Thursday, June 30, 2011

Open Letter to Speaker Boehner

Speaker Boehner,

I have read your latest newsletter.

You said, "We have an extraordinary opportunity to do something big for our economy." ABSOLUTELY CORRECT! Congress has been rubber stamping the Administration for years. which is why we now find ourselves in a dire predicament. It is past time to stand up and do the right thing for our country, but still not too late.

You also said, "There will be no debt limit increase unless it includes spending cuts that are larger than the debt limit increase; includes reforms to hold down spending in the future; and is free from tax hikes." Sounds good, like a typical Obama statement, but lacks specificity, which is an indication of lack of resolve. Forget the "unless". Live within your means, which in this case is the present debt limit. Since the government has presumably reached its previously established debt limit, which has also been increased several times to arrive at this level, now is the time to stop.

Don't borrow any more money. Establish a real payment schedule, which will match expected revenue. Note that I did not say "budget", which has become a word meaning "hope". A real payment schedule will force some real expense cuts. The big opportunities are cutting social programs, such as Welfare, Medicare, and Social Security, but you likely will not want to start there, because of expected voter antagonism. Hit the next obvious ones, which are the various government agencies. The voting public generally either looks negatively at these agencies or is neutral. Cuts there will also have the positive effect of decreasing regulatory inhibitions for business and thus promote jobs. Remember that Congress set up these agencies, and funded them. Congress can now stop funding and take them down. Start with the Dept. of Energy, and move into the National Science Foundation, the EPA, etc.

Finally, ABSOLUTELY NO FEDERAL INCOME TAX INCREASE FOR ANYBODY. The Democrats have been playing the jealousy card, by referring to corporate jets and tax breaks for oil companies. Kill the tax breaks and all subsidies. That will make a favorable impression on the voting public and reduce government expense. The present subsidy receivers will be unhappy and cut donations to your campaign fund, but voters will be more favorably impressed, as you use the Democrat tactic of appealing to their jealousy streak. This will be much more effective than any favorable effect you could get from mealy-mouthed advertisements supporting subsidies.

You also need a better communication source to the general public. Something like an NPR or better yet a TV station. Something which the House controls as opposed to a federal Agency. You then use that outlet to convince the American public that it is people who control wealth who make jobs, not government, unions, or the workers. Somebody has to put money into equipment purchase, etc..

If you find such a direct government outlet too crass, how about endorsing some already available programs, such as Fox News, Huckabee, or the Trump program? You need a promotion program to convince the voting public to buy your stuff with their votes. If you don't feel competent in this area, hire one or two good consultants from the advertising industry.

Tuesday, June 21, 2011

US Jobs

Unemployment in the US is now 9.1%. Most everyone considers this high rate unacceptable, and the News is constantly entertaining persons who lament the high unemployment rate. In a few cases suggestions are made on how to decrease it.

I thought we might want to look at unemployment from a limited historical perspective and also some associated conditions involving standard of living. The 1960's started a distrust of government, similar to what we have today, but there seemed to be no significant economic concerns and jobs did seem to be a major consideration. For those reasons and also because it is a nice, even 50 years of time span, I have chosen data from 1961 for an analogy in several areas, but have eliminated farm employment, because of the lack of good data, the varying nature of migrant farm workers and the probability that ignoring it does not make a significant difference in our conclusions. The significant complete data are attached, but I will use portions in this text.

WORKING PEOPLE

Rather than handle "unemployment", I prefer to concentrate on the positive aspects, and I call it "Working People" or "Employment"

In 1961, there were 54.1 million working people (employed), and the total population was 183.7 million people. Therefore, the percentage employed was 29.5%. Those who were not employed included children, retirees, handicapped people, those who could not find work, and those who did not care to work.

In 2011, there are 139.9 million employed and the total population is 311.6 million people. Therefore, the percentage employed is 44.9%. Looks like a higher percentage of people working in 2011 compared to 1961. Am I missing something?

GROSS DOMESTIC PRODUCT (GDP)

GDP is the total value of goods produced and services provided in a country during one year. In other words, it's the total dollar economy, of which everyone gets a piece, even if unequally. Since the 1961 GDP was measured in 1961 dollars, it is necessary to adjust the 1961 GDP to bring it up to present dollar value. The present $1.00 was worth $ 7.14 in 1961.

In 1961, the GDP was $3,891,400 million, and the total population was 183.7 million people. This gave $21,180 per person.

In 2011, the GDP is $14,870,900 million, and the total population is 311.6 million people. This gives $47,700 per person. Unless I'm missing something, that's more than twice what it was in 1961, Surprised? Some may say. "Well, I don't see it". Look more closely. We now have more cars per family, larger and more expensive homes, prevalent air conditioning, more eating in restaurants, more exotic foods, more expensive vacations, nails and hair done once a week, etc. That doesn't sound like suffering. With a greater percentage of the population in the work force, each family has more wage earners, with higher total income.

DISTRIBUTION OF WORK FORCE

Private vs. Government - The work force consists of those who work in the Private sector and those who work for Government. The Private Sector is considerably larger than the Government Sector.

Private - In 1961, 45.4 million people were employed in the Private Sector. That was 83.9% of the work force.

In 2011, 107.3 million people work in the Private Sector. That is 76.6% of the work force. Not a big drop.

Government - In 1961, 8.7 million people worked for government. That was 16.1% of the work force.

In 2011, 22.5 million work for the government. That is 17.3% of the work force. Not a large increase, but enough to attract the attention of those who say government jobs give the economy a double negative effect. They not only take productive jobs from the Private Sector and turn them into non-productive jobs, but also have a negative effect on private industry by imposing various restrictions.

Goods Producing vs. Service - Goods Producing jobs include mining, construction and manufacturing. Service jobs are everything else. Examples of Service employees are school teachers, auto repair mechanics, barbers & hair dressers, lawyers, physicians, etc.

Goods Producing - In 1961, there were 18.6 million persons in Goods Producing jobs. That was 34.4% of the work force.

In 2011, there are 17.8 million persons in Goods Producing jobs. That is 13.7% of the work force, or a drop of 60.2%.

Service - In 1961, there were 35.5 million people in Service jobs. That was 65.6% of the work force.

In 2011, there are 112.1 million people in Service jobs. . That is 86.4% of the work force, or an increase of 31.7%.

ANALYSIS

We have shown that there is now a significantly higher percentage of the population in the work force than there was in 1961. We have shown that the GDP per person has doubled since 1961. Why then do we have the feeling of unrest?

The answer lies in perception and concern.

Note the huge increase in service jobs since 1961. All of these jobs involve a transfer of internal wealth for services which people in 1961 tended to do more themselves. For example, a barber now has what seems to be a cold. Instead of taking two aspirin, he goes to the doctor. The doctor uses that money to take his family to the cinema. The money you pay for a haircut goes to cinema tickets, and it doesn't stop there. It goes round and around, with each pass adding to the GDP. In some ways the GDP is then fictitious, but your haircut was performed by another person.. That was done more efficiently than you could do it yourself and you have more free time for reading, TV, etc.

Note the huge decrease in manufacturing employment. This can come about through several mechanisms. Mining, construction and manufacturing could have become more efficient, so that the same quantity of goods is produced with fewer people. Or, there could be less production of goods. In fact, both have occurred, but since there is no shortage of goods on the market, the shortfall of local production is made up by imports. There are many jokes about "Made in Japan", China, Barbados, etc. Nice deal that we have somebody else doing the work to produce our goods. All we have to do is pay for it, while we spend more time attending sporting events.

That is where the rub comes in. Only Goods Producing Jobs inject new wealth into the system.. Service Jobs only involve a transfer of wealth within the system. If we limit the "system" to the US, transfer of Goods Producing Jobs to foreign countries not only reduces our ability to inject new wealth, it also creates debt. After all, the foreign Goods Producers must be paid for their production, or they will not be increasing their local wealth.

This creates debt in the US. Not only government debt, but TOTAL debt.

The US public has begun to realize it has been living high on the hog at someone else's apparent expense, and the time will come when the piper must be paid. But, realization and acceptance of responsibility to take corrective action are two different matters. The public is not yet ready to accept responsibility. It is at the stage where it puts the blame on someone or something else. In this case, Government. Such blame is not completely misplaced. Government employment has grown and as mentioned previously, it has had a significant role in reducing US Goods Producing Jobs. While there is public unrest, the fact is that we have a high percentage of the population as a Work Force, and we have a high standard of living, even if it is based on a house of cards.

Pogo was right, when he said, "We have met the enemy and they are us".

US Jobs

Unemployment in the US is now 9.1%. Most everyone considers this high rate unacceptable, and the News is constantly entertaining persons who lament the high unemployment rate. In a few cases suggestions are made on how to decrease it.

I thought we might want to look at unemployment from a limited historical perspective and also some associated conditions involving standard of living. The 1960's started a distrust of government, similar to what we have today, but there seemed to be no significant economic concerns and jobs did seem to be a major consideration. For those reasons and also because it is a nice, even 50 years of time span, I have chosen data from 1961 for an analogy in several areas, but have eliminated farm employment, because of the lack of good data, the varying nature of migrant farm workers and the probability that ignoring it does not make a significant difference in our conclusions. The significant complete data are attached, but I will use portions in this text.

WORKING PEOPLE
Rather than handle "unemployment", I prefer to concentrate on the positive aspects, and I call it "Working People" or "Employment"
In 1961, there were 54.1 million working people (employed), and the total population was 183.7 million people. Therefore, the percentage employed was 29.5%. Those who were not employed included children, retirees, handicapped people, those who could not find work, and those who did not care to work.
In 2011, there are 139.9 million employed and the total population is 311.6 million people. Therefore, the percentage employed is 44.9%. Looks like a higher percentage of people working in 2011 compared to 1961. Am I missing something?

GROSS DOMESTIC PRODUCT (GDP)
GDP is the total value of goods produced and services provided in a country during one year. In other words, it's the total dollar economy, of which everyone gets a piece, even if unequally. Since the 1961 GDP was measured in 1961 dollars, it is necessary to adjust the 1961 GDP to bring it up to present dollar value. The present $1.00 was worth $ 7.14 in 1961.
In 1961, the GDP was $3,891,400 million, and the total population was 183.7 million people. This gave $21,180 per person.
In 2011, the GDP is $14,870,900 million, and the total population is 311.6 million people. This gives $47,700 per person. Unless I'm missing something, that's more than twice what it was in 1961, Surprised? Some may say. "Well, I don't see it". Look more closely. We now have more cars per family, larger and more expensive homes, prevalent air conditioning, more eating in restaurants, more exotic foods, more expensive vacations, nails and hair done once a week, etc. That doesn't sound like suffering. With a greater percentage of the population in the work force, each family has more wage earners, with higher total income.

DISTRIBUTION OF WORK FORCE
Private vs. Government - The work force consists of those who work in the Private sector and those who work for Government. The Private Sector is considerably larger than the Government Sector.
Private - In 1961, 45.4 million people were employed in the Private Sector. That was 83.9% of the work force.
In 2011, 107.3 million people work in the Private Sector. That is 76.6% of the work force. Not a big drop.
Government - In 1961, 8.7 million people worked for government. That was 16.1% of the work force.
In 2011, 22.5 million work for the government. That is 17.3% of the work force. Not a large increase, but enough to attract the attention of those who say government jobs give the economy a double negative effect. They not only take productive jobs from the Private Sector and turn them into non-productive jobs, but also have a negative effect on private industry by imposing various restrictions.
Goods Producing vs. Service - Goods Producing jobs include mining, construction and manufacturing. Service jobs are everything else.
Examples of Service employees are school teachers, auto repair mechanics, barbers & hair dressers, lawyers, physicians, etc.
Goods Producing - In 1961, there were 18.6 million persons in Goods Producing jobs. That was 34.4% of the work force.
In 2011, there are 17.8 million persons in Goods Producing jobs. That is 13.7% of the work force, or a drop of 60.2%.
Service - In 1961, there were 35.5 million people in Service jobs. That was 65.6% of the work force.
In 2011, there are 112.1 million people in Service jobs. . That is 86.4% of the work force, or an increase of 31.7%.

ANALYSIS
We have shown that there is now a significantly higher percentage of the population in the work force than there was in 1961. We have shown that the GDP per person has doubled since 1961. Why then do we have the feeling of unrest?
The answer lies in perception and concern.
Note the huge increase in service jobs since 1961. All of these jobs involve a transfer of internal wealth for services which people in 1961 tended to do more themselves. For example, a barber now has what seems to be a cold. Instead of taking two aspirin, he goes to the doctor. The doctor uses that money to take his family to the cinema. The money you pay for a haircut goes to cinema tickets, and it doesn't stop there. It goes round and around, with each pass adding to the GDP. In some ways the GDP is then fictitious, but your haircut was performed by another person.. That was done more efficiently than you could do it yourself and you have more free time for reading, TV, etc.
Note the huge decrease in manufacturing employment. This can come about through several mechanisms. Mining, construction and manufacturing could have become more efficient, so that the same quantity of goods is produced with fewer people. Or, there could be less production of goods. In fact, both have occurred, but since there is no shortage of goods on the market, the shortfall of local production is made up by imports. There are many jokes about "Made in Japan", China, Barbados, etc. Nice deal that we have somebody else doing the work to produce our goods. All we have to do is pay for it, while we spend more time attending sporting events.
That is where the rub comes in. Only Goods Producing Jobs inject new wealth into the system.. Service Jobs only involve a transfer of wealth within the system. If we limit the "system" to the US, transfer of Goods Producing Jobs to foreign countries not only reduces our ability to inject new wealth, it also creates debt. After all, the foreign Goods Producers must be paid for their production, or they will not be increasing their local wealth.
This creates debt in the US. Not only government debt, but TOTAL debt.
The US public has begun to realize it has been living high on the hog at someone else's apparent expense, and the time will come when the piper must be paid. But, realization and acceptance of responsibility to take corrective action are two different matters. The public is not yet ready to accept responsibility. It is at the stage where it puts the blame on someone or something else. In this case, Government. Such blame is not completely misplaced. Government employment has grown and as mentioned previously, it has had a significant role in reducing US Goods Producing Jobs. While there is public unrest, the fact is that we have a high percentage of the population as a Work Force, and we have a high standard of living, even if it is based on a house of cards.
Pogo was right, when he said, "We have met the enemy and they are us".

Friday, June 17, 2011

Discord in the UN on "Green Economy"

In my writings, I generally tend to be critical. However In this case, I have some good, positive news to report. While there are some negative aspects, in total the news is good..

The United Nations has recently held a UN Conference on Sustainable Development. It is said to commemorate and build on a continuation of the 1992 Earth Summit, which was held in Rio de Janeiro and brought together scores of global leaders who signed the world's first treaties on climate change and biodiversity protection.

The article, which I am now using as reference is contained in the May 30 issue of C&E News. The recent UN Conference was held in New York City in May. UN Chief Ban said the UN is promoting a "green economy development through growth in income, decent work and poverty eradication". A noble statement. However in addressing the details, there was considerable disagreement.

The Conference attendees included an organization called the G-77. Its membership is 30 developing countries. The UN program is to have developed countries countries, such as the US, contribute substantial funds, in order to develop the "green economy". One would expect that the G-77 would easily accept this program. However, surprisingly they objected to it, but only indirectly. They generally did not agree to use of the phrase "green economy". The stated reason was that there was no agreed-on definition.

Another surprising statement came from the the US Representative John Matuszak, Chief of the US State Department's Sustainable Development and Multilateral Affairs Division. He works for Obama and yet made the statement that "the US, as with many other countries, is actively cutting budgets to reduce our deficit and cannot make new financial commitments or support costly new initiatives". Instead, he suggested that "governments, the private sector and others must engage to leverage the lack of resources in order to help the developing world on sustainable development issues". I like the first part but have less enthusiasm for the second part.

The delegate from India shed some light on the thinking of the G.-77 by saying that "requirements for green products may distort free flow of global trade and erect barriers to some products. Importing countries' environmental standards, subsidies, and market incentives for green goods could limit the ability of developing countries that export to achieve their sustainability goals".

Finally, some developing countries are opposed to significantly lower emissions of carbon dioxide. Unfortunately, Cheryl Hogue has shown her bias by volunteering that she believes carbon dioxide to be a major greenhouse gas, which it is not.

This is all good news, in that country leaders are starting to recognize that the situation is more complex than a simple hand-out and there could be disadvantages in controlling carbon dioxide emissions, without even considering that it is not necessary.