Archive for November 21, 2008

20 more reasons to reduce working time now…

November 21, 2008 Leave a comment

73079997MG008_forumOur favorite doomsayer, Nouriel Roubini, has returned with an expanded list of 20 reasons why this will be a longer and deeper recession than common wisdom imagines.

The driving force for this recession, which, he predicts, will be the worst since World War II, and will last through 2009, is, of course, that you are so deep in debt you are incapable of maintain your current standard of living.

While you were looking the other way, Washington has driven you to the brink of impoverishment.

All along, Washington’s strategy has been to hold your income and wages down, while furnishing you with ever greater amounts of easy credit to purchase homes, cars, and other big tickets items – items which, once purchased, created demand for additional complementary goods, like refrigerators and televisions, roads and bridges.

For the most part, this has worked for the last sixty years since President Truman first signed off on National Security Council Memorandum 68. And Washington was richly rewarded with a growing economy out of which it could siphon an ever greater portion of resources to build out its massive empire.

Built on the 1930s depression in the demand for industrial and farm labor, which remains the core of the economy and has never gone away, Washington has been able to erect a massive bubble economy based on easy credit, the proliferation of service (non-goods producing) oriented businesses, government employment, and an ever lengthening work day – a work day growing longer not primarily with the addition of more hours per individual employee, but the addition of more wage earners per household.

(We call this a bubble economy because it consists of pseudo-economic activity which is entirely empty, satisfies no human need whatsoever, puts no food on the table, and adds nothing to your standard of living. An example of this is the confession of a friend who is a classic example of the bubble economy employee: his job is to support the computer systems of a well known financial company. As a practical matter, he often states, “My job is to drag email from the help-desk inbox to one of the folders under the inbox.”)

From your point of view, the ever lengthening work day was the result of inflation and taxation, and the stagnation or fall of real income in the face of rising prices. Over time the income gained by traditional male wage earner required the addition of wages earned by his female counterpart in order to keep up with the pace of inflation.

Families with a single earner – so-called broken homes, run by single mothers – felt the crushing loss created by inflation and became the fodder for the growing mass of families permanently mired in poverty – a permanent underclass of multi-generational losers.

Hence, politicians like Jesse Jackson, and Barack Obama seem that much more astonishing because they managed to escape just this government provoked poverty trap to rise to their present circumstances – thus making it possible to face millions of others not so lucky or resourceful, to tell them, “You too can overcome everything we have thrown in your path designed to make you fail.”

First, turn off that television you purchased on the credit we provided in lieu of a decent wage.

Over the past sixty years, these two measures employed by households to maintain their income in face of Washington’s deliberate policy of economic growth (the official name for government created inflation) – the entrance of millions of mothers into the labor force and the accumulation of household debt – have reached their maximum sustainable levels.

According to Roubini,

The US consumer is shopped out saving less and debt burdened and now faltering…millions of households are insolvent, [slipping] into negative equity territory and on the verge of losing their homes…

There is no solution to this downward spiral, there is only an adjustment to it: the immediate reduction of working hours.