Showing posts with label middle class. Show all posts
Showing posts with label middle class. Show all posts

Friday, January 6, 2017

The New(ish) economy: Dirty Jobs Trump the Ivory Tower

We are all witness in this new golden age of journalism and media, the likes we have never seen before. With a video camera and an internet connection, people are etching out their own place in the world to tell truths and raise suspicion in ways we haven't seen since the days of Thomas Paine.
As more media comes online, media that isn't solely driven by profit but instead driven by passion & truth it's competing on level playing field and in some cases replacing traditional media outlets. Where no longer your platform is your advantage. And it's not just newspapers in jeopardy anymore. All traditional and mainstream media quivers with the notion they're being tuned OUT, not IN. But to be a credible witness you must pass the jury of truth.
We are that jury of truth. Words, ironically enough do matter. Thank you, leftists! And if we sit back and take everyone at face value without preconceived notions of platform and statue whose words are true and whose are incoherent nonsense may surprise you.
Today I present to you, the jury of truth, three witnesses. And the case I present to you is Jobs and the skills gap. Skills "gap," you say? This happens to be a dirty little secret for anyone that works in construction or simply travels the country enough to see there are jobs to be had; we just don't have the quality of trained people to fill them. As a small business owner myself, for me this is the biggest struggle I have growing my business. Anecdotal of course but make no mistake, across the country the skills gap is very real.
Paul Krugman, a liberal economist doesn't believe there is a skills gap. He once opined that the skill gap was in fact “a prime example of a zombie idea — an idea that should have been killed by evidence, but refuses to die”. Yes, the same Paul Krugman who blamed the weakest recovery in American history (apologist for Mr. Obama no doubt) because the government was forced to curb deficit spending. In Krugman's world, deficit spending = job creation. Without pointing out the obvious short-sidedness of this in any long term measurables, even at the zenith of optimism, in the short term… it’s a dead cat bounce at best.
“TO FIGHT THIS RECESSION THE FED NEEDS MORE THAN A SNAPBACK; IT NEEDS SOARING HOUSEHOLD SPENDING TO OFFSET MORIBUND BUSINESS INVESTMENT”
This is a man after all who believes and writes op-ed after op-ed on how the FED can cure all that ails the natural economic cycle. The FED. Not natural interest rates but the artificial rates orchestrated by the FED. Be that it may, a crooked petrol dollar fiat scheme until the bitter end, it's still of this world and a 100% human creation. Therefore you cannot escape its entropy. Inflation in this monetary system is like gravity in spacetime. You cannot travel faster than the speed of light to outrun gravity and you cannot escape the compound interest paradox regardless of how many Harvard degrees you accumulate on your wall. Paul Krugman is not a credible witness.
Donald Trump complains about jobs leaving overseas. SEIU, one of the largest unions still left and incidentally enough the largest government union in the nation announced last week it's cutting its budget by 30% because of.... President-elect Trump.
“BECAUSE THE FAR RIGHT WILL CONTROL ALL THREE BRANCHES OF THE FEDERAL GOVERNMENT, WE WILL FACE SERIOUS THREATS TO THE ABILITY OF WORKING PEOPLE TO JOIN TOGETHER IN UNIONS,” PRESIDENT MARY KAY HENRY WROTE IN AN INTERNAL MEMO OBTAINED BY BLOOMBERG BUSINESSWEEK.
First of all, "far right"? Trump? Trump is hardly far right but I digress. That is actually a win for Trump. Nothing to add to that. But my eyes could simply skim over this quote from President Mary Kay Henry...
“FOCUS OUR RESOURCES AND ENERGY ON THE FIGHTS THAT POSITION US TO RETAKE POWER IN 2018, 2020 AND BEYOND.”
Organized labor fighting for power in elections. Where have we seen this movie before? Circa 1933?
To his credit, Trump was the only candidate to continuously rail against NAFTA and TPP. While it’s true, the middle class has been chipped away at over the last four decades with trade being a part of that decline; it’s not the biggest culprit. That decline was in effect long before the offshoring of jobs started taking a footing. The best way to sum up the decline of the middle class and the loss of jobs overseas is simply this: It's complicated. So much so that it’s layered with layers of many competing mitigating factors. To blame it on free trade above all else is irresponsible and just plain not true.
We have seen entire sectors hollowed out while others boom. Sure, many Americans do feel left out and left behind in Middle America. And that, probably above all is what made Mr. Trump the 45th president. But that doesn’t make those people or he correct if they’re thinking to end free trade or raising tariffs will simply be the magic wand to make America great again. It might bring back some jobs but it will destroy just as much or more of existing jobs with existing families relying on them. Surely, It will make goods and services costs rise and that is no recipe to grow an economy.
Recently, Deborah Lockridge wrote a piece on free trade and quoted FedEx Chairman and CEO Fred Smith. Smith speaking to the audience at the National Council on Competitiveness Forum in mid-December warned Trump by saying this:
“WE HAVE THE BEST EXAMPLE OF PROTECTIONISM FROM OUR OWN HISTORY. THE DEVASTATING SMOOT-HAWLEY ACT OF 1930 RAISED TARIFFS ON MORE THAN 20,000 ITEMS. THIS CONTRIBUTED TO A 66% DECLINE IN WORLD TRADE FROM 1929 TO 1934. THIS MISGUIDED ACT OF CONGRESS IGNITED THE GREAT DEPRESSION.”
Does this mean raising tariffs is a bad idea? Not necessarily but raising prices on goods and services will cancel its gains out by raising prices. Government wins, consumers lose.
Bringing back blue collar jobs (manufacturing) is a noble cause and one that should be positive but how that is accomplished will be messy. In a matter of a decade, we saw manufacturing slip from 20% of GDP to 5%. But how many jobs can be saved from automation? It's not like we are living a Jetsons lifestyle just yet but automation is at some point will be the next scapegoat for the declining middle class as its only a matter of time where technology is improved and even more jobs will die off. However, while bringing back jobs that were let go offshore won't save the middle class it certainly couldn't be any worse than the previous administration's stance on offshoring jobs...
"SERVICES LIKE ENGINEERING, RESEARCH, AND DEVELOPMENT, FINANCE AND SOFTWARE PRODUCTION– WHICH TYPICALLY PAY HIGH WAGES – CAN NOW BE MORE EASILY TRADED ACROSS COUNTRIES. AS A RESULT, THE UNITED STATES IS POISED TO EXPAND ITS TRADE SURPLUS IN SERVICES, WHICH HAS ALREADY GROWN SUBSTANTIALLY, NEARLY TRIPLING IN SIZE SINCE 2003, TO $146 BILLION IN 2010."
So if unpacking the jobs that left will be hard what about the jobs we have here now that are going unfilled? Contrary to popular belief and the stigma that goes along with it, a college degree isn't the only pathway to a respectable and sustainable living.
Take transportation for example. This is is one sector that has been a major winner with free trade. Trucking alone has had shortages of drivers for at least a decade.
Bill Graves, former president and chief executive of the American Trucking Associations wrote about this issue last summer.
"WHEN I FIRST CAME TO THE AMERICAN TRUCKING ASSOCIATIONS IN 2003, AMONG OUR INDUSTRY’S TOP CONCERNS WERE DIESEL COSTS, THE DRIVER SHORTAGE, INSURANCE COSTS AND SECURITY.
IN THE NEARLY 14 YEARS SINCE MANY THINGS HAVE CHANGED. I THINK IF YOU SPOKE TO TRUCKING INDUSTRY EXECUTIVES TODAY, THE COST OF FUEL AND INSURANCE OR HOW BEST TO SECURE THE SUPPLY CHAIN WOULDN’T BE AT THE TOP OF THEIR PRIORITY LIST, BUT THEY’D HAVE A LOT TO SAY ABOUT THE DRIVER SHORTAGE."
Driving a truck, that doesn't seem that prominent does it? But that's just it. That's the problem with perception and conditioning. We've been conditioned to scoff at these types of jobs while they go unfilled while another college graduate goes underemployed or simply unemployed.
2015 mean annual earnings of truck drivers: $43,410
2015 average earnings for college graduates is: $45,400
2015 those who’ve only completed high school: $25,900
We don't have a jobs problem here. We have a fortitude problem. So Trump, like many or most of his diatribes is tapping into a problem or sees the writing on the wall, except it's written in hieroglyphics and he only speaks in sign language. Thus, Trump isn't FIRED but he must do a better job of addressing the wage gap that already exists.
Now, may I please present to you juror #3. Mike Rowe. Yes, that Mike Rowe of the Dirty Jobs variety. He's doing his best to promote ending the skills gap with actually incentivising skilled work through his charity ProfoundlyDisconnected.
There is now a 5.6 million skills gap from everything to plumbers to masons to heavy equipment operators and everywhere else in between. This is not just some random number from Mike Rowe either. He is quoting the Department of Labor. And training for these new careers won't add to the 1 trillion (and growing) dollar boondoggle that is the student debt bubble that ominously awaits an eruption like a fiat Mt St Helens.
So yes we do have a problem with the hollowing of the middle class. People left behind from the factory that disappeared are a reality but the problem isn’t just going to be cured by a company reopening its doors via tariffs, repatriating or from idle threats. Does that mean trading jobs for tax breaks should not still be pursued? Of course not. The corporate tax rate stifles business especially small business but in the meantime, let's take the easiest route possible. It's just a matter of perception and priorities. Mike Rowe gets it. He's traveled the country and understands quite well the reality versus perception that has sacked this nation's "can do" spirit.
If we define success and working nirvana by a four-year degree with a mountain of debt attached to it (thank you subsidies) then that gap only widens. But if we reverse this pussification and get real about OUR economy we will achieve the closest we've been to full employment as we've ever been.