Wednesday, January 19, 2011

The "mystery" of the jobless recovery

NYT tells me the experts are confounded by this conundrum:
Alone among the world’s economic powers, the United States is suffering through a deep jobs slump that can’t be explained by the rest of the economy’s performance. [...]

Economists are now engaged in a spirited debate, much of it conducted on popular blogs like Marginal Revolution, about the causes of the American jobs slump. Lawrence Katz, a Harvard labor economist, calls the full picture “genuinely puzzling.”
Well here's a couple of clues from the same piece:
Just consider the main measure of corporate health: profits. In Canada, Japan and most of Europe, corporate profits have still not recovered to precrisis levels. In the United States, profits have more than recovered, rising 12 percent since late 2007. [...]

...a greatly shrunken group of American workers, working harder and more efficiently, is producing these goods and services.
I'm not a big time econoexpert but not seeing why it's so damned difficult to connect the dots here. Mega-corporations are building enormous profits by cutting their workforces and compelling remaining workers, under threat of losing their jobs, to do the work of two or three people for the same amount of pay, often accompanied by reduced benefits.

The mega-corps aren't using these profits to expand and create new jobs. They're using the money to make more money -- for themselves. They buy back their own stocks. They pass it out freely to their execs via obscene bonus packages. Those execs don't spend that money here. They tend to invest it in foreign vehicles that offer bigger returns and then they avoid contributing their fair share to the national revenues by stashing the dough in offshore accounts and other tax dodging schemes.

And I'm not the only one who noticed that the biggest winners in this "recovery" are the financial industry "wizards" who crashed the economy in the first place and sent the majority of the population into a downward spiral of ever increasing economic insecurity at best and flat out poverty at worst.

You don't to be a high paid economist to see the obvious solution. An economy that depends on consumerism won't recover unless more people have money to spend. So quit coddling the 1%ers at the top and find ways to put money in the pockets of Americans who will spend it on goods and services -- in America.

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