This is depressing:
By most measures, Harley-Davidson has been having a rough ride.
Motorcycle sales are falling in 2010, as they have for each of the last three years. The company does not expect a turnaround anytime soon.
But despite that drought, Harley’s profits are rising — soaring, in fact. Last week, Harley reported a $71 million profit in the second quarter, more than triple what it earned a year ago.
This seeming contradiction — falling sales and rising profits — is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.
Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year — more than a fifth of its work force.
Are we approaching an era where unemployment will be at 9% for decades? What would the long term impact of this be, other than simply devastating the middle class?
It goes without saying that this is probably because Obama hurt someone’s feelings.
El Cid
Granted
but why on Earth would they expand hiring (or hourse) and production when demand is so weak?
I really don’t grasp the argument that some magic trick would make lots of businesses start expanding etc. when there’s not enough customers & clients for their products & services any way.
LarsThorwald
Well, at least the good news today will be that Tony Heyward will only get $16 or 17 million dollars when he is fired later today by BP.
Alex S.
There is a chapter in Adam Smith’s “The Wealth of Nations” that describes how companies in rich countries don’t make a lot of profit, while companies in poor countries, especially in pauperizing countries, are very profitable – because of the scarcity of goods and other developments, but I can’t quite recall it completely.
Brien Jackson
@El Cid:
Exactly. And where hiring is concerned, you wouldn’t really expect to see firms investing in that early anway, since the labor force can be expanded quickly.
General Stuck
I guess Mort didn’t get the firebagger memo that Obama is a corporatist sellout.
Well, you see Willard… In this war, things get confused out there
Calvin Jones and the 13th Apostle
@El Cid: That’s why you have to make it painful for companies to hoard money. Cutting more jobs isn’t going to make anyone run out and make a big ticket purchase. In fact, just the opposite.
enplaned
Paul Krugman and others are doing a great job fighting the good fight over stimulus vs austerity.
Both sides agree, however, that in the long-run, debt needs to be cut. But to my mind that obscures the real long-run issue — the danger that the US economy has been so hollowed out by 30 years of deficit spending, 30 years of trade deficits, 30 years of offshoring, and many more than 30 years of a crappy educational system, that it simply doesn’t have the ability to support full employment anymore without constant injections of debt.
mr. whipple
Yes.
demimondian
@El Cid: Actually, it’s more complicated than that. The really interesting issue is that HD can make the same number of motorcycles, and charge the same amount for each of them, while using fewer workers.
Of course they’re conserving cash. Why on earth would they retain more workers?
Calvin Jones and the 13th Apostle
And Mort Zuckerman is a clown!!
Foxhunter
@El Cid:
Someone needs to pass that little bit of rational thought to Indiana’s resident dumazz Mike Pence who fears the expiry of Bush tax cuts for the top 3% will doom the //cough// recovery.
The Moar You Know
Yes. SATSQ.
I don’t really care. It will destroy my life and the lives of virtually everyone I know, and that’s all that I have the energy or will to care about. Sure, it would be nice if it wouldn’t destroy America’s preeminence in the world or make the lives of the poor shittier than they already are, but again, I can’t really afford to give a shit about that because the middle class, of which I am a member, is the target of these policies, not other groups. The poor don’t have the money that the uber-wealthy are looking to steal, and the rich…well, they’re the ones stealing it.
Someone last night posted a variation on what I’m about to say, can’t remember who it was, but it sums it up pretty well; this isn’t academic debating material anymore; these people are really out to kill you, and you’d better fucking wake up and realize that this really is war. With your ass in the crosshairs.
El Cid
@demimondian: No, I realize that. But there’s not a conflict between the two — even if you were to grant the prior assumed relationship between productivity and labor, we’re still in a time period where they main problem is people not being able to buy stuff.
comrade scott's agenda of rage
I’m not so sure HD is such a bellweather. A couple of years back, I read that the bulk (don’t ask me to define “bulk” in this context) of HD sales wasn’t motorcycles but swag, logos, tshirts, etc etc.
Also, HD has hit a demographic brick wall. Nobody under the age of 40 is buying their 2-wheeled products and their “go-to” demographic, white men over the age of 40, have discovered the cost of owning an HD is high, ie., it doesn’t come close to ending after you leave the dealership. And since white men over 40 are getting pounded in the Great Recession, most aren’t exactly able to rush out and plonk down yet another 20K on a piece of transportation they use to drive 100 miles or so on the weekends. HD tried to market to the wives of Over-40 white men with middling results.
I little known HD story, when Reagan hiked the import tariff in the 80s to save HD’s ass from furrin’ competition, HD still wasn’t selling a lot of bikes. So, what else did Unca Sam do to help? Gave em a contract to provide 500 and 1000 pound bomb casings to the military. Seems that HD’s technology and factories were well suited to make iron shells straight out of World War II.
Daddy-O
“Are we approaching an era where unemployment will be at 9% for decades?”
Approaching? Baby, we’re smack dab in the middle of it.
And that’s not change I can use. Don’t give me any shit for the dig at Obama, because he’s had the keys to the car for a year and a half, and Atrios has been saying exactly what you said here for at least a year–ever since the original stimulus was knocked in half, right after he was inaugurated.
9% unemployment, the norm–sure, the richest of the rich can live with that.
Brien Jackson
@Calvin Jones and the 13th Apostle:
I think more than making it “painful” to hoard money, you need to give them a reason to invest it. Just because it’s easier.
Face
And this only lasts so long. CR predicted this many months ago; that companies would actually post decent numbers in the last half of ’09 and thru ’10 due to cost cutting (read: shedding employees), but that a company can only do this once. A company can only get so thin (read: piling more and more work on less employees), and soon no more cost cutting can be done. Watch the market tank in ’11.
Daddy-O
@The Moar You Know: Excellent summation. Class warfare is undeclared, but it’s ON.
Punchy
Why on earth are you linking to your own Twitter messages? WTH?
asdf
A little thread music.
Straight to Hell, by the Clash.
http://www.youtube.com/watch?v=HQwm1v1R-qM
jcricket
As others have said. Yes.
Oh, and because we have a shitty welfare state this will further screw people and strain governments, compared to countries that know social welfare is a good thing and have been preparing/spending for years.
Take a look at France, which we always make fun of for running deficits (i.e. having a terrible economy). They do indeed run deficits of around 5% most of the time, and they have been hit a little by this recession. But guess what – they’re running less of a deficit than we are, because they already prepared for big recessions by having a social welfare state that, you know, helps people.
America, on the other hand, has turned into a nation of Neo-Hooverites, determined to cut of their own noses.
p.a.
Wasn’t the economic conventional wisdom in the stagflation-era 1970’s that the natural rate of unemployment was about 6%-7%? Just remember that most economists are handmaids of the establishment. They are already working up excuses to explain how the next disaster is just the natural workings of the market.
I try hard not to believe conspiracy theories on the existence of our overlords, and focus on the reality of democratic institutions, but it gets harder all the time.
mr. whipple
Yes, it is truly amazing he has yet to fix everything. Maybe Atrios can primary Obama.
El Cid
I had some small business owning nitwit complaining to me about how he was suffering because of “the Obama recession“.
Things I have learned:
First, there is no need for calendars in our modern era.
Second, owning a small business is the equivalent of decades of scholarship in economics, such that you can loudly pronounce on any matter economic with complete expertise, mainly because you worked long hours and dealt with a bunch of crap. Except, this is only true if you will spout the same exact shit as is heard on right wing talk radio — librul small business owners are immature naifs who soon will learn the true painful truth.
Third, the fact that your small business just doesn’t have the customers and jobs you need is not too important for your current company’s suffering; rather, it has to do with deficit spending, and businesses worrying somewhere else about future taxes.
Fourth, all this financial regulation is about to drive businesses under, because other businesses not your own are going to stop doing anything, and what’s worth, your small business might have to fill in more forms and this might mean illegal things you do now (paying for things and people in cash under the table) might have to be done legally.
wilfred
Read this:
http://finance.yahoo.com/tech-ticker/the-u.s.-middle-class-is-being-wiped-out-here%27s-the-stats-to-prove-it-520657.html?tickers=^DJI,^GSPC,SPY,MCD,WMT,XRT,DIA
beltane
I remember Alan Greenspan, back in 1996 or ’97, expressing concern that the unemployment rate was too low. High unemployment is conducive to corporate wage and benefit cutting, which is good for shareholders. One would think there will be a point in the near future where declining sales will take a toll on this little scam. Or perhaps this is a whole new form of capitalism that is shareholder, and not consumer driven.
fasteddie9318
What none of our Galtian titans of industry will tell you openly is that high unemployment and the wrecking of the middle class is a feature, not a bug. The bigger the available labor pool and the longer people are conditioned to living on poverty wages, the easier it becomes to hire workers with rock bottom compensation packages.
Stillwater
Are we approaching an era where unemployment will be at 9% for decades? What would the long term impact of this be, other than simply devastating the middle class?
I’m curious about this as well. Personally, I think the actions of the Fed and Congress coupled with the lack of a formal justification for why gov. institutions are being so complacent about remedying what ought to be a front page story (ie, the unemployment rate) suggests that a) unemployment will remain high for a long time and that b) this is a form of permitted (rather than imposed) austerity to reduce share of GDP going to worker compensation packages.
I could be wrong about this. I’d love to be wrong, in fact. Won’t hold my breath. My own take on it is that the international finance markets have determined that the US, like the EU and others, is in need of a ‘labor market readjustment’. My only real question, I guess, is whether government policy supporting (or passively permitting) austerity is justified by some demonstrable general-welfare economic principles or if it’s just an opportunistic continuation of investor class warfare.
El Cid
@fasteddie9318: This is the Laffer curve they won’t mention openly.
I.e., ‘as unemployment goes up, our power grows greater, except there is some level at which there may be so many unemployed as to cause us inconvenience’.
PeakVT
@p.a.: The accepted rate for NAIRU has varied over time, but during the late 1990s it was about 5%.
Sheila
Can any of us remember when the “economy” actually existed to serve people rather than vice versa, or does that extend as far back as the age of bartering? If you want to get a good picture of the deleterious effects of the financial sector on the quality of living for many people, see the July edition of Harper’s: “The Food Bubble: How Wall Street starved millions and got away with it.” One can only wish that someday average people unite to totally bypass this sector: our own small businesses providing all the goods and services we need (which is far less than we think we need). Community Supported Agriculture is a tiny start; I have heard about communities organizing to provide their own utilities (I am not sure how this is done). We should build on these small beginnings and inherit the earth, which is rightfully ours, since we are alive, and financial institutions are not.
brendancalling
@Daddy-O:
I was about to write the same thing about Atrios. he has been HAMMERING the “9%+ unemployment is NOT OK” for months now, and i am glad someone has joined the chorus.
also seconded: “Obama has had the keys to the car for nearly a year and a half.”
Sorry for being relentlessly negative. It’s fostered and fueled by the blogosphere, as you know.
El Cid
@Sheila: What, are you some sort of insane, anti-capitalist leftist? All people who think like you do were defeated with the USSR and Ronald Reagan created the modern economy and everyone was happier ever after, The End.
mclaren
Indeed not. We’re approaching an era in which the unemployment will start at 9% and ratchet slowly up with each new recession, decade after decade.
9% to 10% to 11% to 12% to 13% to 15%. Up and up and up. Without end. Constantly increasing, never going back down. From now on, each new recession will produce a jobless recovery, and there will be more and more recessions more frequently, each one more severe than the last, as the price of oil ratchets steadily upward and globalization extinguishes the middle class at little bit more.
Capitalism is dying before our eyes. It’s falling apart. Something else will take its place.
What that will be, we don’t know yet. It won’t be communism and it won’t be so-shul-ism. It will be something new. Something different.
But things can’t go on like this. People have to live. They need to eat. Everyone in America can’t sleep under bridges. Everyone in America can’t become unemployed. Something has to give, and it will be capitalism that finally disintegrates under the pressure. The invisible hand doesn’t work when it strangles everyone to death.
fasteddie9318
@El Cid:
I wish we could get to that line, frankly, because nothing’s going to improve until we start inconveniencing these
fuckersgreat American business leaders.Zifnab
@fasteddie9318: To do what? Make widgets for the do-hickeys that other peasants can’t afford to purchase? What good is it for AT&T to pay it’s labor force minimum wage, if it’s labor force can’t afford to buy phone service?
It’s the Walmart conundrum. If you pay your employees rock bottom wages, such that they can’t even afford to shop at your own store, you can turn a massive profit. But if EVERYBODY pays wages that low, you’ll go out of business because no one can afford to shop from you.
I honestly don’t believe the Wall Street titans and financial elites are thinking that far ahead. They see “short-term profit” and breeze over “long-term consequences”, take the money and run. This financial collapse isn’t according to any grand Machiavellian plan. It’s the product of ten thousand robber barons sacking the economy over and over again to restock the cupboards when they run low on blackjack, coke, and hookers.
Martin
@demimondian:
That’s been going on for decades and here’s the point that I believe we have reached: automation and other productivity gains have made it so that the US doesn’t need its entire labor force working a steady 40/wk to meet the actual consumer/industrial demand of the US. Even if you shifted 100% of the manufacturing back to the US, we’d still have a surplus of labor. Sure, you can invent 37 new flavors of Pringles to try and spur new consumption, but there’s an honest to God limit to how much the population can reasonably consume.
Now, we can try and export more, but what and to whom are we going to export that we aren’t already? Manufacturing won’t solve this puzzle. Engineering might, but I doubt even that will go terribly far. I suspect we’re either going to have to pump a steady flow of money into public infrastructure projects to generate new demand, regulate industry into creating new kinds of demand, or break out of our 40hr/50wk work mindset, mandate long paid vacations, or a reduction to the workweek with a corresponding increase in wages – but I don’t think we’ll ever see demand sufficient to keep the workforce going that isn’t part of some kind of bubble.
BR
@mclaren:
Everything I’ve read says you’re right. We’ll probably see brief “recoveries” between the more frequent recessions, giving the false impression that everything is returning to normal. So it’ll be 10% -> 8% “recovery” -> 12% -> 10% “recovery” -> 14%…
I think the real and only solution is for folks to start taking care of their necessities on their own, starting now. I figure if I have homegrown food and clean water, I can live in the absence of a wage job. But yeah, we need to start getting folks ready to downscale their expectations.
The best talk I’ve heard recently explaining all this is this one:
http://sheffield.indymedia.org.uk/2010/06/453356.html
Everyone should give it a listen. (It also is remarkable in that it’s a talk on the economy not by a stuffy old condescending man.)
Zifnab
STUPID MODERATION FILTER! WHAT DO YOU WANT?!
Shalimar
The only long-term impact from 9%+ unemployment that I think would be fairly certain would be greater support for government-run social safety-net programs. I haven’t studied the period, but I’m guessing far more people supported New Deal-like programs during the 1932 campaign compared to early 1930.
Either that, or we rise up and kill lots of rich people so we can live off of their stuff rather than dying in the street. I prefer the former, but the latter would be an appealing alternative if Republicans keep trying to eliminate the middle class for a few more years.
bemused
@beltane:
He said there needed to be a certain amount of “worker insecurity” so businesses would thrive. Rand forbid that businesses be insecure. I love these cute little terms, worker insecurity vs unemployment, people come up with to soften the real meanings.
NickM
What kills me about this class war is the fifth column teabagger types seem to be bigger and louder the more the middle class is assaulted.
Cain
@Daddy-O:
Look, you’re asking the executive branch to do what exactly? They can’t do shit without congress passing bills. Sure, the stimulus could have been a lot more money, and we should be a lot more regulation but I’m not sure how much more he could have gotten with a dithering congress. Whatever landmark legislation to get us going where we need to go still requires congress to sign off on it. We’ve seen the dramatics in the Senate, politics is still geared towards center-right despite the demographics.
It is intolerable that we are dithering over this stuff. We need to spend like a motherfucker, and tax multinational corporations, and high income people. U.S. based corporations that send jobs overseas get punished, U.S. based corporations that hire here get tax cuts. The white house can do all this stuff, but it still has to get passed congress. You can insert anybody in that damn role as president but the outcome is unlikely to change without congress not afraid of its own shadow.
We give way too much benefit of the doubts to businesses right now. They are a class of “people” who have no loyalty to anybody but shareholders.
cain
Catsy
@fasteddie9318:
This. It is a basic feature of the leverage that comes from holding the strong hand in the supply and demand dynamic.
When the supply of labor exceeds the demand, you have unemployment. The imbalance means that those responsible for the demand–the employers–have a stronger bargaining position than those responsible for the supply.
In layman’s terms, they have you over a barrel.
This places downward pressure on wages, because employers can get away with paying you less regardless of what their profit margins are. The same for compensation packages in general, benefits, and so on. Whistleblowers are less likely to do what they should and risk being out of work with a slim chance of finding something else. Employees are less likely to complain about abusive management practices. People stick it out in crappy jobs longer rather than taking the risk of looking for a new job.
Conservatives want things this way. High unemployment helps them because it takes most of the power and leverage from the employee and shifts it to the employer, who can quite literally get away with murder. You think Boehner and his ilk actually gives a shit about “rescuing” the economy? It’s working just fine.
BR
@Shalimar:
Simpler strategy: I could envision a activist, populist group whose job it was to leak information about criminal activity (other than the usual) done by banksters and the like. Take for example video of them doing / buying drugs. I mean, the laws are on the books so we might as well use them – the cops in NYC go after black / latino young men rather than the banksters who are just as surely doing drugs because the former are easier to harass politically. An activist group could do the work the cops aren’t willing to.
Zifnab
@Martin:
You’d think this would be a good thing. We’re reaching a productivity threshold where we don’t need to work sun up to sun down from cradle to grave, just to put food on the table.
Raise the minimum wage, mandate greater leisure time (which will – in turn – increase spending) and cap those ludicrously high salaries. Share the wealth.
That said, I do suspect that demand will rise as aggregate fortune increases. How many people can’t afford an iPhone or faster broadband access? How many people want season tickets to the local baseball team? How many more WoW servers would be filled to capacity if everyone had an extra day of leisure time?
When you’re in a massive recession, no shit demand is down.
Bulworth
Yeah, it sounds odd. Where are the profits coming from if there’s not much selling going on? Cost cutting only works if you are still, at the end of the day, selling something, preferably many somethings.
The Moar You Know
@mr. whipple: Try not being such an unrelenting apologist for the guy for once. Is he better than President Palin? No doubt. Is he the guy who put Bernanke and Geithner in charge of the economy, two unabashed corporatists who seem hellbent on driving the economy right back into the ditch that Bush left it in? Again, no doubt.
He is fucking up royally on the economy and unless he gets a clue-by-four to the head and figures out that the American people need to be thrown a bone, he’s going to be a one-term president just like GHW Bush was, getting his lunch eaten by someone who is smart enough to recite “it’s the economy, stupid” as a mantra. If the Clintons figured that one out, anyone can, and somebody will.
roshan
So the poor corporations were being looted all this time? They never knew that such profit could be made with so few employees. What we need is a lawsuit against all those corrupt retired (dead included) and fired employees, who have hoodwinked these poor corporations out of all this profit. The Roberts court would surely agree.
EDIT: is it ok to call it reparations?
Kryptik
The most upsettingly retarded thing about this all is that it will, invariably, be used as proof that we need MORE supply-side economics. That the only reason we’re in a rut and HD is in this kind of situation is that we haven’t completely abolished taxes on the rich. Because that would for sure give them the money to hire more folks.
They just don’t fucking get that, without incentive or reason to hire more people, they will just continue to horde and pare down to maximize their own money while everyone else is fighting over bread crusts and fruit rinds.
EDIT: You know what, I take it back. That’s only the second most upsettingly retarded thing. The first most upsettingly retarded thing is that the media will continue to parrot the Supply-side view and then wonder why Obama hasn’t done the right thing and abolish the federal gov’t wholesale, ‘for the sake of the economy’.
The Moar You Know
@BR: No, actually, you can’t.
All that this form of “store and train for the Apocalypse” breed of survivalism does is delay the inevitable. If everything truly breaks down and we hit the Mad Max/Escape From New York/Warriors/Red Dawn scenario, and it is permanent (and it would require a massive die-off of the human population to be permanent) then all your supplies and know-how is not going to do you any good when your appendix bursts, or a tooth abscesses, or you break your back when driving a quad full of stolen gasoline back to your Fortress of Survival. You’re not going to be able to cast your own bullets for your AR-15 when you’ve shot them all. Your muzzleloader? Who owns those? Even most post-apocalyptic survivalists don’t own muzzleloaders – the only kind of gun that you can cast your own bullets for. With all others, you’ll blow up the chamber by getting the headspace wrong, and then die of infection in your shattered face because there aren’t any hospitals.
You might get lucky. You, or your kids, might survive long enough to procreate. Assuming that mom doesn’t die in childbirth and you pull it off (the odds are pretty good) and assuming your little GI Joe doesn’t die in his/her first five years of life (odds much less good) then what? You can teach them everything you know, and assuming (odds also not that good) that you are a good teacher, they will know what you know. Since it probably won’t work that way, odds are pretty good that there won’t be a third generation.
Hell, you might survive into your sixties, if you’re lucky. Long enough to enjoy a miserable, agonizing, undignified and shitty death with no palliative care, no hospitals, and no painkillers.
There’s got to be a better way than that. Giving up on civilization is stupid, it’s all we have.
Brien Jackson
@Catsy:
The problem with this conspiracy theory is that you can’t very well maintain profitability on the back of cost cutting and productivity increases for very long. At some point, the low demand caused by such high unemployment is going to affect sales, and the firm is going to start to lose money.
jeffreyw
Know what else is thriving? The local bar economy.
PeakVT
@Bulworth: A lot of companies are probably strip-mining their future by hollowing out product development. HD appears to be doing that by ditching their Buell brand.
mr. whipple
And I would ask, just what exactly would you have him do? Even if the original stim would have been bigger, how much better would our current situation be with 8.5% unemployment instead of 9.7? People would still be bitching, and when the gvt stim money ran out we’d be in the same position.
The fact is that the economy has been shit for working people for 30 freaking years. We’ve gone from bubble to bubble that has disguised it, with spending propped up by fake ‘wealth’ in consumer’s IRA’s or using their houses like ATM’s, or having jobs in things like construction making houses for a fake, unsustainable boom.
I don’t know what the answer is. Congress is hell bent to do nothing. So I don’t know how anyone can blame Obama for a problem 30 years in the making that’s he’s been given a year and half to fix, but hey, if that’s what floats your boat, by all means keep it up.
BR
@The Moar You Know:
Um…I never said any of that. I don’t believe in any of the Mad Max nonsense. I don’t believe in stockpiling anything.
I think what’s more likely is we’ll be living through a permanent form of the great depression. That is, no roving bands of thugs. Just lots of poor people, trying to scratch out an existence on what little land they can find to grow some food and pump some water.
Kryptik
@Brien Jackson:
You pretend like anyone, especially the big corporations these days, care about long term planning. The whole reason we’re in this shitmess is because of the culture of instant gratification by those at the top, especially by cutting out the little guys beneath ’em by their Achilles Tendon.
Belafon (formerly anonevent)
It’s the Laffer curve as applied to earnings: People cuts for the wealthy will obviously increase earnings for everyone else.
Zifnab
@BR:
Two problems. First, the more elite members of society tend to be better insulated from that sort of thing. They vacation in prostitution legal locations. They get drugs from private dealers, not street thugs. And they generally occupy gated communities.
Secondly, how are you going to publicize it? Sure, if you caught Tony Hayward doing blow off a dead hooker in Malaysia today it would make headlines. But a year ago? No one gives a damn who Hayward is. At best, he’d be sacked and replaced with another corporate drone. Beyond that, even the Tiger Woods affair only had a shelf life of a month or two. People just won’t care.
BR
@Zifnab:
No idea. I think it’d require some group like wikileaks to actively solicit leaks of criminal activity from disgruntled banking industry insiders.
As for people not caring, I agree, the media won’t care. However, it will, if done repeatedly cast a chilling effect on the behavior of the banking industry. Sure it might just drive their criminality further underground, but it might also scare off newcomers who see the line of work as too risky to their personal lives.
mclaren
@Shalimar:
That might happen. It won’t fix things, though. Moreover, the rich aren’t going to be rich that much longer, not if things go on like this. Think about it: American CEOs get rich by outsourcing all the blue-collar manufacturing work and all the white-collar knowledge work for their products to the third world. But soon those third world contractors realize the American CEOs don’t add any value, so the third world contractors cut out the American corporations and crank out knockoff pirate copies of the American products, and then something even worse happens… The third world contractors create entirely new product categories that the American CEOs can’t envision because they no longer deal with actual customers in a real economy.
And now the third world contractors have rising wages, so they have to outsource to even poorer regions of the world. And the cycle starts all over again. Eventually it all falls apart because the price of oil rises high enough to kill globalization dead, and it makes no sense to manufacture anything in the third world and ship it back to the first world, because fuel makes it too expensive. And all the factories are robot-operated, so opening factories in America again doesn’t create any jobs. Toyota has whole car plants in Japan that have only 2 people in them. That’s the future we’re headed for.
Whatever the solution to this collapse and implosion of capitalism, it will probably look something like this or maybe this.
It won’t be survivalism, it won’t be so-shul-ism, it won’t be communism, it won’t be capitalism. We don’t have a name for it yet. It will be something new. Some different.
Professor
@brendancalling: And do you realise that Obama can only propose policy and your congress disposes of that policy? Which part of your government process do you not understand? eg: The Administration wanted to close Guantanamo but your congress did not agree with that policy, so we are held in limbo! So why blame Obama for things not getting done? Also bear in mind that you have Joe Lieberman, Ben Nelson (N), Blanche Lincoln and Landrieu as members of the caucus
Mnemosyne
@Kryptik:
Yep. They’re not thinking about what happens in the long term. They’re figuring that their golden parachute will float them to a gated community on a lovely tropical island long before the mobs start beating down their doors. The deterioration of American society is Someone Else’s Problem, just like our broken water mains and collapsing bridges.
Svensker
@Bulworth:
That is why a number of economists are having conniptions about what’s ahead when there are no more cost cuttings to be done…and there are no customers either.
Did you ever see the movie Vanishing Point? We’re all going for a looooooonnnngggg ride.
Catsy
@Brien Jackson:
This was where I stopped reading.
Get back to me when you can discern the difference between “conspiracy theory” and “stuff I disagree with”.
demimondian
@El Cid: Um…no.
We’re in a period where some people can’t buy stuff. When the recovery comes — and it has, in fact — demand will rise. Employment will not. That’s what we’ve been seeing since 1992 — jobs are going, boys, and they aren’t coming back.
Some part of that is, yes, competition with China. More of it, though, is retooling.
Zifnab
@Catsy: I think the difference is the claim “I don’t like how CEOs run the companies that drive our economy” morphing into “A secret cabal of billionaires is planning to turn the United States into 17th Century Romania”.
PurpleGirl
@BR: Just lots of poor people, trying to scratch out an existence on what little land they can find to grow some food and pump some water.
How do you see this working in a city? Places where there may not be access to ground water for wells? Where you have a few million people who need food and water? We can’t all move out to the country because many areas can’t support life, think of the desert southwest like Arizona or California or the high plains. And I’m sure there are areas on the East Coast that can’t support number of people, parts of Florida probably.
PanAmerican
This article is bullshit. The “improved” numbers reflect the clean up of the finance arm disaster area rather than the screw job they’re putting to the labor force.
Cain
@Zifnab:
Right, because they’ll get a bailout since they are oh so important. We need to remember no single company is “too big to fail” if they fuck up that’s their own damn fault…especially for wallstreet. Nothing will please me more than to see a whole bunch of top end wall street executive experience market forces deflowering their virgin ass.
cain
Keith G
The economic process of any society (post 1800) has been, and is, under constant change and adjustment. Quite often, it has been just about minor degrees of change. Our strengths have been based on being a relatively young, resource rich society with, at times, a near monopoly on technology and intellectual infrastructure.
As such, when faced with the challenge of economic change, we usually could get by with exploiting new resources, new markets or both.
Not anymore. Plainly, not anymore.
An economic system is nothing but a tool box that a society uses to distribute scarce resources. We need to re-examine our tool box.
We don’t have to throw the whole thing out, but it seems we need to explore it tool by tool, throwing some out and replacing others. Our ongoing change in the distribution of health care is an example of that process.
What is happening to autoworkers and Harley Davidson is but a small representation of the spectrum of issues we are confronted with.
My guess is that we will continue to do little (and even retrench a bit) until more of our society is so fucked that its truly crises time. Even Obama, with his now soft-spoken incrementalist tendencies, is not much help.
BR
@PurpleGirl:
It probably won’t work. Which is why, just like the great depression, we’ll have millions of okies. Except this time they won’t be from OK. They’ll be from Southern CA and NV and AZ and NM and CO and UT. The migration will have to go in the other direction – back East.
It is possible to live in some areas on pretty scarce water supplies. I mean, take what the Dervaes family has been able to do in a small suburban lot in Pasadena:
http://www.urbanhomestead.org/
mr. whipple
Great post on this topic today:
“The “jobless recovery” is in fact a realignment of the US labor force. Fewer and fewer employees are needed to produce durable goods. As this situation has progressed, the durable goods workforce has decreased as well. This does not mean the US manufacturing base is in decline. If this were the case, we would see a drop in both manufacturing output and productivity. Instead both of those metrics have increased smartly over the last two decades, indicating that instead of being in decline, US manufacturing is simply doing more with less.”
Bill
If I had a nickel for every time I heard “increase shareholder value” in a rah-rah corporate speech, I wouldn’t need to be job hunting… at all… for the rest of my life.
Too many otherwise good companies had made the mistake of going public, sacrificing their employee loyalty to make sure that earnings per share remains a robust positive number from quarter to quarter.
Cain
@mr. whipple:
Exactly. To make that kind of correction will require political capital that we don’t have. Hell we can’t even give this guy the illusion that we have his back to even give him any political capital. We’re too busy whining about stuff and not even giving him the political power to bend Congress to his will. Then expecting stuff from him and then creating a negative cycle. He also has to deal with the stupid racial angle constantly.
That said, I think we still need hold his ass to the fire. He needs to hire much better people than he’s got. I think that is definitely within his power. I’m not really pleased with the performance of some of the people he’s gotten on his team. Of course, hiring new people is also pain in the ass, hell it has been two years and he’s still waiting for approval from congress on some his appointments.
cain
ThresherK
@PeakVT:
+1
The word “entrepreneur” is devalued by misuse today, but Erik Buell’s ideas and H-D’s logistical support resulted in some great bikes, and I can’t imagine Honda or such eating their seed corn like that.
Brien Jackson
@Kryptik:
Well, the comment I was replying to was talking about a long-game conspiracy to drive down wages and labor leverage, so…
Brien Jackson
@Catsy:
Well let’s see, it’s obviously a theory, and it involves the assumption of a nefarious scheme involving multiple actors, which pretty clearly fits the definition of a conspiracy, so…
Martin
@Zifnab:
I’m not saying that demand can’t be generated to some extent, but there’s a limit to how much leisure time people can fill – and increasingly the things people fill their time with scale very efficiently – the internet and TV both scale very well, as does time going out hiking or swimming or playing with the kids, etc. If I had an extra day per week, I’d pretty much blow it barbecuing and reading on an iPad. That’s not going to contribute anywhere near as much to the economy wrt jobs as the 8 hours of lost productivity will.
BeccaM
What’s been lost sight of is the fact that a healthy, vibrant economy depends on regular people living their lives — like when someone earning, say, $20k a year gets a 10% increase, which enables them to invest for their retirement or qualify for a small home.
Economies where any paltry increase in GDP is driven by people becoming billionaires rather than millionaires are ultimately doomed. To put it another way, when Philmore T Moneybags knocks down a billion in salary, bonuses, and stocks, he’s not going to put any more back into the economy than when he was only getting $100 million, or ten million.
ksmiami
If you want to fix the economy, make getting an MBA or a degree in economics illegal. The Wharton whores, the Chicago quants and the HBS crew have wrecked America, the gear heads at the Fed… THESE ARE THE MUTHAEFFING BAD GUYS.
PurpleGirl
@Martin: If you got an extra off from your employer you’d probably also lose a day’s pay. The trend is to get as much work as possible from workers and not to pay them very much for it. With lower income I doubt you’d be buying very much more of anything.
PurpleGirl
@BeccaM: Yes. This. A million times.
brendancalling
@Professor:
yes, i am well aware of this.
I’m also aware that the president is not powerless, has the bully pulpit, and all sorts of other ways to deal with recalcitrant members of his party when he wants to use them. Like when his administration told progressives to vote for the war supplemental or they could kiss any election help goodbye.
again, apologies for being relentlessly negative.
Death Panel Truck
That’s why instead of a Harley, I bought an ’09 Suzuki Boulevard M50 three months ago. Only had 2 miles on the clock. I’m 47, but I wouldn’t be caught dead on a Harley. I only paid $9,000 for a fantastic bike that I ride to work every day.
Catsy
@Zifnab:
Well then, since I didn’t write that or anything close to it, I guess we don’t have a problem.
What, were you expecting a serious response? Next time comment on what I wrote, not on a hyperbolic strawman.
@Brien Jackson:
I can’t tell if this is snark or stupidity. Your definition of a conspiracy theory not only redefines it out of meaningful distinction, but ignores the fact that I never alleged collusion of any kind. I pointed out that anyone who places profits and the interests of business over workers has no incentive to reduce unemployment and in fact benefits from the power imbalance that results from high unemployment. It’s a feature, not a bug.
Large numbers of people acting independently out of obvious self-interest is not a conspiracy.
Steve Finlay
Backing up Comrade Scott: I met Harley-Davidson’s marketing manager for western Canada on a plane about four years ago. Back then, he told me that Harley’s profit on actual BIKES was pretty close to zero. Most of the company’s profits came from jackets, t-shirts, hats, jewelry, etc. etc. This recent news fits right into the same picture.
maus
@Brien Jackson:
That’s why the new hotness is to invest in tulip bulbs. Long-term profitability has always been overrated.
Triassic Sands
Is the American capitalist’s dream finally within reach?
Produce nothing, employ no one, and maximize profits.
Rob
The HD CEO is new. And like all newly minted CEOs who really don’t know what they are doing, he’s pushing to cut labor costs. It isn’t forward looking, it doesn’t grow the product, and it doesn’t help the company. But it can goose stock prices for a 12-18 months.
El Cid
@demimondian: What do you mean with this smarmy “um, no”? I was describing the situation we have right now — a period of lower demand because people are buying less Not as low as maybe at the lowest point. Take this bullshit elsewhere, unless you’re disagreeing that aggregate consumer demand is significantly lower than a pre-recession rate, or into the future when things are different.
Arclite
Not to forget this is the number of people actively looking for work. Throw in people who would like to work but have given up, and that number approaches 20%. And it says nothing of the people who reduced their salaries or hours worked. We cut salaries by 10% across the board three years ago, and have yet to reinstate them. All raises have been deferred during that time as well.
Nylund
You’d think that companies would realize that when you retain profits to reward the 1% of the population that own the vast majority of stocks, you hurt the ability of everyone else to buy your goods.
It really seems as if American corporations have decided the business plan should be, “pay the super rich, and sell to the super rich, everyone else be damned.”
The grand (and sad) irony is that the people who claim to want a return for the times when life wasn’t like this are doing everything they can to push for an expansion of this strategy.
Somehow the GOP (and the Tea Party) have convinced quite a number of average Americans that they are the Have’s that Obama is supposedly trying to screw when in fact they’re the Have Not’s that their own party leaders are bamboozling.
BobS
@comrade scott’s agenda of rage: @Death Panel Truck: I’m not exactly sympathetic to HD right now. I’m recently back from the Grand Canyon, where it’s nearly impossible to escape the noise of old men and women on their bikes, even in the backcountry. You get a totally different experience in Zion, where visitors ride park service buses. It would be nice if the park service would consider noise restrictions for vehicles, the same way they’d frown on me having a conversation with someone 12 sites away in a campground.
TenguPhule
You see okies, I see an army willing to kill anyone in their way to survive. That’s what its going to come down to in the end.
Streets of blood.
Learn where the CEOs and manager drones live and drive. And learn explosives.
lou
Yeah they can. Can you say America the Third World Country? That’s where we’re heading. The CEOs will just move their corporate hqs elsewhere if they feel uncomfortable. They have no sense of patriotism and I wish Obama and the Dems would hammer this point home.