Steagall, which had kept the big banks in line since The Great Depression. Which is why the faltering middle class is now living through another Depression.
Painful Truth No. 13: Self driving vehicles will destroy at least 4.4 million jobs.
Yeah I know, the mainstream news media says this a good thing. That’s propaganda.
The painful truth is that self-driving vehicles are going to destroy more jobs than six North American Free Trade Agreements.
The relentless pressure to grow profits is the reason companies like Google and Tesla are pushing the very questionable benefits of self-driving cars, trucks and buses on the floundering U.S. labor market.
There are huge downsides for the labor market associated with self-driving vehicle technology. Replacing human drivers with robots and software will reduce corporate labor costs over time, but also drastically increase the number of Americans out of work.
The technology will destroy as many as 4.4 million jobs. That’s how many people make their living as cab drivers, bus drivers and commercial truck drivers.
The number is equivalent to six and a half times the job destruction wrought by the infamous NAFTA. It has destroyed 680,000 jobs since its 1994 passage, according to the Economic Policy Institute.
So, why do it? And why does our mainstream news media ignore this enormous downside when they write about it?
Because Americans are programmed to think all technical innovations are desirable.
That’s not always true, as we’ve already seen with grocery store self checkout lines, self-serve gasoline, and computerized customer service interfaces. All huge job destroyers.
Know why you stand in line to order your food at McDonald’s and Burger King, instead of being waited on at a table?
So they dont have to hire waitresses and waiters.
Know why you clean up after yourself?
So they don’t have to hire bus boys.
Know why you now get to fill your own soda cup?
So they don’t have to.
None of this is about customers paying less. The fast-food industry doesn’t share the savings from these job killing measures with its customers in the form of lower prices. Its all about growing their profits by employing fewer people. They call them “efficiency measures” to make them sound like something desirable.
Same exact thing is going to happen with self-driving technology.
Painful Truth No. 14: The housing market is even worse than it looks
If the labor market was really booming many of the people with new jobs would be buying new homes. That’s not happening.
New home sales topped out in 2005 at 1.283 million. We’ll be lucky to reach 500,000 this year. That’s a paper decline of 61 percent during a period in our national population added 27 million potential home buyers.
The true decline in the new home purchase rate is actually more along the lines of 400 percent once you adjust for population growth, which housing indicators habitually and intentionally ignore.
This convenient sin of omission precludes them from ever having to share painful truths. Like the fact that just one new home is being sold for every 644 Americans this year. Versus one for every 161 Americans in 2005.
In other words, you only had to chat with 10 classmates in 2005 to find someone buying a new home that year. Today you would have to chat with 40.
If you want to celebrate that kind of Depression Era garbage, go ahead.
Personally, I’m holding out for a real labor market recovery and a real housing market recovery before I pop my champagne cork.
Our economy needs more jobs and more job security, and it desperately needs legislation to bolster consumer confidence in banks again. People will never buy homes in large numbers from sketchy mortgage lenders, especially when they face the prospect of a frivolous layoff that may require them to relocate to another area to find work.
The big banks need to apologize to American consumers and and assure us they won’t play the villain ever again. Instead, Trump seems to be preparing to help them tie the poor and middle class to the railroad tracks.
You don’t have to be a genius to realize it’s not going to have a happy ending.
For our economic system to work, middle class Americans have to have predictable income and expenses, and enough job security to allow them to be prolific consumers. That’s just not happening any more.
Instead, we’re seeing one scheme after another from the private equity and hedge fund industries that lock the middle class and their children into a cycle of forever debt. From for-profit colleges to payday lending.
Painful Truth No. 15: Wall Street has been completely unhinged by technological innovation
Used to be, investors would buy a couple thousand shares in a company and keep the paper certificates in their safes for years. Now, they often trade electronic shares hundreds of times a day thanks to the magic of the Internet and computerized trading.
One of the unintended consequences has been an irrational obsession with short-term profit growth. Very short-term.
Investors no longer care if a company is stable or being managed well in the longer term, so as to guide its evolution into a stable business and employment hub.
Because they don’t need it to be stable. They just need its stock price to go up.
To qualify as a growth company and attract money from those Wall Street investors, publicly traded companies have to generate at least 8 percent a year in profit growth. It may not sound like much, but it’s virtually impossible to sustain year, after year, after year.
Here’s an example of just how hard:
A company with $100 million of annual profit which succeeded in sustaining an 8 percent annual growth rate would be generating profit of $82.6 trillion a year by 2188 in an inflation-free environment. That’s more than the current global world product of $78 trillion. In just 172 years.
This kind of metric insanity is what drove Wells Fargo to fire 10,000 of its own from July 1, 2013, to March 20, 2014, to cut labor costs so it could continue to post record profits. It’s also what drove its people to open bogus bank accounts to meet their equally bogus performance goals.
I know because about a half dozen accounts were opened in my name when I was covering Wells Fargo for the Gannett news chain, without my knowledge.
Could be the people who opened them were trying to tell me something. Could be they were opening the accounts to call for help, much as Gotham used to run up the old Bat signal.
Painful Truth No. 16: Congress’ insider trading exemption is an invitation to legalized bribery
The rules don’t apply to them, because they’re better than you and me. Just ask them.
This indefensible example of institutionalized political corruption has elevated Congress’ median net worth to more than $1 million per member in a nation where less than 3 percent of the general population enjoys that rarefied financial status. The median adult wealth in the U.S. was just $49,787 in 2015, per the Credit Suisse Global Wealth report.
Senate Minority leader in Nancy Pelosi built an $89 million fortune while in public office, largely on insider trading tips from the corporate lobbyists and investors she’s supposed to be keeping honest.
Author Peter Schweizer, a conservative researcher who has been critical of both political parties, described the insider trading exemption as “a venture opportunity.”
“This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family,” said Schweizer, author of “Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison.”
If Hillary or Bill Clinton had refused to address the nation’s Too Big to Fail Banks they might have commanded one payment of $200,000 when they broke their silence. Not 729 payments in the same ballpark.
That’s the number of overpaid “speeches” they allegedly made from 2001 to 2014.
A speaking fee consistent with that market actually would be more along the lines of zero for a presidential hopeful like Hillary. Strictly because of her need to remain in the public spotlight.
Former President Jimmy Carter gets about $50,000 to $100,000 per speech, according to The Annenberg Media Center. George W. Bush gets about $110,00.
Now, contrast those amounts with the 12 speeches the Clintons have given to Goldman Sachs since 2004 for a combined $2.25 million. And the nine speeches they gave to UBS for $1.9 million.
Hillary also rang up a $250,000 payday in 2015 from Apollo Global Management. Apollo was a big player in the for-profit college scam and is now trying to gain control of assets in the insurance sector, where it’s buying companies and laying off large number of U.S. workers.
UBS is the Swiss-based bank which has helped members of the 1 Percent escape trillions in taxes by improperly hiding their money in offshore tax shelters. It agreed to pay a fine of $780 million to the U.S. government in 2009 as part of a deferred prosecution agreement.
Goldman Sachs is the bank that agreed to a $5.1 billion settlement with federal investigators in April to order to avoid admitting wrongdoing for exacerbating the mortgage bubble which triggered The Great Recession. It helped destroy a staggering 9 million American jobs
There’s no telling how many political hookers are playing the speaking fees game, but it’s a safe bet the practice is widespread.
Because Congress hasn’t done anything to limit it.
Painful Truth No. 18: There are no term limits for members of Congress
That’s why it features 51-year incumbent John Conyers of Michigan, 45-year incumbent Charles Rangel of New York, 39-year incumbent Orrin Hatch of Utah, and 41-year incumbent Patrick Leahy of Vermont.
Those numbers are not their ages. They represent how long these men have been in Congress.
In 2014, researchers at Princeton and Northwestern universities found that the U.S. was no longer a representative democracy, but actually a functioning oligarchy in which only the rich count. Martin Gilens and Benjamin I. Page concluded that the opinions of ordinary Americans had become irrelevant to the public policies being crafted by our so-called elected leaders.
“The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy,” Gilens and Page wrote in their analysis.
Instead of changing the scandalous behavior which has given it some of the lowest approval ratings in U.S. history, Congress has decided to stifle free speech and peaceful protest. It passed the so-called Anti-Occupy Law in 2012 to make the poor and middle class even more invisible.
The law has nothing to do with the CIA. It’s meant to further insulate the corrupt elected officials the agency is charged with protecting.
Because members of Congress are very sensitive to verbal criticism. It messes with their digestion.
They passed this draconian law in response to the Occupy Wall Street movement for more equal distribution of U.S. benefits and burdens, such as taxes and tax breaks. And did so at a time when billionaire Warren Buffett was wryly noting that he pays less in taxes than his secretary due to all the breaks for the rich.
The law makes it easier to prosecute this type of loyal opposition in federal areas bankrolled by our taxes. The old code required that a violator be “knowingly” and “willfully” in a restricted area. The new law scraps the word “willfully.”
The change gives Congress a license to suppress our freedoms of speech, association and expression on a case by case basis. One which is selectively enforced to conceal just how ridiculously sweeping it is.
It’s pure tyranny.
“Basically, if the government wants to shut down a protest, they just send a secret service officer down there to scratch his balls, and then they can start putting people in jail for a year or more,” wrote Lee Camp of the Huffington Post.
Painful Truth No. 20: Citizens United gave the rich control of our elections
Virtually all of the corporate and foreign SuperPacs and other “political action committees (PACs)” have become nonprofits since Citizens United was passed in 2010.
To summarize: Times are hard. It’s not your imagination. No matter what the politicians tell you.
Because they’re completely full of baloney whenever they talk about the economy.
With the notable exception of U.S. Senators Bernie Sanders and Elizabeth Warren, our elected leaders have no credibility whatsoever. They are not leaders. They’re something else.
The parallels to the eroding Austro-Hungarian Empire in 1913 are amazing. Critics of its reptilian political establishment mourned the rise of a social sickness within it.
One characterized by “the striving for money and career, egoism, materialism, vanity and the total neglect of moral behavior.”
In short, an unwillingness to lead by example to advance the greater good.
Austria’s Habsurgh royals managed their armies far from the battlefield and were unaware that entire formations were falling apart during World War I. Just as Hillary and her fellow 1 Percenters are blind to the increasingly grim realities of life outside the walls of their estates, prep schools, country clubs, and gated communities.
The Austro-Hungarian Empire once covered the modern equivalent of Austria, Hungary, The Czech Republic, Slovakia, Ukraine, Bosnia-Herzogovenia, Slovenia, Macedonia, Croatia, Albania, Ukraine, and Poland. It’s virtually unknown in the U.S. today.
The Habsburg family which once ruled it lost their power in 1918. Their demise was largely the result of self inflicted wounds. A similar fate befell the Russian and German royal families.
Our 1 percent seems intent on following in their footsteps.
What’s the saying?
“Those who do not learn history are doomed to repeat it.”
Victor Epstein is not a formally trained economist with a university degree in the dismal science. His knowledge is derived largely from one-one-one exchanges with the planet’s top economists conducted when he was covering economic indicators for an extended audience of millions.
(A shorter version of this story first appeared on Nov, 19, 2016).