Friday, January 21, 2011

50% Plus Equals Minus 15 Million

15 Million Jobs Were Suppose To Have Been Created In The Past 10 Years But Weren't.  Why?  Because Greed Doesn't Work The Way It Used To.

National Journal:  "The Phantom 15 Million"

At the turn of the millennium, the Bureau of Labor Statistics predicted that the U.S. economy would create nearly 22 million net jobs in the 2000s, only slightly fewer than the boom 1990s yielded. The economists predicted “good opportunities for jobs” and “an optimistic vision for the U.S. economy” through 2010.  At the decade’s economic peak, though, that number stood at only 7 million. Job growth in the 2000s was the lowest of any decade ever recorded by the federal government, stretching back to the 1940s.
U.S. payrolls, by their 2008 peak, had grown about 5 percent from the start of the decade. Ever since the Labor Department began tracking employment in the late 1930s, no previous decade produced less than 20 percent payroll growth.

Economists from top university research departments, regional Fed banks, think tanks, and the wonky economic blogosphere, who were asked why U.S. job creation had stalled so spectacularly in the past decade. Liberals and free-market purists alike all said, “Good question,” and almost to a person added some form of “I wish we knew the answer.”

Lawmakers have still barely touched the question—they are too focused on taxes, regulation, and government spending, policy areas that hardly any economist has suggested as explanations for our lost decade of job growth. Researchers are just starting to piece together the evidence, and no one can yet finger the culprit.

American companies have adopted a cold-blooded attitude toward recessions, one that fits the new model of globalization and automation. Technology makes it easy to lay off your 100 least-effective workers and ship their jobs to India or elsewhere. 

Here is how the evolving global economy is supposed to work: Mature economies with high living standards, such as the United States, ship some of their lower-skill jobs to developing countries where wages are lower. The costs of the outsourced goods and services go down, and the buying power of the developing countries goes up. American firms reap higher profits, which they invest in developing higher-value products that can’t be made elsewhere and sell them to increasingly flush consumers at home and abroad. Laid-off American workers find jobs in the innovative industries that result.

But here we are with all the economic indicators suggesting we are emerging from the "Great Recession" but unemployment is not declining.  How come?  Do me a favor and re-read the last sentence of the previous paragraph.  Notice where is says, "products that can't be made elsewhere"?  Now read the next paragraph.

A recent paper by researchers at the Asian Development Bank Institute concluded that the iPhone, one of the United States’ top innovations of the past decade, actually contributes nearly $2 billion to our trade deficit because it is almost entirely produced and assembled in Asia. The paper also raises a conundrum for lawmakers and business leaders alike: If Apple moved its assembly line to the United States and created domestic jobs but didn’t raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold.

Old-fashioned greed doesn't work the way it used to because just about anything can be made just about anywhere.  Now, I'm no economist but it sounds like to me that's what happened to "the phantom 15 million".

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