Showing posts with label Unemployment. Show all posts
Showing posts with label Unemployment. Show all posts

22 April 2013

Bob Feldman : African-Americans and Institutional Racism in Texas, 1954-1973

Barbara Jordan was elected to the Texas State Legislature in 1966.
The hidden history of Texas
Part 13: 1954-1973/3 -- African-Americans elected to office but institutional racism continues
By Bob Feldman / The Rag Blog / April 17, 2013

[This is the third section of Part 13 of Bob Feldman's Rag Blog series on the hidden history of Texas.]

In 1966 an African-American, Barbara Jordan, was elected to the Texas State Legislature, and by 1971 African-American City Council members had been elected in Austin, Bryan, Fort Worth, Galveston, Hearne, Houston, Huntsville, Malakoff, Port Arthur, San Antonio, Waco, and Wichita Falls.

But institutional racism in Texas did not disappear during the last half of the 1960s and the early 1970s, despite the victories achieved by local civil rights movement activists in the early 1960s struggle to end legal forms of racial discrimination, white supremacy, and racial segregation in Texas.

In Austin , for example, local residents voted to repeal a Fair Housing Ordinance in a May 1968 referendum; and the U.S. Justice Department initiated a lawsuit against the Austin School District in August 1970 because of the failure of city officials to desegregate Austin’s public school system.

In addition, in the early 1970s the Austin Human Relations Commission reported that discrimination in employment in Austin was still “widespread and well-documented,” according to David Humphrey’s Austin: An Illustrated History.

In 1969, the University of Texas administration still only employed one African-American faculty member. And although the poll tax in Texas was finally declared unconstitutional in 1966, as late as 1966 the Texas Rangers law enforcement agency still included no African-Americans.

African-Americans in Texas were still also likely to live in poverty. Around 39 percent of all African-American residents of Texas still lived in poverty in 1970, for example, whereas 90 percent of all white Anglo residents of Texas did not live in poverty.

Dormitories at Texas Southern University that housed African-American students were shot up by Houston police in 1967; and in the late 1960s, “Lee Otis Johnson, who led anti-war protests at Texas Southern University and publicly criticized the mayor and police of Houston at a Martin Luther King memorial rally, received a 30-year sentence for giving a police undercover agent a marijuana cigarette,” according to Alwyn Barr’s Black Texans.

Peoples Party II leader
Carl Hampton.
After People’s Party II was formed in Houston in the summer of 1970, its African-American chairman, Carl Hampton, was killed by Houston police on July 26, 1970; and three African-American supporters and a white supporter of People’s Party II were wounded by the Houston police in the same incident.

During the late 1960s and early 1970s, “Negroes in many Texas cities continued to complain that police stopped and searched them without reason, used dogs to move non-violent persons or groups, and still used... profane terms in addressing black people,” according to Black Texans. Not surprisingly, there was an African-American urban rebellion in Midland, Texas, in July 1968 and an African-American urban rebellion in Lubbock, Texas, in September 1971.

Affordable housing opportunities for African-Americans who lived in Texas cities like Dallas, Houston, and San Antonio were also still limited in 1970 because residential segregation still existed in these three cities at that time -- although 26 percent of all Houston residents and 25 percent of all Dallas residents were now African-American in 1970.

And in Austin, “as a result of the Keating urban renewal project in Austin during the 1960s... one-third of the families in the `renewed’ area did not get decent homes, 70 percent paid more rent or higher house payments afterward, and 19 percent of the pre-project home owners had become renters;” and “highway construction in Austin went far toward eliminating the small black enclave called Clarksville on the overwhelmingly white west side of the city,” according to Black Texans.

The official unemployment rate for African-American workers in Texas also continued to be nearly double the official unemployment rate for white workers in the state during the late 1960s and early 1970s. Between 1967 and 1970, the jobless rate for African-American workers in Texas was between 5.7 and 7.6 percent, while the jobless rate for white workers in Texas was between 2.7 and 4 percent.

And as late as 1970, African-American workers were still apparently being excluded from membership in the construction worker unions and skilled trades unions in Texas. And, although in the late 1960s “Negroes formed 20 to 25 percent of the population in Dallas and Houston, they owned only about 3 percent of the businesses in each city” and whites still “owned a majority of the businesses in the black community,” according to Black Texans.

[Bob Feldman is an East Coast-based writer-activist and a former member of the Columbia SDS Steering Committee of the late 1960s. Read more articles by Bob Feldman on The Rag Blog.]

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08 August 2011

Ted McLaughlin : Unemployment News is Nothing to Celebrate

No celebration here. Image from the Atlanta Post.

The new unemployment numbers
are nothing to get excited about


By Ted McLaughlin / The Rag Blog / August 8, 2011

The U.S. Labor Department released its unemployment figures for the month of July, and if you just gave a cursory glance at the headlines you might think the unemployment situation is improving. There are headlines saying things like "Unemployment Rate Down," "Jobs Rebound In July," "Hiring Picks Up," and "Improving Jobs Outlook." Headlines like that could make a person feel like good times are back.

But don't be fooled. Good times are not back and the unemployment situation is not getting better. Now you may want to correct me by saying that 117,000 jobs were created in July and the unemployment rate fell from 9.2% to 9.1% -- isn't that an improvement? Actually no. Let me explain.

While the 117,000 jobs created in July were more than the anemic number created in June, they were not even enough to cover the number of new workers entering the work force. It would take at least another 30,000 to 40,000 to do that. So the truth is that once again we have more people out of work than we did the month before -- actual unemployment got worse.

But if we have more people unemployed, how did the unemployment rate fall from 9.2% to 9.1%. To understand that you have to know how the government figures the unemployment numbers. Any person that the government cannot verify has looked for work in the last four weeks is not counted as unemployed. They may still be unemployed and looking for work on their own (or have given up), but they are no longer counted by the government as unemployed.

In fact, the government figures show that the workforce (the employed plus the official unemployed) shrank last month. In June it was 153.4 million people, but in July it was only 153.2 million people. Of course the workforce didn't actually shrink -- the government is just not counting an additional 200,000 people (probably because they can't be verified as looking for work in the last four weeks). This statistical shrinkage is the reason the official unemployment rate fell from 9.2% to 9.1%.

In June, the government figured the unemployment rate by dividing the number of unemployed (14.1 million) by the total workforce (153.4 million), and that came out to 9.2%. In July, after ignoring the 200,000 people they no longer want to count, they divided 13.9 million unemployed by a workforce of 153.2 million, and got a rate of 9.1%. That makes it look like the rate is going down, but it's all just a numbers and statistics game -- those people now being ignored are still out there and still out of work.

The government calls those they don't wish to count as people "marginally attached" to the workforce. They estimate the number of those people to be about 2.8 million people. That figure is probably very low because these people do not receive unemployment benefits and no longer visit the unemployment office -- making them very hard to count.

But let's assume the government is correct and the number is about 2.8 million. To get a truer picture of the real employment number we need to add them back to the unemployed number and the total workforce number. Then dividing the number of unemployed (now 16.7 million) by the total workforce (now 156 million), we find a more honest unemployment rate of 10.7%.

And if you add in the number of the underemployed (those involuntarily working part-time because they can't find full-time work -- about 8.4 million people), the rate climbs much higher. Adding the 16.7 million unemployed to the 8.4 million underemployed, we get a figure of 25.1 million (which is the number of full-time jobs needed for full employment). It would take nearly 18 years (at 117,000 jobs a month) to achieve that (and then only if no new workers entered the workforce in those 18 years).

Dividing the 25.1 million by the 156 million workforce (since the 8.4 million underemployed are counted as employed and included in the workforce number), we come up with an unemployment/under employment rate of 16.1%. That is a horribly high number, but it is the number we really should be worrying about because it more accurately reflects the number of Americans who cannot find full-time jobs.

Now you may be telling yourself at this point that we are still doing better than during the Great Depression when the unemployment rate peaked at 22.1% in 1932. But that's like comparing apples to oranges. The unemployment rate was figured differently back then. If the Great Depression unemployment rate was figured like the government computes unemployment now, it would be somewhere between 10% and 16%.

Since our current rates are between 10.7% (the unemployed) and 16.1% (adding in the underemployed), it looks to me like we are already experiencing Great Depression unemployment rates! And we haven't even discussed the 1.8 million jobs our economy is expected to lose due to the new debt ceiling deal. That could jack the rates up to between 11.9% and 17.2%.

So you can see that we're still in deep trouble as far as unemployment goes, and it looks like it will be a long time before things get better -- especially since neither political party seems to care about doing much to encourage job creation. And don't even try to tell me the Republican plan of tax cuts for the rich and government cuts is going to create any jobs. That's the prescription that got us in this mess in the first place.

Celebrate the new 117,000 jobs if you want to, but it's going to take a LOT more than that to even begin to pull us out of this hole.

[Ted McLaughlin also posts at jobsanger. Read more articles by Ted McLaughlin on The Rag Blog.]

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09 May 2011

Ted McLaughlin : The Unemployment Monster

Political cartoon by Rodrigo / Expresso.

And the recession rages on:
The unemployment monster

By Ted McLaughlin / The Rag Blog / May 9, 2011

The cartoon above may seem funny to a lot of people, but I suspect those would be people who currently have a decent job. For those without jobs the monster of unemployment is all too real (and very frightening). They know that looking for a job is much harder than actually working, and nobody lives large off an unemployment check (if they're lucky enough to receive one).

The Labor Department released it's monthly unemployment figures last week. The headline that most pundits want to talk about is that somewhere around 244,000 jobs were created in April (that fact is trumpeted in the first line of the report). But before you get carried away with celebrating this "good news" you need to know the rest of the story (and it's not a pretty story).

Even though those jobs were created in April, they didn't even make a dent in the unemployment rate. In fact, the unemployment rate actually climbed in April -- from 8.8% to 9.0% according to the government. That means the unemployment situation got worse instead of better.

Consider the following numbers. The Labor Department says the number of unemployed people is currently 13.7 million. But that is just the number of unemployed people that the government could verify looking for a job in the last four weeks. They also admit there are at least 2.5 million people who are out of work, but have virtually given up and it could not be verified that they looked for work in the last four weeks (although that figure is just a guess and is probably much larger).

But just for grins let's take the government figure of 2.5 million people "marginally attached" to the work force. Add that to the 13.7 million still actively seeking work and we get a figure of 16.2 million people who can't find work. Then we have the people who are working part-time because their hours have been cut back or they can't find full-time work (and all of these people would like to get a full-time job). There are 8.6 million of these people.

Add that 8.6 million to the 16.2 million and you get a better picture of the number of Americans who would like to have full-time jobs but can't find any -- and that number is 24.8 million people (between 16% and 17% of the workforce in this country). And there is little doubt that that is a low-ball figure (since the marginally-attached people are pretty invisible and very hard to count).

The truth is that the recession is still raging for working people and it got a little worse last month (in spite of the positive job creation). Now the economists say that an unemployment rate of about 3-4% is considered to be full employment (since there will always be some movement with people quitting jobs or moving and looking for new jobs). At 4% this would be around 6 million people. That means we have 18.8 million Americans (or more) who would be working if the economy was healthy, but are currently unemployed.

To show you how really anemic the creation of 244,000 jobs is, it would take 6.5 years to put those 18.8 million people back to work -- and that is only if no new workers entered the job market in that 6.5 years! But since the unemployment rate went up even though 244,000 jobs were created, we can assume this number of new jobs didn't quite cover the number of new workers entering the job market.

The sad fact is that it will take many, many years to put most of America's unemployed back to work -- and then only if the economy is booming (something we can only dream about right now). And if we continue to follow the Republican economic policies, the current unemployment rate might last far into the future (if it improves any at all) -- because they and their corporate masters like the current situation (because desperate workers will accept very low wages and no benefits).

Some right-wingers will say that there are jobs to be had if a worker is willing to lower his or her expectations. Even that is not true. Consider what happened when McDonald's (a company known for paying low wages with few benefits) announced they would be hiring thousands of new workers. Over a million people applied for those pitiful jobs -- and about 62,000 people were hired. That means over 938,000 people couldn't even get hired for that low-wage company.

And while the politicians talk about abolishing Medicare and Medicaid, cutting Social Security benefits, and slashing social programs (including food stamps and unemployment insurance) -- while giving corporations subsidies and cutting taxes for the rich -- there is absolutely nothing being done by the government to solve the jobs problem. Is it any wonder that ordinary Americans are mad at both political parties?

Don't let the politicians fool you. The rich are doing very well, but the recession is still raging for most Americans -- and it looks like it will be for quite a while.

[Ted McLaughlin also posts at jobsanger. Read more articles by Ted McLaughlin at The Rag Blog.]

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07 March 2011

Ted McLaughlin : Is Unemployment Actually Climbing?

Political cartoon from Gallery View.

Poll puts lie to government figures:
Gallup shows unemployment is on the rise

By Ted McLaughlin / The Rag Blog / March 7, 2011

The official government unemployment figures have not been released yet for the month of February, but if they're anything like the January figures then they probably can't be trusted anyway. In January the government figures showed that the unemployment rate had fallen to 9.0%, even though there were barely enough jobs created to keep up with the number of new people entering the workforce (if that many).

How can it be that the figures dropped then? The government doesn't bother to count ALL of the unemployed -- only the ones getting unemployment benefits or using unemployment centers to try and find work. Those who have decided the unemployment center can't help them or have given up altogether on finding a job aren't counted.

The Labor Department, that compiles the unemployment statistics, even admitted that the 9.0% figure just showed that a whole lot more people had given up in January rather than showing a real reduction in the number of people out of work.

So how are we to know what the real unemployment is in America? Is it improving or getting worse? One resource that is probably more accurate than government figures is the Gallup Poll.

Gallup does a survey of the population by contacting about 18,000 people each month (which gives their survey a margin of error of only 1% -- very accurate). And Gallup paints a very different picture of unemployment in America than the flawed government statistics do.

Gallup shows unemployment has been steadily climbing since the end of December. They showed a 9.6% unemployment rate at the end of December and a 9.8% rate at the end of January. The end of February marked a return to double-digit unemployment with a rate of 10.3%. That is virtually the same rate as this time last year (10.4%), which means that the economy is just spinning its wheels and going nowhere regarding job creation.

Underemployment: where things get scary. Graphic from Gallup.

And when you add in the number of people who are working part-time because they can't find full-time work (about 9.6%), which Gallup calls the underemployment rate, the numbers get pretty scary. That figure now rests at 19.9%. Last year at this time it was 19.7%.

And considering the fact that most of the few new jobs being created pay less, in both wages and benefits, than the jobs lost due to the recession and outsourcing (which continues unabated) it becomes obvious that the job market is not only not improving -- it is getting worse.

And with the return to power of Republicans (at least enough power to block any job stimulus programs) the job market is not going to improve anytime soon.

The Republicans want to return to their policy of "trickle down" economics -- which is to slash government spending while continually lowering taxes on corporations and the richest Americans. Today we tend to think this policy started with the Reagan administration, and it is true that's when America started a return to that policy. But the policy is much older than that. It was the flawed policy of the Hoover administration (and previous Republican administrations), and it was directly responsible for turning a serious recession into the Great Depression.

Today our government is beginning to repeat that disastrous bit of history, only this time we have added to it a policy of encouraging American companies to outsource good jobs, so they can turn them into low-wage jobs (with no benefits) in other countries. How can we expect a better outcome now than 80 years ago?

The truth is that the Republicans, with the help of some misguided "blue dog" Democrats, have put us on the path to destruction -- and there's not a thing we can do about it for the next couple of years. Even if the Democrats have enough backbone to block many of the worst Republican cuts to necessary government services (which is in doubt), the Republican control of the House of Representatives will allow them to kill any effort by Democrats to stimulate real job creation.

Buckle your seat belts because we're in for a very bumpy ride, and the best we can hope for is to survive that ride until enough Americans realize what the Republicans are doing to the economy. I just hope they wake up before we hit the ground and crash.

[Rag Blog contributor Ted McLaughlin also posts at jobsanger.]

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06 April 2010

Employment Crisis : Inequality and the Global South


How it impacts workers:
Transformation in the Global South

The end product... has been increasing global inequality in wealth and income and the continuation of massive poverty, powerlessness, and precariousness.
By Harry Targ (with David Cormier) / The Rag Blog / April 4, 2010

Neo-liberalism challenges the non-aligned movement

Since the 1970s, poor countries have been increasingly forced to embrace neo-liberal economic policies at home -- cutting government programs, privatizing the economy, opening up the economy to foreign penetration, and shifting to an export-orientation -- contrary to the agenda of the Non-Aligned Movement. For many countries, neo-liberal policies constituted a radical break from state policies in which government collaboration with or oversight of the economy were common (so-called heterodox policies).

The Non-Aligned Movement of newly independent countries began to meet in the 1950s. Their concern was the polarization of the international system around debates about “communism” and the “free world” or USSR/U.S. conflicts. For them the central issue was economic development. NAM countries became attracted to variants of Socialist or heterodox policies that called for strong state involvement in economic growth.

Because of United States/Soviet competition during the Cold War for the support of NAM, it gained voice in the United Nations system. Leaders of NAM countries began to demand a new international economic order or NIEO that would regulate international capitalism: limit the free reign of transnational corporations (TNCs), reschedule debts, liberalize patent laws, stabilize prices of agricultural commodities and raw materials, and in other ways regulate global capitalism to reduce some of its negative consequences for the Global South.

In Latin America, these policies were referred to as Import-Substitution Industrialization. The thinking behind ISI, initially developed by Economic Commission for Latin America economists and later amended by dependency theorists, was that manufacturing countries gain more from global exchange than export-oriented raw materials producing countries. Consequently Latin American countries needed to shift resources to industrialization. In the process, ISI policies required protections from unbridled foreign, i.e. United States, economic penetration.

The debt trap

The ability to further implement the NIEO and ISI was dramatically reversed by two historic world events. First, the Middle East wars led to dramatic increases in the price of oil during the 1970s. Oil poor countries that had embraced industrial development policies based on the importation of cheap oil experienced enormously increased trade deficits. Western banks choked with oil profits needed to find ways to use the glut of petro dollars. As a result, poor countries were forced to borrow huge sums of money from banks and banks encouraged the blossoming debt system.

To illustrate, indebtedness of the non-oil producing Global South increased five times between 1973 and 1982 reaching a total of $612 billion (Wayne Ellwood, The No-Nonsense Guide to Globalization, 43). By the new century, the total debt of developing countries had reached nearly $3 trillion, or $400 for each person living in the Global South (Ellwood, 48) In the 1990s, payments flowing from the South to the North in interest on loans exceeded loan funds entering the countries concerned.

In addition to the debt trap, as suggested above, the debt system came with a policy price: requirements that debtor countries reverse commitments to the NIEO vision and ISI policies. In the 1980s, the neo-liberal economic policies, central to the process of globalization, began to spread throughout the global economy. The debt system has been institutionalized ever since such that countries have become trapped in debt and requirements to carry out the policies of the banks.

The nail-in-the-coffin of Socialist or mixed-economy policies resulted from the economic and political disintegration of Socialism in the 1980s. The former Soviet Union sought to match the U.S. side of the arms race (the Reagan military build-up was the biggest in U.S. history). It found itself in expensive military quagmires in places such as Afghanistan. In addition, political legitimacy of the regime in the Soviet Union and across Eastern Europe declined with the inability of Socialist economies to match consumer growth in the West. The end result was the collapse of Socialism at the same time that the debt system was imposing neo-liberal policies everywhere.

Paradoxically, its advocates claimed, the neo-liberal policy agenda would increase the ability of poorer countries to participate in the global economy. Economic reforms at home would entice increased foreign investment. Shifting from tariffs to markets and from production for domestic consumption to production for sale on world markets would increase earnings which could be plowed into domestic economic development (as well as paying back the bankers for interest on loans).

Data on the 1990s indicated that direct foreign investment increased by about 15 times over the decade. However, 75% of the investment went to just 12 countries, the most industrialized of the countries of the Global South with the largest markets. These countries included Argentina, Brazil, China, Indonesia, Mexico, and South Korea.

Also trade data, exports and imports, indicated that the countries of the European Union, the United States, Japan, and Canada accounted for half of all world trade. Similarly a small number of countries accounted for half of the world’s imports. Despite claims by advocates, neo-liberal economic policies did not increase incorporation of most poor countries into the global economy.

The transformation of work

The transformation from Socialist or heterodox policies in the Global South to neo-liberalism, while not stimulating incorporation into the global economy and development, did facilitate changing work patterns. Neo-liberal policies, including privatization and shifting production from domestic consumption to exports, radically transformed rural work in many countries of the Global South.

Governmental pressures undermined traditional patterns of agriculture including land ownership and production processes. Land holdings were consolidated under the control of foreign or wealthy domestic investors. More productive and larger agricultural units began to produce commodities for sale in rich overseas markets.

Peasant farmers who in the past produced food stuffs for domestic consumption were replaced by agricultural workers and new technologies to produce winter vegetables and flowers for foreign customers. Countries which had produced enough food for their own people became net importers of food products. In addition, agricultural subsidies characteristic of the United States and countries of the European Union made it all but impossible for poor farmers to compete with the cheap imported food.

As a result of the new agriculture, and farmers forced off their land, migration to urban centers magnified, as more and more rural dwellers sought work. Cities in the Global South doubled or tripled in size, becoming surrounded by make-shift dwellings of people looking for work. Some rural migrants were able to find work in the new export-processing zones or sweat shop industries rising in some countries of the Global South.

The pool of cheap labor in the Global South, replenished by the transformation of agriculture, provided an attractive opportunity for textile, electronics, and other manufacturing employment, once basic to the manufacturing economies of the industrialized countries. The globalization of production occurred in tandem with the imposition of neo-liberal economic policies, and the transformation of agriculture.

These changes were reflected in changing employment/unemployment rates and the kind of work that became available in the Global South. From 1950 to 1990, there was a decline by almost 1/3 of those of working age in the world engaged in agriculture. The percentage of the world work force in agriculture in 1990 was down to 49%, from 67% in 1950 (In Latin America and the Caribbean the decline from 1950 to 1990 was from 54% to 25% in agriculture).

In addition, the growth in industrial employment between 1950 and 1990 was modest, not commensurate with the declining agricultural employment. (In Latin America, the decline in agriculture was more dramatic than the world figures while the increase in industrial employment was not greater than the world figures.) More recent International Labor Organization (ILO) data suggests that in the world at large “the share of employment in manufacturing declined between 1990 and 2001 in all economies for which data are available…” (ILO, 21 Nov. 2005).

Further, the world data (and the data for Latin America) indicate that the major sectoral growth in employment has been in the service sector. Increases in service sector employment ranged from 8% to 16% among countries in different economic strata. The largest growth in the service sector occurred in the lower-middle income countries.

The rise of the informal sector

Finally, the most significant shift in employment throughout the world, particularly in the Global South, is from the formal economy (agriculture, industry, and service) to the informal economy. Most workers in this growing sector of the work force are driven by a desperate need to provide the rudiments of life. Consequently, they are willing to do virtually anything to earn money.

This may involve lucrative small street market sales, or low wage home work (from house cleaning to garment assembly), or prostitution, or drug dealing. Work in the informal economy is not regulated. Workers enjoy no work place health and safety protections. They receive no health or retirement benefits. And, of negative consequence to the national government, they pay no taxes.

In a recent report produced by the Department of Economic and Social Affairs of the United Nations, “The Inequality Predicament,” a distinction is made between “haves” and “have-nots” in terms of employment. The former are employed in the formal economy. They are more likely “...to earn decent wages, receive job-related benefits, have secure employment contracts and be covered by relevant laws and regulations” (UN, 2005, 29). The informal sector represents the polar opposite in terms of wages, benefits, and rights. The growth of the informal sector worldwide, the report says, is intimately tied to growing global inequality.

The UN report estimates that “informal employment accounts for between one half and three quarters of non-agricultural employment in the majority of developing countries.” They indicate that the percentage of those who work in the informal sector varies across the Global South: 48% in North Africa, 51% in Latin America and the Caribbean, 65 % in Asia and 78% in Sub-Saharan Africa (UN, 30).

In addition, the report refers to studies that suggest that the informal sector accounts for significant shares of the overall income and gross domestic product of individual countries. One study of 110 countries in 2000 found that the 18% of the gross national incomes of OECD countries came from the informal sector, 38% in “transition” countries (formerly Socialist), and 41% in developing countries. The informal economy accounted for 42% of the GNP in Africa, 26% in Asia, and 41% in Latin America (UN, 30-34).

The precarious classes

Data shows that unemployment around the world rose over the period from 1993 to 2002 and declined somewhat in 2003. What may be the most significant finding from this data is the fact that the seeming recovery of 2003 only imperceptibly impacted on unemployment rates. Even if sectors of the global economy experience growth, some theorists suggest, recovery given the system of global capitalism is “jobless.”

The economic transformations initiated in the Global South in the 1970s occurred in the context of the concentration and globalization of capital and the declining resistance including the collapse of Socialism. The oil crisis, the rise of a global debt system, global policy shifts from state/market economies to neo-liberalism parallel significant changes in work activity from agriculture and industry to service, to the rise of the informal sector and unemployment. The end product of these transformations has been increasing global inequality in wealth and income and the continuation of massive poverty, powerlessness, and precariousness.

While rates of poverty declined over the last 20 years of the twentieth century, still half the world’s population in 2001 lived on less than $2 a day. And the percentage declines in extreme poverty, less than $1 a day, during this period mask the fact that more people in 2001 were in extreme poverty than 20 years earlier. The numbers of people in extreme poverty increased in Latin America and the Caribbean, the Middle East and North Africa, South Asia, Sub-Saharan Africa, and India. The numbers of those in poverty declined in East Asia and the Pacific and China.

Also, it is clear that income inequality has been increasing between richer and poorer regions of the globe. With the OECD countries representing the rich countries, on a per capita income basis, shares of income of peoples in Sub-Saharan Africa, South Asia, the Middle East and North Africa, Latin America and the Caribbean have declined between 1980 and 2001. Weller, Scott, and Hersch (2001) report that in 1980 median income in the richest countries (top 10 percent) was 77 times greater than the median income in the poorest countries (the bottom 10 percent). By 1999, the gap had expanded to 122 times.

The transformation of employment from agriculture and industry to service and the informal sector -- a shift that has been characterized as one from “have” to “have-not” jobs -- has been reflected in the continuation of massive poverty around the globe and substantial evidence that the distribution of wealth and income has worsened over the period of neo-liberal policy influence. “The Inequality Predicament” makes it clear as well that income inequality is reproduced in the distribution of access to health care, education, housing, access to water, and sanitation.

Data like these led Samir Amin (2003) to predict that the transformation of the global political economy was precipitating a crisis of poverty and human misery that will transcend the expectations of the most well-meaning humanists. Amin described the emergence of “precarious classes” in both rural and urban areas.

Estimating that half the world’s population (3 billion people) live in the country, he predicted that nearly 2.8 billion of them will become economically redundant. That is, given technology, 20 million people could provide the food needs for the planet. In the cities, 1.5 billion of 3 billion people are marginalized workers who experience work temporarily and/or who always live with the insecurity of job and income loss.

Over 4 billion people of the 6 billion living on the planet, Amin wrote, constitute “the precarious classes,” made redundant because of declining employment and being reduced to perpetual employment insecurity due to the exigencies of the pursuit of profit in an era of neo-liberal globalization. This situation, Amin asserted, constituted a coming global crisis not seen in human history.

[Harry Tarq is a professor in American Studies who lives in West Lafayette, Indiana. He blogs at Diary of a Heartland Radical.]

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07 February 2010

Austin and Texas : Economic Slump Finally Hitting Home


Texas unemployment up;
Austin's tech economy fading

Since Texas has borrowed all it can, and since a state can't print money like the federal government, the feds are now under enormous political pressure to function as the job creators of last resort.
By Roger Baker / The Rag Blog / February 7, 2010

The Texas Employment Commission, which closely monitors such things, recently announced an increase in Texas' unemployment from 8% to 8.3%. This jobless increase says that Texas, a traditionally poor state, is now strongly feeling the effects of the national economic slump.

Note that the Texas unemployment rate is mostly rising due to private jobs continuing to disappear. The numbers for the various Texas jobs sectors seem to indicate that average folks are trying to restructure their spending by cutting back as much as they can on discretionary spending; things like travel and utility costs.
Despite the gain of 50,000 jobs in the past three months to the Texas economy, unemployment levels are still on the rise.

The unemployment rate in Texas has risen from 8 percent to 8.3 percent between the November to December, even with employment gains. This is greatly due to the reduction of 23,900 jobs from various Texas employers.

"Texas continues to feel the effects of this serious national recession with unemployment in our state now at 8.3 percent," said Texas Workforce Commission chairman Tom Pauken. "Nonetheless, unemployment in Texas remains well below the national level of 10 percent."

Education and health services in the past 12 months have received around 60,400 jobs, specifically 4,800 just in December. Logging and mining even showed signs of growth with an addition of 300 jobs.

"December job losses offset some of the gains from the last couple of months," said TWC Commissioner Representing Labor Ronny Congleton.

Job markets hit with the the most losses include: Trade, transportation and utilities - accounting for a total loss of 7,400 jobs just in December. Other notable job losses for December include: Leisure/hospitality with 6,500 and professional/business services with 5,300.
Down at the micro-economic level, in Texas as elsewhere, the consumer economy seems to be restructuring in a sensible way, given the hard times. We don't really need as many malls and salesman as last year, now that more folks shop over the Internet for things they really need. Families, perhaps jobless and struggling to live on food stamps, cast what is arguably the most meaningful vote they still have, when they decide whether or not to buy some seductive item they see advertised on TV.

Clean energy and the Austin economy

How does this outside situation affect the Austin area economy? As economic background, Austin lost about 2600 jobs in 2009. Austin unemployment rate rose from about 5.2% to 6.9%. Austin-Round Rock's registered jobless worker numbers rose from 43,000 to 63,000.

There is always reason to be skeptical of perennial optimism. Take those who point to the Austin area as one of the nation's strongest metropolitan economies.

Nowadays, we see that computers, high tech, semiconductors, and construction have all mostly faded as lucrative sources of profitable investment for the Austin economy. It is now frequently less expensive to develop software abroad, except for fine tuning local user needs and service requirements. With energy prices less a concern than in 2008, the investment impetus for clean energy has considerably faded.

What is Austin's next big thing? In the past few years, the Austin business community, Sen. Kirk Watson, and a constellation of influential movers and shakers have been energetically promoting Austin as a clean energy research hub. The "Pecan Street Project" is being promoted by Austin ex-city council member, Brewster McCracken, with the goal of making the Austin area into "America’s clean energy laboratory."

Just in the last month, we have had access to another opinion that is widely accepted by the local business community. A local economic forecasting group, AngelouEconomics Inc., led by long time Austin economist Angelos Angelou, has just issued its Austin area 2010-2011 Economic forecast; a sort of a report card on Austin's economic future, concluding as follows:
For Austin to maintain its competitiveness, it must continually build upon these great assets. In today's struggling financial environment, this translates into increased local government support. Effective economic development policy must be bolstered by strategic incentives and inducements that are competitive with other cities' attraction packages.

In addition to government support that attracts companies and people, Austin's success will also be determined by its capacity to grow jobs from within. To do so, the Austin area must cultivate entrepreneurism and attract additional early-stage capital. If people migrating to the region cannot find work, they must find the tools in place to create their own. Austin area residents are very entrepreneurial, and the region needs to continually assess and improve its infrastructure to keep entrepreneurism flourishing.

AngelouEconomics expects the current economic conditions to extend through the second quarter of this year, as the embattled technology sector and real estate markets struggle to rediscover their footing. In the meantime, Austin's traditional economic base, the public sector, will continue to provide stability. While this
“recession-proof” sector is incapable of supplying the region with an abundance of new jobs, gradual employment gains will persist through the end of the year.

The region's economy will continue its path of improvement with the addition of 9,200 jobs in 2010 and another 17,100 jobs in 2011.
As a rule, it is probably a fact that presidential advisors, fortune tellers, and economists do not thrive on delivering bad news. This new report is not cheery, but it does deliver a whiff of guarded optimism by predicting a modest resumption of job growth for the Austin area. But this is not through the creation of many of the kinds of jobs envisioned by Austin's clean energy development promoters.

China is now aggressively using its mountain of accumulated U.S. treasury debt to acquire the means to surge ahead on green energy manufacturing, from electric cars, to PV, to wind turbines. Contrast this with the slow progress at Austin-subsidized PV startup Heliovolt. Venture capital, which has been the lifeblood of advanced technology development efforts, is down since even last year, both locally and nationally. The Angelou report regards Austin's clean energy research efforts as lagging in the face of international competition.

The new thinking is that the health, education, and government sectors will likely be the big job gainers in the Austin economy, to somewhat match the steady decline in Austin area manufacturing over the last decade. It is no coincidence that these are the same economic sectors that thrive on public spending by federal and state governments. For lack of an alternative, the solid job creation burden will increasingly fall on state and or federal government.

Statewide, as we can see from the Texas Workforce report, it is primarily government-subsidized jobs sectors like health and education and government that are increasing. Presumably, Austin should be able to fit into this kind of picture. But now we see spending cutbacks and hiring freezes at the Texas state level, and also at the University of Texas, requiring shutting down the iconic Cactus Cafe, and more.

The state of Texas is broke, at least in the sense that it has slashed state expenses about as far as it can. Since Texas has borrowed all it can, and since a state can't print money like the federal government, the feds are now under enormous political pressure to function as the job creators of last resort.

The mortgage and credit-card-debt burdened U.S. consumers spend about 70% of all the money spent in the U.S. Such debt-ridden consumers are not currently regarded as a good source of profit; the consumer sector seems to be in a deflationary spiral of uncertain duration. Yet it is only the expectation of profit that can encourage banks to lend money, leading to the creation of jobs which depend on these same consumers as customers.

The big picture

With the decline of Austin's past economic drivers, Austin's future is now more closely linked to conditions in both the Texas and national economies. Looking at the big picture as it affects most states, they have to depend on the feds.

Meanwhile, federal deficits are now pretty much out of control, meaning that the dollar is almost certainly going to have to be devalued in terms of its buying power. Either devalued through a messy collapse or more gradually, which is much preferable.

This means we are likely to see the U.S. consumer's spending ability continue to deteriorate over the next few years. Here is quite a good quantitative analysis explaining the background to this uncomfortable conclusion.

Wrapping up, what does this all imply for the regional Austin economy? In general, the feds appear to be attaching more strings, in ways that often seem to be sensibly restrained compared to the past, assuming they are still spending. They are tightening up on the ozone limits affecting transportation planning, tightening up federal loan requirements, targeting energy conservation, etc.

As a trend, it looks like the feds will increasingly have to be the source of public funds needed to relieve Austin's growing unemployment problem. The Austin area will continue to rely on state government and higher education for its traditional and reliable economic base of support, but if so, it will have to be through increasing federal participation.

Accordingly, Austin should figure out how best to play ball with the federal administrators who will be funding Austin's future jobs programs. Let us hope that this message reaches the Texas Legislature -- the fact that we are probably entering a new leaner and more practical and populist era, a time when the luxurious inefficiency of the traditional Texas good-old-boy politics probably isn't going to work. Need proof? Just ask Gov. Rick Perry whatever happened to his Trans-Texas Corridor plan.

Conclusion: For lack of a better alternative, it probably makes good sense to let the feds guide the way toward Austin's new industrial future. This necessarily implies political competition with the other needy areas of the USA, already impatiently waiting in line for federal help.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog.]

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07 December 2009

John Ross : Days of Dementia in Obamalandia

The Zhu Zhu virtual hamster: Dementia in Obamalandia. Photo by Rex Larsen / The Grand Rapids Press.

On the loose in Obamalandia:
Days of Dementia ('Is the war over yet?')
Yes, Baracko, the economy is booming again for Chinese-made mechanical hamsters but homelessness is the real growth industry.
By John Ross / The Rag Blog / December 7, 2009

TRINIDAD, CA. -- Each Friday afternoon since Bush's illegal invasion and occupation of Iraq in March 2003, my old friend Janine V. has been standing with Women In Black here near the 101 off-ramp as a silent reminder of the on-going Bush-Obama genocide in the Middle East.

In the early days of this heroic now-nearly eight year-old vigil, patriotic motorists, often on their way to the local Tsuri Indian Casino to swill at the Firewater Lounge, would hurl invectives and sometimes loaded beer cans at the women. But as the war settled into a daily grind and the U.S. body count climbed incrementally towards 5000, the insults and the beer cans diminished and a few locals now even honk their horns in support.

In the seven years that Trinidad Women In Black have held their ground by the off-ramp, the participants, never spring chickens to begin with, have grown older and one now suffers from dementia. Now when the women stand, she turns to Janine and often asks if the war is over yet?

Barack Obama's nationally televised December 1 declaration of renewed jihad against Al Qaeda's estimated 100 Afghan warriors that will elevate U.S. troop deployment to nearly a quarter of a million in Afghanistan and Iraq (plus another quarter million mercenary contractors) will keep Trinidad Women In Black in business for at least another decade.

The President's goal of "disrupting, dismantling, and destroying" the Taliban-Qaeda Axis of Evil is calculated to tickle America's terrorist nerve. As his grip on the wheel of state grows slack, Obama's presidency increasingly depends on harpooning "America's white whale" as Robert Wright recently dubbed Bin Laden in a New York Times op-ed piece. Al Qaeda's spiritual leader, a Frankenstein fabricated by Reagan's CIA, probably died years ago dragging his dialysis machine over the Khyber Pass.

Robert Fisk notes that Obama-man's West Point kowtow to the generals parallels a similar Soviet troop build-up way back in 1980 that was designed to train Afghan security forces to confront the CIA-financed Muhajadeen. We all know how successfully that plan backfired.

With Blackwater loading up the drones in Pakistan, it's only a matter of months before General McCrystal marches into Pakistan to wipe out the Taliban's safe havens and the Commander-in-Chief puts another 50,000 boots on the ground to secure that nuclear-empowered nation against "international terrorism."

Factoring in another 120,000 "crusaders" bogged down in Iraq, Gates & Company is talking about a bigger army -- actually U.S. economic calamity has translated into box office business for Army and Marine recruiters who are filling out their quotas for the first time since the 9/11 rush to vengeance thanks to the American "downturn."

Predictably, the chickens keep coming home to roost. Major Nidal Hasan's November 5 homicidal rampage at Fort Hood, the most dastardly act of "Islamic terrorism" on U.S. turf since 9/11 as the Glenn Becks vomit, is indeed an ominous sign. Driven by years of hearing out the horror stories of returning soldiers, the Major, a military psychiatrist and a devout Muslim who recoiled at the thought of deploying to Afghanistan to kill other Muslims, created his own horror story. Fort Hood is home to such time bombs. In the month since Major Hasan opened fire with a weapon bought a few yards off base, at least two other Fort Hood soldiers have been killed in soldier-to-soldier violence.

In the first nine months of 2009, 10 soldiers have commited suicide on base -- 76 in all at Fort Hood since Bush and his cronies declared war on Iraq. Soldier suicides in 2009 will again set a record (over 140) as they have every year for the past four. Another 1000 members of the U.S. Army are thought to have attempted suicide -- numbers are not available for other branches of the armed forces.

Meanwhile, domestic violence is pandemic on military bases. During a visit to Fort Bragg North Carolina, the home of the Center for Special Forces and the much-redeployed 81st Airborne a couple of years ago, I was told of soldiers who returned home at noon and by nightfall had massacred their entire family -- local newspapers no longer ran the stories. Fort Bragg, Fort Hood, and Fort Campbell Kentucky have the highest redeployment rates in the military.

The havoc that the Bush-Obama wars continue to wreck upon military families is of course a mere drop in the bucket of blood that these criminal aggressions have poured upon the peoples of Iraq and Afghanistan, a million of whose citizens have been slaughtered and maimed and exiled since 9/11. Despite the deadly outfall and the palpable suffering now so evident on the streets of America, Congress continues to allocate hundreds of billions of increasingly worthless greenback dollar bills to sustain this ghastly genocide.

I have been on my annual Day of the Dead pilgrimage to the land where my father croaked. I huddle in the kitchen hard by the carcass of this year's dead bird and try to divine the future from its picked-over bones. The task is not a thankful one. A full year after Obama's geyser of hope drenched North America from sea to stinking sea, the forecast is as bleak as a Cormac McCarthy novel. It's not just the venomous particulate drizzling from those few pulp mills and coal-burning plants that are still operating that batters the physical contours of our befouled lives.

Official unemployment is running 12.5% in California and 15% in Michigan but the real numbers are probably twice that if those who have given up looking for work or whose checks have run out or who are working part-time for less pay are counted into the mix. Despite Obama's scripted optimism that the "economy is growing again," there are currently six applicants for every job available and those in the know anticipate double-digit unemployment through 2012 -- the end of the world on the Mayan calendar.

A million more workers will soon have no income whatsoever when Congress, in an interlude of maximum callousness, fails to get around to extending their unemployment benefits while it debates the pros and cons of spending billions more that could nourish social lifelines to kill civilians on the ground in Afghanistan, Pakistan, and Iraq. No dear, the wars are not over yet.

Thanksgiving 2009 was a particularly cruel season for the homeland. Fifteen percent of your fellow citizens -- one in every seven families -- are struggling to put food on the table if the mal gobierno's indicators are to be believed. According to the numbers, 17.5 million Americanos suffer "food insecurity," that is they have been forced to reduce their daily caloric intake at some point in the past year.

Such belt tightening has not much slimmed down the poor. The physique of poverty is now corpulence -- 34% of those living under the poverty line are considered obese and Precious is the new Miss America. And as with every set of stats cranked out by Obama's bean counters, those of darker hue suffer the brunt of deprivation -- 70% of those families who go to bed hungry every night are brown or black. Meanwhile, Wall Street, a gated community where white skin privilege is rewarded, is making a killing again.

The turkey bones yield apocalyptic visions of melting icebergs and Palin/Dobbs in the White House. The portents for this dynamic duo are particularly favorable. As the self-styled "rogue of the right" zooms to the top of the airport best-seller list, Lou Dobbs gloats that times are so tough for "illegal aliens" (read Mexicans) that they will soon be driven from the country -- impoverished families back in hardscrabble Michoacan and Oaxaca are now sending relatives stranded at the bottom of the Yanqui Depression money from home. Remittances from Mexican workers in El Norte, the lifeblood of the Mexican rural economy (10,000,000 Mexicans are dependent on them), dipped 35% this October.

To spice up this end-of-the-world scenario (2012 is boffo at the Multiplex), plague stalks the republic. The Center for Disease Control reports 6,000,000 case of H1N1 in 48 out of 50 states. The swine flu is spread exponentially by infected workers obligated to punch in and send their kids to school every day because they have no paid sick leave -- 40% of all U.S. workers suffer this affliction. Even those ostensibly covered do not stay home for fear that they will lose their jobs. The New York Times reports on one Wal-Mart worker sent home after he turned pale on the job and who fell gravely ill with the swine flu but failed to visit a doctor because he couldn't afford the co-pays on the mega-corps' health care plan.

Nonetheless, this worker's forced furlough may well have saved his life this past Black Friday when hordes of berserk consumers are wont to break down Wal-Mart doors and trample the help underfoot in their eagerness to spend money they do not possess. This year's toy to die for is a Chinese-made mechanical hamster at $17 a crack (one to a customer), a no-nuisance substitute for the real thing.

Yes, Baracko, the economy is booming again for Chinese-made mechanical hamsters but homelessness is the real growth industry. 2010 is expected to be a peak year for foreclosures -- business is percolating for the Flint, Michigan, sign maker in Michael Moore's Capitalism: A Love Story who has landed a contract from local banks to churn out "Foreclosure" signs.

As evictions soar, the homeless overrun the shelters. Perhaps the cruelest twist of the holiday season was the 90-day jail sentence meted to an elderly rancher in San Luis, Obispo, California, for housing a score of homeless clean-and-sober vagrants on his property.

The mood of the country as the Yuletide season heaves into view is decked with dark resentment. One AP story reports that food stamp eligibility workers in Detroit fear for their safety. Irritated applicants herded into long lines that snake into the street throw chunks of concrete through the windows. The cops are called to control unruly clients.

The rule of thumb posits that hard times drive the underclass together. Class distinctions become viscerally clear and solidarity flows. But given American exceptionalism, this is not a likely trend in Obamalandia.

This is a nation where the Great Unwashed have been coerced by vulture consumerism that puts them at each other's throats over mechanical hamsters. American workers have become independent contractors battling with their neighbors over scraps. Most of us do not even know who lives on the other side of the sheetrock. Racism has raised the walls even more precipitously in this post-racialist year. Hate crimes are on a roll -- how about the thug who butchered a Florida Greek Orthodox priest because he thought he was a Muslim? President Obama is said to have spiked at nearly 400 death threats a day.

Recent revelations by those who purportedly speak for the Left have not been helpful. Moore's Capitalism seriously soft soaps criminal capitalism. The 1950s and '60s were hardly the working class paradise the filmmaker portrays -- strikers were beaten, workers were red-baited and blacklisted, black people dangled from poplar trees, fieldworkers were poisoned by the Agribiz kings. The bosses may have seemed like so many benevolent Scrooge McDucks to Moore when he was a lad growing up in a Catholic Caucasian industrial elite household but he is indeed spreading a white lie.

Michael Moore's egregious absolution of Barack Obama for his complicity in beefing up the fat cats while the rest of us grovel for carfare is Capitalism's most painful flaw. MM affirms that the Obamanator's candidacy so discombobulated the rulers that they threw gobs of money at him out of fear of what he represented and abracadabra he became the first Afro-American president of these United States.

We see Obama surrounded by jubilant throngs. We do not see the money. We see nothing about how the first Afro-American president feathered the nests of the Wall Street vultures. Nothing about the sleazy White House backroom deals with pharmaceutical industry creep Billy Tauzin to greenlight the steepest rise in prescription drug prices in 20 years as a prelude to Obamacare. Nothing about dishing up the whole enchilada to the insurance vampires so they can more commodiously gouge the aged and infirm.

Since I was diagnosed with liver cancer eight months ago (now in remission), I have accumulated a foot-high stack of bills and am dunned daily to pay off California-Pacific Medical Center to the tune of $34,000, nearly five times my yearly social security checks -- from which Medicare deducts a hundred bucks a month to allegedly cover my health needs.

Obama's health care pogram has never been about reforming a deformed system to treat the medically indigent. Obamacare was conceived to insure reelection and the health of the Democratic Party and the insurance tycoons. Let’s face it. We're all on the Jack Kevorkian health plan.

Another apostle of the Left I bumped into during my recent foray in Obamalandia was Amiri Baraka who as Leroi Jones I sometimes ran with back in the Village during the bebop '50s. Performing before a packed house in an auditorium named for a notorious San Francisco sweatshop at the main branch of the SF Public Library, Baraka read a love letter to Obama written soon after the election of the first Afro-American President and reviled those on the Left who continue to take to the streets to protest his tainted policies, as "infantile anarchists" and closet racists.

The former Marxist-Leninist-Maoist-Stalinist poet laureate of New Jersey (a dubious distinction of which Amiri was stripped after claiming that 1400 "Hymies" employed at the World Trade Center stayed home on 9/11 day) raised eyebrows by hailing Obama's appointment of Rahm Emanuel, a member of the Israeli Defense Forces, as his chief of staff, a clever trick on the Zionists Baraka called it.

He urged his audiences to continue to vote vote vote for fork-tongued Democratic candidates. We have to grow the unlikely coalition that elected these charlatans! Other evasions and foolishness followed. Baraka was not much alarmed by his president's firing of Van Jones, the first Afro-American green jobs czar.

I was one of the first to take the mic for q's and a's. For 22 days prior to Obama's stirring inauguration on the Capitol mall, I pointed out, the Israelis had rained death down on Gaza, slaughtering 1400 civilians -- 360 more have died since -- and then the Zionists judiciously paused for Barack's historic oath-taking. Throughout this grotesque bloodletting, Obama (and Emanuel) remained stonily silent. All they had to say were three little words: Stop the Killing! Why had they not responded?

Barraka was irritated by my question and waved me away from the mic. Then poet Michael McClure pointed out that Amiri had not once mentioned the other elephant in the room, Afghanistan. "He's trying to get us out of there," the poet blathered. Sure, by sending in another 30,000 dead soldiers, we yodeled back.

"Is the war over yet?"

With Barack Obama calling the shots, and lefties like Michael Moore and Amiri Baraka defending him, the Trinidad Women In Black will all be slipping into dementia before the war is over.

["On The Loose In Obamalandia" is the first dispatch from the North American underbelly as John Ross embarks on a monster 2010 book tour presenting his latest cult classic El Monstruo: Dread and Redemption In Mexico City from sea to stinking sea. The author continues to seek midwest, southern, and east coast venues for late March and April. Any bright ideas? Write johnross@igc.org.]

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06 December 2009

Economy and Unemployment : Real Recovery a Long Shot

Photo from OOlaah.com

Real unemployment nears depression levels;
Sustained recovery appears unlikely


By Roger Baker / The Rag Blog / December 6, 2009

It should come as no big surprise that our economy is in worse shape than the U.S. government would like to admit. Lets start out by looking at the current U.S. economic situation.

John William's Shadow Government Statistics argues that the REAL unemployment rate is about 22%, with an obvious upwards momentum that can be seen on the unemployment chart. This figure is calculated in such a way as to roughly correspond to earlier times. We had about 25% national unemployment during the great depression in 1932, when FDR was elected.

This video graphically shows the current dynamics of unemployment spreading geographically:



There are now numerous areas of high unemployment in the USA, with a severity no doubt comparable to the great depression. The portion of the population dependent on food stamps is soaring. A quarter of the children in Travis County, Texas, now receive food stamp support as this interactive map from The New York Times indicates.

From the same Times article:
With food stamp use at record highs and climbing every month, a program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.
Another way to view our depressed economy is in the recent contraction of the banking credit market -- a type of funding source close to small business and the average consumers who mostly drive the US economy. Look at the credit chart in this article form the Asia Times:
A 20% decline year on year does not look like a recovery. In fact, it looks like nothing we have seen since the Great Depression. C&I loan growth lags the end of recessions, to be sure, but this extreme level of credit reduction suggests profound trouble.

35% or so of Americans work for enterprises with fewer than 100 employees, and 20% work (or used to work) for firms with fewer than 20 employees. The percentages of employment in smaller firms (less than 100 employees) are much higher in real estate (46%) and construction (77%) as of the 2004 Economic Census.

It isn’t just the 17.5% broad-measure unemployment number that we should worry about, but the massacre of smaller businesses, who are concentrated in the most vulnerable sectors: real estate, construction, and retail. Retail sales may get a temporary shot in the arm from cash for clunkers, and a combination of tax credits and (de facto) subsidized mortgage rates may hold up the bottom of the housing market for a short time. But today’s data show how fragile these matters are.
In other words, the banks are not lending to support business as usual, because they realize the average American is deep in debt and thus a bad loan risk. This fact drags down other sectors. They say commercial loans will be the next sector to need a bailout. In the case of the "zombie banks," we have the remains of a vastly over-extended sector of the U.S. economy -- the byproduct of unregulated investment bankers competing to issue mountains of leveraged debt based on the capitalist credo of exponential growth forever until 2007. Yet a lot of these junk loans are still on the books.

With all these bad loans, the world of big investment banks looks objectively like a shaky house of cards, a monkey on the back of U.S. taxpayers. What to do? The answer, so far, has been to apply economic band-aids while allowing the banks to generate phony profits.

Does it ever occur to folks that the supposedly recovering banks sure are making a lot of profit on something mighty mysterious for a country that has many of its factories shut down or outsourced, and about 20% real unemployment?

Here is how the phony profit scam works. The Fed’s covert tactic of using monetary policy to recapitalize the banking system is also proving effective, perhaps too effective. By keeping short-term interest rates at or close to zero per cent, it is enabling banks to borrow at minimal cost and to invest the proceeds in higher yielding securities. The “spread” on this trade amounts to a gift from the government, and, because the Fed has promised to keep rates low for the indefinite future, it is almost risk free. Bank of America is making so much money it can afford to give the government 26.2 billion dollars in cash -- or so it says. (The other 18 billion dollars will come from a new issue of convertible stock.)

The downside is that eventually those blessed with the cash are going to take these newly abundant bank profits and try to buy something that is not equally abundant, like maybe oil. Lots of hoarded dollars, not much goods. Under these conditions, and as soon as people start spending freely again, you have a self-reinforcing tendency for commodity prices to soar.

The USA seems at this point to be willfully devaluing the dollar. To the world's many treasury bond holders, like China, this comes as bad news because they are pegged to the dollar, which means this trend degrades the value of their currency at the same time. So the Chinese are now on a global natural resource buying spree using their trillion or so of accumulated U.S. dollars, spending them on mineral deposits like oil, copper, and iron -- things calculated to give a long-term trade advantage before their dollars go bad on them.

Devaluing the dollar has several U.S. government advantages. It makes it easier to compete in trade in those areas where we are still competitive (while making key imports like oil cost more). Second, it is an easy choice for a government to, in effect, just print a bunch of money to pay off the bills. Debt for economic stimulus, bills for wars, for handling the soaring social security costs of an aging population, for paying the bills of a medical system that is impervious to cost reform, for keeping GM afloat, for bankrolling Freddie and Fannie, for backing up bad credit default swaps, for paying off the previous debt, for widespread food stamp support, bank bailouts, keeping the prime rate near zero, and the list goes on. And on.

You don't have to be a genius to see that this economic process, taken as a whole, is unlikely to get the U.S. economy back on track. What it is most likely to lead to is repaying the lenders with effectively shrunken dollars when the treasury debt comes due. As the U.S. government, you have little alternative when already debt-ridden taxpayers who provide the revenue are too far in debt to help by paying many taxes.

Dollar devaluation is a process of the marketplace expressing the supply and demand for our fiat currency. This loss of faith is already being reflected in the soaring price of gold, as central banks stock up on something that has held its value throughout history. When global lenders shun the dollar and buy gold, it really means that the buyers think the dollar is going to shrink in exchange value. Ultimately, on close examination, economics is seen to be a branch of politics. And politics, as we know, is based on psychology.

When gold soars in price like now, it means that the big players who still have dollars to lend to the U.S. government are signaling that they expect dollar devaluation, which means price inflation for internationally traded goods . Before long, lenders are likely to demand more treasury bond interest in compensation for the shrinking dollars paid back on their loans. Although the Federal Reserve is promising to keep interest rates low, there is only so long that they can defy what amounts to an economic law of gravity. Rising interest rates would of course further depress an already depressed U.S. economy.

When you are a government that can make the rules, you can get away with running heavy deficits and generating lots of Keynesian stimulation spending for years. Prominent Keynesian economists like Paul Krugman are urging heavy spending right now. However, both Krugman and most other Keynesians, like University of Texas economist Dr. James Galbraith, insist that this spending must be accompanied by banking reform. In other words, strict rules need to be imposed to stop the U.S. Treasury from becoming even more of a politicized cookie jar than it has already become.

However, the political will to reform the U.S. banking and finance system is still missing. Needless to say, this is an ominous sign. Levy Institute Scholar Galbraith recently reported on an international meeting of mostly-liberal economists, assembled a few months ago to discuss the state of the global economy. Suffice to say that the prevailing mood was not one of optimism. You can read more details of the conference notes here:
A group of experts associated with the Economists for Peace and Security and the Initiative for Rethinking the Economy met recently in Paris to discuss financial and monetary issues; their viewpoints, summarized here by Senior Scholar James K. Galbraith, are largely at odds with the global political and economic establishment.

Despite noting some success in averting a catastrophic collapse of liquidity and a decline in output, the Paris group was pessimistic that there would be sustained economic recovery and a return of high employment. There was general consensus that the pre-crisis financial system should not be restored, that reviving the financial sector first was not the way to revive the economy, and that governments should not pursue exit strategies that permit a return to the status quo. Rather, the crisis exposes the need for profound reform to meet a range of physical and social objectives.
[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog.]

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07 November 2009

Real Unemployment Rate : Closing in on the Great Depression


Good times around the corner?
Real unemployment rate at 17.5 percent

This economic disaster was created by far too many years of Reagan-Bush-supply-side-trickle-down-union-busting-corporate-welfare-market-driven economic policy.
By Ted McLaughlin / The Rag Blog / November 7, 2009

Yes, I know the federal government says the unemployment rate is now 10.2% -- up from 9.8% after the country suffered a net loss of another 190,000 jobs in October. And that is a very scary figure in itself. After all, it shows nearly 16 million Americans are out of work.

But those are the "adjusted" figures the federal government uses to keep the American people from knowing just how bad unemployment really is in this country. When you add in the number of people who have given up trying to find a job and the people who have accepted part-time work because they can't find a full-time job, you get much closer to the REAL unemployment rate.

The sad fact is that the real unemployment rate is now at least 17.5%. That means more than one out of every six workers in this country cannot find a full-time job.

Folks, that's rapidly approaching the unemployment figures from the Great Depression, when the rate of unemployment climbed over 20%. And the government admits that the rate will continue to climb over the next several months (and probably longer). It is within the realm of possibility that we'll reach those Great Depression numbers.

What bothers me is that the government and private economic pundits are currently trying to convince Americans that better times are just around the corner. They tell us the recession is actually over (because one quarter of GDP showed some growth). Then they assure us that unemployment is just a lagging indicator and will turn around in a few months as the economy continues to grow.

I wish I could believe that, but I don't. All of the jobs were not lost due to the poor economy. Some of those jobs were cut so the companies could show a short-term gain and drive up their stocks -- making millions for executives and investors. Many other good-paying jobs have been shipped overseas where the companies can exploit low-wage workers. None of these jobs are coming back, regardless of how much the economy rebounds.


Around 70% of the GDP (Gross Domestic Product) figure depends on consumer buying in this country. With the job losses continuing to rise each month in this country, fewer people each month will have money to spend. Those who still are working will also close their pocketbooks even tighter because the tanking economy scares them.

Even when the economy does start producing jobs instead of losing them, what kind of jobs will they be? Will they be good-paying jobs with benefits, or minimum wage jobs with no benefits? There is no shame in flipping burgers, but you certainly can't buy food, make house payments and pay for a car with that kind of job.

Political pundits are now saying that if the economy and jobs don't turn around before the next election, it will be blamed on the Democrats because they are in power. That's probably true, even though it may be unfair.

Lest we forget, this mess wasn't created by the Democrats. This economic disaster was created by far too many years of Reagan-Bush-supply-side-trickle-down-union-busting-corporate-welfare-market-driven economic policy. The elder Bush was right when he called it "voodoo economics" (before he sold out and went along with it).

The truth is that the recession is not over. It won't be over until the economy starts producing good jobs. But fasten your seat belts, because that's a long way down a very bumpy road.

[Rag Blog contributor Ted McLaughlin also posts at jobsanger.]

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26 October 2009

Austin Economy : We're Number 2! Maybe.


Is this picture too rosy?
Austin economy called second strongest


By Roger Baker / The Rag Blog / October 26, 2009

Here's the proud headline from the October 23, 2009, Austin Business Journal:

BusinessWeek: Austin 2nd strongest economy in the nation

(Texas had half of the top ten. San Antonio was number one; Dallas-Ft. Worth, 5th; Houston, 9th, and El Paso was 10th.)

On close inspection, it turns out that the Austin Business Journal actually borrowed this optimistic outlook from Business Week. In turn, BW got their information from the Brookings Institution. [Source: The Brookings Institution's MetroMonitor]

Here are the Austin numbers and the context:

Austin-Round Rock, TX; Overall rank: 2

Austin, a high-tech center, is also home to the University of Texas. Employment in the Austin metro peaked in the fourth quarter of last year. Gross metropolitan product peaked in the second quarter. Home prices grew 2.5% in the second quarter compared with the same period a year earlier. And the unemployment rate in June was 7.1%, up 2.6 points from a year earlier. (Please see below for the various criteria used by the Brookings Institution to determine the overall ranking.)

Job growth (since peak) rank: 2
Gross Metro Product (since peak) rank: 2
Unemployment change (year over year) rank: 16
Home price change (year over year) rank: 18
So we click on over to Brookings to find out how they got their information. It turns out they compile something called the GMP or Gross Metropolitan Product. But where does Brookings get its numbers? It turns out that they don't actually compile their own information, but rather they process information collected by the feds, which we can see by going here and here.

The second link above reveals the following interesting information.
The metropolitan (statistical) areas used by BEA for its entire series of GDP statistics are the county-based definitions developed by the Office of Management and Budget (OMB) for federal statistical purposes and last updated in November 2008.
In other words, when you drill down, the Austin economy didn't really boom so much as it did less badly than most areas of the United States. The Austin area unemployment rate rose over the last year from 4.5% to its current 7.1% . Also go here for what is probably the most recent employment info, closely tracking the Business Week numbers. It indicates that Austin area unemployment rose from 4.6% to 7.2 from Sept. 2008 to Sept. 2009.

This fairly recent employment data indicates that Austin regional employment actually increased less than 1% year over the year -- from about 832,000 to 839,000, even as area unemployment increased sharply. This slight job increase is good, but not not much to brag about; it is likely partly due to the stabilizing effect of government and education, since these factors buffer the Austin economy from decline more than most places.

The #2 rank of Austin's Gross Metro Product used by Brookings is a snapshot of old federal data, and is likely to reflect the recent boom in construction. But construction has recently decreased sharply. In fact, construction has decreased by more than 20% in the past year. Here is the relevant headline and some numbers.

Bottom line:

We don't have enough good recent data to draw the conclusions that the local business press likes to brag about. There is no doubt that Austin is doing less badly than most areas of the USA, but Austin's metro area unemployment has risen sharply in the past year. Construction, one of Austin's historically important growth sectors, is headed sharply downward. What drives construction employment is of course high growth in other sectors like government, education, and high tech manufacturing. Of these, government was still increasing steadily and rapidly from 2001 to 2008, (the latest numbers available). Likewise, the real estate sector.

However, with deficits increasing on every level of government, it is questionable whether government can continue to pull the Austin area economy, or whether the charts would look the same if extended to 2008-2009.

Interested in high tech business trends? Too bad. The software sector and computer manufacturing sector numbers are suppressed. Also "education and health services." As the federal Bureau of Economic Analysis puts it: "Not shown in order to avoid the disclosure of confidential information." What local economic data is not considered to be secret is revealed here. You can generate line charts for the non-confidential sectors of the Austin-Round Rock metro area economy here.

Then go to:

Interactive Charts and Graphs: GDP by State and Metropolitan Area Interactive Chart

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