The Face of Raising Unemployment

[Mega]

Re: The Face of Raising Unemployment

Unemployed in the early 80's.......made some money rebuilding crash/old motor bikes. You picked up skills to patch & make do cars etc to spin your money further.

Over the last 10 years i watch people go out & "Just buy new".........throw good high class TV's out because they were not "Flat screen".

People are going to have to "Make do" again!
Mike

[Wild Style]

Re: The Face of Raising Unemployment

That was definitely not the case in the 1970's -- the demise of compassion in the states started with the Reagan Administration and the simultaneous rise of the "Yuppies" and their glorification of "selfishness"

I didn't know that to be honest. I was born in the mid 70s. I hear my uncle talk about the time when he was growing up in the 40s and the stories he tells about America are nothing like what we see today so I assume you are right.

[tree]

Re: The Face of Raising Unemployment

Unemployed in the early 80's.......made some money rebuilding crash/old motor bikes. You picked up skills to patch & make do cars etc to spin your money further.

Over the last 10 years i watch people go out & "Just buy new".........throw good high class TV's out because they were not "Flat screen".

People are going to have to "Make do" again!
Mike

"Use it up, make it do, make it last or do without."

History is so boring.

[tombat1913]

Re: The Face of Raising Unemployment

Americans do not pay higher taxes than they did in the 1960s and 1970s -- when their levels of generosity and well being were much higher

Tax Rates for single person from 1965 to 1976 (the rates were not indexed to inflation then)

14.00%	$0.00	$500.00
15.00%	$500.00	$1000.00
16.00%	$1000.00	$1500.00
17.00%	$1500.00	$2000.00
19.00%	$2000.00	$4000.00
31.00%	$4000.00	$6000.00
24.00%	$6000.00	$8000.00
25.00%	$8000.00	$10000.00
27.00%	$10000.00	$12000.00
29.00%	$12000.00	$14000.00
31.00%	$14000.00	$16000.00
34.00%	$16000.00	$18000.00
36.00%	$18000.00	$20000.00
38.00%	$20000.00	$22000.00
40.00%	$22000.00	$26000.00
45.00%	$26000.00	$32000.00
50.00%	$32000.00	$38000.00
55.00%	$38000.00	$44000.00
60.00%	$44000.00	$50000.00
62.00%	$50000.00	$60000.00
64.00%	$60000.00	$70000.00
66.00%	$70000.00	$80000.00
68.00%	$80000.00	$90000.00
69.00%	$90000.00	$100000.00
70.00%	$100000.00	-

However let me give an extract from Elaine Supkis -- and I can vouch that this is how things were then



Going through grad school, in the 1970's, it was possible to live well, and save money on a graduate assistants pay. But I doubt if it is feasible now.

The problem today is not taxation, but rather indebtedness of the US public brought on by the gutting of banking laws starting with Reagan and continuing through Clinton and finally Bush.

I would agree that we have way more debt now. However, without any debt, working and trying to pay for college today sounds nothing like what she describes. So what are we missing here?

[Rajiv]

Re: The Face of Raising Unemployment

The basic cause is inflation -- inflation caused by the availability of cheap money which implies indebtedness -- since debt equals money.

In 1974, the minimum wage was $2.00 per hour. Graduate Assistant pay ~ 3.25 time minimum wage = $6.50 per hour

If minimum wage kept up with CPI

BLS min wage $8.75 ergo Grad Asst pay = $28.44

CPI+lies min wage ~ $20 ergo Grad Asst pay = $65

Graduate Asst pay today $16.50 per hour

So wages have not kept up with either official inflation or true inflation

[Down Under]

Re: The Face of Raising Unemployment

(while the select few "the chosen, the privlaged and the utterly corrupt" on Wall Street enjoy their $700 Billion for bonuses , acuisitions and mergers)

Have to agree; it's an absolute joke what is happening regarding bonuses to Wall Street. You screw up in any other job, you get the flick. Screw up on Wall Street and walk away with a big fat bonus.

Some of these people should be in jail; will that happen? Probably not...

[Rajiv]

Re: The Face of Raising Unemployment

This 5 minute video is worth watching. The situation is totally different from what it was in the 60s and 70s

ANP: College Debt 101 in Bloomington, Indiana

Students face mounting debt as economic crisis unravels

Is Sallie Mae poised to join Fannie Mae on the list of economic disaster stories? The rising cost of a university education combined with a flat job market is making it difficult for students and their families to pay off college loans. In Bloomington, Indiana many of those waiting tables and cleaning dishes at the famed Mother Bear's Pizzeria are Indiana University students working their way through school. Catching the rare free moment between orders, workers describe the stress they are feeling in these rocky economic times. The recent credit crunch at the banks and the chaos on Wall Street has already added to their worries - undercutting family credit records, draining stock funds, and causing some students to question what the future will hold.

[The Outback Oracle]

Re: The Face of Raising Unemployment

That was definitely not the case in the 1970's -- the demise of compassion in the states started with the Reagan Administration and the simultaneous rise of the "Yuppies" and their glorification of "selfishness"

I can't speak for the US and i don't speak for Aus, but my observation is that compassion was lost here when the Leftist Governments took over the function of many of the previous voluntary charities. Imoprtant communal things were lost.

[kingcopper]

Re: The Face of Raising Unemployment

I would agree that we have way more debt now. However, without any debt, working and trying to pay for college today sounds nothing like what she describes. So what are we missing here?

Don't forget about the debts of our glorious universities and their professors! They now need more because debt forms a beautiful pyramid of sh*t!

[Rajiv]

Re: The Face of Raising Unemployment

If you see my reply to Tombat, you will see that the wages have not kept up with inflation. That holds for Graduate Assistants as well as University Professors.

So where did all that money go? Since we have postulated that increased money supply was the cause of the inflation -- who were the beneficiaries?

So here are two thoughts

The Wealth Divide - The Growing Gap in the United States Between the Rich and the Rest

Edward Wolff is a professor of economics at New York University. He is the author of Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It, as well as many other books and articles on economic and tax policy. He is managing editor of the Review of Income and Wealth.

In the United States, the richest 1 percent of households owns 38 percent of all wealth.

Multinational Monitor: What is wealth?

Edward Wolff: Wealth is the stuff that people own. The main items are your home, other real estate, any small business you own, liquid assets like savings accounts, CDs and money market funds, bonds, other securities, stocks, and the cash surrender value of any life insurance you have. Those are the total assets someone owns. From that, you subtract debts. The main debt is mortgage debt on your home. Other kinds of debt include consumer loans, auto debt and the like. That difference is referred to as net worth, or just wealth.

MM: Why is it important to think about wealth, as opposed just to income?

Wolff: Wealth provides another dimension of well-being. Two people who have the same income may not be as well off if one person has more wealth. If one person owns his home, for example, and the other person doesn’t, then he is better off.

Wealth — strictly financial savings — provides security to individuals in the event of sickness, job loss or marital separation. Assets provide a kind of safety blanket that people can rely on in case their income gets interrupted.

Wealth is also more directly related to political power. People who have large amounts of wealth can make political contributions. In some cases, they can use that money to run for office themselves, like New York City Mayor Michael Bloomberg.

MM: What are the best sources for information on wealth?

Wolff: The best way of measuring wealth is to use household surveys, where interviewers ask households, from a very detailed form, about the assets they own, and the kinds of debts and other liabilities they have run up. Household surveys provide the main source of information on wealth distribution.

Of these household surveys — there are now about five or six surveys that ask wealth questions in the United States — probably the best source is the Federal Reserve Board’s Survey of Consumer Finances.

They have a special supplement sample that they rely on to provide information about high income households. Wealth turns out to be highly skewed, so that a very small proportion of families owns a very large share of total wealth. Most surveys miss these families. But the Survey of Consumer Finances uses information provided by the Internal Revenue Service to construct a special supplemental sample on high income households, so they can zero in on the high wealth holders.

MM: How do economists measure levels of equality and inequality?

Wolff: The most common measure used, and the most understandable is: what share of total wealth is owned by the richest households, typically the top 1 percent. In the United States, in the last survey year, 1998, the richest 1 percent of households owned 38 percent of all wealth.
This is the most easily understood measure.

There is also another measure called the Gini coefficient. It measures the concentration of wealth at different percentile levels, and does an overall computation. It is an index that goes from zero to one, one being the most unequal. Wealth inequality in the United States has a Gini coefficient of .82, which is pretty close to the maximum level of inequality you can have.

MM: What have been the trends of wealth inequality over the last 25 years?

Wolff: We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976.

Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s.

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See also Larry Gellman's Pay It Backward--The Greatest Wealth Transfer in History

For the last 20 years, I have been hearing that we were in the midst of the Greatest Wealth Transfer in History (GWTH). During that period the slogan has remained the same but both the alleged sources and beneficiaries of the wealth have changed several times.

The first time I heard about this wealth transfer was in the late 1980s in my role as both a solicitor for and a donor to a number of Jewish community organizations. We were all told that the next 25 years would be a critical period for philanthropy because the generation of immigrants who had achieved enormous financial success in America would soon start passing from the scene. The huge amounts of wealth they had amassed over the years would be passed on to their families and/or the organizations that many of these people had generously supported during their lifetimes.

As fund raisers we were instructed to get out in front of this transfer of wealth lest all the money pass into the hands of their less generous children who would be more likely to spend it on themselves and less inclined to be philanthropic.

I have to assume that this wealth transfer is well underway but we don't hear so much about it anymore.

That's because a new GWTH has supplanted it in the public conversation with an assist from T. Boone Pickens.

That GWTH is the transfer of more than $700 billion a year from the United States to those countries that provide us with oil. Pickens has spent more than $50 million of his own money over the last year to publicize our need to eliminate our dependence on foreign oil. The case is even more compelling since the recipients of our wealth include all the countries and leaders in the world who are trying to destroy us.

Pickens has met privately with and apparently had a great influence on the thinking of both John McCain and Barack Obama, each of whom has incorporated most of his talking points into their campaign rhetoric. Each candidate,of course blames the other for the problem.

As is so often the case, while all of the media headlines and political attention has been focused elsewhere, the real GWTH has been taking place quietly and beneath the radar. There is no Pickens Plan or other public effort being made to alert people, but it is by far the most significant wealth tranfer in our lifetime.

It has been the trillions of dollars of wealth that our generation has transferred (actually embezzled) out of the pockets of our children so we can live way beyond our means.

This addiction to debt--the things it can buy us and the painful choices it keeps us from making--has saturated every level of our society including government, corporations, and our personal finances.

The devastating impact that the irresponsible use of leverage has had on the financial system is well documented. Established blue chip companies such as Lehman, Bear Stearns, and AIG have disappeared from the scene completely and many others are a shadow of their former selves--not because they made bad investments but because they were so leveraged up and had borrowed so much that a big move against them in the market could actually wipe them out.

On the personal finance side we have all heard about the sub-prime mortgage disasters but we're learning that the sickness is far more widespread. According to CNN, more than 20% of all homeowners in the U.S. now owe more principal on their mortgages than their homes are now worth and that number is rising. That means that purely from an investment perspective, they would be better off giving their homes back to the lender and walking away with nothing.

And it doesn't end there. Millions of people now owe more on their auto loans than their cars are currently worth. Pools of securitized car loans could be the next credit issue that the markets have to deal with.

On top of that, millions more Americans are maxed out on multiple credit cards which they have used along with home equity loans to maintain their unsustainable standards of living for many years. Now credit is harder to come by and the credit card companies are actually starting to call in outstanding debt and raise minimum monthly payments dramatically. It's not surprising that the economy is in the tank.

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[alcyone]

Re: The Face of Raising Unemployment

Years ago I went through this same nightmare. I was broke, my home was in foreclosure, the Sheriff was knocking on my door every day with a new lawsuit, I finally filed bankruptcy, my marriage crumbled under the stress and as an added insult to injury I came down with shingles. I remember sitting on the beach with a bottle of Jack Daniels in one hand and a joint in the other thinking what the f__k is going on. I'm a hardworking nice guy... why is this horror show happening to me. That said, I have the greatest compassion in the world for the millions who are going through this same experience. Now I am not a particularly religious fellow, far too pragmatic to buy what passes for the evangelical bullshit going around nowadays. I am much more interested in what "religion" implies. As one sage put it, "...the end of religion is the beginning of spirituality and the end of spirituality is the beginning of Reality". The critical issue then is WHAT IS THE TRUE NATURE OF REALITY? People should be seeking THAT, not how to get Jesus or the government to save them but how to acquire a whole new orientation to Reality that encompasses what is euphemistically called salvation or faith. The problem with what passes for religion today is that it tries to acquire with the mind what can only be achieved through the lived experience. The result is an aggresive proselytization by people mired in dogma who really have no idea what they are talking about.
The truth is that if you truly understand the nature of reality and its secret embrace of the miraculous, you have nothing whatever to worry about. Whatever you need will come, and in the most astonishing ways, so long as you do not give in to appearances. The problem is that most people are like Plato's prisoners in his "Allegory of the Cave" they mistake appearance as reality and remain enchained in illusion. Those who have based their wellbeing on Ego, Money and a dogmatic Religiosity are about to be sorely tested, but this is in the nature of how consciousness evolves.

[Rajiv]

Re: The Face of Raising Unemployment

Just looked again at Shadowstats, and the numbers look even worse

CPI+lies min wage ~ $27.20 per hour ergo Grad Asst pay = $85 per hour

compared to $16-18 todays pay for graduate assistants

[labasta]

Re: The Face of Raising Unemployment

If you see my reply to Tombat, you will see that the wages have not kept up with inflation. That holds for Graduate Assistants as well as University Professors.

So where did all that money go? Since we have postulated that increased money supply was the cause of the inflation -- who were the beneficiaries?

So here are two thoughts

The Wealth Divide - The Growing Gap in the United States Between the Rich and the Rest



See also Larry Gellman's Pay It Backward--The Greatest Wealth Transfer in History

On the surface, it sounds like money went into personal debt consumption and not investment in companies. At least we know where money should now go, hence EJ's reindustrialisation post.

Someone on another post mentioned the anaolgy of one man having all the money and not being able to get more money because no one else had any to give. I don't think that is entirely correct.

You could replace that "one man" with "government" which could employ half the people in making stuff and services. This "half" would have money to spend on these same goods and services. Some of this half would save their money and eventually start other businesses and eventually employ the other unemployed half etc.

The "one man" story does highlight the systematic problem of "interest" on loans however. It does seem that interest may be the blood sucker of the economy and may need to be banned for an economy to truly prosper.


Because of the disparity of wealth ("One man" problem) the future may mean communism/socialism unless number 1. happens below. I can see 3 things happenning.

1. The wealthiest of wealthiest either give their money away or invest it in enterprise (more likely both to different degrees). Only having a minimum amount stuck in a bank account.

2. The government takes the money away from the wealthy and gives it away and invests it in enterprise, so that money isn't stuck in someone's bank account. This may only happen if 1. fails to a great enough extent.

3. People form small groups (villages and small towns) and drop out completely. These people form their own goods and services and trade with other small groups using a common currency or barter system.

I believe a combination of all 3 could happen depending how bad it gets.

More thoughts on these options:

1. If the "return" on money via interest (above real inflation) disintegrates as the economy collapses (goes down a lot), then the ueber rich must invest their money in enterprise to get any hope of a return. Plus the few philantropists who could see starvation outside their window will also donate. On a side note, the mega welathy could leave their money in the bank and let the bank invest for them, giving them "interest" on their investment as long as this investment by the bank was in enterprise and not debt consumption. Unfortunately, due to systemic bank insolvency, we are probably too late for banks to do anything about this.

2. I believe since the truly wealthy own government (or are government), then the government would unfortunately inflate to create the new investment rather than take the money from the ueber rich. This is very dangerous as it could force the ueber rich not to invest in enterprise, but to "take the money and run".

3. If "take the money and run" occurs, then communes will form across America. This will bring a sense of joy to a lot of Americans as I believe it is this kind of pioneering spirit which is the essence of the USA (or at least was).


I don't think the government wants option 3. to happen as that would dramatically reduce the power of the government.

The government really is between a rock and a hard place.

[The Outback Oracle]

Re: The Face of Raising Unemployment

WTF is wrong with all you blokes and interest??????????

You have a society in a shambles because there is no saving anmd mountains of debt because interest rates have been negative for 40 years or more and then you say "interest is the problem".

Sometimes there are things on this site that simply amaze me at the stupidity!
Hells bloody bells...what are you going to do???????????? Have continuous negative interest rates to keep piling up the debt!!!! FOR HEAVEN'S SAKE THINK!!! JUST FOR ONE MINUTE!!!!!
THE INTEREST IS NOT THE PROBLEM THE debt IS THE PROBLEM!!!!!!