Friday, March 6, 2009

Dimidiae quod Dimidium Nodus

So, I heard this story yesterday, apparently it was on NPR: There was a job as a school janitor in Ohio that opened up, and 700 people applied. The end.

I think it's safe to say at this point that our economy is seriously fucked, and it's going to take a lot of work getting out of the mess we're in.

President Obama's State of the Union address had a bit to say about the economy...Fine speech, I think. After 8 years of a Southern-accented monkey mangling English worse than the Welsh in Shakespeare, anything will sound better. But I think it actually was a good speech.

He makes a great point: The economic crisis is the greatest American issue affecting our country.
While it's true we certainly are in the economic shitter, I think an even greater issue than the economic crisis is what caused the economic crisis: namely, de-industrialization, militarism, and corporate political power. And these issues were never addressed, even though there is a clear need to deal with the deepening level of recession.
In February, 651,000 jobs were lost, making it the third month in a row where more than 600,000 jobs were lost. The last time America had three months in a row of that many jobs lost was in 1939.
The President's proposed budget was $3.5trillion. The federal deficit is expected to hit $1.75trillion. Half of the budget will be financed by red ink.

The trouble with the proposals put forward by the President is that none of them show much chance of working.
During his speech, he stressed the need to get banks lending again. The problem is not that banks aren't lending, the problem is that no one is borrowing. Who wants to invest in an economy going down the toilet? Auto sales are down 40%, despite offers from GM, Ford, and Toyota for no money down and 0% financing. 0% financing? Clearly the difficulty is not that consumers are unable to borrow, they just don't want to. People are cutting back on their spending because of the recession, so what do they need to borrow for? Debt relief? It makes no sense to go into debt to pay off debt. Somehow, with the team of bankers at the President's side, this fact gets ignored. It's also why the first $350billion given to banks was as effective as pissing on a forest fire: no one noticed a difference. Look at the market value of these companies. Citigroup received $75billion in bailout money, and their market value is worth only $5.4billion. That's less than what Autozone is worth. AIG received $180billion, and their market value is worth less than $1billion.
It makes no sense whatsoever to dump money into this black hole of a financial market. But all the Wall Street cronies who make up President Obama's economic team continue to suggest that dropping billions on these companies will somehow rebolster the economy.

The only solution to the economic crisis is job creation and security. America is stuck in a massive trade deficit: we consume more than we produce (One of the reasons Rome fell is that it was forced to conquer other nations just to satisfy its appetite). Corporate outsourcing to other countries for cheaper labor is just as bad for the economy as if they weren't providing a product in the first place. There goes job creation. Job security is under fire in many cases(especially in the IT realm, with firms like GE and Microsoft, to be specific) by corporations who replace their American workers with foreign workers under H-1b work visas, who work for much cheaper.
Suddenly America is filled with employees who have a Masters in Business looking for work selling Starbucks or Pinkberry. 700 people apply for a janitor position in a school in Ohio. Service industry jobs have been the main source of job creation in America for quite some time. Everytime Prezzy Bush got on television bragging about the number of jobs created in America, the vast majority of those jobs were in the service industry. The trouble is, service industry jobs don't actually make anything. It's pure consumer spending with no production involved. The imbalance between consuming and producing needs to be fixed immediately. Corporate America needs greater incentive (or harsher penalties) to create jobs in America rather than offshore, and fill them with American workers rather than foreign employees with a work visa. This is the only way to turn the economy around.

All this spells disaster in education, too. You don't need higher education to sell coffee or clothes. Hell, you don't need a high school education to sell coffee or clothes. That's why these jobs were great part time jobs for students. Now it's become a job for anyone who needs to make money while they try to enter or reenter a full time work-force which has no room for them.
Kids are smart, too. Well, they're good at picking up moods, anyway. Expect drop-outs to go up as kids figure out there's no reason to complete high school unless you actually like education.
Given the sorry state of our public school system, I don't imagine too many kids liking the education they are receiving.
Why is it always the arts that get cut out of a child's development first? It is in the Arts where a child's imagination and creativity develop and assume physical shape, in the form of music or painting or poetry or whatever. And it is only from a healthy imagination and well-tended garden of creativity that will encourage scientific innovation, social solutions, and feats of engineering.
Before we were able to land on the moon, someone had to dream about it.
Without the Arts, reading and writing and arithmetic becomes merely letters and numbers on a page without any concept of usefulness.

The best things the government can do to turn the economy around is assist local governments in funding schools and educational programs (and get rid of the creativity killing No Child Left Behind Act), and job creation.
Like putting the unemployed to work installing and renovation green systems, like Geothermal Heating and Cooling. Tax cuts to home-owners to renovate towards green technology will bolster and encourage a market for it, and the market will create jobs to fill that need.
Seriously, check out Geothermal systems, it's pretty amazing (the article I linked is a decade old, too).

The best things the public can do to turn the economy around is work on balancing their consumption of goods with an equal share of production. And when we buy, we need to be mindful that products made in other countries do not help our economy.

Perhaps you've heard of the Invisible Hand Theory of Economics? It's also known as trickle-down economics.
The idea is that when you buy a product, that money goes to a company, and the company uses some of that money to pay their employees, who then go buy more products and the process repeats. It is like a ripple effect, or an invisible hand gently rubbing the testicles of economy.
The trouble with this theory in our current free market economy is that when we buy products from foreign companies (or from American companies who've moved production offshore) we are putting our money in companies who are paying employees who don't live in America. Those employees then by products in their own country, and with American production being so low, the products they buy are not likely to be American.
The Invisible Hand is trying to stimulate a vacuum.

Now, I get it. When you want to buy a product, you want to buy the best product you can at the best price available. But I encourage you to do your research. See if you can get something just as good only made in America. Even better would be made in America by companies who are environmentally responsible.
Consumers control the market. Corporations merely fill it. Essentially, it's consumerism which drives corporate production. Use your control wisely.

"Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit." --Aristotle