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Contents Bulletin Scripting in shell and Perl Network troubleshooting History Humor

Over 50 and unemployed

News Stoicism Recommended Links Neoliberalism as a Cause of Structural Unemployment in the USA Underemployment Perma Temps Secular Stagnation The myth of human capital
Scapegoating and victimization of poor and unemployed Neoliberalism war on labor The role of automation and AI in decimation of workforce Neoliberal rationality Neoliberalism and Christianity The Rise of the New Global Elite The Iron Law of Oligarchy The Pareto Law
IT Outsourcing/Offshoring Skeptic: Fighting Outsourcing Myths Commodization of IT: "IT does not matter" fallacy and what in Nicholas Carr views matter Bootlickocracy: "Kiss up, kick down" style in corporate IT Cargo cult programming SAP/R3 implementation disasters IT Slang Neoliberalism war on  labor Automation
Office Slaves: the rise of bullshit jobs Tactful communication Diplomatic Communication  Negative Politeness Dealing With Negative Criticism Six ways to say No and mean it Rules of Verbal Self Defense   Avoiding Anger Trap 
Programmers and sysadmins health issues Marriage and unemployment Coping with prolonged joblessness Adverse Selection Surviving a Bad Performance Review The Fiefdom Syndrome Female Sociopaths The Hare Psychopathy Checklist
Signs that you might be dismissed soon Bureaucracies Bureaucratic avoidance of responsibility Bureaucratic alienation IT Outsourcing/Offshoring Skeptic Social Problems in Enterprise Unix Administration The psychopath in the corner office The IT workplace
Slightly Skeptical View on Enterprise Unix Administration Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime Corporate bullshit Information Overload Fundamental Absurdity of IT Management Slackerism Cloud Computing Related Humor Etc

Introduction

"Don't tell people you're unemployed. Tell them you're semiretired.
It changed my self-identity. I still look for jobs, but I feel better about myself."
 

Many IT professionals, who are over 50, recently found  themselves excluded and marginalized: "without work, without possibilities, without any means of escape." (Pope Francis on danger of neoliberalism). Typical feelings experienced after loss of employment included emptiness, inadequacy, humiliation, rage, shame, envy, and worthlessness. Additional aspects include  grief over the additional losses that followed the job loss, such as loss of social connectedness, and professional status. For some people, unresolved conflicts vis-a-vis former employers produce strong revengeful feelings.  For others, self-loathing, contempt, self-criticism, and insecurity or fear of trying new things are more prominent. That might affect common activities such as attending children's graduations or weddings, getting through major holidays,  sustaining interest in former leisure activities or hobbies. As the period of unemployment exceeds one year most usually experienced increased and sometimes overwhelming sadness and grief at what had been lost. Paradoxically, reentering workforce now led to comparisons of "there and then" with "here and now". Reactions including rage and feelings of unfairness  were not uncommon. Shame and anger are especially notable.

The key question here is how to survive this prolonged slump, which is very similar to the situations that often happened in Arctic expeditions at the beginning of XX century: the ship squeezed by ice goes down and survivors face life in tents in Arctic weather.  With limited supplies and a long time before the rescuers can reach them. Often forced to survive in those tents Arctic winter. Dr. Sidney Blair, the Navy psychiatrist who coordinated personnel selection for the Operation Deep Freeze voiced the following opinion (BOLD ENDEAVORS. p. 260):

When I am asked, "If you want to be 100% sure that a person will adjust [ to Antarctic duty], what do you look for?"

My usual answer is that I look for somebody who loves their work. This is probably the most important thing on the list of positive factors, they have to love their work. It is almost all right if they love their work to the exclusion of everyone else.

Another important factor is ability to survive isolation and confinement inherent in long unemployment. Neoliberalism tried to atomizes employees, destroy social bonds between them, propagating " under the disguise of competition old "Man Is Wolf to Man " mentality( from Latin ' Homo homini Iupus est" . Which, in essence, is an old style "divide and conquer" strategy. Moreover there was never a trade union of IT administrators of programmers so they are by definition pretty isolated specialty, without much inter-employee solidarity. But as Mark Twain aptly said "No man is a failure who has friends". 

As in Arctic, in the situation of unemployment an isolated person is a doomed person. You need to rely of support of other people and you better start cultivating them (as well a funds) before the blow strikes. Again this is a very similar to situations that occur in Arctic expeditions, in older types of submarines crews, etc. IT specialists over 50 who succeed after long unemployment belong to the same type people who would survive in case of crash of the ship in Arctic expedition. This is a real life experiment on what we do in moments of great challenge. Do we rise to the occasion or fail? Are we heroes or cowards? Are we loyal to the people we love most or do we betray them? Are the most close people remain loyal to you in such a challenging circumstances or they are ready to betray? What is the right thing to do in such difficult circumstances? Like Arctic explorers in the past you need to face the danger and difficult decisions. It is easy to say that one had to be brave and strong and keep moving forward despite hardships. It is quite difficult to do. It's about ordinary people drawn into circumstances beyond their control and the choices they must make to take back some of that control... impulsive choices, dangerous choices, heart wrenching and even catastrophic choices that can't be undone. It's more complex that just bravery and cowardice.

People who are rated as low in impatience and irritability and low in the characteristics associated with creation interpersonal conflicts (e.g. egotistic, boastful, hostile, arrogant) have better chances in this situation. People who are more concerted with well-being of other paradoxically typically fared better in situation of Arctic expedition crisis. Other-directiveness helps to survive is such harsh environment. Traits like social compatibility or likability, emotional control, patience, tolerance to others, self-confidence without egotism, ability to subordinate your own interests to the interests of the team, a sense of humor, and  are extremely valuable and are now checked for potential members of long duration expeditions that involve severe hardships.  To those scientifically established traits for selection of people into Arctic expeditions one can add

  1. The level of self-control. There are powerful "animal" mechanisms that are still active within us and due to them we tend to display some behaviors typical for "cornered animal" in the situation of long unemployment and unsuccessful search for a job.  Emotionally the hit of losing job is comparable with the hit of losing close relative. The ability to take those behaviors under control are critical. See also Avoiding Anger Trap. The ability to take job loss "cool" without excessive negative emotions (as in "sh*t happens" attitude)  is very important. Otherwise Job loss can cause heart issues, and the stress and bad habits that frequently come with unemployment can build up over time. There is even danger to your mental health with long unemployment as depression is more common among long term unemployed:.
    Michael McKee, a psychologist and stress expert at the Center for Integrative Medicine at the Cleveland Clinic in Ohio, agreed that attention needs to paid to the body blow that job loss can inflict on any individual’s sense of identity and self-respect.

    “If you keep trying to find a job and don’t,” he noted, “or if you find a job and then lose it, and that pattern repeats and repeats, you not only lose identity, you lose income, the structure to your day, your sense of achievement, your friends from work, your other friends because you are embarrassed to be around them, your self-confidence, your self-respect. Then you start to lose hope and meaning and purpose, [and] feel alienated and hopeless and helpless.”

    So, McKee added, “Well-meaning programs, public and private, which help people find jobs, need to add caution to eagerness. Caution that they not set people up for repeated failure, for long times between jobs, which is likely to accelerate the ride to depression. Always finding another job quickly lets you keep your hope up, but struggling [can] often lead to increased fear and anxiety.”

    Related to that is the ability to use physical exercise to control your emotional state. Consider it as an effective medication for excessive aggressiveness and anger. See also Avoiding Anger TrapThe ability to maintain your physical and emotional  tonus, which now is especially important. Stretch exercises are known to help is such situation for many people.  So called 4 x 4 running/walking (fast running for 4 minute then walking 4 minutes; and so one 4 times -- 32 min total ) also is very helpful exercise to reduce the level of aggressiveness and anger. Swimming is another highly recommended exercise.  Generally spending some time near the water tend to help many people.
     

  2. Tactfulness in interpersonal relations (see Tactful communication, Diplomatic Communication, Negative Politeness). This trait can't be overestimated. For married couples, tact can avoid one of the main problem in long unemployment - stress and possible dissolution of the marriage. No matter how hard your try to compensate this is a huge hit for your self-esteem and the truth is such a hit encourages some maladjusted compensation mechanisms and first of all excessive aggression toward family members. You need to resist this tendency. The single best prediction of marital longevity is that both partners are kind and emotionally generous to each other. But this is easier said that done is such situation as long unemployment. Those who feel appreciated and valued by thier spouse may feel more committed to their marriage and have more positive outlook on overcoming existing difficulties. 
     
  3. Effective conflict resolution skills, especially in marriage, as marriage comes under stress during period of long unemployment. See Conflict Couple A Dialectical Behavior Therapy Guide to Finding Peace.  It is better to assume part of household hours to help the other partner. Nothing destructs a person so much and so quickly as prolong period of idleness and even routine tasks related to home that you can take from your spouse are beneficial in adaptation. Consider it to be a new part time job.  Expect and prepare to problems in your marital life (Marriage and unemployment). In fact, unemployment stimulates transition of a pre-existing marital conflict into the state when spouses are separated emotionally but not physically, or  became “upstairs/downstairs” couples who are estranged, but share the same house. This is a real danger during long unemployment.
     
  4. Stoicism, ability to withstand hardships with honor, without betrayal of yourself and those who are close to you. The key idea if stoicism is that  "virtue is sufficient for happiness". Such an attitude stresses the value an inner freedom in the face of the external, often hostile world. Stoicism teaches the development of self-control and fortitude as a means of overcoming destructive emotions such lust and greed; the philosophy holds that becoming a clear and unbiased thinker allows one to better understand yourself and thus overcome hardships without betrayal of yourself and those who are close to you. As Seneca said "The point is, not how long you live, but how nobly you live." Admiral James Stockdale, who was shot down over North Vietnam, held as a prisoner and repeatedly tortured was deeply influenced by Epictetus after being introduced to his works while at Stanford University. As he parachuted down from his plane, he reportedly said to himself "I'm leaving the world of technology and entering the world of Epictetus!" The same word can be repeated by IT specialist who are over 50 and became unemployed.  Practicing  Stoicism is an active process of preparation to overcome negative influence of hardships with honor  (and viewing hardships as a test that God send to evaluate a person) and acquiring deeper self-knowledge in the process (see below)
     
  5. The sense of humor.  The sense of humor is really important for survival in such circumstances. Sense of humor  serves as an important safety valve, preventing depression.  The future can be scary, but people with the sense of humor adapt easer to harsh conditions.  We often cannot predict how we will be feeling – our level of emotional stability.  Again, I would like to stress, that the sense of humor serves as a safety valve in this cases, and  really help to prevent depression caused by such circumstances.
     
  6. The ability to be easily entertained and  fight the sense of boredom.   This is an interesting observation: the easier one can fight the sense of boredom, the better are chances he/she has to survive long unemployment without emotional scars.  As Nansen frequently wrote in his journal, to survive isolation and confinement, one must learn to be idle without feeling guilty (BOLD ENDEAVORS, p.261)  See below You will survive: Fight the sense of isolation and related higher level of aggression I remember the story of one prisoner whom only entertainment in solitary confinement to observe a female rat in his cell. He observed how she behaved, gave birth, etc and noted that he probably would not survived without this strange companion of his confinement.  And this situation with excessive boredom is not limited to people with the long term unemployment problem.  It is pretty common for example for actors too.  Linda Fiorentino  who played the famous female sociopath character in  The Last Seduction once observed "As actors, the thing we have to fight, more than even the business part of making movies, is boredom."   Temporary work, or even volunteering are important for the same reason. You can't wait for your best chance forever. This is also very similar to the situation actors find themselves. As Linda Fiorentino noted  "Sometimes I have to work because I need the money. You weigh the issues and ask yourself, "Can I wake up every morning and do this?"
     
  7. Ability to regulate and maintain healthy sleep.  Sleep is one thing that people over 50 can't take for grunted. Problems with sleep due to "toxic worry" further aggravate the level of aggressiveness, especially in men and are pretty common in such situations. Switching wake up hours to suit you natural internal clock might help. Now you have such a possibility.   Valerian root tablets (over the counter) can help. Not working on the computer for three hours before going to bed might help.
     
  8. Interest in keeping a regular log of events. That can be done either on computer on or by writing it in the form of lab journal (writing a regular journal make it easier to keep it private; in case of computer you need to use encrypted USB drive which is unlocked, for example, using fingerprint or code combination). That helps to view that situation as pretty cruel experiment that neoliberal society staged upon you, and gives you an ability see a bigger picture. The picture on the level above your personal problems. See Start a log book
     
  9. Maintaining proper (or may be even slight upscale) attire and useful work habits.  Well dressed people have higher self-esteem. As simple as that. That's an important fact that dictates that you need to be dressed up. For the same reason regular visits to the library revive your work routines. That also forces you to dress properly and helps with self-confidence  Public library can serve as a substitute for working place just for few hours a day and along with positive influence on self-confidence helps to fight the sense of isolation. The same role can play a course in your local community college (if you enroll in one course in it it is tax deductable; highly recommended). People are social animals in many respects (see Your Body Language Shapes Who You Are Amy Cuddy TED Talks - YouTube :-)  See also The importance of keeping yourself occupied

Like Arctic explorers with ship squeezed by ice which went down, you need to became an expect in survival in hostile environment and keeping the friendship of a few people you can rely upon. Isolated people die in Arctic really quick. The value of the ability to manage conflicts and to communicate tactfully in your current relationships increase tenfold in such situations:

It takes more skill, effort and commitment--and, at least in the short run, more stress--to face the challenge together with the other person involved in the dispute. Certainly it seems as if it would be easier to fight, withdraw, or give in. Yet in the long run, working through difficulties together will help us live a less stressful and more fulfilling life.

The value of stoicism in fighting consequences of a job loss


The secret of happiness, you see, is not found in seeking more, but in developing the capacity to enjoy less. – Socrates

Be content with what you have; rejoice in the way things are. When you realise there is nothing lacking, the whole world belongs to you. – Lao Tzu

It is not the man who has too little, but the man who craves more, that is poor. – Seneca

God, give me grace to accept with serenity
the things that cannot be changed,
Courage to change the things
which should be changed,
and the Wisdom to distinguish
the one from the other.
Living one day at a time,
Enjoying one moment at a time,
Accepting hardship as a pathway to peace,
Serenity Prayer - Wikipedia

Admiral James Stockdale, who was shot down over North Vietnam, held as a prisoner and repeatedly tortured was deeply influenced by Epictetus after being introduced to his works while at Stanford University. As he parachuted down from his plane, he reportedly said to himself "I'm leaving the world of technology and entering the world of Epictetus!" The same words can be repeated by  IT specialist who are over 50 and became unemployed: it is the ability to fight adversity that distinguishes real men from fakes.

Stoics teach us that not everything is under our control, not it should be. There are some things we have control over (our judgments, our own mental state) but for a  lot of things we do not exercise much control -- this is what the concept of destiny is about (external processes and objects, transformations of the society, like the USA conversion to neoliberalism in 1980th with banks running amok for quick profits, resulting from this social cataclysms like Great Recession or, worse,  civil war in some countries (all wars are bankers wars)). Part of our unhappiness can be traced to confusing these two categories: thinking we have control over something that ultimately we do not.

The wisdom can can be viewed as the ability to distinguish things that we can control and those that we can not. This stoic attitude was aptly captured by American theologian Reinhold Niebuhr[ (1892–1971) in his famous Serenity Prayer:

God, give me grace to accept with serenity
the things that cannot be changed,
Courage to change the things
which should be changed,
and the Wisdom to distinguish
the one from the other.
Living one day at a time,
Enjoying one moment at a time,
Accepting hardship as a pathway to peace,

Loss of job is a severe hit for a person no matter young or old. A hit comparable in its effects with the dissolution of the marriage or a death or a jail term of a close relative. In other words it is a traumatic event with negative long term consequences.  Among them:

But you have the ability to minimize them. Stoicism is a philosophy of life that might help, at least for some people,  is those circumstances. It tried to address the problem of loss of self-esteem but reformulating it from the the "dimension" of possession to the dimension of personal courage.  After all if everything if gone a man can quit the life voluntarily. That means that he should be able to fight to last breath against even uneven adds.  The key idea of stoicism is that  "personal virtue and courage in adversity, courage in fight against uneven odds is sufficient for maintaining high self-esteem". 

In other words stoicism reasserts  human dignity as the ability to fight the external, often hostile world. Stoicism teaches the development of self-control and fortitude as a means of overcoming destructive emotions such desperation, lust and greed; the philosophy holds that the ability to see clearly your circumstances and fight them to the extent you can  is an achievement in itself, toward which we all should strive.  No matter what is the outcome of this fight. The Stoics taught that we fail far more often than we succeed, that to be human is to be fearful, selfish, and angry far more often than we’d like. But they also taught a realistic way to be less fearful, less selfish, and less angry.  It also teaches to prepare for adversity and do not expect that your life with be smooth sailing to the very end.

In addition to this "glorification of human courage in fighting adversity" stoics also strive  "to be free from anger, envy, and jealousy" (The Stoic ideal of dispassion is accepted to this day as the perfect moral state by the Eastern Orthodox Church). AS value of a person is in his inner properties , stoics teach to accept everybody as "equals, because all men alike are products of nature." In ancient world this was an innovative, rebelous postulates. Related to social status of unemployment is remains to be so even now. In their view the external differences which are considered of such primary importance in Western civilization, such as rank and wealth should not be primary criteria of judging others, not they should the primary goals in your life, or of primary importance in social relationships

After all it is the idea of capitalism to deprive part of the population from meaning full employment to increase obedience of theirs. Neoliberalism requires that employees sell their labor as a condition of survival. Nothing more, nothing less. The "entrepreneur" can exert power by denying access to work, hence income, hence survival. Watch "Office space" which provides a pretty realistic picture how fear of loss of employment paralyzes even young, rebellious people, making the easy prey to any corporate sociopath. The state has the ability to enforce this social order by "brute force”  and in modern times, when social safety nets are weak routinely destroys efforts of the remnants of organized labor to defend employees rights. And neoliberalism  is certainly remains the preferred order among Western elites. All in all "it is not your fault". Seriously.

In the words of Epictetus (note that the word happiness here has slightly different meaning then in regular English language), you can be  "sick and yet happy, in peril and yet happy, dying and yet happy, in exile and happy, in disgrace and happy..." If we assume that "happiness" means here the ability to maintain high self-esteem this quote might be more understandable. Stoic ethics stressed the rule: "Follow where reason leads." One must therefore strive to be free of the distortions caused by "passions", bearing in mind that the ancient meaning of "passion" was more close to contemporary words "emotions",  "anguish" or "suffering", that is, "passive reaction to external events, which is different from the modern use of the word. In other words you need the ability to dispassionately and persistently "stay the course" after you had chosen it with all the wisdom you are capable of; it is about "who controls whom.": either you control your your emotions, or your emotions control you. 

The four cardinal virtues of the Stoic philosophy are: wisdom (Sophia), courage (Andreia), justice (Dikaiosyne), and temperance (Sophrosyne).  The ability to fight in adversarial conditions considered to be a virtue.  This stoical sentiment with more stress on desire to fight the adversity to the bitter end despite uneven odds was expressed in old Russian song Varyag (the cruiser  that became  became famous for her crew's stoicism at the Battle of Chemulpo Bay when she alone tried to break the blockade of the port by the whole Japanese fleet)

All to the upper deck and man your battle posts,
The last battle for our ship is coming
Our proud "Varyag" will not surrender to the enemy,
And none of us want their mercy.

But this situation needs a different type of courage, then military courage required to face overwhelming enemy force and fight to the bitter end despite low or even non-existent odds of the victory and survival. Unlike military battles, unemployment can last for years. So endurance comes to the front. This is more like prolonged war, then a single battle.

Unemployment also press people to get into compromises they would never get otherwise. Stoics teach that a person should strive to be just and moral in an unjust and immoral world (see also Reinhold Niebuhr's book Moral Man and Immoral Society) despite all odds:

"Moral Man and Immoral Society", by Reinhold Neibhur, was published during the years of the Great Depression. In this work, Reinhold asserts the requirement of politics in the fight for social justice because of the depravity of human nature, that is, the arrogance of human beings. Neibur sees the flaws of the mind when it comes to solving social injustice by moral and wise means, "since reason is always the servant of interest in a social situation". This is his judgment of liberal Christian doctrine, which fully believes in the intellectual ability of humans to make themselves be good, and he admits this vulnerability as our existence. In other words, Neibhur accurately saw the evil of systems in society and its empty endeavors to better individuals and their insufficiencies.

Neibhur warns us about adopting "herd mentalities." According to him, individuals are morally able to think of the interests of others above themselves. That is, human beings can be kind. Societies, however, find it essentially impossible to manage intelligently the competing interests of subgroups. Societies, he contends, effectively gather up only individuals' selfish impulses, not their abilities for charitable thoughtfulness toward others.

According to Niebuhr, this group egocentricity of individuals-in-groups is immensely powerful. "In every human group there is less reason to guide and to check impulse, less capacity for self-transcendence, less ability to comprehend the needs of others, therefore more unrestrained egoism than the individuals, who compose the group, reveal in their personal relationships".

Avoidance of fight for justice is viewed by stoics a rejection of one's social duty. Stoic philosophical and spiritual practices included  contemplation of hardship, training to value the life as it is (similar to some forms of Eastern meditation), and daily reflection on everyday problems and possible solutions (by keeping a diary). Practicing  Stoicism is an active process of preparation to overcome  hardships that your destiny could send upon you with honor and courage  (and viewing hardships as a test that God send to evaluate a person). As well as acquiring deeper self-knowledge and the knowledge of the society in the process.

In his Meditations (which were not written for print, but as a  personal diary) Marcus Aurelius defines several such practices. For example, in Book II.I:

Say to yourself in the early morning: I shall meet today ungrateful, violent, treacherous, envious, uncharitable men. All of the ignorance of real good and ill... I can neither be harmed by any of them, for no man will involve me in wrong, nor can I be angry with my kinsman, or hate him; for we have come into the world to work together...

It was stoicism that gave mankind the idea if equality of all men. In this situation it applies to those who suffer from the long term unemployment. Below are some quotations from major Stoic philosophers, selected to illustrate common Stoic beliefs:

Epictetus:

Marcus Aurelius:

Seneca the Younger:

A good introduction to Stoicism can be found in A Guide to the Good Life by William B. Irvine. Here are some Amazon reviews of the book:

...Readers learn how to minimize worry, how to let go of the past and focus our efforts on the things we can control, and how to deal with insults, grief, old age, and the distracting temptations of fame and fortune.

We learn from Marcus Aurelius the importance of prizing only things of true value, and from Epictetus we learn how to be more content with what we have.

Finally, A Guide to the Good Life shows readers how to become thoughtful observers of their own life. If we watch ourselves as we go about our daily business and later reflect on what we saw, we can better identify the sources of distress and eventually avoid that pain in our life...

David B Richman (Mesilla Park, NM USA)
The Best Introduction to an Ancient Philosophy, December 23, 2008 See all my reviews

A Guide to the Good Life: The Ancient Art of Stoic Joy (Hardcover)

I first read Marcus Aurelius' "Meditations" while flying to the eastern United States for a scientific meeting. It was during a rather difficult period in my life and I had picked up on "Meditations" because of a mention of this work by Edwin Way Teale in "Near Horizons" as a book he turned to in times of trouble.

I was not disappointed by these insightful notes written for his own use nearly 2000 years ago by the Roman Emperor and Stoic philosopher. It was thus that I was primed to read William B. Irvine's "A Guide to the Good Life: The Ancient Art of Stoic Joy." This is one of those books that can be really life changing, if the reader is ready for it.

Irvine briefly discusses the history of Stoic philosophy and its relationship to other philosophies in ancient Greece and Rome. He concentrates most of the book, however, on the Stoics of the Roman Empire, namely Seneca, Gaius Musonius Rufus, Epictetus and, of course, Marcus Aurelius. After his historical review Irvine spends some time on the practical aspects of Stoicism, including

  • negative visualization (visualizing how your life could be worse),
  • dichotomy of control (what we can and cannot control),
  • fatalism (about the past and present, not the future),
  • self-denial (putting off pleasure so as to appreciate it more when you have it),
  • duty (what we owe to others),
  • social relations (how we relate to others),
  • insults (how to react to them),
  • grief (how to deal with loss),
  • anger (how to turn it to humor),
  • personal values (how to deal with fame and fortune, or the lack thereof),
  • old age (how to deal with the aging process),
  • and dying (how to prepare for this certainty).

The last part of the book is devoted to the practice of Stoicism in the modern world, with both its pluses and minuses.

Although I would have to practice a modified Stoicism (I doubt that most of us would like to sleep even occasionally on a board or give up sex except for procreation), there is much of Stoicism that we can use in the modern world.

Unlike the Cynics who slept on boards all the time and generally followed ascetic practices, Stoics wanted to enjoy life and followed something akin to the Middle Way of Buddhism.

This attitude could certainly be of use to counter the worst of this "me first" society of rampant consumerism. In truth you really cannot take it with you when you die and to act like you can is the height of folly.

This book is a fascinating exposition of Stoic philosophy and its possible uses in the present day. The current economic collapse and other disasters of modern living could be a fertile ground for a revival of Stoic ideas. I also recommend it as a refreshing antidote for the hectic modern world in general. Take what is useful, and leave the rest, but read it if you would live deliberately and thus be free!

Secular stagnation of the economy

The world  entered a period of economic stagnation. American middle class families now earn less and have a lower net worth than before the Great Recession.  For individuals, this translates into less savings at the age of 50. Both in 401K and in accounts outside 401K, such as Roth or regular investment account, such as Vanguard. That means that "downsizing" in case of chronic unemployment need to go deeper and be more painful. To raise funds you not only need to change your house for apartment (a good move when you children are grown up in any case) bu take other measures, like getting rid off of extra car, boat, etc. 

Rising unemployment level of IT professional over 50 is just a tip of the iceberg of multiple problems caused by secular stagnation.  Here is a short description:

Secular Stagnation is a term proposed by Keynesian economist Alvin Hansen back in the 1930s to explain America’s dismal economic performance — in which sluggish growth and output, and employment levels well below potential, coincide with a problematically low (even negative) real interest rates even in the face of extraordinarily easy monetary policy. This is stagnation that lasts longer period then the business cycle (also called Japanification of economy). It looks like a suppression of economic performance for long (aka secular) period of time.

The global stagnation we are experiencing is the logical result of dominance of neoliberalism and a sign of its crisis an a ideology, somewhat similar to the crisis of Bolshevik's ideology in the USSR in 60th when everybody realized that the existing society cannot fulfill the key promise of higher living standards and that over centralization of economic life naturally lead to stagnation.  Analogy does not ends here, but this point is the most important.

Neoliberalism replaced over-centralization (with iron fist one party rule) with over-financialization (with iron fist rule of financial oligarchy), with generally the same result as for the economy ( In other words neoliberalism like bolshevism is equal to economic stagnation; extremes meet).  End of cheap oil did not help either. In a sense neoliberalism might be viewed as the elite reaction to the end of cheap oil, when it became clear that there are no enough cookies for everyone.

This growth in the financial sector's profits has not been an accident; it is the result of  engineered shift in the elite thinking, which changed government policies. The central question of politics is, in my view, "Who has a right to live and who does not".  In the answer to this question, neoliberal subscribes to Social Darwinism: citizens should be given much less rather than more social protection. Such  policies would have been impossible in 50th and 60th (A Short History of Neo-liberalism)

In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard neo-liberal toolkit, you would have been laughed off the stage at or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist.

The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience.

And this change in government polices was achieved in classic Bolsheviks coup d'état way via forming first the Party of "professional neoliberal revolutionaries" who pushed for this change. The crisis of "New Deal capitalism" helped, but without network of think tanks and rich donors, the triumph of neoliberalism in the USA would have been impossible:

...one explanation for this triumph of neo-liberalism and the economic, political, social and ecological disasters that go with it is that neo-liberals have bought and paid for their own vicious and regressive "Great Transformation". They have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.

Most economists are acutely aware of the increasing role in economic life of financial markets, institutions and operations and the pursuit of profits via exotic instruments such as derivatives (all this constituted  financialization). This dominant feature of neoliberalism has huge the re-distributional implications, huge effects on the US economy, international dimensions and monetary system, depth and longevity of financial crises and unapt policy responses to them.

They have built this highly efficient ideological cadre because they understand what the Italian Marxist thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you can occupy peoples' heads, their hearts and their hands will follow.

I do not have time to give you details here, but believe me, the ideological and promotional work of the right has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us.  

Neoliberalism naturally leads to secular stagnation due to redistribution of wealth up. which undermines purchasing power of the 99%, or more correctly 99.9 of the population. In the USA this topic became hotly debated theme in establishment circles after Summers speech in 2013.  Unfortunately it was suppressed in Presidential campaign of 2016. Please note that Sanders speaks about Wall Street shenanigans, but not about ideology of neoliberalism.  No candidates tried to address this problem of "self-colonization" of the USA, which is probably crucial to "making America great again" instead of continued slide into what is called "banana republic" coined by American writer O. Henry (William Sydney Porter 1862–1910). Here is how Wikipedia described the term:

Banana republic or banana state is a pejorative political science term for politically unstable countries in Latin America whose economies are largely dependent on exporting a limited-resource product, e.g. bananas. It typically has stratified social classes, including a large, impoverished working class and a ruling plutocracy of business, political, and military elites.[1] This politico-economic oligarchy controls the primary-sector productions to exploit the country's economy.[2]

... ... ...

In economics, a banana republic is a country operated as a commercial enterprise for private profit, effected by a collusion between the State and favoured monopolies, in which the profit derived from the private exploitation of public lands is private property, while the debts incurred thereby are a public responsibility.

This topic is of great importance to the US elite because the USA is the citadel of  Neoliberalism. It also suggest that the natural way neoliberal economic system based on increasing of the level of inequality (redistribution of wealth up) should behave: after the initial economic boom (like in case of steroids use) caused by  financialization of economy (as well as dissolution of the USSR), helped by off-shoring of manufacturing, the destructive effects of this temporary boost come into foreground. Redistribution of wealth up increases inequality which after a certain delay starts to undercuts domestic demand. It also tilts the demand more toward conspicuous consumption (note the boom of luxury cars sales in the USA).  

But after  inequality reaches certain critical threshold  the economy faces extended period of low growth reflecting persistently weak private demand (purchasing power of lower 90% of population).  People who mostly have low level service economy jobs (aka MC-jobs) can't buy that much.  Earlier giants of American capitalism like Ford understood that, but Wall Street sharks do not and does not want.  They operate under principle "Aprčs nous le déluge" ("After us, the deluge").

An economic cycle enters recession when total spending falls below expected by producers and they realize that production level is too high relative to demand. What we have under Neoliberalism is Marx's crisis of overproduction on a new level. At this level it is intrinsically connected with the parasitic nature of complete financialization of the economy. The focus on monetary policy and the failure to enact fiscal policy options is the key structural defect of Neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hits the USA. That might not happen soon.  Bolshevism lasted more then 70 years. If we assume that the "age of Neoliberalism" started at 1973 with Pinochet coup d'état in Chile, Neoliberalism as a social system is just 43 years old (as of 2016). It still has some "time to live"(TTL) in zombies state due to the principle first formulated by Margaret Thatcher as TINA ("There Is No Alternative") -- the main competitor, bolshevism, was discredited by the collapse of the USSR and China leadership adoption of neoliberalism. While Soviet leadership simply abandoned the sinking ship and became Nouveau riche in a neoliberal society that followed, Chinese elite managed to preserved at least outer framework of the Marxist state and the political control of the Communist party (not clear for how long). But there was a neoliberal transformation of Chinese economy, initiated, paradoxically, by the Chinese Communist Party.

Currently, no other ideology, including old "New Deal" ideology can  compete with neoliberal ideology, although things started to change with Sanders campaign in the USA on  the left and Trump campaign on the right. Most of what we see as a negative reaction to neoliberalism in Europe generally falls into the domain of cultural nationalism.    

The 2008 financial crisis, while discrediting Neoliberalism as an ideology (in the same way as WWII discredited Bolshevism), was clearly not enough for the abandonment of this ideology. Actually Neoliberalism proved to be remarkably resilient after this crisis. Some researchers claim that it entered "zombie state" and became more bloodthirsty and ruthless.

There is also religious overtones of Neoliberalism which increase its longevity (similar to Trotskyism, and neoliberalism can be called "Trotskyism for rich"). So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important of all, its hell for heathen and sinners who dare to contest the revealed truth.  Like in most cults adherents became more fanatical believers after the prophecy did not materialized. The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature of the US economy, not a transitory state.

But there is another factor in play here: combination of peak (aka "plato" ;-) oil and established correlation of  the speed of economic growth and prices on fossil fuels and first of all on oil. Oil provides more than a third of the energy we use on the planet every day, more than any other energy source (How High Oil Prices Will Permanently Cap Economic Growth - Bloomberg). It is dominant fuel for transport and in this role it is very difficult to replace. 

That means that a substantial increase of price of oil acts as a fundamental limiting factor for economic growth. And "end of cheap oil" simply means that any increase of supply of oil to support growing population on the planet and economic growth now requires higher prices. Which naturally undermine economic growth, unless massive injection of currency are instituted. that probably was the factor that prevented slide of the US economy into the recession in 2009-2012.  Such a Catch-22.

Growth dampening potential of over $100-a-barrel oil is now a well established factor. Unfortunately, the reverse is not true. Drop of oil price to below $50 as happened in late 2014 and first half of 2015 did not increase growth rate of the USA economy. It might simply prevented it from sliding it into another phase of Great Recession. Moreover when  economies activity drops, less oil is needed.  Enter permanent stagnation.

Also there is not much oil left that can be profitably extracted at prices below $80. So the current oil price slump is a temporary phenomenon, whether it was engineered, or is a mixture of factors including temporary overcapacity . Sooner or later oil prices should return to level "above $80", as only at this level of oil price capital expenditures in new production make sense. That des not mean that oil prices can't be suppressed for another year or even two, but as Herbert Stein aptly noted   "If something cannot go on forever, it will stop,"

Move to the cloud, lumpenization of IT and degeneration of IT brass

Currently the "conversion to the cloud" in the latest IT fashion. and under this sauce a lot of salaried jobs in IT are eliminated.  Technically speaking this just a new flavor of outsourcing.  While such a move have some technical merits:

But for everything else this is not "one size fit all" type of solution. As soon as the service requires considerable bandwidth (such as backup) it became really brittle after move into the cloud.  Also large provider which enjoy economy of scale (such a Google with Gmail or Amazon cloud, Microsoft or Web hosting companies) typically often experience periodic catastrophic outages just became of their huge scale: at such scale even minor mistake can has unpredictable consequences.  And there is nothing, absolutely nothing that you can change in such a situation, if your services are outsourced.  You is just one of many customers and as such there is no special loyanty toward you from the cloud provider staff. Unless you regular employees they do not care much about your company.  See "Everything in the Cloud" Utopia

But it does not matter for IT brass. In reality this conversion is used as an opening salvo in an attack of "traditional", salaried  IT workforce. Which are first transferred to the "cloud provider" and them partially eliminated when datacenter change hands due to "move to the cloud". Many of the older folds choose to retire (and that doubles the value of sound handling of your 401K -- think about it not so much as retirement fund, but more as a private unemployment insurance).  Combining some income stream from 401K and a low paying job helps to survive this adversity

The trend  under Neoliberalism is unmistakable: temps and contractors gradually displace permanent (salaried) employees, top brass gets richer and richer.  Less qualified and lower paid personnel with less benefits gradually is replacing old workforce, whenever such change is even marginally possible. Management gets outsized bonuses.  That's why large companies now are hunting for the opportunity to "convert datacenter to the cloud". 

In reality the conversion to the cloud is used as an opening salvo in an attack of "traditional", salaried IT workforce. Which are first transferred to the "cloud outsourcer" and them partially eliminated  when datacenter change hands. Many older folds choose to retire (and that double the value of sound handling of your 401K -- think about it not so much as retirement fund, but more as a private unemployment insurance).  Combining some income stream from 401K and a low paying job helps to survive this adversity.

The trend toward less qualification in IT (aka "lumpenization of IT") as also connected with the fact that as university graduates get into mature stage of development of major technologies and did not experience the emerging of all those technologies as old-timers did, unless they were amateur enthusiasts who tried to build their own computers and experimented with such OSes as MS DOS and Linux in school. That often means that they have less unique,  "in-depth" knowledge of technologies and processes that old-timers, which they acquired  by being the first hand witnesses of the  evolution of IT to the present level. As such they are more predisposed to use "packaged" solutions.

But of course there are old-timers and old-timers. Large swat of IT old-times are accidental people which moved to the field during boom years of IT (say, 1990-1998). Many of them  have neither native talent which drove "real" old-timers into IT from other specialties (often physics, or electrical engineering), nor computer science university degree which allow to see a bigger picture. Such people are just barely competent despite all the advantages cited above that their entrance at the field at the early stage of development of many important technologies (and first of all web-based technologies) provides. 

At the same time the concerns about reliability and downtime are not as simple as having old seasoned workforce on the payroll. A new generation of IT workers (mostly part-time and lower paid guys from outsourcers) is not greatly affecting network or server reliability in a negative way. May be something does happen on the margins. But major business disruptions coused by the ground floor incompetence looks completely remote to me. More often such cases are caused by gross incompetence of the top brass.

Paradoxically with the current level of hardware and software technology this new temp workers and contractors might be adequate to maintaining status quo. Its completely other game with the development of something new, but just maintaining existing services much like maining electrical network does not requires much talent and dedication. Business can survive with completely outsourced IT, if all they need are basic services. And many businesses unfortunately belongs to this type.  Of cause, everything became slow like running in the dense mud, but services somehow function and the enterprise does not collapse. Also both hardware and software architecture itself became more resilient for reasons external to the datacenter technologies used. For example, if company mail and phone network are down, people still can communicate using their cell phones SMS messages and web based personal accounts (which is bad but those are extraordinary circumstances which require extraordinary measures are better then nothing)

Another trend is that due to commodization of the technology the IT support on the level of the firm now matters less. Actually much less: any complex issues are delegated and solved by vendor support, or professional consultants. Enterprise software also became more or less standardized. Of course this is not applicable to research labs and such, but regular corporate office now runs predictable mixture of standard software suits and components including Microsoft Office, some database (Oracle or Microsoft SQL of both), backup software and storage area network, helpdesk software, datacenter monitoring software, videoconferencing software, and so on. Operating systems re also pretty much standardized: only a half dozen of operating systems such as VMware, Windows, RHEL, and SLES (with some remands of Solaris, HP-UX, AIX and remnants of mainframes OSes). Mail, DNS, proxy, firewall, NFS servers now are often implemented as appliances. 

Where  huge, damaging to the company, blunders are now made is at senior level, where the IT brass became completely detached from technology (and often from reality). In large companies, now there are way too many technically illiterate bean counters who were promoted to senior IT positions. What is important to understand is that they rely mainly on fashion (and vendor hype as well as good old bribing) in adopting new technologies for the firm. Recently misguided security efforts became a major threat to stability of the enterprise IT. In somw cases causing almost paralyses. And security for some reason attract the most incompetent careerists and "good-for-nothing" type of specialists. One typical "corporate excess" is preoccupation with firewalls. 

But contrary to the speculation about the demise of IT from the IT brass incompetence, the net result of that looks stupid and highly questionable from the ground floor are just modest cost overruns almost unnoticeable for the firm.  Nothing to be exited about. Something that should probably cost  $100K is bought for $200K or, in rare cases (if you buy from IBM ;-)  $300K. Plus additional 10-20% in annual maintenance fees. That's about it. So the level of inefficiency is not that great. Nothing in comparison with DoD. 

Please remember the cost of IT is generally around 1% of the total cost of the operation of a large company. Most often slightly less then 1%. So at the scale of the firm all those cost overruns is just a rounding error.

You should not consider your situation as your personal fault


You only have power over people so long as you don't take everything away from them. But when you've robbed a man of everything, he's no longer in your power - he's free again.

-- Aleksandr Solzhenitsyn

Man goes to doctor. Says he's depressed. Says life seems harsh and cruel. Says he feels all alone in a threatening world where what lies ahead is vague and uncertain. Doctor says, "Treatment is simple. Great clown Pagliacci is in town tonight. Go and see him. That should pick you up." Man bursts into tears. Says, "But doctor...I am Pagliacci."

You should view your situation is as a fight against unjust and cruel neoliberal society  which put you into neoliberal Gulag. In which human beings are considered consumer goods to be used and then discarded. And the guards is no less cruel and much better equipped then under Stalinism. Like prisoners in Gulag "masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape." (Pope Francis on danger of neoliberalism)

The social forces working toward shrinking of middle class have been building up for a while with the growth of neoliberalism. Among the the first and foremost factor here was the complete financialization of the economy (casino capitalism) and the steady rise in health costs and cost of university education. Due to this neoliberal transformation which meant redistribution of profits in favor of for the top 1% (much like in Gilded Age), not on the larger society,  outsourcing pressures are now huge. All those factors have hastened the demise of the safe, secure white-collar jobs, especially in IT.

Under neoliberalism the wealthy and their academic servants, see inequality as a noble outcome. They want to further enrich top 1%, shrink middle class making it less secure, and completely impoverish poor limiting payment to them to what is needed for bare survival (actually for some category of worker Wal-Mart and other retailers already pay less then that). In other words they promote under the disguise of "free market" Newspeak a type of economy which can be called a plantation economy. Or XIX century economy if you want. In this type of the economy all the resources and power are in the hands of a wealthy planter class who then gives preference for easy jobs and the easy life to their loyal toadies.

The wealthy elites like cheap labor. And it's much easier to  dictate their conditions of employment when unemployment is high. Keynesian economics values the middle class and does not value unemployment or cheap labor. Neoliberals like a system that rewards them for their loyalty to the top 1% with an easier life than they otherwise merit (look at academic economists as a good example of this trend ;-).  In a meritocracy where individuals receive public goods and services that allow them to compete on a level playing field, many neoliberal toadies would be losers who cannot compete.

Despite the neoliberal obsession with wage suppression via outsourcing, history suggests that such a policy is self-destructive, especially in high-tech industries. High wages promote both loyalty and rapid technological change that the US Information technology industry was famous for.  Now smell of "socialist enterprise" with its slogan "they pretend that they pay us, we pretend that we work" is distinctly felt in many large corporation with outsourced/offshored IT. Helpdesk tickets travel for several days, instead of resolution problems are swiped under the carpet, employees are unable to get qualified help and resort to creation of "shadow IT". And so on.

There are two major trends in job market under neoliberalism that hit especially hard older IT professionals:

One of the most important measures of the health of an economy is the following criteria: how many fulfilling, living-wage jobs are created or destroyed (most other economic factors can be distilled to this.). For example, widely used measure of economic growth, GDP is too influenced by financial masturbation and does not distinguish useful activity from harmful or irrelevant.  From this point of view we could describe the current economic system as Crapitalism, which treats ordinary people and lower level professionals as crap.

One of the most important measures of the health of an economy is the following criteria: how many fulfilling, living-wage jobs are created or destroyed (most other economic factors can be distilled to this.).

We live in a society where it's hard to maintain self-respect if you don't have a job. If you've been unemployed and are over 50 you already know this, but if you haven't, here's a news flash: Coping with prolonged joblessness is a very challenging and personally difficult task. Being unemployed is a stigma in the US neoliberal society, and being unemployed and over 50 is a double stigma. Those who are over 50 need to face subtle -- and not so subtle -- biases including hidden caveats on job ads for positions. 

Being unemployed is a stigma in the US neoliberal society, and being unemployed and over 50 is a double stigma (being young is a virtue under neoliberalism). Those who are over 50 need to face subtle -- and not so subtle -- biases including hidden caveats in job ads for relevant  positions.

And BTW the current laws don't prohibit discrimination against the jobless. As was aptly observed in Even Harvard couldn't protect me

Strikingly, no other circumstance triggers a larger decline in well-being and mental health than involuntary joblessness.

Only the death of a spouse compares.

The quest for ever higher degree of efficiency and dominance of neoliberalism as an ideology makes such a  society (and by extension the economy) extraordinarily brittle. And IT is on the forefront of this process. They essentially are destroying IT as we know it. Good, long lasting, full time jobs IT start to disappear, while percentage of IT temp jobs and low paid entry level jobs increased dramatically. Often the attitude toward older It professionals is highly negative:

"...older people are too much trouble.” When pressed on that statement, she continued, “You older folks know too much. You call us out on the BS — that every big outfit uses to keep the kids in line. Face it, you’re a threat to the system.” Evidently, overqualified also means having a social conscience today. I do pity the young folks today though. They’re growing up in a new Dickensian Age.

It does not help that white collar and professional jobs in general and IT jobs in particular are now being lost in the USA due to outsourcing. In a very deep sense many things in IT become either based on external support (and sometimes external infrastructure like in overhyped "cloud computing") or project-based with people hired at the beginning and said good by at the end. In this environment, losing a full time IT position for a person over 50 means significant hardship, as he is essentially forced by the new employment situation into temp labor pool.  As a result older IT specialist suffer a double hit -- a dramatic decline of earnings and effects of adverse selection of unemployed professionals over 50 making finding any new job a real challenge. 

A person over 50  is essentially forced by the new employment situation into temp labor pool.  As a result older IT specialist suffer a double hit -- a dramatic decline of earnings and effects of adverse selection of unemployed professionals over 50 making finding any new job a real challenge. 

The term adverse selection refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information (i.e. access to different information). In this case the "inferior" products or services are more likely to be selected. As AARP noted: 

One report citing September figures noted, “Good News for Older Jobseekers Remains Elusive.” That’s one way to put it. Depressing might be another—especially if you’ve been out of work for more than a year.

“Will I ever work again?” is a common thought for unemployed people over 50, many of whom have been jobless for an average of 55 weeks. A group called Over 50 and Out of Work featuries 100 video stories on its web site to help others understand the plight of the unemployed at 50+.

Perma-temp is now a new perm for those who no longer can find full time job. You can't change the society in which you live. At least by yourself (that does not mean that you should vote for those who promote neoliberalism, which is the root case of this situation). And while you can and probably should make your voice and frustration heard via voting, on the individual day-to-day level the best philosophy to deal with this situation is Stoicism.

The fact on the ground is that IT environment as a whole seems to be thumped by "ageism" in a higher proportion than even racism or sexism. Age discrimination in the private sector IT is growing as range of candidates is vast when unemployment is high and younger employees are more malleable and controllable. Look at composition of staff of Google and, previously, at Microsoft.  It's all young people...

So situation when you are over 50 and unemployed is now pretty typical. In other word there is mass unemployment among IT professionals over 50 years old. If, despite all efforts, you got into this situation, you should try to take it easy. You are not the first and not the last who was thrown under the bus... 

Neoliberalism as a social system came as a replacement of New Deal and is about lowering standard of living of the middle class and dramatic raising the standard of living of the top 1%. This is what is happening now and It is just a part of bigger picture. You can change the society you live in. so don't take it to the heart. Other have been in this situation and survived, you will too.

This is the key point. You was thrown under the bus by neoliberal financial institutions of the country. Highly paid full time job in general and in IT  especially, are disappearing. Looks like the top 1% does not need middle class anymore and is content with Latin-American social structure of the society. So the process of Latin-americanization started we situation in It is a part of more general process of shrinking middle class.  The process which actually started decade or more ago. In other words, there is a profound, age-neutral economic transformation of the US economy: shredding large chunk of middle class jobs. For IT there are several additional powerful factors in play: commodization of IT, automation, which also affect IT jobs and, of course, outsourcing.

So people who are 50 now had the bad luck to reach their peak earning years during an economic perfect storm. Which was the recent "Great Recession" and its aftermath.

Also IT itself changes and despite the fact that most of the "cloud hype" is just hype, new technologies are gradually displacing older as hardware (especially Intel hardware) becomes more and more powerful and cheaper. Look at consolidation of OSes in Unix world into Linux as a telling example. "It's a true paradigm shift," says Karen Hochman, chair of the New York City chapter of MENG, all of whose 550 members have held top corporate jobs and half of whom are out of work.

"You've got hundreds of thousands of obsolete professionals who can't find employment in positions where they've been successful. These are people living off retirement savings 15 years before they were supposed to retire. They don't know what they're going to do."

Such understanding and mentality of a fighter for just cause can give one some additional moral strength which helps overcome the adverse situation. Mentality of a fighter for just cause, for human dignity,  greatly helps to maintain self-discipline, morale and physical condition. It gives another dimension to your physical exercises, attempt to maintain dignity and preserve a healthy lifestyle. And you should consider other is the same situation as allies that can help you, not as adversaries fighting like animals for few spots on the job market. Although you can't inflict even minor damage to neoliberals in Congress by your voting  in two party system, when both candidates competing for the job were already vetted by financial oligarchy via party "nomenclatura" (apparatchiks) mechanisms borrowed by neoliberalism from bolshevism (As George Carlin explained in his famous monologue the two party system protects interests of oligatchy extremly well  and you are f*cked no matter how you vote), it is your duty to explain to your friends and family that the situation in which you found yourself and help to navigate their choice  unless others, more radical, political actions can be taken (which sometimes is possible although such movements are either quickly "institualized" like Tea Party or suppressed like Occupy movement).  

You need to be aware that deindustrialization of the country and related job cuts often lead to long periods of unemployment, intermittent employment and/or underemployment, and the effects transcend simply the loss of pay, medical benefits and purchasing power. Financial strain creates stress, depression and family tensions, which can manifest in a variety of ways, from increased use of drugs and alcohol to suicide and domestic violence (The Social Costs of Deindustrialization):

...unemployment correlates with increased physical health problems. Reduced access to health care makes it less likely that displaced workers and their families will receive appropriate care. The mental and physical health costs of deindustrialization do not harm only pa­tients; increased demand for health care combined with decreased eco­nomic resources leads to health care workers and systems that are overburdened and ultimately unable to meet the community's needs.

Displaced workers, especially primary breadwinners, are likely to feel significant pressure and anxiety about providing for their families. But job loss causes more than just financial distress; work plays a key role in shaping individual identity and social relations. The loss of work can disrupt an individual's sense of self and his or her value and competence. As Al Gini writes, "To work is to be and not to work is not to be."42

... "anxiety, depression, and other forms of anguish may be the normal result of rational calculation of these life chances," according to Hamilton.47 Finding a new job does not entirely alleviate these fears, because the experience of being laid off can generate persistent fear about losing the next job. The security that workers once felt, especially those who worked for local companies that seemed to be dependable employers, disappears.

Neoliberalism as killing of human solidarity to enforce the rule of elite

Neoliberalism -- the ideological doctrine that market exchange is an ethic in itself, capable of acting as a guide for all human action -- has become dominant in both political thought and practice throughout much of the world since 1970 or so. It helped to crush communism in the USSR and largely displaced Marxism.

These problems are exacerbated by the loss of social networks under neoliberalism which openly process the law of jungel, the survival of the fittest for everybody execpt financial oligarchy ("masters of the universe" under neoliberalism). In other words they instill real "Homo homini lupus est" (a Latin saying  meaning "man is a wolf to [his fellow] man.")  ideology. And are pretty effective in that. 

Pope Francis recently took issue with neoliberalism and related pseudo theory called "trickle-down economics", which is designed to mask abject inequality usually created by neoliberal regimes (and resulting National Security State, where under the disguise of protecting citizens from terrorism  protects top 1% financial gains). He stressed that so-called supply side economics is a smoke screen for redistribution of wealth up by the financial oligarchy. As Eugene Patrick Devany noted in his comment to Paul Krugman's post The Case for Techno-optimism (Nov 27, 2013. NYT):

It seems that, "a persistent shortfall on the demand side" is a euphemism for the fact that half the population will remain near bankruptcy for quite sometime.

Pope Francis said two days ago

"To sustain a lifestyle which excludes others ... a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion ..."

One may consider the Pope less qualified to "pontificate" about technology than Prof. Krugman who "tracks technology" and sees that "smart machines are getting much better at interacting with the natural environment in all its complexity ... [and concluding] that a real transformative leap is somewhere over the horizon" Pope Francis said,

"This epochal change has been set in motion by the enormous qualitative, quantitative, rapid and cumulative advances occurring in the sciences and in technology, and by their instant application in different areas of nature and of life. We are in an age of knowledge and information, which has led to new and often anonymous kinds of power."

"This epochal change" seems to be a reference to "fear and desperation, even in the so-called rich countries" and to people forced to live "with precious little dignity".

The best description of supply side or “trickle down” economics I ever heard was by JK Galbraith:

“trickle down economics is the idea that if you feed the horse enough oats eventually some will pass through to the road for the sparrows.”

Here are several more relevant Pope Francis quotes:

... Such an [neoliberal] economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naďve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase; and in the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

The shift toward neoliberalism occurred in the 1970s because businesses and the super-rich began a process of political self-organization in the early 1970s that enabled them to pool their wealth and influence to achieve dominant political power and to capture administration.  As David Swan noted in his review  (E. David Swan's review of A Brief History of Neoliberalism)

From its founding America's wealthy have feared democracy recognizing that the majority, being poor and middle class, could vote to redistribute wealth and reduce the control held by the elites. After World War II, the middle class in the United States grew dramatically somewhat flattening the countries power base. As a reaction to this dispersal of power the early 1970's saw the formation of groups like The Business Roundtable, an organization of CEO's who were `committed to an aggressive pursuit of political power for the corporation'. As the author writes, `neoliberalization was from the very beginning a project to achieve the restoration of class power'. T

The neoliberal plan was to dissolve all forms of social solidarity in favor of individualism, private property, personal responsibility and family values. It fell on well funded think tanks like The Heritage Foundation to sell neoliberalism to the general public using political-philosophical arguments.

Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle which mimics the Bolsheviks organizational muscle. And  a bunch of Trotskyite turncoats such as James Burnham, who knew the political technology of bolshevism from the first hands, were probably helpful in polishing this edifice.  Carter and Clinton sold Democratic Party to the same forces.

This rise of special interests politics has been at the expense of the middle class including IT professionals.  And the neoliberal plan was "to dissolve all forms of social solidarity in favor of individualism, private property, personal responsibility and family values" proved to be a huge success. The whole generation is now completely poised/brainwashed by those ideas. No longer the USA can be viewed as a Christian county by any objective observer. Neoliberalism became a new dominant enforced by the state religions which displaced Christianity. Now we have what we have.

Understand your situation as a part of civil war inflicted on the society by neoliberalism

Consider yourself in war zone now. In a sense it is true as your survival is at risk and you can lose you "living space". That means that you need to access all resources you have and try to make the best of them. In more then one way a way you view yourselves to be in  a war zone now.  This is a civil war for the destruction of New Deal capitalism (Neoliberal Capitalism destroying Society)

It is a form of terrorism because it abstracts economics from ethics and social costs, makes a mockery of democracy, works to dismantle the welfare state, thrives on militarization, undermines any public sphere not governed by market values, and transforms people into commodities. Neoliberalism’s rigid emphasis on unfettered individualism, competitiveness and flexibility displaces compassion, sharing and a concern for the welfare of others. In doing so, it dissolves crucial social bonds and undermines the profound nature of social responsibility and its ensuing concern for others. In removing individuals from broader social obligations, it not only tears up social solidarities, it also promotes a kind of individualism that is almost pathological in its disdain for public goods, community, social provisions, and public values. Given its tendency to instrumentalize knowledge, it exhibits mistrust for thoughtfulness, complexity, and critical dialogue and in doing so contributes to a culture of stupidity and cruelty in which the dominant ethic is organized around the discourse of war and a survival of the fittest mentality. Neoliberalism is the antithesis of democracy. – Henry A. Giroux

Like in any war, for civilian to survive one need to rely on resources you managed to accumulate in "peace time" and first of all your savings. Nothing is sacred in this situation: neither you401K not your house. They are just source of funds to survive. They should not be viewed via the usual prism "Keeping up with Jones" anymore. forget about it.   Move might be necessary, and not necessary to the place with more jobs -- move to place with much loser expenses also makes perfect sense

The "buck up and get over it" is useless advice. It's silly to assume most people aren't doing the best they can. For people who are over 50 it's not about trying or not trying. This is about premature switch to part part employment., Possibly for the rest of  your working life (that means before you can get Social Security which is around 67 years old now). There's just so little available IT jobs out there, that your chances of getting one are not that great. That does not mean that you should not try your best. You should do you best and continue trying despite disappointment. Never give up.  But some modest attempt to create income stream should proceed outside your specialty after your unemployment benefits expire. Even  reselling something like used books, cellphones or computers on eBay beats feeling hopeless. That actually allow you to write one room of your house as business expense. Think about it.

Analyze available funds and view them as bullets left

Most fold at 50 have some equity in the house and some sizable 401K. This is now two sources of supplementary income that can tremendously help if all you can get is a low paid job.

Create spreadsheet with your current expenses (see Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime).  Cutting your current expenses to bare bones is a necessary step and the earlier you can do it, the better. It is important to not to go too far here and determine what percentage you can save without dramatically lowering your standard of living. Much depends what "emergency fund" you currently have. Please not that you can also "borrow" from 401K without penalty based of "hardship" provisions of US tax code.  It is a much better move that accumulation of credit card debt. 

You usually can sell some unused staff that you accumulated over the years on eBay. While it's not much money, there are some benefits for this as small business activity which can improve the level of your psychological comfort as you are feel engaged in some systematic activity.

Create a spreadsheet of your monthly expenses and analyze each item. Some steps that help to cut your expenses are easy.

There are several other ways to make your balance sheet more healthy depending on your situation and whether you rent or own the house or apartment.  For example, if community library is nearby, using it in can slightly cuts your air conditioning or heating costs.  Adding a thin film on your windows is another good step in the same direction. Now you have time to do this, at last. Amazon has a lot of low cost offering under such titles as  "Heat control Residential Windows Film",  "Sun control Window Firm". For example Gila LES361

For the examples table below shows monthly expenses obtained by downsizing your life style:

Item Monthly Annual
Total expenses 2470 29640
Rent 800 9600
Food 800 9600
Electricity and heating (if not in rent) 100 1200
Books and once course at community colledge 50 600
Medical Insurance (hospital only) 150 1800
Car amortization/repairs/etc (one car) 100 1200
Car insurance (one car) 100 1200
Gas/transportation 60 720
Other expenses (meals, washing cloth, dry cleaning, etc) 80 960
Drugs, Doctor visits and dental costs 100 1200
Job search expenses 50 600
Cable internet 40 480
Cell phone or tablet with cell connection plus 1GB traffic a month 40 480

The importance of keeping yourself occupied

Unemployment means boredom and it destroys the person morale and self-worth assessment. That means that it is important to keep yourself occupied. It does not really matter with what activity: Creation of personal website, carving some wood, teaching free classes in the library, helping relative and neighbors. Fred Glogower, the Navy psychologist who was responsible for screening all the US Antarctic personal in 90th, stated this point in a very clear way: "The key to successful winter-over at a station is to keep the people busy."

Experienced Antarctic managers strive to identify and assign worthwhile projects to crew members that can be completed within the period of isolation and confinement. Working towards an established goal, such as writing a new program or participating if creation of documentation for some open source project provides sense of accomplishment when the goal is achieved.

Clearly defined interim goals help to maintain the focus. Self-checks of your knowledge of Unix and scripting languages, rehearsing interview with family members, passing certification exam for RHEL or their Linux distribution, etc also can help to create that sense of mission. For this reason one need to to be aware of danger of low workloads and prepare countermeasures.

Some retraining should be considered, but without too much zeal

Among other things this new situation means that you might benefit from getting some new skills or improving an old one to be more viable on the marketplace to get back to work. But please do not bite nonsense about everyone needing to reinvent themselves.  The last think you need is $40K student debt.  In this case  taking a minimum wage position is out of the question for me since all my salary would actually go to pay my debt and I would not have money even for transportation back and forth to work.

EconomistNC,  May 5, 2015

As a former public servant teaching University Level Econometrics for nearly 15 years and possessing numerous 'Excellence' awards, this development is nothing short of shameful. I have had dozens of recruiters and HR 'specialists' debase my public service as not being 'Real World' experience despite the fact that without my commitment to 'Real World Applications' education, many of those with whom I apply for employment would not hold a college degree. Indeed, I find many of the hiring managers with whom I speak regarding positions for which I have both technical and applications experience, there is impenetrable discrimination once they meet me in person.

The point made in several articles of this nature revolve around lack of knowledge and experience with newer technologies. In an effort to address this issue, I went back to school (again) to obtain expertise in IT Networking and Security, PMP Path Project Management and ITIL. Now I am being told that my education is of no value since I do not have the requisite 'Real World' experience using these newly acquired skills.

Indeed, to meet the criteria for many positions I find open requires that I be a 'recent college graduate.' When I point out that I have been continually retraining and taking online courses to keep my IT skills current, I am once again met with the lack of 'Real World' experience requirement. For a society that purports itself to value education and hard work, for those among us that have worked very hard for substandard pay and benefits to be so casually cast aside is absolutely inexcusable.

Sill some, modern steps to adapt can and should be taken. For example, fashion rules in programming and system administration and getting a course or two for the latest fad can improve your prospects getting back to work. In community college it does not cost much money and expense is tax deductible. It is also interesting opportunity professionally as often in the corporate environment longtimers are pushed to the niche which is far from being interesting and sometimes represents a dead end for their former skills.

There are several programs which might  provide some minor financial assistance, but don't count on them too much. In any case tax deduction for one couse in the community college is yours to get.

Please understand that colleges also changed and "neoliberalized"  with money becoming primary driver of their activities. That means that many of them now are greedy money extracting machines which can capitalize of your distressed situation. Don't believe hype of magical retraining courses that charge $10K or more for a summer and teach almost nothing. This is a popular brand of  educational scams, nothing more, nothing less. And those "courses" are typically run by really ruthless education sharks. Time when in films college professor was a positive hero are long gone. Now they can well be just another variety of white color criminals. Please read the notes at Slightly Skeptical View on University Education.

In other words, if you are over 50 accumulation of education debt is gambling -- it does not really improve your chances of getting back to workforce due to age discrimination issues. Making a sizable investment in re-training with an uncertain outcome, without understanding full consequences and chances to get an entry level position in newly acquired field (and forget about any other level), might make your situation dramatically worse. See comment from hen3ry below.  You are warned...

Still there are several ways of getting positive return from educational institutions without spending much money:

I would like to mention also two related educational opportunities not directly connected to the college:

You can also try to find special federal and state programs that aid adults in returning to college. Look at website of Workforce Professionals, Employment & Training Administration (ETA) - U.S. Department of Labor. They usually provide better conditions and lower interest rate then private funding (see for example Trade Act Program TAA for Workers, Employment & Training Administration (ETA) - U.S. Department of Labor). Several community organizations and foundations provide assistance to adults going back to school. You may be eligible.  Check out associations and societies that offer scholarships and grants to older students.  If you are a female and/or a single parent there are programs and awards especially for this category.

Start a log book 

With the current complexity of the environment memory is no longer reliable store of your experience.  So create a log book and write down each evening the steps you have taken. Once a week write the review of the week and once a month write the review for the month. You will be surprised at the amount of times you step on the same rake and repeated unnecessary mistakes ;-).

Also that helps you to remember key things from one encounter from another. Logbook helps you to organize your memory and avoid repeating the same mistakes again and again.

You you use regular logbook put is somewhere were nobody else can read it. If you use computer put it on electronic USB drive with built-in encruption and iether fingerprint authentication or numeric code authentication. Log should remain private and never shared with anyone.  That extremely essential. 

Learn to get to the library each (or some) of mornings as a new working place

Use library as your new "temporary working place".  It can be a community library or nearby college library but you need to get out of house at  least for the first half of the day. This will help you in a way you don't anticipate.  First of all you can meet people, the second you preserve a resemblance of your usual schedule which positively affected your general psychological state and prevent depression which often accompany long tome unemployment. People need community just of preserving psychic health.

Just the fact you still need to get up in the morning, take a bath, have breakfast and your morning coffee, dress up and go has a strong positive influence. People are creatures of routine; don't break your current routine.  You can also save on air-conditioning going to the library at summer.

Pay attention to your attire when you are going to the library. Try to dress the way you used to dress going to work or slightly better. That keeps you in tonus as being well dressed provide strong implicit feedback to you and improve your self-confidence. Like people used to say "form liberates".

Electronic libraries as Oreily Safari is also a possibility but cost money. O'Reilly provides a short trial period that you can use as additional source of books. But nothing can substitute a real library when you are unemployed.

Enroll into one course in community college

This is a tax deductable expense. And for $400-$800 this is another opportunity to meet people and learn new skills. That also a very helpful for your psychological condition and greatly helps you stay mentally sharp.  If you worked in IT for a long time, you usually lost a lot of your knowledge due to limitations of your regular corporate job.

Now there is a chance to get some of those losses back. Programming course such as Unix shell course or C++ course while not necessary for you employment actually is a great way to relearn many useful thing and feel much better about yourself as you can compare yourself with other students.  In other words attending a college course increases your self-esteem, which is an important thing in your situation.

What is also extremely important is that your status as a student gives you access to the community college computer lab and community college library.  This is a pretty powerful learning environment in itself.

 

Create a home lab

Skilled became rusty if not used on a regular basis. You can recreate part of your former environment (and actually learn few new things is the process) by creating a home lab. Used tower computers from Dell such as Optiplex and workstations. They are very inexpensive and quite reliable. They can be bought for less then $150 each on eBay (with shipping).  4GB of RAM is more then enough to have very complex Linux setups including virtual machine setup. You can also buy used CISCO router or switch if this is part of your skills.

It is more difficult to accommodate your needs if in-addition to linux you managed Solaris o, AIX or HP-UX. But still it is possible, especially with Solaris on UltraSparc (and you can use Solaris on Intel instead).   Still even if you limit yourself to Linux it is better then nothing. 

In any case creating home linux infrastructure is no-brainer. You can have two or three linux boxes and one Solaris box. Install local DNS, DHCP, sendmail and other services. Create a "lab website". Install helpdesk or ticket tracking software. And you can enroll the help of your former colleagues for thing that you currently do not understand. 

Now you are ready to run some small development project or at least tinker with the boxes to prevent losing your skills.

You will survive: Fight the sense of isolation and related higher level of aggression

  It took all the strength I had not to fall apart
Kept trying hard to mend the peaces of my broken heart
I spent so many nights just feeling sorry for myself
I used to cry
But now I hold my head up high

Gloria Gaynor

Sense of isolation and desperation in finding a new job increase the level of aggressiveness in people. It's much like an animal which is being cornered. And this is strongly felt by family members, if any. Obeying simple guidelines might help

Humans can endure almost anything, but you need to be aware of typical pitfalls that develop in your situation. Material below is based on the book  BOLD ENDEAVORS, Chapter 18)

The primary lesson that can be learned form studying cases of long term unemployment is that humans are capable of enduring conditions far more austere financially and more challenging morally that initially planned. Your self-worse does not depend on the size of your salary. This is an important point.

People can adjust from change to living in a comfortable cabins on the ship to living in tent in Arctic. Their diaries reveal that members can remain cheerful and even had to remind themselves about their desperate situation.  Arctic expeditions prove that humans can endure unimaginable hardships when the survival is in stake. Humans also exhibited a remarkable capacity to adaptation to living on greatly reduced standard, incomparably lower that any unemployed face. Description o of the life in Nancen't hat on Frans Josef Land illustrate the extremes of human mental and physical endurance and should be a required reading.

the polar whaling industry during nineteen and early twentieth century is another example of people surviving under extremely austere and dangerous conditions,, The crews of sealing and wailing ships endure crowed and anti-sanitary conditions, bad food, harsh treatment and long period of boredom punctuated by now and then by hard work and danger.  Midshipman William Reynolds of the Wilkes Expedition described adaptability of sailors on one of his letters home in 1839 (BOLD ENDEAVORS, p 305):

As for bodily inconveniences, they are easily endured, and as long as extremes of endurance are not called for, all are disposed to make light of the present and trust to better luck in the future. Sailors are your true philosophers in these cases and never employ themselves in fancying their situation worse that it is,.

When you thing about such austere and difficult conditions as described in  BOLD ENDEAVORS,  long term unemployment does not look too bad of a situation anymore.

 

Church can be a valuable meeting place with people in the same situation

If you are a church goer, you can utilize this institution too. Church is one of the few place when your current situation does not have any stigma attached to it: religion is was created as an antipode to the Homo homini lupus est  attitude of the marketplace.

Moreover you can use it to create a group of people in similar situation which can a little bit help each other. Just communication with people in similar situation helps.

Checking your friends for job opportunities in their companies

It is a trivial advice, but important nuance is that you should not do it as the first step without talking to recruiter and understanding your situation better. You need to prepare for each such talk, as if you go to the interview, despite the fact that this is your friend.

If position in his/her company does exist, those are usually more reliable and valuable lids, that those from recruiter.  Create the list and call starting from the most promising, not in alphabet order. Those who will take your calls and at least formally try to help can be left on the list. Purge others. Inform those who responded about your the new plans and situation as you understand it now.

Often people do not do anything unless they are more informed about the roadblocks you face, your next steps and plans. This way they become more involved. Expect that some of your friends will do nothing.  Those who will try are kind of virtual team that you can use. Look for opportunities based of your LinkedIn account and you address book; some companies might be looking for consultants, if not permanent staff.  

Volunteer for some community work

Volunteering for some community work is an important source of keeping you skills in shape. Try to help some small business near you for free. Your church, your municipality, and small business around you are suitable targets if they have the infrastructure you know about and can improve.

This can greatly help to stay you sharp and even improve the skill valuable in the marketplace.

Adapt to the fact that you are now can exprience midlife crisis

Unemployment excsabates midlife crisis in individuals. For approximately 10% of individuals the condition is most common from the ages of 41 through 60 (a large study in the 1990s  found that the average age at onset of a self-described midlife crisis was 45). Mid-life crises last about 3–10 years in men and 2–5 years in women. If a  mid-life crisis coincides with losing your job it can form potentially toxic combination. Mid-life is the time from years 45 to 60 where a person is often evaluating his or her own life. Loss of employment creates an "overload" of stressors and exacerbate mdlife crisis. Especiallly in women who often experience additional multiple stressors because of their simultaneous roles as wives, mothers, and  daughters,. Personality type and a history of psychological crisis are believed to predispose some people to  a variety of negative symptoms and behaviors.  by aging itself, or aging in combination with changes, problems, or regrets over:

An American cultural stereotype of a man going through a midlife crisis may include the purchase of a luxury item such as an exotic car, or seeking affairs with a younger woman.  A woman's crisis is more related to re-evaluations of their roles. In both cases the emotions can be intense.

One of the main characteristics of a mid-life crisis  is the reavulation of self-worth. Moreover, the age period, between 50 and 60 if often the time when some chronic illness such as diabetes can come to the forefront. Individuals experiencing a mid-life crisis may feel:

If  individual lacks introspection capabilities they often exhibit a non-healthy response to such a crisis including:

Watching movies about unemployment can provide emotional support

There are several really insightful movies about unemployment. And first of all (Unemployment at the Movies 15 Films for Tough Times - Bloomberg):

The Grapes of Wrath (1940) Starring: Henry Fonda, Jane Darwell, John Carradine
Director: John Ford
U.S. Unemployment Rate, 1940: 14.6%

The epic tale of the Joad family's search for jobs in Depression America. Tom (Fonda) returns from prison just in time to see his family kicked off their farm. They strike out for California, where it's rumored there are plenty of jobs. Instead they wind up in an itinerant camp with other desperate families. Tom finds more trouble than work and delivers an immortal speech against injustice.

On the Waterfront (1954) Starring: Marlon Brando, Karl Malden, Lee J. Cobb
Director: Elia Kazan
U.S. Unemployment Rate, 1954: 5.6%

Terry Malloy (Brando) is the ex-prizefighter who has to choose between a cushy, no-show job and the hard work of doing the right thing. Terry provides muscle for Johnny Friendly's mobbed-up union thugs, but he falls for the sister of one of Johnny's victims. When he decides to testify about waterfront corruption, he is cast out of the gang. Kazan directs heavyweights who include Rod Steiger and a real-life fighter, "Two Ton" Tony Galento.

On the Waterfront (1954) Starring: Marlon Brando, Karl Malden, Lee J. Cobb
Director: Elia Kazan
U.S. Unemployment Rate, 1954: 5.6%

Terry Malloy (Brando) is the ex-prizefighter who has to choose between a cushy, no-show job and the hard work of doing the right thing. Terry provides muscle for Johnny Friendly's mobbed-up union thugs, but he falls for the sister of one of Johnny's victims. When he decides to testify about waterfront corruption, he is cast out of the gang. Kazan directs heavyweights who include Rod Steiger and a real-life fighter, "Two Ton" Tony Galento.

The Godfather Part II (1974) Starring: Al Pacino, Robert De Niro
Director: Francis Ford Coppola
U.S. Unemployment Rate, 1974: 5.6%

It all began with a layoff in turn-of-the-century New York City. In Coppola's strong sequel to The Godfather, young Vito Corleone (De Niro) steals away to America and takes a job in a grocery store. He is fired when a local mob boss forces the store owner to hire his nephew. Thwarted by nepotism, Vito takes up a life of crime with pals Peter Clemenza and Sal Tessio. And the rest is cinema history.

Gung Ho (1986) Starring: Michael Keaton, Gedde Watanabe
Director: Ron Howard
U.S. Unemployment Rate, 1986: 7.0%

Hunt Stevenson (Keaton) is foreman of a Pennsylvania car factory that's been shut down; he has to convince Japanese auto executives to reopen it. They agree, but only if they can subject the American workers to lower pay and new work rules. Conflict and cultural confusion ensue. Worth watching if only to confirm that there once was a time when Japan seemed unstoppable and unions had power. \

Glengarry Glen Ross (1992) Starring: Al Pacino, Jack Lemmon, Alec Baldwin
Director: James Foley
U.S. Unemployment Rate, 1992: 7.5%

Just imagine how cutthroat this crew would be in today's housing market. Blake (Baldwin) has been sent to light a fire under the salesmen at a tough Chicago real estate office. His pitch: a sales contest in which only the top two sellers will keep their jobs. The salesmen in this film version of David Mamet's play are matched in desperation only by their would-be clients. To quote Blake: "Only one thing counts in this life: Get them to sign on the line which is dotted." 

Everything Must Go (2010) Starring: Will Ferrell, Rebecca Hall, Christopher Jordan Wallace
Director: Dan Rush
U.S. Unemployment Rate, 2010: 9.6%

No hiding the indignity of a layoff in this one. It's all out in the open—literally—for Nick Halsey (Ferrell). Nick has hit the misery trifecta: A relapsed alcoholic, he's been fired and his wife has left him. His solution? Live in his front yard with his "stuff," or at least hold a yard sale as long as he can legally pull it off. The tale is adapted from a Raymond Carver short story published in the late 1970s, yet the theme of a man's struggle for dignity seems very much of these times.

Among more modern firms we can recommend the list by Arun Kumar  (Best Movies about Unemployment - I - CreoFire)

It is often referenced in the media that a country is progressing by leaps and bounds in the matter of economy, but at the same time there is always a sharp increase in the number of unemployed. Growing population, inflation, corruption, despotism and various other factors might play a role in spawning unemployment. But, let’s forget the causes of unemployment and how it affects society on the whole. What does unemployment does to an individual and to his immediate family? In this recession era, the psychological effects of involuntary unemployment look daunting. Our societies have buried a thought that only our job defines our worthiness. For many of us job isn’t what we do to pay our bills — it defines who we are. And when that socioeconomic identity is taken away, the emotional consequences can be severe. The movies mentioned below in the list explore the various emotional stresses a person faces due to joblessness. If I have missed out any great movie, dealing this subject, please mention it in the comments section.

Up in the Air (2009)

 Jason Reitman’s part funny, part serious work is about the corporate layoffs. Its protagonist Ryan Bingham, played charmingly by George Clooney, makes his living by ending the careers of others. His baritone voice and authoritative manner makes him to fly around US to downsize employees for companies whose HR departments are too cowardly to do the task themselves. It has got a bit touchy storyline and a script that loses some fire, but captures contemporary angst of the economic fallout with wit and humanity.

Tokyo Sonata (2008)

Famous J-horror director Kiyoshi Kurosawa’s bleakest indictment of modern Japan looks at the ripple effects caused within a family by corporate downsizing. The protagonist Ryuhei is cast out when his administrative job is outsourced to China. The humiliated breadwinner hides his unemployed state from his wife, Megumi and two sons. He suits up as usual and wanders around the city like a zombie and learns the routine of maintaining face over downsizing. The recession-era shows how out dignity is stripped away by a job and how the corporations turns our mind into vegetative state, devoid of basic human connections.

The Pursuit of Happyness (2006)

 This unsentimental Chris Gardner biopic takes an honest, intense look at the day-to-day survival that too many Americans must contend with. Every one of us could at least see some portion of the film and remember being faced with similar obstacles in their lives. Will Smith played Gardner and scored some great emotional points through his portrayal of an African-American male who turns out to be an extraordinary single-parent. The film convincingly asks us to never give up on our dreams, even when we are staying financially afloat.

Time Out (2001)

Laurent Cantet’s French psychological drama tells the story of an executive who conceals, from his family that he has been fired from his job. He later invents a phony investing scheme, calling up old friends to invest in it. The film seriously conveys absurdity behind a white-collar corporate life and showcases how words like ‘emerging markets’ can draw in even smart guys to invest huge load of money. Unlike a Hollywood protagonist, the central character here avoids over-the-top performance giving way to subtle emotions. The strain and scenarios exhibited can be understood by anyone who has held a job.
Starring: Aurélien Recoing, Karin Viard, Serge Livrozet
Director: Laurent Cantet
French Unemployment Rate, 2001: 7.8%

Vincent (Recoing) has lost his job—he's just not telling anyone. Also unclear is what he's up to now: a new consulting job with the U.N.? An investment scam? As his fantasy life ropes in a widening circle of friends and family members, the pressure builds and Vincent's calm facade begins to crumble. Vincent drives from dreary office to bland apartment complex, watching family and former colleagues through windows in the dark, having lost his identity when he was shown the door.

Office Space (1999)

 Mike Judge’s satirical comedy must be dedicated to everyone, whose life and soul is stomped out by an uncaring corporate entity. The story revolves around a frustrated corporate employee Peter Gibbons, who through an accidental session of hypnotherapy is freed from chronic anxieties and fears of unemployment. Stephen Root playing the fat, mumbling employee, Milton and three workers bashing a fax machine with a baseball bat are some of the memorable situation in the movie. Even though the movie offers enough fun, you can’t miss out the bitter truths beneath those gags.

Random Tips

The key here is to understand the your current situation is not the end of the life. You need to survive the current slump. Even if you are forced to take job at much lower salary, if this is a job that corresponds to your qualification and allow to improve them, you might be able to find something better later on.  You can also learn a few new things on a new job and such knowledge is money. You can also work less hours. Often much less hours.  Time is money after all.  Here is one relevant comment:

In worst case you will find itself in "semi-retirement" situation when the only type of jobs that are available as McJobs and entry level temporary jobs.  If you put enough efforts to adjust your cost of living with the new nasty reality you will survive even this situation.

Here are tips for getting back on your feet and into the IT job market from someone who's been there and back By Ron Nutter , Network World , 08/25/2008

Editor's note: On Feb. 20, IT manager and Network World columnist Ron Nutter was called into his boss's office and told he was being let go — that day. Once the initial shock wore off, Nutter launched an aggressive search for new employment in the Kansas City area. Over the next 76 days, Nutter applied for 85 jobs, and had 16 interviews before landing a new position. He chronicled the job search in a daily blog. Now that he has had some time to reflect on the experience, Nutter offers these 20 tips for surviving a layoff.

1. As you're getting laid off, be sure to take notes

This can be difficult to do, since losing a job can be a very emotional experience. But while everything is still fresh in your mind, write down all the details that you can remember.

For example, I was told that I would be paid for the full two-week pay period, plus my remaining vacation and sick time. When my last check arrived, there were discrepancies. Having written notes helped me when I went back and reminded my former boss and the HR folks of their commitment.

2. Take some time for yourself

Take a few days for yourself. A traumatic event has just happened to you and you need to get over the initial shock before jumping into the fray to search for a new job.

3. Review the papers from the company that laid you off

Several important things need to be attended to rather quickly. One is how to file for unemployment. Another is how long your company-paid health insurance will be in force before you have to consider paying for COBRA.

4. Update your resume

This is something that we should all do, but it doesn't always get the attention that it should. I was told a long time ago that your resume should be more than two pages with a max of three bullet points per employer. That may work in some cases but not all.

I have found that some recruiters/employers use software that does a "word count" to look for how many times a particular word, such as Cisco, or a word describing a certain type of experience is listed. I can attest that this is happening to a degree. When I was looking for a prior job, a recruiter had me just about totally rewrite my resume to specifically list all the different Cisco hardware that I had worked with. It was interesting to note how the callbacks increased after I did that.

You may find that it may be necessary to keep more than one type of resume depending on the type(s) of jobs you are looking for, so that the resume is specifically tailored to the type of job you are pursuing.

5. Get a handle on monthly bills

Even though I had a little money put back for a "rainy" day, I went through all my recurring bills to see if there was any room for saving money. One area I looked at was car and home insurance. I found that by shopping around, I was able to keep the same level of auto and homeowners coverage while reducing the amount of both bills. I had been thinking about doing it for a variety of reasons, but being unemployed helped push it to the top of the list.

6. Cut food costs

If you live by yourself, this will be easier to do. If you have a family, everyone will need to sit down and understand that they will all have to help out until you can get another job. ... ...

7. Look at health insurance options

Your company supplied health insurance will come to an end. If it was like my former employer, the health insurance ended a few days after I was separated from the company. Worse yet, I wasn't "due" to receive the COBRA information until after my company health insurance had lapsed. Because my previous employer had also been doing the claims processing for my health insurance, I wasn't comfortable with them having any further access to my medical records. Doing a little research on the Internet, I found a single health insurance policy from Blue Cross/Blue Shield for half the price and better coverage than the COBRA policy my former employer was going to offer me. 

... ... ...

10. File for unemployment compensation

This is something that I delayed a little bit. Partially because of pride and partially because I didn't anticipate the job hunting process to take more than three months. As someone pointed out to me, you earned this money and you should take advantage of it. In my case, filing was complicated by the fact that I had moved from another state in the past 18 months. The unemployment folks go back that far in figuring out where you need to file for unemployment. That potentially had me talking with three different state unemployment departments.

I spent several days on the phone with two states that would be involved in my situation. As painful as it may be to deal with this part of your unemployment process, the sooner you start, the sooner the money will start coming in to help pay the bills until you get another job.

11. Check the job boards

During my job search, I looked at CareerBuilder, Craigslist, Dice and Monster. I found no job leads from Monster in my career area. Several of the HR folks that I talked to during the process told me that they used Monster very little due in part to the higher fees that Monster charged for a job posting compared with other job boards, and the generally poorer quality of applications they received. I found some new job postings on Dice, but with a significant number of jobs cross-posted on different boards, I didn't find Dice to be a significant source of potential job leads. One source I wouldn't have thought to check for jobs was Craigslist. More than one recruiter told me that he had good results from posting new jobs on Craigslist. Set aside time each day to do this.

12. Make the job boards work for you

Dice has a feature where you can make your resume searchable by recruiters/companies looking to fill a position. I did get some calls from that. CareerBuilder recently followed suit by offering that feature as well. While Dice allows companies/recruiters to repost the same job each day so that it looks new, this makes the process of truly identifying the new jobs a little harder in some cases. Turn the tables in your favor by making periodic changes to your resume, so that when it is being searched it will show up as being new/changed and possibly get you looked at by a company or recruiter that might have passed you by the day before.

13. Prepare for the interview

One thing that I have done when preparing for an interview with a company is to do research on the company, the companies/sectors/industries that they serve. If it is a publicly listed company, do a little reading on the past quarter or two of press releases to see what changes have occurred at the company and what new directions they are heading in. From the response I have received from several companies, it seems to make a good impression that you show interest in finding out about the company when going to interview with them. It may seem like a small thing or something that you should do anyway but there seems to be quite a few people looking for a job that don't do this.

Also, have several copies of your resume printed out and with you when at an interview. This becomes even more important once you see your resume as the client/recruiter sees it, when they have downloaded it or printed it out from the job board that you applied for the position through. The formatting is pretty much gone. To make matters worse, the paragraphs or bullet points that you had in the resume will look like a series of poorly written run-on sentences that may cause distinctive or unique information about you to be overlooked.

14. Deal with recruiters

I encountered a couple of recruiters that would give used car salesmen a bad name, but as a general rule I found the recruiters pretty decent to work with. Several positions that I was approached for were not on the job boards and sometimes were only from a single recruiter. The trick I had to learn to develop was to identify the same end job when it coming from different recruiters. One situation that you want to avoid is to not have more than one recruiter pitching you to the same client. Most recruiters will usually tell you early on who the actual end client is.

15. Accept help from family

While your pride may make it hard for you to accept help, keep in mind that the unemployment situation you are dealing with is affecting them to a degree as well. Depending on the age of the family, this is something that may be new to them and that they may have never had the need to deal with. There was a time, unfortunately long gone now, when the company you first went to work for was the only company you would work for your entire career. How much help you accept from family is something that you will have to decide. Look at it this way, whatever help they do give you is that much less you will have to spend for food.

16. Keep good records

This suggestion came from a letter I received from the Department of Unemployment telling me that I would need to provide some basic information. I set up a spreadsheet in OpenOffice with three tabs. The first tab was where I kept track of the jobs I had applied for. I tracked the date, source of the job, how the job was applied for, company name (if known), job name, contact name and job number if provided. The next tab was where I kept track of the recruiters I talked to, HR folks that I had contact with for the jobs I had applied directly on, and anything else such as job fairs that I attended. This information was helpful when I got audited by the Department of Unemployment folks to make sure I was looking for another job. The last tab was where I recorded when I filed my unemployment claim each week, when I received the check, the check number, when it was deposited.

17. Get your personal records in order

When you do get an offer and accept it, one of the things that you will have to deal with is the lovely I-9 form that says you are allowed to work in this country. You will need a variety of things. If you can't find your Social Security card, now would be an excellent time to order a replacement card. This will take several weeks to get processed and get it to you. The sooner you get it, the sooner you will have it ready to produce when starting that new job. If you haven't seen a copy of the I-9 form lately, get a copy of one so you can see what documents will be needed. Another document that you want to make sure that you have a copy of, even if you don't need it for the I-9, is your birth certificate. This is one that might take a little while to get a copy of. I didn't know until recently that, depending on when and/or where you were born, there are two types of birth certificates – one that the hospital does and one done when the birth is registered with the local authorities. You will want to get one that is a copy of what is on file with the local authorities.

18. Don't wait for the phone to ring

This may be one of the harder things to do. Keep in mind that recruiters and HR types move at their own pace. That pace can be slow, very slow. When you first apply for a job, it could be several days or more before you get the first contact. Waiting for the phone to ring will have you climbing the walls in short order. Sometime you will get a call within hours of applying for a job, but expect that to be the exception. There are always things that you can do while waiting for movement on the job front and some of them may be done at little to no cost – doing that little bit of touch-up painting you have never gotten around to, do that trimming around the yard that always needs to be done. The point I am trying to make here is that you need to stay active, don't just sit around and watch the clock move forward.

19. Get out the house at least once a day

At some point you will run out of things to do around the house or just simply need to get out. There will be the occasional job fair, but that won't take a large amount of your time. While you can knock on some doors at some companies that you would like to work at, with the price of gas hovering around $4 a gallon, depending on where you live, that can be an expensive trip to make for an unknown return. Do some things that you like to do, such as going to a museum or sports game. The main thing is to get out to keep from getting cabin fever.

20. Never give up

Don't leave any stone unturned. You may just find that a company that passed you by today for another applicant may come back to you when that person leaves to move onto greener pastures. I would have never thought that could happen but I have seen it happen twice in the past year.

 


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[Apr 19, 2017] Paul Krugman Gets Retail Wrong: They are Not Very Good Jobs

Apr 19, 2017 | economistsview.typepad.com
anne , April 17, 2017 at 05:55 AM
http://cepr.net/blogs/beat-the-press/paul-krugman-gets-retail-wrong-they-are-not-very-good-jobs

April 17, 2017

Paul Krugman Gets Retail Wrong: They are Not Very Good Jobs

Paul Krugman used his column * this morning to ask why we don't pay as much attention to the loss of jobs in retail as we do to jobs lost in mining and manufacturing. His answer is that in large part the former jobs tend to be more white and male than the latter. While this is true, although African Americans have historically been over-represented in manufacturing, there is another simpler explanation: retail jobs tend to not be very good jobs.

The basic story is that jobs in mining and manufacturing tend to offer higher pay and are far more likely to come with health care and pension benefits than retail jobs. A worker who loses a job in these sectors is unlikely to find a comparable job elsewhere. In retail, the odds are that a person who loses a job will be able to find one with similar pay and benefits.

A quick look at average weekly wages ** can make this point. In mining the average weekly wage is $1,450, in manufacturing it is $1,070, by comparison in retail it is just $555. It is worth mentioning that much of this difference is in hours worked, not the hourly pay. There is nothing wrong with working shorter workweeks (in fact, I think it is a very good idea), but for those who need a 40 hour plus workweek to make ends meet, a 30-hour a week job will not fit the bill.

This difference in job quality is apparent in the difference in separation rates by industry. (This is the percentage of workers who lose or leave their job every month.) It was 2.4 percent for the most recent month in manufacturing. By comparison, it was 4.7 percent in retail, almost twice as high. (It was 5.2 percent in mining and logging. My guess is that this is driven by logging, but I will leave that one for folks who know the industry better.)

Anyhow, it shouldn't be a mystery that we tend to be more concerned about the loss of good jobs than the loss of jobs that are not very good. If we want to ask a deeper question, as to why retail jobs are not very good, then the demographics almost certainly play a big role.

Since only a small segment of the workforce is going to be employed in manufacturing regardless of what we do on trade (even the Baker dream policy will add at most 2 million jobs), we should be focused on making retail and other service sector jobs good jobs. The full agenda for making this transformation is a long one (higher minimum wages and unions would be a big part of the picture, along with universal health care insurance and a national pension system), but there is one immediate item on the agenda.

All right minded people should be yelling about the Federal Reserve Board's interest rate hikes. The point of these hikes is to slow the economy and reduce the rate of job creation. The Fed's concern is that the labor market is getting too tight. In a tighter labor market workers, especially those at the bottom of the pecking order, are able to get larger wage increases. The Fed is ostensibly worried that this can lead to higher inflation, which can get us to a wage price spiral like we saw in the 70s.

As I and others have argued, *** there is little basis for thinking that we are anywhere close to a 1970s type inflation, with inflation consistently running below the Fed's 2.0 percent target, (which many of us think is too low anyhow). I'd love to see Krugman pushing the cause of full employment here. We should call out racism and sexism where we see it, but this is a case where there is a concrete policy that can do something to address it. Come on Paul, we need your voice.

* https://www.nytimes.com/2017/04/17/opinion/why-dont-all-jobs-matter.html

** https://www.bls.gov/news.release/empsit.t19.htm

*** http://cepr.net/blogs/beat-the-press/overall-and-core-cpi-fall-in-march

-- Dean Baker

Fred C. Dobbs -> anne... , April 17, 2017 at 06:17 AM
PK: Consider what has happened to department stores. Even as Mr. Trump was boasting about saving a few hundred jobs in manufacturing here and there, Macy's announced plans to close 68 stores and lay off 10,000 workers. Sears, another iconic institution, has expressed "substantial doubt" about its ability to stay in business.

Overall, department stores employ a third fewer people now than they did in 2001. That's half a million traditional jobs gone - about eighteen times as many jobs as were lost in coal mining over the same period.

And retailing isn't the only service industry that has been hit hard by changing technology. Another prime example is newspaper publishing, where employment has declined by 270,000, almost two-thirds of the work force, since 2000. ...

(To those that had them, they were probably
pretty decent jobs, albeit much less 'gritty'
than mining or manufacturing.)

BenIsNotYoda -> anne... , April 17, 2017 at 06:42 AM
Dean is correct. Krugman just wants to play the racism card or tell people those who wish their communities were gutted that they are stupid.
JohnH -> BenIsNotYoda... , April 17, 2017 at 06:48 AM
Elite experts are totally flummoxed...how can they pontificate solutions when they are clueless?

Roger Cohen had a very long piece about France and it discontents in the Times Sunday Review yesterday. He could not make heads or tails of the problem. Not worth the read.
https://www.nytimes.com/2017/04/14/opinion/sunday/france-in-the-end-of-days.html?rref=collection%2Fcolumn%2Froger-cohen&action=click&contentCollection=opinion&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection&_r=0

And experts wonder why nobody listens to them any more? Priceless!!!

BenIsNotYoda -> JohnH... , April 17, 2017 at 07:34 AM
clueless experts/academics. well said.
paine -> anne... , April 17, 2017 at 08:27 AM
Exactly dean
Tom aka Rusty -> anne... , April 17, 2017 at 07:39 AM
Krugman is an arrogant elitist who thinks people who disagree with him tend to be ignorant yahoos.

Sort of a Larry Summers with a little better manners.

anne -> Tom aka Rusty... , April 17, 2017 at 08:18 AM
Krugman is an arrogant elitist who thinks people who disagree with him tend to be ignorant yahoos.

[ This is a harsh but fair criticism, and even the apology of Paul Krugman was conditional and showed no thought to the other workers insulted. ]

cm -> Tom aka Rusty... , April 17, 2017 at 08:11 AM
There is a lot of elitism to go around. People will be much more reluctant to express publicly the same as in private (or pseudonymously on the internet?). But looking down on other people and their work is pretty widespread (and in either case there is a lot of assumption about the nature of the work and the personal attributes of the people doing it - usually of a derogatory type in both cases).

I find it plausible that Krugman was referring those widespread stereotypes about job categories that (traditionally?) have not required a college degree, or have been relatively at the low end of the esteem scale in a given industry (e.g. in "tech" and manufacturing, QA/testing related work).

It must be possible to comment on such stereotypes, but there is of course always the risk of being thought to hold them oneself, or indeed being complicit in perpetuating them.

As a thought experiment, I suggest reviewing what you yourself think about occupations not held by yourself, good friends, and family members and acquaintainces you like/respect (these qualifications are deliberate). For example, you seem to think not very highly of maids.

Of course, being an RN requires significantly more training than being a maid, and not just once when you start in your career. But at some level of abstraction, anybody who does work where their autonomy is quite limited (i.e. they are not setting objectives at any level of the organization) is "just a worker". That's the very stereotype we are discussing, isn't it?

anne -> cm... , April 17, 2017 at 08:26 AM
Nicely explained.
paine -> anne... , April 17, 2017 at 08:40 AM
Yes
anne -> Tom aka Rusty... , April 17, 2017 at 08:24 AM
Krugman thinks nurses are the equivalent of maids...

[ The problem is that Paul Krugman dismissed the work of nurses and maids and gardeners as "menial." I find no evidence that Krugman understands that even after conditionally apologizing to nurses. ]

paine -> anne... , April 17, 2017 at 08:42 AM
Even if there are millions of mcjobs
out there
none are filled by mcpeople

[Apr 16, 2017] The most common characteristic of people running their own business was that theyd been fired twice

Notable quotes:
"... things might have worked out with better luck on timing), you need your head examined to start a small business ..."
"... If you can tolerate the BS, it is vastly better to be on a payroll. 90% of all new businesses fail and running one is no picnic. ..."
"... And new business formation has dived in the US, due mainly IMHO to less than robust demand in many sectors of the economy. ..."
"... You're so right. It used to be that there were set asides for small businesses but nowadays Federal and State Governments are only interested in contracts with large businesses. The SBA classification for small business is based on NAICS code (used to be SIC code) is usually $1-2 million or up to 500 employees. I wonder how they can be small businesses! ..."
"... To survive, small businesses need to sell their goods/services to large businesses. Most of the decision makers who purchase these items are unreachable or already have their favorites. Unless your small business has invented a better mousetrap you're SOL! ..."
Apr 16, 2017 | www.nakedcapitalism.com
Yves Smith, April 16, 2017 at 5:00 pm

As someone who has started three businesses, two of them successful (I went to Australia right before the Gulf War started, which led to new business in Sydney coming to a complete halt for six months; things might have worked out with better luck on timing), you need your head examined to start a small business. The most common characteristic of people running their own business was that they'd been fired twice.

If you can tolerate the BS, it is vastly better to be on a payroll. 90% of all new businesses fail and running one is no picnic.

And new business formation has dived in the US, due mainly IMHO to less than robust demand in many sectors of the economy.

steelhead , April 16, 2017 at 5:41 pm

Unless your family fully bankrolls you until BK kicks in (snark). I would have loved to write as a career. Unfortunately, at the time, promises that had been made were broken and I had to go to work for a F500 just to survive right after my undergraduate degree was completed. Fate and Karma.

oh , April 16, 2017 at 5:56 pm

You're so right. It used to be that there were set asides for small businesses but nowadays Federal and State Governments are only interested in contracts with large businesses. The SBA classification for small business is based on NAICS code (used to be SIC code) is usually $1-2 million or up to 500 employees. I wonder how they can be small businesses!

To survive, small businesses need to sell their goods/services to large businesses. Most of the decision makers who purchase these items are unreachable or already have their favorites. Unless your small business has invented a better mousetrap you're SOL!

[Apr 12, 2017] The Despair of Learning That Experience No Longer Matters

Apr 12, 2017 | economistsview.typepad.com
RGC , April 12, 2017 at 06:41 AM
The Despair of Learning That Experience No Longer Matters

By Benjamin Wallace-Wells April 10, 2017

.....................

The arguments about Case and Deaton's work have been an echo of the one that consumed so much of the primary campaign, and then the general election, and which is still unresolved: whether the fury of Donald Trump's supporters came from cultural and racial grievance or from economic plight. Case and Deaton's scholarship does not settle the question. As they write, more than once, "more work is needed."

But part of what Case and Deaton offer in their new paper is an emotional logic to an economic argument. If returns to experience are in decline, if wisdom no longer pays off, then that might help suggest why a group of mostly older people who are not, as a group, disadvantaged might become convinced that the country has taken a turn for the worse. It suggests why their grievances should so idealize the past, and why all the talk about coal miners and factories, jobs in which unions have codified returns to experience into the salary structure, might become such a fixation. Whatever comes from the deliberations over Case and Deaton's statistics, there is within their numbers an especially interesting story.

http://www.newyorker.com/news/benjamin-wallace-wells/the-despair-of-learning-that-experience-no-longer-matters

[Apr 12, 2017] Why losing your job leads to a very long-lasting decline in your lifetime wages

Apr 12, 2017 | lse.ac.uk
Gregor Jarosch (2015, Chicago, Stanford): Jarosch writes a model to explain why losing your job leads to a very long-lasting decline in your lifetime wages. His hypothesis is that this is due to people climbing a ladder of jobs that are increasingly secure, so that when one has the misfortune of losing a job, this leads to a fall down the ladder and a higher likelihood of having further spells of unemployment in the future. He uses administrative social security data to find some evidence for this hypothesis.

[Apr 11, 2017] Legacy systems written in COBOL that depends on a shrinking pool of aging programmers to baby

Notable quotes:
"... Of course after legacy systems [people] were retrenched or shown the door in making government more efficient MBA style, some did hit the jack pot as consultants and made more that on the public dime . but the Gov balance sheet got a nice one time blip. ..."
"... In the government, projects "helped" by Siemens, especially at the Home and Passport Offices, cost billions and were abandoned. At my former employer, an eagle's nest, it was Deloittes. At my current employer, which has lost its passion to perform, it's KPMG and EY helping. ..."
"... My personal favourite is Accenture / British Gas . But then you've also got the masterclass in cockups Raytheon / U.K. Border Agency . Or for sheer breadth of failure, there's the IT Programme That Helped Kill a Whole Bank Stone Dead ( Infosys / Co-op ). ..."
"... I am an assembler expert. I have never seen a job advertised, but a I did not look very hard. Send me your work!!! IBM mainframe assembler ..."
"... What about Computer Associates? For quite a while they proudly maintained the worst reputation amongst all of those consultancy/outsourcing firms. ..."
"... My old boss used to say – a good programmer can learn a new language and be productive in it in in space of weeks (and this was at the time when Object Oriented was the new huge paradigm change). A bad programmer will write bad code in any language. ..."
"... The huge shortcoming of COBOL is that there are no equivalent of editing programs. ..."
"... Original programmers rarely wrote handbooks ..."
"... That is not to say that it is impossible to move off legacy platforms ..."
"... Wherefore are ye startup godz ..."
Apr 11, 2017 | www.nakedcapitalism.com
After we've been writing about the problem of the ticking time bomb of bank legacy systems written in COBOL that depends on a shrinking pool of aging programmers to baby them for now nearly two years, Reuters reports on the issue. Chuck L flagged a Reuters story, Banks scramble to fix old systems as IT 'cowboys' ride into sunset, which made some of the points we've been making but frustratingly missed other key elements.

Here's what Reuters confirmed:

Banks and the Federal government are running mission-critical core systems on COBOL, and only a small number of older software engineers have the expertise to keep the systems running . From the article:

In the United States, the financial sector, major corporations and parts of the federal government still largely rely on it because it underpins powerful systems that were built in the 70s or 80s and never fully replaced

Experienced COBOL programmers can earn more than $100 an hour when they get called in to patch up glitches, rewrite coding manuals or make new systems work with old.

For their customers such expenses pale in comparison with what it would cost to replace the old systems altogether, not to mention the risks involved.

Here's what Reuters missed:

Why young coders are not learning COBOL . Why, in an era when IT grads find it hard to get entry-level jobs in the US, are young programmers not learning COBOL as a guaranteed meal ticket? Basically, it's completely uncool and extremely tedious to work with by modern standards. Given how narrowminded employers are, if you get good at COBOL, I woudl bet it's assumed you are only capable of doing grunt coding and would never get into the circles to work on the fantasy of getting rich by developing a hip app.

I'm sure expert readers will flag other issues, but the huge shortcoming of COBOL is that there are no equivalent of editing programs. Every line of code in a routine must be inspected and changed line by line.

How banks got in this mess in the first place. The original sin of software development is failure to document the code. In fairness, the Reuters story does allude to the issue:

But COBOL veterans say it takes more than just knowing the language itself. COBOL-based systems vary widely and original programmers rarely wrote handbooks, making trouble-shooting difficult for others.

What this does not make quite clear is that given the lack of documentation, it will always be cheaper and lower risk to have someone who is familiar with the code baby it, best of all the guy who originally wrote it. And that means any time you bring someone in, they are going to have to sort out not just the code that might be causing fits and starts, but the considerable interdependencies that have developed over time. As the article notes:

"It is immensely complex," said [former chief executive of Barclays PLC Anthony] Jenkins, who now heads startup 10x Future Technologies, which sells new IT infrastructure to banks. "Legacy systems from different generations are layered and often heavily intertwined."

I had the derivatives trading firm O'Connor & Associates as a client in the early 1990s. It was widely recognized as being one of the two best IT shops in all of Wall Street at the time. O'Connor was running the biggest private sector Unix network in the world back then. And IT was seen as critical to the firm's success; half of O'Connor's expenses went to it.

Even with it being a huge expense, and the my client, the CIO, repeatedly telling his partners that documenting the code would save 20% over the life of the software, his pleas fell on deaf ears. Even with the big commitment to building software, the trading desk heads felt it was already taking too long to get their apps into production. Speed of deployment was more important to them than cost or long-term considerations. 1 And if you saw this sort of behavior with a firm where software development was a huge expense for partners who were spending their own money, it's not hard to see how managers in a firm where the developers were much less important and management was fixated on short term earnings targets to blow off tradeoff like this entirely.

Picking up sales patter from vendors, Reuters is over-stating banks' ability to address this issue . Here is what Reuters would have you believe:

The industry appears to be reaching an inflection point, though. In the United States, banks are slowly shifting toward newer languages taking cue from overseas rivals who have already made the switch-over.

Commonwealth Bank of Australia, for instance, replaced its core banking platform in 2012 with the help of Accenture and software company SAP SE. The job ultimately took five years and cost more than 1 billion Australian dollars ($749.9 million).

Accenture is also working with software vendor Temenos Group AG to help Swedish bank Nordea make a similar transition by 2020. IBM is also setting itself up to profit from the changes, despite its defense of COBOL's relevance. It recently acquired EzSource, a company that helps programmers figure out how old COBOL programs work.

The conundrum is the more new routines banks pile on top of legacy systems, the more difficult a transition becomes. So delay only makes matters worse. Yet the incentives of everyone outside the IT areas is to hope they can ride it out and make the legacy system time bomb their successor's problem.

If you read carefully, Commonwealth is the only success story so far. And it's vastly less complex than that of many US players. First, it has roughly A$990 billion or $740 billion in assets now. While that makes it #46 in the world (and Nordea is of similar size at #44 as of June 30, 2016), JP Morgan and Bank of America are three times larger. Second, and perhaps more important, they are the product of more bank mergers. Commonwealth has acquired only four banks since the computer era. Third, many of the larger banks are major capital markets players, meaning their transaction volume relative to their asset base and product complexit is also vastly greater than for a Commonwealth. Finally, it is not impossible that as a government owned bank prior to 1990 that not being profit driven, Commonwealth's software jockeys might have documented some of the COBOL, making a transition less fraught.

Add to that that the Commonwealth project was clearly a "big IT project". Anything over $500 million comfortably falls into that category. The failure rate on big IT projects is over 50%; some experts estimate it at 80% (costly failures are disguised as well as possible; some big IT projects going off the rails are terminated early).

Mind you, that is not to say that it is impossible to move off legacy platforms. The issue is the time and cost (as well as risk). One reader, I believe Brooklyn Bridge, recounted a prototypical conversation with management in which it became clear that the cost of a migration would be three times a behemoth bank's total profit for three years. That immediately shut down the manager's interest.

Estimates like that don't factor in the high odds of overruns. And even if it is too high for some banks by a factor of five, that's still too big for most to stomach until they are forced to. So the question then becomes: can they whack off enough increments of the problem to make it digestible from a cost and risk perspective? But the flip side is that the easier parts to isolate and migrate are likely not to be the most urgent to address.

____
1 The CIO had been the head index trader and had also help build O'Connor's FX derivatives trading business, so he was well aware of the tradeoff between trading a new instrument sooner versus software life cycle costs. He was convinced his partners were being short-sighted even over the near term and had some analyses to bolster that view. So this was the not empire-building or special pleading. This was an effort at prudent management.

Clive , April 11, 2017 at 5:51 am

I got to the bit which said:

Accenture is also working with software vendor Temenos Group AG to help

and promptly splurted my coffee over my desk. "Help" is the last thing either of these two ne'redowells will be doing.

Apart from the problems ably explained in the above piece, I'm tempted to think industry PR and management gullibility to it are the two biggest risks.

Marina Bart , April 11, 2017 at 6:06 am

As someone who used to do PR for that industry (worked with Accenture, among others), I concur that those are real risks.

skippy , April 11, 2017 at 6:07 am

Heaps of IT upgrades have gone a bit wonky over here of late, Health care payroll, ATO, Centerlink, Census, all assisted by private software vendors and consultants – after – drum roll .. PR management did a "efficiency" drive [by].

Of course after legacy systems [people] were retrenched or shown the door in making government more efficient MBA style, some did hit the jack pot as consultants and made more that on the public dime . but the Gov balance sheet got a nice one time blip.

disheveled . nice self licking icecream cone thingy and its still all gov fault . two'fer

Colonel Smithers , April 11, 2017 at 7:40 am

Thank you, Skippy.

It's the same in the UK as Clive knows and can add.

In the government, projects "helped" by Siemens, especially at the Home and Passport Offices, cost billions and were abandoned. At my former employer, an eagle's nest, it was Deloittes. At my current employer, which has lost its passion to perform, it's KPMG and EY helping.

What I have read / heard is that the external consultants often cost more and will take longer to do the work than internal bidders. The banks and government(s) run an internal market and invite bids.

Clive , April 11, 2017 at 9:33 am

Oh, where to start!

My personal favourite is Accenture / British Gas . But then you've also got the masterclass in cockups Raytheon / U.K. Border Agency . Or for sheer breadth of failure, there's the IT Programme That Helped Kill a Whole Bank Stone Dead ( Infosys / Co-op ).

They keep writing books on how to avoid this sort of thing. Strangely enough, none of them ever tell CEOs or CIOs to pay people decent wages, not treat them like crap and to train up new recruits now and again. And also fail to highlight that though you might like to believe you can go into the streets in Mumbai, Manila or Shenzhen waving a dollar bill and have dozens of experienced, skilled and loyal developers run to you like a cat smelling catnip, that may only be your wishful thinking.

Just wait 'til we get started trying to implement Brexit

Raj , April 11, 2017 at 12:10 pm

Oh man, if you only had a look at the kind of graduates Infosys hires en masse and the state of graduate programmers coming out of universities here in India you'd be amazed how we still haven't had massive hacks. And now the government, so confident in the Indian IT industry's ability to make big IT systems is pushing for the universal ID system(aadhar) to be made mandatory for even booking flight tickets!

So would you recommend graduates do learn COBOL to get good jobs there in the USA?

Clive , April 11, 2017 at 12:22 pm

I'd pick something really obscure, like maybe MUMPS - yes, incredibly niche but that's the point, you can corner a market. You might not get oodles of work but what you do get you can charge the earth for. Getting real-world experience is tricky though.

Another alternative, a little more mainstream is assembler. But that is hideous. You deserve every penny if you can learn that and be productive in it.

visitor , April 11, 2017 at 1:36 pm

Is anybody still using Pick? Or RPG?

Regarding assembler: tricky, as the knowledge is tied to specific processors - and Intel, AMD and ARM keep churning new products.

Synoia , April 11, 2017 at 3:40 pm

I am an assembler expert. I have never seen a job advertised, but a I did not look very hard. Send me your work!!! IBM mainframe assembler

visitor , April 11, 2017 at 10:02 am

What about Computer Associates? For quite a while they proudly maintained the worst reputation amongst all of those consultancy/outsourcing firms.

How does Temenos compare with Oracle, anyway?

Clive , April 11, 2017 at 10:05 am

How does Temenos compare with Oracle, anyway?

Way worse. Yes, I didn't believe it was possible, either.

MoiAussie , April 11, 2017 at 6:13 am

For a bit more on why Cobol is hard to use see Why We Hate Cobol . To summarise, Cobol is barely removed from programming in assembler, i.e. at the lowest level of abstraction, with endless details needing to be taken care of. It dates pack to the punched card era.

It is particularly hard for IT grads who have learned to code in Java or C# or any modern language to come to grips with, due to the lack of features that are usually taken for granted. Those who try to are probably on their own due to a shortage of teachers/courses. It's a language that's best mastered on the job as a junior in a company that still uses it, so it's hard to get it on your CV before landing such a job.

There are potentially two types of career opportunities for those who invest the time to get up-to-speed on Cobol. The first is maintenance and minor extension of legacy Cobol applications. The second and potentially more lucrative one is developing an ability to understand exactly what a Cobol program does in order to craft a suitable replacement in a modern enterprise grade language.

MartyH , April 11, 2017 at 12:53 pm

Well, COBOL's shortcomings are part technical and part "religious". After almost fifty years in software, and with experience in many of the "modern enterprise grade languages", I would argue that the technical and business merits are poorly understood. There is an enormous pressure in the industry to be on the "latest and greatest" language/platform/framework, etc. And under such pressure to sell novelty, the strengths of older technologies are generally overlooked.

@Yves, I would be glad to share my viewpoint (biases, warts and all) at your convenience. I live nearby.

vlade , April 11, 2017 at 7:52 am

"It is particularly hard for IT grads who have learned to code in Java or C# or any modern language to come to grips with"

which tells you something about the quality of IT education these days, where "mastering" a language is more often more important than actually understanding what goes on and how.

My old boss used to say – a good programmer can learn a new language and be productive in it in in space of weeks (and this was at the time when Object Oriented was the new huge paradigm change). A bad programmer will write bad code in any language.

craazyboy , April 11, 2017 at 9:32 am

IMHO, your old boss is wrong about that. Precisely because OO languages are a huge paradigm change and require a programmer to nearly abandon everything he/she knows about programming. Then get his brain around OOP patterns when designing a complex system. Not so easy.

As proof, I put forth the 30% success rate for new large projects in the latter 90s done with OOP tech. Like they say, if it was easy, everyone would be doing it.

More generally, on the subject of Cobol vs Java or C++/C#, in the heyday of OOPs rollout in the early 90s, corporate IT spent record amounts on developing new systems. As news of the Y2K problem spread, they very badly wanted to replace old Cobol/mainframe legacy systems. As things went along, many of those plans got rolled back due to perceived problems with viability, cost and trained personnel.

Part of the reason was existing Cobol IT staff took a look at OOP, then at their huge pile of Cobol legacy code and their brains melted down. I was around lots of them and they had all the symptoms of Snow Crash. [Neil Stephenson] I hope they got better.

Marco , April 11, 2017 at 12:21 pm

It never occurred to me that the OOP-lite character of the newer "hipster" languages (Golang / Go or even plain old javascript) are a response to OOP run amok.

Arizona Slim , April 11, 2017 at 9:35 am

A close friend is a retired programmer. In her mind, knowing how to solve the problem comes​ first.

MartyH , April 11, 2017 at 12:54 pm

@Arizona_Slim: I agree with her. And COBOL lets you write business logic with a minimum of distractions.

Mel , April 11, 2017 at 11:36 am

In the university course I took, we were taught Algol-60. Then it turned out that the univ. had no budget for Algol compiles for us. So we wrote our programs in Algol-60 for 'publication' and grading, and rewrote them in FORTRAN IV to run in a cheap bulk FORTRAN execution system for results. Splendid way to push home Turing's point that all computing is the same. So when the job needed COBOL, "Sure, bring it on."

rfdawn , April 11, 2017 at 1:30 pm

My old boss used to say – a good programmer can learn a new language and be productive in it in in space of weeks (and this was at the time when Object Oriented was the new huge paradigm change). A bad programmer will write bad code in any language.

Yes. Learning a new programming language is fairly easy but understanding existing patchwork code can be very hard indeed. It just gets harder if you want to make reliable changes.

HR thinking, however, demands "credentials" and languages get chosen as such based on their simple labels. They are searchable on L**kedIn!

A related limitation is the corporate aversion to spending any time or money on employee learning of either language or code. There may not be anyone out there with all the skills needed but that will not stop managers from trying to hire them or, better still, just outsourcing the whole mess.

Either choice invites fraud.

reslez , April 11, 2017 at 2:02 pm

Your boss was correct in my opinion - but also atypical. Most firms look for multi-years of experience in a language. They'll toss your resume if you don't show you've used it extensively.

Even if a new coder spent the time to learn COBOL, if he wasn't using it on the job or in pretty significant projects he would not be considered. And there aren't exactly many open source projects out there written in COBOL to prove one's competence. The limiting factor is not whether you "know" COBOL, or whether you know how to learn it. The limiting factor is the actual knowledge of the system, how it was implemented, and all the little details that never get written down no matter how good your documentation. If your system is 30+ years old it has complexity hidden in every nook and cranny.

As for the language itself, COBOL is an ancient language from a much older paradigm than what students learn in school today. Most students skip right past C, they don't learn structural programming. They expect to have extensive libraries of pre-written routines available for reuse. And they expect to work in a modern IDE (development environment), a software package that makes it much easier to write and debug code. COBOL doesn't have tools of this level.

When I was in the Air Force I was trained as a programmer. COBOL was one of the languages they "taught". I never used it, ever, and wouldn't dream of trying it today. It's simply too niche. I would never recommend anyone learn COBOL in the hopes of getting a job. Get the job first, and if it happens to include some COBOL get the expertise that way.

d , April 11, 2017 at 4:04 pm

having seen the 'high level code' in C++, not sure what makes it 'modern'.its really an out growth of C, which is basically the assembler language of Unix. which it self is no spring chicken. mostly what is called 'modern' is just the latest fad, has the highest push from vendors. and sadly what we see in IT, is that the IT trade magazines are more into what they sell, that what companies need (maybe because of advertising?)

as to why schools tend to teach these languages than others? mainly cause its hip. its also cheaper for the schools, as they dont have much in the way of infrastructure to teach them ( kids bring their own computers). course teachers are as likely to be influenced by the latest 'shinny;' thing as any one else

craazyboy , April 11, 2017 at 4:34 pm

C++ shares most of the core C spec but that's it. [variables and scope, datatypes, functions sorta, math and logic operatives, logic control statements] The reason you can read high level C++ is because it uses objects that hide the internal code and are given names that describe their use which if done right makes the code somewhat readable, along with a short comment header, and self documenting.

Then at high level most code is procedural and/or event driven, which makes it appear to function like C or any other procedural language. Without the Goto statements and subroutines, because that functionality is now encapsulated within the C++ objects. {which are a datatype that combines data structures and related functions that act on this data)

ChrisPacific , April 11, 2017 at 5:31 pm

Well put. I was going to make this point. Note that the today's IT grads struggle with Cobol for the same reason that modern airline pilots would struggle to build their own airplane. The industry has evolved and become much more specialized, and standard 'solved' problems have migrated into the core toolsets and become invisible to developers, who now work at a much higher level of abstraction. So for example a programmer who learned using BASIC on a Commodore 64 probably knows all about graphics coding by direct addressing of screen memory, which modern programmers would consider unnecessary at best and dangerous at worst. Not to mention it's exhausting drudgery compared to working with modern toolsets.

The other reason more grads don't learn COBOL is because it's a sunset technology. This is true even if systems written in COBOL are mission critical and not being replaced. As more and more COBOL programmers retire or die, banks will eventually reach the point where they don't have enough skilled staff available to keep their existing systems running. If they are in a position where they have to fix things anyway, for example due to a critical failure, they will be forced to resort to cross-training other developers, at great expense and pain for all concerned, and with no guarantee of success. One or two of these experiences will be enough to convince them that migration is necessary, whatever the cost (if their business survives them, which isn't a given when it comes to critical failures involving out of date and poorly-understood technology). And while developers with COBOL skills will be able to name their own price during those events, it's not likely to be a sustainable working environment in the longer term.

It would take a significant critical mass of younger programmers deciding to learn COBOL to change this dynamic. One person on their own isn't going to make any difference, and it's not career advice I would ever give to a young graduate looking to enter IT.

I am an experienced developer who has worked with a lot of different languages, including some quite low level ones in my early days. I don't know COBOL, but I am confident that I could learn it well enough to perform code archaeology on it given enough time (although probably nowhere near as efficiently as someone who built a career on it). Whether I could be convinced to do so is another question. If you paid me never-need-to-work-again money, then maybe. But nobody is ever going to do that unless it's a crisis, and I'm not likely to sign up for a death march situation with my current family commitments.

Steve , April 11, 2017 at 6:47 am

"Experienced COBOL programmers can earn more than $100 an hour"

Then the people hiring are getting them dirt cheap. This is a lot closer to consulting than contracting–a very specialized skill set and only a small set of people available. The rate should be $200-300/hour.

reslez , April 11, 2017 at 2:46 pm

I wonder if it has something to do with the IRS rules that made that guy fly a plane into an IRS office? Because of the rules, programmers aren't allowed to work as independent consultants. Since their employer/middleman takes a huge cut the pay they receive is a lot lower. Coders with a security clearance make quite a bit but that requires an "in", getting the clearance in the first place which most employers won't pay for.

d , April 11, 2017 at 4:05 pm

not any place i know of. maybe in an extreme crunch. cause today the most COBOL jobs have been offshored. and maybe thats why kids dont lean COBOL.

ChrisPacific , April 11, 2017 at 5:31 pm

I had the same thought. Around here if you want a good one, you would probably need to add another zero to that.

shinola , April 11, 2017 at 6:52 am

Cobol? Are they running it on refrigerator sized machines with reel-to-reel tapes?

ejf , April 11, 2017 at 8:45 am

you're right. I've seen it on cluckny databases in a clothing firm in NY State, a seed and grain distribution facility in Minnesota and a bank in Minneapolis. They're horrible and Yves is right – documentation is completely ABSENT

d , April 11, 2017 at 4:06 pm

in small business, where every penny counts, they dont see the value in documentation. not even when they get big either

Disturbed Voter , April 11, 2017 at 7:05 am

No different than the failure of the public sector to maintain dams, bridges and highways. Basic civil engineering but our business model never included maintenance nor replacement costs. That is because our business model is accounting fraud.

I grew up on Fortran, and Cobol isn't too different, just limited to 2 points past the decimal to the right. I feel so sorry for these code jockies who can't handle a bit of drudgery, who can't do squat without a gigabyte routine library to invoke. Those languages as scripting languages or report writers back in the old days.

Please hire another million Indian programmers they don't mind being poorly paid or the drudgery. Americans and Europeans are so over-rated. Business always complains they can't hire the right people some job requires 2 PhDs and we can't pay more than $30k, am I right? Business needs slaves, not employees.

d , April 11, 2017 at 4:08 pm

COBOL hasnt been restricted to 2 points to the right of decimal place. for decades

clarky90 , April 11, 2017 at 7:06 am

The 'Novopay debacle'

This was a "new payroll" system for school teachers in NZ. It was an ongoing disaster. If something as simple (?) as paying NZ teachers could turn into such a train-wreck, imagine what updating the software of the crooked banks could entail. I bet that there are secret frauds hidden in the ancient software, like the rat mummies and cat skeletons that one finds when lifting the floor of old houses.

https://en.wikipedia.org/wiki/Novopay

"Novopay is a web-based payroll system for state and state integrated schools in New Zealand, processing the pay of 110,000 teaching and support staff at 2,457 schools .. From the outset, the system led to widespread problems with over 8,000 teachers receiving the wrong pay and in some cases no pay at all; within a few months, 90% of schools were affected .."

"Many of the errors were described as 'bizarre'. One teacher was paid for 39 days, instead of 39 hours getting thousands of dollars more than he should have. Another teacher was overpaid by $39,000. She returned the money immediately, but two months later, had not been paid since. A relief teacher was paid for working at two different schools on the same day – one in Upper Hutt and the other in Auckland. Ashburton College principal, Grant McMillan, said the 'most ludicrous' problem was when "Novopay took $40,000 directly out of the school bank account to pay a number of teachers who had never worked at the college".

Can you imagine this, times 10,000,000????

d , April 11, 2017 at 4:12 pm

this wasnt COBOL. or even a technology problem. more like a management one. big failures tend to be that way

vlade , April 11, 2017 at 7:48 am

"but the huge shortcoming of COBOL is that there are no equivalent of editing programs. Every line of code in a routine must be inspected and changed line by line"
I'm not sure what you mean by this.

If you mean that COBOL doesn't have the new flash IDEs that can do smart things with "syntactic sugar", then it really depends on the demand. Smart IDEs can be written for pretty much any languages (smart IDEs work by operating on ASTs, which are part and parcel of any compiler. The problem is more of what to do if you have an externalised functions etc, which is for example why it took so long for those smart IDEs to work with C++ and its linking model). The question is whether it pays – and a lot of old COBOL hands eschew anything except for vi (or equivalent) because coding should be done by REAL MEN.

On the general IT problem. There are three problems, which are sort of related but not.

The first problem is the interconnectedness of the systems. Especially for a large bank, it's not often clear where one system ends and the other begins, what are the side-effects of running something (or not running), who exactly produces what outputs and when etc. The complexity is more often at this level than cobol (or any other) line-by-line code.

The second problem is the IT personell you get. If you're unlucky, you get coding monkeys, who barely understand _any_ programming language (there was time I didn't think people like that get hired. I now know better), and have no idea what analytical and algorithmic thinking is. If you're lucky, you get a bunch of IT geeks, who can discuss the latest technology till cows come home, know the intricate details of what a sequence point in C++ is and how it affects execution, but don't really care that much about the business. Then you get some possibly even brilliant code, but often also get unnecessary technological artifacts and new technologies just because they are fun – even though a much simpler solution would work just as well if not better. TBH, you can get this from the other side too, someone who understands the business but doesn't know even basic language techniques, which generally means their code works very well for the business, but is a nightmare to maintain (a typical population of this groups are front office quants).

If you are incredibily lucky, you get someone who understands the business and happens to know how to code well too. Unfortunately, this is almost a mythical beast, especially since neitehr IT nor the business encourage people to understand each other.

Which is what gets me to the thirds point – politics of it. And that's, TBH, is why most projects fail. Because it's easier to staff a project with 100 developers and then say all that could have been done was done, than get 10 smart people working on it, but risk that if it fails you get told you haven't spent enough resources. "We are not spending enough money" is paradoxically one of the "problems" I often see here, when the problem really is "we're not spending money smartly enough". Because in an organization budget=power. I have yet to see an IT project that would have 100+ developers that would _really_ succeed (as opposed to succeed by redefining what it was to deliver to what was actually delivered).

Oh, and last point, on the documentation. TBH, documentation of the code is superfluous if a) it's clear what business problem is being solved b) has a good set of test cases c) the code is reasonably cleanly written (which tends to be the real problem). Documenting code by anything else but example is in my experience just a costly exercise. Mind you, this is entirely different from documenting how systems hang together and how their interfaces work.

Yves Smith Post author , April 11, 2017 at 7:52 am

On the last point, I have to tell you I in short succession happened to work not just with O'Connor, but about a year later, with Bankers Trust, then regarded as the other top IT shop on Wall Street. Both CIOs would disagree with you vehemently on your claim re documentation.

vlade , April 11, 2017 at 8:25 am

Yes, in 90s there was a great deal of emphasis on code documentation. The problem with that is that the requirements in real world change really quick. Development techniques that worked for sending the man to the moon don't really work well on short-cycle user driven developments.

90s was mostly the good old waterfall method (which was really based on the NASA techniques), but even as early as 2000s it started to change a lot. Part of it come from the realization that the "building" metaphor that was the working approach for a lot of that didn't really work for code.

When you're building a bridge, it's expensive, so you have to spend a lot of time with blueprints etc. When you're doing code, documenting it in "normal" human world just adds a superfluous step. It's much more efficient to make sure your code is clean and readable than writing extra documents that tell you what the code does _and_ have to be kept in sync all the time.

Moreover, bits like pretty pictures showing the code interaction, dependencies and sometimes even more can now be generated automatically from the code, so again, it's more efficient to do that than to keep two different versions of what should be the same truth.

Yves Smith Post author , April 11, 2017 at 8:31 am

With all due respect, O'Connor and Bankers Trust were recognized at top IT shops then PRECISELY because they were the best, bar none, at "short cycle user driven developments." They were both cutting edge in derivatives because you had to knock out the coding to put new complex derivatives into production.

Don't insinuate my clients didn't know what they were talking about. They were running more difficult coding environments than you've ever dealt with even now. The pace of derivative innovation was torrid then and there hasn't been anything like it since in finance. Ten O'Connor partners made $1 billion on the sale of their firm, and it was entirely based on the IT capabilities. That was an unheard of number back then, 1993, particularly given the scale of the firm (one office in Chicago, about 250 employees).

vlade , April 11, 2017 at 9:23 am

Yves,

I can't talk about how good/bad your clients were except for generic statements – and the above were generic statements that in 90s MOST companies used waterfall.

At the same time please do not talk about what programming environments I was in, because you don't know. That's assuming it's even possible to compare coding environments – because quant libraries that first and foremost concentrate on processing data (and I don't even know it's what was the majority of your clients code) is a very very different beast from extremely UI complex but computationally trivial project, or something that has both trivial UI and computation but is very database heavy etc. etc.

I don't know what specific techniques your clients used. But the fact they WANTED to have more documentation doesn't mean that having more documentation would ACTUALLY be useful.

With all due respect, I've spent the first half of 00s talking to some of the top IT development methodologists of the time, from the Gang Of Four people to Agile Manifesto chaps, and practicing/leading/implementing SW development methodology across a number of different industries (anything from "pure" waterfall to variants of it to XP).

The general agreement across the industry was (and I believe still is) that documenting _THE CODE_ (outside of the code) was waste of time (actually it was ranging from any design doc to various levels of design doc, depending on who you were talking to).

Again, I put emphasis on the code – that is not the same as say having a good whitepaper telling you how the model you're implementing works, or what the hell the users actually want – i.e. capturing the requirements.

As an aside – implementation of new derivative payoffs can be actually done in a fairly trivial way, depending on how exactly you model them in the code. I've wrote an extensive library that did it, whose whole purpose was to deal with new products and allow them to be incubated quickly and effectively – and that most likely involved doing things that no-one at BT/O'Conner even looked at in early 1990s (because XVA wasn't even gleam in anyone's eye at that time).

Clive , April 11, 2017 at 9:54 am

Well at my TBTF, where incomprehensible chaos rules, the only thing - and I do mean the only thing - that keeps major disasters averted (perhaps "ameliorated" is putting it better) is where some of the key systems are documented. Most of the core back end is copiously and reasonably well documented and as such can survive a lot of mistreatment at the hands of the current outsourcer de jour.

But some "lower priority" applications are either poorly documented or not documented at all. And a "low priority" application is only "low priority" until it happens to sit on the critical path. Even now I have half of Bangalore (it seems so, at any rate) sitting there trying to reverse engineer some sparsely documented application - although I suspect there was documentation, it just got "lost" in a succession of handovers - desperate in their attempts to figure out what the application does and how it does it. You can hear the fear in their voices, it is scary stuff, given how crappy-little-VB6-pile-of-rubbish is now the only way to manage a key business process where there are no useable comments in the code and no other application documentation, you are totally, totally screwed.

visitor , April 11, 2017 at 3:51 pm

Your TBTF corporation is ISO 9000-3,9001/CMM/TickIt/ITIL certified, of course?

Skip Intro , April 11, 2017 at 11:48 am

It seems like you guys are talking past each other to some degree. I get the sense that vlade is talking about commenting code, and dismissing the idea of code comments that don't live with the code. Yves' former colleagues are probably referring to higher level specifications that describe the functionality, requirements, inputs, and outputs of the various software modules in the system.
If this is the case, then you're both right. Even comments in the code can tend to get out of date due to application of bug fixes, and other reasons for 'drift' in the code, unless the comments are rigorously maintained along wth the code. Were the code-level descriptions maintained somewhere else, that would be much more difficult and less useful. On the other hand the higher-level specifications are pretty essential for using, testing, and maintaining the software, and would sure be useful for someone trying to replace all or parts of the system.

Clive , April 11, 2017 at 12:30 pm

In my experience you need a combination of both. There is simply no substitute for a brief line in some ghastly nested if/then procedure that says "this section catches host offline exceptions if the transaction times out and calls the last incremental earmarked funds as a fallback" or what-have-you.

That sort of thing can save weeks of analysis. It can stop an outage from escalating from a few minutes to hours or even days.

Mathiasalexander , April 11, 2017 at 8:22 am

They could try building the new system from scratch as a stand alone and then entering all the data manually.

Ivy , April 11, 2017 at 10:39 am

There is some problem-solving/catastrophe-avoiding discussion about setting up a new bank with a clean, updated (i.e., this millennium) IT approach and then merging the old bank into that and decommissioning that old one. Many questions arise about applicable software both in-house and at all those vendor shops that would need some inter-connectivity.

Legacy systems lurk all over the economy, from banks to utilities to government and education. The O'Connor CIO advice relating to life-cycle costing was probably unheard in many places besides
The Street.

d , April 11, 2017 at 4:24 pm

building them from scratch is usually the most likely to be a failure as to many in both IT and business only know parts of the needs. and if a company cant implement a vendor supplied package to do the work, what makes us think they can do it from scratch

visitor , April 11, 2017 at 9:44 am

I did learn COBOL when I was at the University more than three decades ago, and at that time it was already decidedly "uncool". The course, given by an old-timer, was great though. I programmed in COBOL in the beginnings of my professional life (MIS applications, not banking), so I can provide a slightly different take on some of those issues.

As far as the language itself is concerned, disregard those comments about it being like "assembly". COBOL already showed its age in the 1980s, but though superannuated it is a high-level language geared at dealing with database records, money amounts (calculations with controlled accuracy), and reports. For that kind of job, it was not that bad.

The huge shortcoming of COBOL is that there are no equivalent of editing programs.

While in the old times a simple text editor was the main tool for programming in that language, modern integrated, interactive development environments for COBOL have been available for quite a while - just as there are for Java, C++ or C#.

And that is a bit of an issue. For, already in my times, a lot, possibly most COBOL was not programmed manually, but generated automatically - typically from pseudo-COBOL annotations or functional extensions inside the code. Want to access a database (say Oracle, DB2, Ingres) from COBOL, or generate a user interface (for 3270 or VT220 terminals in those days), or perform some networking? There were extensions and code generators for that. Nowadays you will also find coding utilities to manipulate XML or interface with routines in other programming languages. All introduce deviations and extensions from the COBOL norm.

If, tomorrow, I wanted to apply for a job at one of those financial institutions battling with legacy software, my rusty COBOL programming skills would not be the main problem, but my lack of knowledge of the entire development environment. That would mean knowing those additional code generators, development environments, extra COBOL-geared database/UI/networking/reporting modules. In an IBM mainframe environment, this would probably mean knowing things like REXX, IMS or DB2, CICS, etc (my background is DEC VMS and related software, not IBM stuff).

So those firms are not holding dear onto just COBOL programmers - they are desperately hoarding people who know their way around in mainframe programming environments for which training (in Universities) basically stopped in the early 1990s.

Furthermore, I suspect that some of those code generators/interfaces might themselves be decaying legacy systems whose original developers went out of business or have been slowly withdrawing from their maintenance. Correcting or adjusting manually the COBOL code generated by such tools in the absence of vendor support is lots of fun (I had to do something like that once, but it actually went smoothly).

Original programmers rarely wrote handbooks

My experience is that proper documentation has a good chance to be rigorously enforced when the software being developed is itself a commercial product to be delivered to outside parties. Then, handbooks, reference manuals and even code documentation become actual deliverables that are part of the product sold, and whose production is planned and budgeted for in software development programmes.

I presume it is difficult to ensure that effort and resources be devoted to document internal software because these are purely cost centers - not profit centers (or at least, do not appear as such directly).

That is not to say that it is impossible to move off legacy platforms

So, we knew that banks were too big to fail, too big to jail, and are still too big to bail. Are their software problems too big to nail?

d , April 11, 2017 at 4:27 pm

actually suspect banks like the rest of business dont really care about their systems, till they are down, as they will find the latest offshore company to do it cheaper.

Yves Smith Post author , April 11, 2017 at 5:58 pm

Why then have I been told that reviewing code for Y2K had to be done line by line?

I said documentation, not handbooks. And you are assuming banks hired third parties to do their development. Buying software packages and customizing them, as well as greater use of third party vendors, became a common practice only as of the 1990s.

JTMcPhee , April 11, 2017 at 10:33 am

I'm in favor of the "Samson Option" in this area.

I know it will screw me and people I care about, and "throw the world economy into chaos," but who effing cares (hint: not me) if the code pile reaches past the limits of its angle of repose, and slumps into some chaotic non-form?

Maybe a sentiment that gets me some abuse, but hey, is it not the gravamen of the story here that dysfunction and then collapse are very possible, maybe even likely?

And where are the tools to re-build this Tower of Babel, symbol of arrogant pride? Maybe G_D has once again, per the Biblical story, confounded the tongues of men (and women) to collapse their edifices and reduce them to working the dirt (what's left of it after centuries of agricultural looting and the current motions toward temperature-driven uninhabitability.)

Especially interesting that people here are seemingly proud of having taken part successfully in the construction of the whole derivatives thing. Maybe I'm misreading that. But what echoes in my mind in this context is the pride that the people of Pantex, https://en.wikipedia.org/wiki/Pantex_Plant , have in their role in keeping the world right on the ragged edge of nuclear "Game Over." On the way to Rapture, because they did G_D's work in preparing Armageddon. http://articles.chicagotribune.com/1986-09-05/features/8603060693_1_pantex-plant-nuclear-weapons-amarillo

"What a wondrous beast this human is "

lyman alpha blob , April 11, 2017 at 10:57 am

So is it time to go long on duct tape and twine?

ChrisAtRU , April 11, 2017 at 11:19 am

#Memories

My first job out of uni, I was trained as a MVS/COBOL programmer. After successfully completing the 11-week pass/fire course, I showed up to my 1st work assignment where my boss said to me, "Here's your UNIX terminal."

;-) – COBOL didn't strike me as difficult, just arcane and verbose. Converting to SAP is a costly nightmare. That caused to me to leave a job once had no desire to deal with SAP/ABAP. I'm surprised no one has come up with an acceptable next-gen thing . I remember years ago seeing an ad for Object-Oriented-COBOL in an IT magazine and I almost pissed myself laughing. On the serious side, if it's still that powerful and well represented in Banking, perhaps someone should look into an upgraded version of the language/concepts and build something easy to lift and shift COBOL++?

Wherefore are ye startup godz

#OnlyHalfKidding

#MaybeNot

Peewee , April 11, 2017 at 12:22 pm

This sounds like an opportunity for a worker's coop, to train their workers in COBOL and to get back at these banks by REALLY exploiting them good and hard.

MartyH , April 11, 2017 at 12:57 pm

@Peewee couldn't agree more! @Diptherio?

susan the other , April 11, 2017 at 1:02 pm

so is this why no one is willing to advocate regulating derivatives in an accountable way? i almost can't believe this stuff. i can't believe that we are functioning at all, financially. 80% of IT projects fail? and if legacy platforms are replaced at great time and expense, years and trillions, what guarantee is there that the new platform will not spin out just as incomprehensibly as COBOL based software evolved, with simplistic patches of other software lost in translation? And maybe many times faster. Did Tuttle do this? I think we need new sophisticated hardware, something even Tuttle can't mess with.

Skip Intro , April 11, 2017 at 3:40 pm

I think it is only 80% of 'large' IT projects fail. I think it says more about the lack of scalability of large software projects, or our (in-) ability to deal with exponential complexity growth

JimTan , April 11, 2017 at 2:34 pm

Looks like there are more than a few current NYC jobs at Accenture, Morgan Stanley, JPMorgan Chase, and Bank of America for programmers who code in COBOL.

https://www.indeed.com/jobs?q=mainframe+Cobol+&l=New+York%2C+NY

[Apr 09, 2017] Time to do some fact checking on this right wing spin

Apr 09, 2017 | economistsview.typepad.com
DeDude , April 08, 2017 at 12:31 PM
Now isn't that amazing. When you increase the income of the consumer class workers you grow the economy.

http://ritholtz.com/2017/04/new-seattle-post/

Nobody could have predicted that - at least not if they were addicted to right wing narratives.

pgl -> DeDude... , April 08, 2017 at 12:31 PM
Ritholtz has had a field day debunking the right wing intellectual garbage of Martin Perry but today he turns on right wing toadie Tim Worstall.

Great link!

pgl -> pgl... , April 08, 2017 at 12:38 PM
Worstall:

https://www.forbes.com/sites/timworstall/2017/04/05/seattles-2-9-unemployment-rate-tells-us-nothing-about-the-effects-of-seattles-minimum-wage-rise/#782d373068b8

"Sure, it's lovely that unemployment in Seattle dips under 3%. But an attempt to tie that drop in the unemployment rate to the minimum wage isn't going to work. For we can as easily note that the unemployment rate has dropped everywhere in the US over this same time period and the minimum wage hasn't risen everywhere over that time period. We've not even got a consistent correlation between minimum wages and unemployment that is.mWhat we've actually got to do is try to work out some method of what would have happened in Seattle from all of the effects of everything else other than the minimum wage, then compare it to what did happen with the minimum wage. The difference between these two will be the effect of the minimum wage rise. Seattle City Council know this, which is why they asked the University of Washington to run exactly such a study."

Worstall reaches back to this July 2016 paper:

https://evans.uw.edu/sites/default/files/MinWageReport-July2016_Final.pdf

Time to do some fact checking on this right wing spin.

[Apr 06, 2017] Approximately 10 million males ages 25-54 are unemployed. Fifty-seven percent of these are on disability

Apr 06, 2017 | economistsview.typepad.com
New Deal democrat , April 05, 2017 at 05:56 AM
Via Business Insider
http://www.businessinsider.com/jamie-dimon-ceo-letter-jpmorgan-on-education-and-labor-force-participation-2017-4

This is from Jamie Dimon's letter to stockholders:

"If the work participation rate for this group [men ages 25-54] went back to just 93% – the current average for the other developed nations – approximately 10 million more people would be working in the United States. Some other highly disturbing facts include: Fifty-seven percent of these non-working males are on disability"

I don't know where he got the statistic from, but if it is true it is potent evidence that the main factor behind the 60 year long decline in prime age labor force participation by men is an increase in those on disability, probably due to both the expansion of the program, and better longevity and diagnostics -- and probably also tied in to opiate addiction as well.

pgl -> New Deal democrat... , April 05, 2017 at 08:14 AM
So does Jamie sitting on his mountain of other people's money have some magic solution that will get this EPOP back to 93%? I guess if we all bank at JPMorganChase, all will be fine? C'mon Jamie.
New Deal democrat -> pgl... , April 05, 2017 at 08:54 AM
I'm only citing him for the disability stat.

Do you happen to have any source material that would indicate whether that stat is correct or not?

pgl -> New Deal democrat... , April 05, 2017 at 09:37 AM
There has been a bit of a discussion on this - most of which I sort of found unconvincing. Sorry but I am not the expert on this one. And I doubt Jamie Dimon is not either.
EMichael -> New Deal democrat... , April 05, 2017 at 08:26 AM
Never, ever listen to Jamie Dimon about anything.

"This is another common explanation for the drop in male participation. But again it doesn't explain more than a fraction of the phenomenon.

There's not much doubt that Social Security Disability Insurance takes people out of the workforce, often by inelegant design. In order to qualify for disability payments, people typically have to prove that they cannot work full-time. SSDI critics say this policy sidelines many people who might otherwise be able to contribute to the economy.

But how many people does SSDI really remove? From 1967 to 2014, the share of prime-age men getting disability insurance rose from 1 percent to 3 percent. There is little chance that this increase is entirely the result of several million fraudulent attempts to get money without working. But even if it were, SSDI would still only explain about one-quarter of the decline in the male participation rate over that time. There are many good reasons to reform disability insurance. But it's not the singular driving force behind the decline of working men."

https://www.theatlantic.com/business/archive/2016/06/the-missing-men/488858/

pgl -> EMichael... , April 05, 2017 at 08:28 AM
When Dimon makes a recommendation re regulating his own sector, the best thing to do is just the opposite.

[Apr 04, 2017] Americans Want More Than Just Money to Live On

Apr 04, 2017 | www.bloomberg.com

APRIL 3, 2017 9:00 AM EDT

Donald Trump's election as president should have reminded liberals that Americans want more than money from their work. They responded to Trump's promise of jobs more than to Hillary Clinton's promise of government benefits because in addition to money, people also need dignity, a sense of self-reliance and respect within their community. For centuries, jobs have provided all of those.

To say that work is disappearing would be an exaggeration. But despite the low unemployment rate, fewer Americans have jobs than in years past:

[chart]

This new class of non-workers may be able to survive on the government dole, the charity of friends and family or via black-market activities like drug sales. But they've probably lost some of the dignity and respect that used to come with working for a living. Falling employment has been linked to declining marriage rates, reduced happiness and opiate abuse. Some economists even blame disappearing jobs for the recent rise in mortality rates afflicting white Americans.

What's more, the longer people stay out of the labor force, the more trouble they will have getting back into it. They lose work ethic, skills and connections, and employers become suspicious of the large gaps in the resumes. Economists Brad DeLong and Larry Summers have shown that this so-called labor-market hysteresis can have potentially large, long-lasting negative effects on the economy.

When the economy is in recession, the best approach is probably a combination of fiscal and monetary stimulus. But when the labor-force dropout problem is chronic, as it is now, a different kind of policy may be needed -- a government-job guarantee.

The U.S. has used an approach like this before. In 1935, the administration of President Franklin Roosevelt established the Works Progress Administration, which employed millions of American men, mostly in public-works projects. WPA employees received hourly wages similar to other unskilled workers in the surrounding area. Most of them built infrastructure and buildings, but a few were paid to make art and write books. The total cost of the program was high -- $1.3 billion a year, or about 1.7 percent of U.S. gross domestic product. An equivalent expenditure now would be a little more than $300 billion, or about half of federal defense spending. But the popularity of the program is hard to deny, given Roosevelt's resounding victory in his reelection bid in 1936.

The idea of a new work program isn't a new one -- economists on all sides of the political spectrum have been kicking it around for years now. It has received support from Stephanie Kelton, an adviser to the Bernie Sanders presidential campaign, and from Kevin Hassett, who is reportedly Trump's pick to lead the Council of Economic Advisers. Jeff Spross has an excellent article in Democracy exploring the idea in depth.

William Darity of Duke University has been a particularly avid promoter of a job guarantee. He describes it thus:

Any American 18 years or older would be able to find work through a federally funded public service employment program -- a "National Investment Employment Corps." Each National Investment Employment Corps job would offer individuals non-poverty wages, a minimum salary of $20,000, plus benefits including federal health insurance. The types of jobs offered could address the maintenance and construction of the nation's physical and human infrastructure, from building roads, bridges, dams and schools, to staffing high quality day care.
There is no shortage of work to be done. Even beyond the tasks Darity lists, the U.S. is full of jobs that need doing, from elder care to renovation of old decaying buildings, to cleanup of lead and other pollution, to construction and staffing of transit systems.

Darity estimates the cost of the program at $750 billion a year, Spross at $670 billion. That's about equivalent to all of the U.S.'s current anti-poverty programs, and would be about twice the size of the old WPA. So this would be a very big deal. But the true cost to society would be considerably less, because the jobs would provide value. Better infrastructure, more child care and elder care, and a cleaner, healthier environment would make the nation a richer, better place to live -- in other words, those benefits should defray much of the program's cost. Also, the program would take people off of the welfare rolls and cut government anti-poverty spending. Finally, even when the economy isn't in a recession, more income will probably increase demand in the local economy.

All told, the program could end up being a bargain. And if the guarantee is limited to distressed, low-employment areas, which could lower the costs down even more, and allow for pilot programs to establish the viability of the concept.

Many people on the left and elsewhere don't like this idea. They doubt that government make-work will provide dignity. And they believe strongly in the theory that automation will soon put large numbers of people out of a job entirely. The only solution, they say, is to change U.S. culture and values to make work less important, and to rely on programs like universal basic income. On the right, some would inevitably see the plan as a first step on the road to socialism.

Maybe the critics will prove right in the long run. But for now, forcing a dramatic change on American culture is a lot harder than simply giving people jobs. Robot-driven unemployment and new social values are still mostly in the realm of science fiction, while the American public wants jobs now. A job guarantee looks like a very good thing to try.

Peter K. said in reply to Peter K.... Do both, the UBI and Job Guarantee.

Why doesn't Noah Smith discuss Fed Fail in detail and about how conservatives forced unprecedented austerity on the economy.

This is not just "natural" or the evolution of technology, demographics and innovation.

He should be supporting an NGDP target, etc.

At very least run the economy hot.

Reply Tuesday, April 04, 2017 at 12:08 PM Peter K. said in reply to Peter K.... What Smith does not discuss is how the Fed is currently raising rates to kill jobs. Reply Tuesday, April 04, 2017 at 12:09 PM

[Mar 22, 2017] Stephen Williamson New Monetarist Economics What is full employment anyway, and how would we know if we are there

Mar 22, 2017 | newmonetarism.blogspot.com
Sunday, March 19, 2017 What is full employment anyway, and how would we know if we are there? What are people talking about when they say "full employment?" Maybe they don't know either? Whatever it is, "full employment" is thought to be important for policy, particularly monetary policy. Indeed, it typically enters the monetary policy discussion as "maximum employment," the second leg of the Fed's dual mandate - the first leg being "price stability."

Perhaps surprisingly, there are still people who think the US economy is not at "full employment." I hate to pick on Narayana, but he's a convenient example. He posted this on his Twitter account:

Are we close to full emp? In steady state, emp. growth will be about 1.2M per year. It's about *twice* that in the data. (1) Employment is growing much faster than long run and inflation is still low. Conclusion: we're well below long run steady state. end
Also in an interview on Bloomberg, Narayana gives us the policy conclusion. Basically, he thinks there is still "slack" in the economy. My understanding is that "slack" means we are below "full employment."

So what is Narayana saying? I'm assuming he is looking at payroll employment - the employment number that comes from the establishment survey. In his judgement, in a "steady state," which for him seems to mean the "full employment" state, payroll employment would be growing at 1.2M per year, or 100,000 per month. But over the last three months, the average increase in payroll employment has exceeded 200,000 per month. So, if we accept all of Narayana's assumptions, we would say the US economy is below full employment - it has some catching up to do. According to Narayana, employment can grow for some time in excess of 100,000 jobs per month, until we catch up to full employment, and monetary policy should help that process along by refraining from interest rate hikes in the meantime.

Again, even if we accept all of Narayana's assumptions, we could disagree about his policy recommendation. Maybe the increase in the fed funds rate target will do little to impede the trajectory to full employment. Maybe it takes monetary policy a period of time to work, and by the time interest rate hikes have their effect we are at full employment. Maybe the interest rate hikes will allow the Fed to make progress on other policy goals than employment. But let's explore this issue in depth - let's investigate what we know about "full employment" and how we would determine from current data if we are there or not.

Where does Narayana get his 1.2M number from? Best guess is that he is looking at demographics. The working age population in the United States (age 15-64) has been growing at about 0.5% per year. But labor force participation has grown over time since World War II, and later cohorts have higher labor force participation rates. For example, the labor force participation rate of baby-boomers in prime working age was higher than the participation rate of the previous generation in prime working age. So, this would cause employment growth to be higher than population growth. That is, Narayana's assumptions imply employment growth of about 0.8% per year, which seems as good a number as any. Thus, the long-run growth path for the economy should exhibit a growth rate of about 0.8% per year - though there is considerable uncertainty about that estimate.

But, we measure employment in more than one way. This chart shows year-over-year employment growth from the establishment survey, and from the household survey (CPS): For the last couple of years, employment growth has been falling on trend, by both measures. But currently, establishment-survey employment is growing at 1.6% per year, and household survey employment is growing at 1.0% per year. The latter number is a lot closer to 0.8%. The establishment survey is what it says - a survey of establishments. The household survey is a survey of people. The advantages of the establishment survey are that it covers a significant fraction of all establishments, and reporting errors are less likely - firms generally have a good idea how many people are on their payrolls. But, the household survey has broader coverage (includes the self-employed for example) of the population, and it's collected in a manner consistent with the unemployment and labor force participation data - that's all from the same survey. There's greater potential for measurement error in the household survey, as people can be confused by the questions they're asked. You can see that in the noise in the growth rate data in the chart.

Here's another interesting detail: This chart looks at the ratio of household-survey employment to establishment-survey employment. Over long periods of time, these two measures don't grow at the same rate, due to changes over time in the fraction of workers who are in establishments vs. those who are not. For long-run employment growth rates, you should put more weight on the household survey number (as this is a survey of the whole working-age population), provided of course that some measurement bias isn't creeping into the household survey numbers over time. Note that, since the recession, establishment-survey employment has been growing at a significantly higher rate than household-survey employment.

So, I think that the conclusion is that we should temper our view of employment growth. Maybe it's much closer to a steady state rate than Narayana thinks.

But, on to some other measures of labor market performance. This chart shows the labor force participation rate (LFPR) and the employment-population ratio (EPOP). Here, focus on the last year. LFPR is little changed, increasing from 62.9% to 63.0%, and the same is true for EPOP, which increased from 59.8% to 60.0%. That looks like a labor market that has settled down, or is close to it.

A standard measure of labor market tightness that labor economists like to look at is the ratio of job vacancies to unemployment, here measured as the ratio of the job openings rate to the unemployment rate: So, by this measure the labor market is at its tightest since 2001. Job openings are plentiful relative to would-be workers.

People who want to argue that some slack remains in the labor market will sometimes emphasize unconventional measures of the unemployment rate: In the chart, U3 is the conventional unemployment rate, and U6 includes marginally attached workers (those not in the labor force who may be receptive to working) and those employed part-time for economic reasons. The U3 measure is not so far, at 4.7%, from its previous trough of 4.4% in March 2007, while the gap between current U6, at 9.2% and its previous trough, at 7.9% in December 2006, is larger. Two caveats here: (i) How seriously we want to take U6 as a measure of unemployment is an open question. There are problems even with conventional unemployment measures, in that we do not measure the intensity of search - one person's unemployment is different from another's - and survey participants' understanding of the questions they are asked is problematic. The first issue is no worse a problem for U6 than for U3, but the second issue is assuredly worse. For example, it's not clear what "employed part time for economic reasons" means to the survey respondent, or what it should mean to the average economist. Active search, as measured in U3, has a clearer meaning from an economic point of view, than an expressed desire for something one does not have - non-satiation is ubiquitous in economic systems, and removing it is just not feasible. (ii) What's a normal level for U6? Maybe the U6 measure in December 2006 was undesirably low, due to what was going on in housing and mortgage markets.

Another labor market measure that might be interpreted as indicating labor market slack is long term unemployment (unemployed 27 weeks or more) - here measured as a rate relative to the labor force: This measure is still somewhat elevated relative to pre-recession times. However, if we look at short term unemployment (5 weeks or less), this is unusually low: As well, the insured unemployment rate (those receiving unemployment insurance as a percentage of the labor force) is very low: To collect UI requires having worked recently, so this reflects the fact that few people are being laid off - transitions from employment to unemployment are low.

An interpretation of what is going on here is that the short-term and long-term unemployed are very different kinds of workers. In particular, they have different skills. Some skills are in high demand, others are not, and those who have been unemployed a long time have skills that are in low demand. A high level of long-term unemployed is consistent with elevated readings for U6 - people may be marginally attached or wanting to move from part-time to full-time work for the same reasons that people have been unemployed for a long time. What's going on may indicate a need for a policy response, but if the problem is skill mismatch, that's not a problem that has a monetary policy solution.

So, if the case someone wants to make is that the Fed should postpone interest rate increases because we are below full employment - that there is still slack in the labor market - then I think that's a very difficult case to make. We could argue all day about what an output gap is, whether this is something we should worry about, and whether monetary policy can do much about an output gap, but by conventional measures we don't seem to have one in the US at the current time. In terms of raw economic performance (price stability aside), there's not much for the Fed to do at the current time. Productivity growth is unusually low, as is real GDP growth, but if that's a policy problem, it's in the fiscal department, not the monetary department.

But there is more to Narayana's views than the state of the labor market. He thinks it's important that inflation is still below the Fed's target of 2%. Actually, headline PCE inflation, which is the measure specified in the Fed's longer-run goals statement, is essentially at the target, at 1.9%. I think what Narayana means is that, given his Phillips-curve view of the world, if we are close to full employment, inflation should be higher. In fact, the long-run Fisher effect tells us that, after an extended period of low nominal interest rates, the inflation rate should be low. Thus, one might actually be puzzled as to why the inflation rate is so high. We know something about this, though. Worldwide, real rates of interest on government debt have been unusually low, which implies that, given the nominal interest rate, inflation will be unusually high. But, this makes Narayana's policy conclusion close to being correct. The Fed is very close to its targets - both legs of the dual mandate - so why do anything?

A neo-Fisherian view says that we should increase (decrease) the central bank's nominal interest rate target when inflation is too low (high) - the reverse of conventional wisdom. But maybe inflation is somewhat elevated by increases in the price of crude oil, which have since somewhat reversed themselves. So, maybe the Fed's nominal interest rate target should go up a bit more, to achieve its 2% inflation target consistently.

Though Narayana's reasoning doesn't lead him in a crazy policy direction, it would do him good to ditch the Phillips curve reasoning - I don't think that's ever been useful for policy. If one had (I think mistakenly) taken Friedman to heart (as appears to be the case with Narayana), we might think that unemployment above the "natural rate" should lead to falling inflation, and unemployment below the natural rate should lead to rising inflation. But, that's not what we see in the data. Here, I use the CBO's measure of the natural rate of unemployment (quarterly data, 1990-2016): According to standard Friedman Phillips-curve logic, we should see a negative correlation in the chart, but the correlation is essentially zero.

Posted by Stephen Williamson at 1 comment:

  1. Avraam J Dectis March 21, 2017 at 7:58 AM

    .
    Nice insightful column.

    One thing I wonder about is the possibility that policy implementing economists are a bit insulated from reality. It seems possible their personal experiences might reinforce a feeling that everything is all right.

    Meanwhile countervailing data may subconsciously be given short shrift. A shrinking middle class, stagnant wages, declining labor force participation of adult males all seem ignored.

    Could it be argued that full employment is characterized by a robust and growing middle class? Economics is both a hard and social science and social criteria may belong in the definition of full employment.

    Is it wise to try to throttle growth as soon as policy mandates are achieved, thus seeking to maintain a virtuous steady state equilibrium? Might it not be better to attempt more of a sine wave economic policy, deliberately overshooting targets to bring the marginal sidelined workers into the economy where they can gain experience and then, if necessary, briefly overshooting constraining measures to quickly contain possible excesses?

[Mar 19, 2017] When inequality is driven by extremes at the tail, using median means that you dont see much change in the demographics

Mar 19, 2017 | economistsview.typepad.com
libezkova : March 16, 2017 at 09:51 PM , 2017 at 09:51 PM
"the U.S. middle class - with household incomes ranging from two-thirds to double the national median"

Median household income in the US in 2015 was less the $60K. Two-thirds is $40K. That's almost poverty not middle class.

Sociologically the middle class is a quasi-elite of professionals and managers, who are largely immune to economic downturns and trends such as out-sourcing.

reason -> libezkova... , March 17, 2017 at 04:24 AM
The definition game? Define something to something else as is being talked about and then claim, claims based on a completely different definition are false?
Lyle -> libezkova... , March 17, 2017 at 12:47 PM
Actually with the change in ratio professionals and managers now tend to upper middle class, (29% of us is upper middle now, 32% middle).

One of the influences is that post WWII it was possible to be middle class and work on an assembly line in a job that was described as check your brain at the door. Automation and process changes have wiped the high pay of such jobs out. Steel makers for example thru mainly process changes (electric furnaces using scrap, continuous casting and the like) mean that it takes 1/5 the hours to produce a ton of steel in did in the 1970s.

The movement of assembly line jobs to the middle class occured because there was a period where the US was much less involved with the rest of the world economically, because their industries had all been destroyed. The change started during the Johnson admin, and showed up in the high inflation of the Nixon admin.

cm -> libezkova... , March 17, 2017 at 10:48 PM
Most "professionals and managers" are nowhere near being immune to downturns and outsourcing, in aggregate.

You could likewise claim that "low skilled" or any other occupations are "immune" as somewhere around 70-80% of their members continue being employed through tough times, in aggregate.

If you take "tech", companies laying off around 5-10% or even more of their staff in busts is a frequent enough occurrence. And that's in addition to the "regular" age discrimination and cycling of workers justified with "outdated skills". Being young and (supposedly) impressionable is a skill!

D. C. Sessions -> libezkova... , March 18, 2017 at 10:16 AM
"the U.S. middle class - with household incomes ranging from two-thirds to double the national median"

That's almost tautological. By definition, there can't be a whole lot of change in the population of groups defined relative to median. Income and wealth of those groups, though, can be enlightening.

Substitute "mean" for "median" and watch what happens. When inequality is driven by extremes at the tail, using "median" means that you don't see much change in the demographics. (Hint: if "middle class" is defined as half to twice the average income, there are damned few in that bracket.)

[Mar 17, 2017] The best existing research suggests that modest increases in minimal wage have had little or no employment-reducing impact.

Mar 17, 2017 | economistsview.typepad.com
Denis Drew : March 17, 2017 at 08:29 AM , 2017 at 08:29 AM
Re: America's employment problem - Lane Kenworthy

"It can do so by increasing the federal minimum wage to $10 per hour and indexing it to inflation. The best existing research suggests that modest increases such as this have had little or no employment-reducing impact. And the government should also increase the Earned Income Tax Credit, a refundable tax credit for workers, for people who don't have children (a strategy Brooks endorses)."

Here we go again. First, I thought we had left EITC behind as any kind of substantial answer to underpaid Americans: redistributing all of 1/2 of one percent of overall income when 45% of our workforce is earning less than what we think the minimum wage should be, $15 an hour.

$15 may be the most fast food can pay. Sometimes in McDonald's there are more people behind the counter than in front (most customers come through the drive through). If fast food (33% labor costs) can pay $15, then maybe Target (10%-15%) can pay $20, and maybe super efficient WalMart (7%) can pay $25.

Always keeping in mind that labor bought and sold sort of on margin. Doubling Walmart's pay could add only 7% to prices.

Bottom 45% of workforce now takes 10% share of overall income -- used to be 20%. Top 1% now 20% instead of 10%. How to get that 10% back -- how to supply the economic and political muscle to TAKE IT BACK: just put some teeth in the (federal) law that already says union busting is illegal.

States can do this without any fear of confronting federal preemption. States can make it a crime for wholesalers for instance to pressure individual retailers from combining their bargaining power -- same such law can overlap federal labor area; especially since fed left blank for 80 years. Blank or not: may overlap as with min wage.

No need for complicated policy researches; no need to spend a dime: states just make union busting a felony and let people organize if they wish to -- and get out of their way. :-)

Back to min wage. If you sell fewer labor hours for more dollars that works out better for labor than for potatoes -- because in the labor market the potatoes get the money to spend -- and they are more likely to spend it more on other potatoes than more upscale. Why min wage raises often followed by higher min wage employment. (Higher wage jobs lost -- everybody looking in wrong place.)

***************************

My minimum wage worksheet

(2013 dollars)
yr..per capita...real...nominal...dbl-index...%-of

68...15,473....10.74..(1.60)......10.74......100%
69-70-71-72-73 *
74...18,284.....9.43...(2.00)......12.61
75...18,313.....9.08...(2.10)......12.61
76...18,945.....9.40...(2.30)......13.04........72%
77 *
78...20,422.....9.45...(2.65)......14.11
79...20,696.....9.29...(2.90)......14.32
80...20,236.....8.75...(3.10)......14.00
81...20,112.....8.57...(3.35)......13.89........62%
82-83-84-85-86-87-88-89 *
90...24,000.....6.76...(3.80)......16.56
91...23,540.....7.26...(4.25)......16.24........44%
92-93-94-95 *
96...25,887.....7.04...(4.75)......17.85
97...26,884.....7.46...(5.15)......19.02........39%
98-99-00-01-02-03-04-05-06 *
07...29,075.....6.56...(5.85)......20.09
08...28,166.....7.07...(6.55)......19.45
09...27,819.....7.86...(7.25)......19.42........40%
10-11-12-13-14-15-16-17 *

anne -> Denis Drew ... , March 17, 2017 at 08:45 AM
https://fred.stlouisfed.org/graph/?g=d30R

January 4, 2017

Real Federal Minimum Hourly Wage for Nonfarm Workers, 1964-2016

(Indexed to 2016)

Denis Drew -> Denis Drew ... , March 17, 2017 at 09:05 AM
Re: The Man Who Made Us See That Trade Isn't Always Free - Noah Smith

"Instead, he and his co-authors found that trade with China in the 2000s left huge swathes of the U.S. workforce permanently without good jobs -- or, in many cases, jobs at all.

"This sort of concentrated economic devastation sounds like it would hurt not just people's pocketbooks, but the social fabric. In a series of follow-up papers, Autor and his team link Chinese import competition to declining marriage rates and political polarization. Autor told me that these social ills make the need for new thinking about trade policy even more urgent."

Here we go again. US manufacturing going from 16% of employment from 2000 to 12% in 2016 (half due automation) nowhere near as sucking-all-the-oxygen-out-of-life as the the bottom 45% of earners taking 10% of overall income, down from 20% over two generations -- more and more being recognized due to the loss of collective bargaining power ...

... for which loss the usual litany of causatives NEVER seem to include one mention of the complete lack of teeth protecting union organizing from market power in US labor law.

Simple answer: no studies or research needed, not a dollar appropriated: simply make union busting a felony at state level -- and get out of people's way.

States can do this without conflict with federal preemption. States can make it a crime for wholesalers for instance to pressure individual retailers from combining their bargaining power -- same such law can overlap federal labor area; especially since fed left blank for 80 years. Blank or not: may overlap as with min wage.

Don't do this and you'll never bring back collective bargaining power -- and all the genuine populist politics that goes with it!

anne -> Denis Drew ... , March 17, 2017 at 09:10 AM
http://www.bls.gov/webapps/legacy/cpslutab3.htm

January 15, 2017

United States Union Membership Rates, 1992-2016

Private wage and salary workers

1992 ( 11.5)
1993 ( 11.2) Clinton
1994 ( 10.9)

1995 ( 10.4)
1996 ( 10.2)
1997 ( 9.8)
1998 ( 9.6)
1999 ( 9.5)

2000 ( 9.0)
2001 ( 8.9) Bush
2002 ( 8.6)
2003 ( 8.2)
2004 ( 7.9)

2005 ( 7.8)
2006 ( 7.4)
2007 ( 7.5)
2008 ( 7.6)
2009 ( 7.2) Obama

2010 ( 6.9)
2011 ( 6.9)
2012 ( 6.6)
2013 ( 6.7)
2014 ( 6.6)

2015 ( 6.7)
2016 ( 6.4)

[Mar 17, 2017] Tax cuts kill jobs. Plain and simple.

Notable quotes:
"... Tax cuts kill jobs. Plain and simple. You can't create jobs by cutting the amount you paid workers. Taxes are prices that workers .pay You dodge taxes by underpaying workers. If taxes are cut, both paying workers is cut AND paying workers to dodge taxes is cut. ..."
Mar 17, 2017 | economistsview.typepad.com
mulp -> DrDick ... March 16, 2017 at 09:54 AM , 2017 at 09:54 AM
Forecasting is done to change human behavior to invalidate the forecasts.

Thus forecasts are by design never accurate about the future.

This is different than designing systems using natural laws.

A plane is designed to fly, because every forecast for it crashing has resulted in design changes to invalidate that forecast.

Conservatives hate forecasts because they hate changing their plans. To forecast slower gdp growth and job creation, or even contraction from tax cuts and spending cuts is unacceptable. Thus they strive to change forecasts or discredit them to get their policy implemented.

My forecast in the late 90s and early 00s was for economic disaster as a result of conservative policy eventually being implemented.

Tax cuts kill jobs. Plain and simple. You can't create jobs by cutting the amount you paid workers. Taxes are prices that workers .pay You dodge taxes by underpaying workers. If taxes are cut, both paying workers is cut AND paying workers to dodge taxes is cut.

That would have been the forecast in the 60s.

Today even Krugman and Bernie support job killing tax cuts based on that creating jobs. Lots of bad forecasting is done to back tax cuts. The tax cuts fail to create jobs, so the bad forecasts are blamed so every forecast is ignored, even the good ones.

New Deal democrat -> John Williams... , March 16, 2017 at 08:02 AM
That ecosystem forecasting system is safe until the animals and plants learn how to read. ;-)
Thi$ World$ Banker$ -> New Deal democrat... , March 16, 2017 at 09:03 AM

Believe it!

When Congressional critters learned to read, 45th POTUS was suddenly and permanently unable to drain the swamp of critters who grow fat on the pork-barrel-legislation that drains the public treasure of We the Workers and Savers.

These parasitic critters will grow fat and strong, strong enough to gobble up the the once brave workers who feed the fat in DC.

Thanks,
NDD
!

[Mar 14, 2017] No wonder the unemployed increasingly kill themselves, or others. The whole economy tells them, indirectly but unmistakably, that their human value does not exist.

Mar 14, 2017 | economistsview.typepad.com
Noni Mausa : March 13, 2017 at 04:13 PM

What the wealthy right wing has decided in the past 40 years is that they don't need citizens. At least, not as many citizens as are actually citizens. What they are comfortable with is a large population of free range people, like the longhorn cattle of the old west, who care for themselves as best they can, and are convenient to be used when the "ranchers" want them.

Of course, this is their approach to foreign workers, also, but for the purpose of maintaining a domestic society within which the domestic rich can comfortably live, only native born Americans really suit.

With the development of high productivity production, farming, and hands-off war technology the need for a large number of citizens is reduced. The wealthy can sit in their towers and arrange the world as suits them, and use the rest of the world as a "farm team" to supply skills and labour as needed.

Proof of this is the fact that they talk about the economy's need for certain skills, training, services and so on, but never about the inherent value of citizens independent of their utility to someone else.

No wonder the unemployed increasingly kill themselves, or others. The whole economy tells them, indirectly but unmistakably, that their human value does not exist. ken melvin : , March 13, 2017 at 04:48 PM

Can someone get me from $300 billion tax cut for the rich to getting the markets work for health care?
ken melvin : , March 13, 2017 at 04:54 PM
It isn't about 'markets', never is. It is about extraction of as much profit as possible using whatever means necessary. This is what the CEOs of insurance companies get payed to do. Insurance policies they don't pay out, the ones Ryan is referring to, are as good as any for scoring.
libezkova : , March 13, 2017 at 07:09 PM
"It isn't about 'markets', never is. It is about extraction of as much profit as possible using whatever means necessary. This is what the CEOs of insurance companies get payed to do."

What surprises me most in this discussion is how Obamacare suddenly changed from a dismal and expensive failure enriching private insurers to a "good deal".

Lesseevilism in action ;-)

ilsm : , March 13, 2017 at 01:41 PM
When the PPACA band-aid is pulled off the US health care mess the gusher will be blamed on "the Russians running the White House".

Cuba does better than the US despite being economically sanctioned for 55 years. Distribution of artificially scarce health care resources is utterly broken. This failed market is financed by a mix of 'for profit' insurance and medicare (which sublets a big part to 'for profit' insurance).

Coverage!!! PPACA added taxpayers' money to finance a bigger failed market. It did nothing to address the market fail!

Single payer would not address the market failure. Single payer would put the government financing most of the failed market.

Democrats have put band-aids on severe bleeds since Truman made the cold war more important than Americans.

At least we know what Trump stands for!

jeff fisher said in reply to ilsm... , March 13, 2017 at 01:58 PM
Cuba is the shining example of how doing the first 20% of healthcare well for everyone gets you 80% of the benefit cheap.

The US is the shining example of how refusing to do the first 20% of healthcare well for everyone only gets you 80% of the benefit no matter how much you spend.

jonny bakho : , March 13, 2017 at 12:09 PM
Mark's very nice argument does nothing to address The Official Trump Counter Argument:

[Shorter version: Obamacare is doomed, going to blow up. Any replacement is therefore better than Obamacare; Facts seldom win arguments against beliefs]

"During a listening session on healthcare at the White House on Monday, President Donald Trump said Republicans "are putting themselves in a very bad position by repealing Obamacare."

Trump said that his administration is "committed to repealing and replacing" Obamacare and that the House Obamacare replacement will lead to more choice at a lower cost. He further stated, "[T]he press is making Obamacare look so good all, of a sudden. I'm watching the news. It looks so good. They're showing these reports about this one gets so much, and this one gets so much. First of all, it covers very few people, and it's imploding. And '17 will be the worst year. And I said it once; I'll say it again: because Obama's gone."

He continued, "And the Republicans, frankly, are putting themselves in a very bad position - I tell this to Tom Price all the time - by repealing Obamacare. Because people aren't gonna see the truly devastating effects of Obamacare. They're not gonna see the devastation. In '17 and '18 and '19, it'll be gone by then. It'll - whether we do it or not, it'll be imploded off the map."

He added, "So, the press is making it look so wonderful, so that if we end it, everyone's going to say, 'Oh, remember how great Obamacare used to be? Remember how wonderful it used to be? It was so great.' It's a little bit like President Obama. When he left, people liked him. When he was here, people didn't like him so much. That's the way life goes. That's human nature."

Trump further stated that while letting Obamacare collapse on its own was the best thing to do politically, it wasn't the right thing to do for the country.

http://www.breitbart.com/video/2017/03/13/trump-republicans-putting-bad-position-repealing-obamacare/

[Mar 03, 2017] The crazy works iof IT hiring

Mar 03, 2017 | economistsview.typepad.com
"Back in the mid/late 90's, there was a running joke that tech companies were looking for people with more years of experience with certain programing languages than the programming languages even existed (in a form to be usable for commercial work)."

That's a very good and historically accurate point(in 90th Java was a crush ;-). And this type of parasitism continues to flourish even now. Just with the new buzzwords...

When employee's complain that that can't fill open positions that often means that they painstakingly define the position is such a way that the person deemed suitable can hit ground running on the first day or week on the job. No retraining period is needed. Like a new brake pads in a car. Totally replaceable.

To say nothing that in reality Google and other giants (Amazon, Microsoft, Facebook, etc) are to a large extent "cemeteries" for IT talent. What's so exciting is creating Gmail and many other Google products ? Absolutely nothing. This is a pretty disgusting reimplementation work.

cm -> New Deal democrat... March 01, 2017 at 07:55 AM , 2017 at 07:55 AM

One issue that you both don't mention is lags. Translating a demand for skill into available skill takes years to decades in the best of circumstances. Even for many so called "low skilled" jobs, people have to be trained commonly for several years. For "knowledge work" or "new technology paradigms", you basically have to bring up a new generation of school/college graduates.

Expecting training to happen "just like that", or to be funded by the workers themselves, is a non-starter.

And when the business has to pay for the training (with the risk that some of the cost cannot be recouped because trained up people may leave), then we are back at "lack of profitability".

Back in the mid/late 90's, there was a running joke that tech companies were looking for people with more years of experience with certain programing languages than the programming languages even existed (in a form to be usable for commercial work).

reason -> cm... , March 01, 2017 at 07:57 AM
"Back in the mid/late 90's, there was a running joke that tech companies were looking for people with more years of experience with certain programing languages than the programming languages even existed (in a form to be usable for commercial work)."

The trouble is, I think that was no joke, it was literally true. Which means that were deliberately recruiting liars. Maybe that explains a lot.

cm -> reason ... , March 01, 2017 at 08:24 AM
Yes, the joke was based on true anecdotes. Not sure about "deliberately", my most plausible assumption is that they just plugged the "skill" description into the standard job ad templates.

Looking for about 5 years experience - enough to (presumably) be able to do stuff, but not yet too old/tainted.

cm -> reason ... , March 01, 2017 at 08:27 AM
Also it is not necessary to have exactly all the asked experiences, at least when your resume will be selected/reviewed by a human. Of course if the recruiting process has been made "efficient" that will filter resumes by strict criteria, then the honest/modest applicants will be disproportionately screened out.
cm -> reason ... , March 01, 2017 at 08:30 AM
In a lot of big corps, the early stages of recruiting (processing/screening incoming resumes) are often outsourced to HR who obviously have little idea about the subject matter of the work, and can only go by buzzwords, possibly using computer software (OCR processing of resumes).

I have heard the story often that hiring managers are presented with unsuitable resumes/candidates, and often find better matches going through the raw data themselves. But that costs time ("inefficient").

Anachronism -> cm... , March 01, 2017 at 09:44 AM
I can tell you that, from a consulting standpoint, I have been on several contracts where we've interviewed someone who had great skills, and the person who showed up had zero. So now companies will Skype with people to make sure they're talking to the actual consultant.
DrDick -> cm... , March 01, 2017 at 11:28 AM
Sadly, that is true of far too many companies of all sorts today, who refuse to train their workers and expect them to come preprogrammed with the company's proprietary software.

[Feb 25, 2017] Unemployment versus Underemployment: Assessing Labor Market Slack

Feb 25, 2017 | economistsview.typepad.com
Unemployment versus Underemployment: Assessing Labor Market Slack : The U-3 unemployment rate has returned to prerecession levels and is close to estimates of its longer-run sustainable level. Yet other indicators of slack, such as the U-6 statistic, which includes people working part-time but wanting to work full-time (often referred to as part-time for economic reasons, or PTER), has not declined as quickly or by as much as the U-3 unemployment rate.

If unemployment and PTER reflect the same business-cycle effects, then they should move pretty much in lockstep. But as the following chart shows, such uniformity hasn't generally been the case. In the most recent recovery, unemployment started declining in 2010, but PTER started to move substantially lower beginning only in 2013. The upshot is that for each unemployed worker, there are now many more involuntary part-time workers than in the past.

anne : , February 21, 2017 at 01:01 PM
https://fred.stlouisfed.org/graph/?g=cNuM

January 4, 2017

Unemployment and Unemployment-Underemployment * rates, 1994-2017

* Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers; age 16 and over.


https://fred.stlouisfed.org/graph/?g=cNuZ

January 4, 2017

Unemployment and Unemployment-Underemployment * rates, 1994-2017

* Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers; age 16 and over.

(Indexed to 1994)

New Deal democrat : , February 21, 2017 at 01:19 PM
"during the last recession, firms reduced the hours of workers in low-skill jobs more than they cut the number of low-skill jobs"

I believe this is the correct explanation. I used to tack growth in hours vs. growth in payrolls, and what I found was that, had the 2008 recession followed the pattern of previous recessions, the peak unemployment rate would have been considerably higher. Let me do a little digging ....

New Deal democrat -> New Deal democrat... , February 21, 2017 at 01:29 PM
Here we go: aggregate hours vs. aggregate payrolls (indexed to 100 in 1964):

https://fred.stlouisfed.org/graph/?g=cNwf

The value reached its lowest level ever in 2009. In other words, relative more hours than jobs were cut in the Great Recession, even compared to other recessions.

anne -> New Deal democrat... , February 21, 2017 at 05:13 PM
Nicely done.

https://fred.stlouisfed.org/graph/?g=cNIF

February 21, 2017

Aggregate Weekly Hours for Production and Nonsupervisory Employees as a percent of Total Nonfarm Employees, 1980-2017

(Indexed to 1980)

anne -> anne... , February 21, 2017 at 03:37 PM
http://cepr.net/blogs/beat-the-press/trump-and-trade-he-s-largely-right

February 21, 2017

Trump and Trade: He's Largely Right

-- Dean Baker

pgl -> anne... , February 21, 2017 at 03:57 PM
Dean covers a ton of material here. One is his points is right in one sense. We are below full employment so we need some sort of aggregate demand expansion. Would trade protection do this for the US? Perhaps if we had fixed exchange rates and we did not suffer a trade war. But as Dean has noted elsewhere, we need more expansionary monetary policy. Dean repeats something that Jared Bernstein wrote:

'If we wanted better data on bilateral trade flows, then it would be desirable to pull out the re-exports from both our exports to Canada and our imports from Germany. This adjustment would make our trade deficit with Canada appear larger and trade deficit with Germany smaller, but would leave our total trade balance unchanged.'

So Dean and Jared thinks that a US multinational that buys a product from Mexico at $80 which ultimately sells in Canada for $100 charges the Canadian distribution affiliate only $80? Dean knows better as he in the past has written about transfer pricing. No - transfer pricing games do affect the current reporting of the trade balance. Dean needs to read Brad Setser.

[Feb 25, 2017] Trump and Trade He's Largely Right Beat the Press Blogs Publications The Center for Economic and Policy Research

Feb 25, 2017 | cepr.net
According to CBO , potential GDP for the 4 th quarter of 2016 was $19,049 billion. This is 1.0 percent higher than the estimate of GDP for the quarter of $18,860.8 billion. This means that if CBO is right, if there had been more demand in the economy, for example due to imports being replaced by domestically produced goods, GDP could have been 1.0 percent higher last quarter.

Of course CBO's estimates of potential GDP are not especially accurate. Its most recent estimates for potential GDP in 2016 are more than 10 percent below what it had projected for potential GDP in 2016 back in 2008, before the severity of the crash was recognized. It is possible it overstated potential by a huge amount in 2008, but it is also possible it is understating potential today. It also hugely understated potential GDP in the mid-1990s, with 2000 GDP coming in more than 5 percent above the estimate of potential that CBO made in 1996. In other words, it would not be absurd to think that the economy could sustain a level of output that is 2.0 percent above the current level. (The fact that the employment rate of prime age workers [ages 25-54] is still 4.0 percentage points below the 2000 peak is certainly consistent with this view.)

Suppose that GDP were consistently 2.0 percent higher than current projections over the next decade due to a lower trade deficit. This would imply an additional $4.6 trillion in output over this period. If the government captures 30 percent of this in higher taxes and lower spending on transfer programs like unemployment insurance and food stamps, this would imply a reduction in the projected deficit of $1.38 trillion over the decade. That's not quite the $1.74 trillion projected by Navarro, but close enough to make the derision unwarranted.

In terms of how you get a lower trade deficit, Navarro's strategy of beating up on China is probably not the best way to go. But there is in fact precedent for the United States negotiating a lower value for the dollar under President Reagan, which had the desired effect of reducing the trade deficit.

There is no obvious reason it could not pursue a similar path today, especially since it is widely claimed in business circles that China actually wants to raise the value of its currency. The U.S. could help it.

The second area of seemingly gratuitous Trump trade bashing comes from a Wall Street Journal news article on the Trump administration's efforts to correct for re-exports in trade measures. Before getting to the article, it is important to understand what is at issue.

Most of what the United States exports to countries like Mexico, Japan, or elsewhere are goods and services produced in the United States. However, some portion of the goods that we export to these countries consists of items imported from other countries which are just transshipped through the United States.

The classic example would be if we offloaded 100 BMWs on a ship in New York and then 20 were immediately sent up to Canada to be sold there. The way we currently count exports and imports, we would count the 20 BMWs as exports to Canada and also as imports from Germany. These re-exports have zero impact on our aggregate trade balance, but they do exaggerate out exports to Canada and our imports from Germany.

If we wanted better data on bilateral trade flows, then it would be desirable to pull out the re-exports from both our exports to Canada and our imports from Germany. This adjustment would make our trade deficit with Canada appear larger and trade deficit with Germany smaller, but would leave our total trade balance unchanged.

This better measure of trade flows would be useful information to have if we wanted to know what happened to trade with a specific country following a policy change, for example the signing of a trade deal like NAFTA. The inclusion of re-exports in our export data would distort what had happened to actual flows of domestically produced exports and imports for domestic consumption.

The United States International Trade Commission already produces a measure of trade balances that excludes imports that are re-exported. However this measure is still not an accurate measure of bilateral trade balances since it still includes the re-exports on the import side. In the case mentioned above, it would include the BMWs imported from Germany that were immediately sent to Canada, as imports. In principle, we should be able to construct a measure that excludes these items on the import side as well. If this is what the Trump administration is trying to do, then it is asking for a perfectly reasonable adjustment to the data.

This is where we get to the WSJ article. According to the piece, the Trump administration was asking the Commerce Department to produce measures of bilateral trade balances that took out the re-exports on the export side, but left them in on the import side. This would have the effect of artificially inflating our trade deficit with a bogus number. If this is in fact what the Trump administration is trying to do, then we should be shooting at them with all guns. (This is metaphorical folks, I'm not advocating violence.)

However some skepticism might be warranted at this point. No one with a name actually said the Trump administration asked for this bogus measure of trade balances. The sole source listed is "one person familiar with the discussions."

There was an official statement from the Commerce Department's Bureau of Economic Analysis (BEA), which collects and compiles the data:

"Any internal discussions about data collection methods are no more than the continuation of a longstanding debate and are part of the bureau's normal process as we strive to provide the most precise statistics possible."

I take very seriously efforts to mess with the data. We are fortunate to have independent statistical agencies with dedicated civil servants who take their work very seriously. However we should wait until we have a bit more solid evidence before assuming that the Trump administration is trying to interfere in their independence, as opposed to trying to make a totally legitimate adjustment to the data that the BEA staff would almost certainly agree is an improvement.

  • Abe Lincoln was protectionist • 2 hours ago Yes - Pres. Trump is MUCH MUCH better at economics than many so-called American economists.

    Also ignores transfer pricing. US corporations are good at gaming their own tax system but face tough regulations elsewhere. Their solution to pulling profits out of their foreign operations and putting them in a non-taxed US is to export phantom products to foreign countries from their American subsidiaries. The US is Ireland on a large scale - the real trade deficit with China is probably closer to $10 in imports for every $1 of export rather than the official $4 in imports to $1 in exports.

  • urban legend 5 hours ago Economists often seem to pooh-pooh the employment-to-population ratio as some kind of unrealistic never-again-to-be achieved holy grail -- as if the phenomenon of women going back into the labor force had been completely expended and there would thereafter be no change in the education level of working age adults. In fact, women entering the labor force continued to grow, and faster than men dropping out, and the education level (and employability) of working age adults has been improving, especially in Southern states that had relatively low high school or college graduation rates and, therefore, low employment-to-population ratios that pulled down the national rate.

    While looking at the employment rate of all non-institutional adults 16 and older may be complicated by baby boomers hitting senior status, the prime working age (25-54) employment rate should be even higher than it was in 2000, not just the same or lower. We saw an inkling then of what full employment might look like, and an inflation problem did not raise its ugly head.

    It's also to be noted that while in January 1994 when the "marginally attached to the labor force" and "discouraged worker" measures were first reported, only two million members of the 16+ adult population were counted as marginally attached and only 600,000 were considered to be discouraged. Yet as demand grew, almost 20 million people crawled out from outside the labor force or from being counted as potential workers by any measurement and took jobs when they became available. That's 18 million more than BLS statistics suggested would be the outermost limit to the size of the labor force.

    In other words, it seems absurd, indeed absurd enough to consider it almost to be offered in bad faith, to suggest that we are anywhere remotely close to full employment. One must ask what the agenda is for it to continue to be suggested, since slowing growth has certain consequences that may help the wealthier members of our society while hurting everyone else.

    • pieceofcake urban legend 5 hours ago 'In other words, it seems absurd, indeed absurd enough to consider it almost to be offered in bad faith, to suggest that we are anywhere remotely close to full employment.'

      If We would be anywhere remotely close to full employment - there would be NO 'gig-economy' - no companies on the Internet which help you to (still) write all these resumes - and probably NO Uber - as - do you know anybody who is willing to work as a Uber driver if he or she can have a real Job?

      And about the wealthier members of our society - Yeah they did that!

      • pieceofcake pieceofcake 5 hours ago - and since I'm back again in the homeland - I have been the guest of 63 Uber-Drivers in 16 different cities -(right now I'm in Redwood City CA) - and the overwhelming majority of the drivers agreed with me - that there might be no better measure for the real unemployment situation in the homeland and the terrible Job market - that so many Americans - who actually have learned some real Jobs - end up driving idiots like me around.

        For heavens sake - the other day I even had a History Prof. - and if I will get Mr. Baker one day as my driver - I tell'ya - I will get really worried.

[Feb 21, 2017] People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed. The voters no longer believe them. Theyre like the boy who cried wolf

Feb 21, 2017 | economistsview.typepad.com
Peter K. -> Peter K.... February 20, 2017 at 08:13 AM

, 2017 at 08:13 AM
https://www.ft.com/content/cd4e8576-e934-11e6-967b-c88452263daf

Revoking trade deals will not help American middle classes

The advent of global supply chains has changed production patterns in the US

by Larry Summers
FEBRUARY 5, 2017

Trade agreements have been central to American politics for some years. The idea that renegotiating trade agreements will "make America great again" by substantially increasing job creation and economic growth swept Donald Trump into office.

More broadly, the idea that past trade agreements have damaged the American middle class and that the prospective Trans-Pacific Partnership would do further damage is now widely accepted in both major US political parties.

As Senator Daniel Patrick Moynihan once observed, participants in political debate are entitled to their own opinions but not their own facts. The reality is that the impact of trade and globalisation on wages is debatable and could be substantial. But the idea that the US trade agreements of the past generation have impoverished to any significant extent is absurd.

There is a debate to be had about the impact of globalisation on middle class wages and inequality. Increased imports have displaced jobs. Companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource. The advent of global supply chains has changed production patterns in the US.

My judgment is that these effects are considerably smaller than the impacts of technological progress. This is based on a variety of economic studies, experience in hypercompetitive Germany and the observation that the proportion of American workers in manufacturing has been steadily declining for 75 years. That said I acknowledge that global trends and new studies show that the impact of trade on wages is much more pronounced than a decade ago.

But an assessment of the impact of trade on wages is very different than an assessment of trade agreements. It is inconceivable that multilateral trade agreements, such as the North American Free Trade Agreement, have had a meaningful impact on US wages and jobs for the simple reason that the US market was almost completely open 40 years ago before entering into any of the controversial agreements.

American tariffs on Mexican goods, for example, averaged about 4 per cent before Nafta came into force. China had what was then called "most favoured nation" trading status with the US before its accession to the World Trade Organization and received the same access as other countries. Before the Korea Free Trade Agreement, US tariffs on Korea averaged a paltry 2.8 per cent.

The irrelevance of trade agreements to import competition becomes obvious when one listens to the main arguments against trade agreements. They rarely, if ever, take the form of saying we are inappropriately taking down US trade barriers.

Rather the naysayers argue that different demands should be made on other countries during negotiations - on issues including intellectual property, labour standards, dispute resolution or exchange rate manipulation. I am sympathetic to the criticisms of TPP, but even if they were all correct they do not justify the conclusion that signing the deal would increase the challenges facing the American middle class.

The reason for the rise in US imports is not reduced trade barriers. Rather it is that emerging markets are indeed emerging. They are growing in their economic potential because of successful economic reforms and greater global integration.

These developments would have occurred with or without US trade pacts, though the agreements have usually been an impetus to reform. Indeed, since the US does very little to reduce trade barriers in our agreements, the impetus to reform is most of what foreign policymakers value in them along with political connection to the US.

The truth too often denied by both sides in this debate is that incremental agreements like TPP have been largely irrelevant to the fate of middle class workers. The real strategic choice Americans face is whether the objective of their policies is to see the economies of the rest of the world grow and prosper. Or, does the US want to keep the rest of the world from threatening it by slowing global growth and walling off products and people?

Framed this way the solution appears obvious. A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

Peter K. -> Peter K.... , February 20, 2017 at 08:16 AM
" The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges."

People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed.

The voters no longer believe them. They're like the boy who cried wolf.

cm -> Peter K.... , February 20, 2017 at 01:05 PM
I would actually agree with the stance in general, if there would be an actuall intention to help the affected people/populations, but there is none. Retraining for yet another job that doesn't exist (in sufficient volume so you can realistically get it) is not help. It is just cover for victim blaming - see we forgive you for choosing an incorrect career, here is your next chance, don't blow that one too (which we know "you will" as there are not enough jobs there either).
Peter K. -> Peter K.... , February 20, 2017 at 08:14 AM
http://www.bradford-delong.com/2017/02/must-read-four-things-are-going-on-technology-globalization-macro-policy-trade-agreements-lawrence-summ.html

DeLong Feb. 20, 2017

Must-Read: Five things are going on with respect to America's blue-, pink-, and--increasingly--white lower-middle and middle-middle working classes. Three of them are real, and two of them are fake:

Technology: It has--worldwide--greatly amplified manufacturing labor productivity, accompanied by limited demand for manufactured goods: few of us want more than one full-sized refrigerator, and very very few of us want more than two. That means that if you are hoping to be relatively high up in the wage distribution by virtue of your position as a hard-to-replace cog on a manufacturing assembly line, you are increasingly out of luck. If you are hoping for high blue-collar wages to lift your own via competition, you are increasingly out of luck.

Legal and institutional bargaining power: The fact that bargaining power has flowed to finance and the executive suite and away from the shop- and assembly-floor is the second biggest deal here. It could have been otherwise--this is, primarily, a thing that has happened in English-speaking countries. It has happened much less elsewhere. It could have happened much less here.

Macro policy: Yes, the consequences of the Reagan deficits were to cream midwestern manufacturing and destroy worker bargaining power in export and import-competing industries. Yes, the low-pressure economies of Volcker, late Greenspan, and Bernanke wreaked immense damage. Any more questions?

Globalization: Globalization deepens the division of labor, and does so in a way that is not harmful to high-paying manufacturing jobs in the global north. The high-paying manufacturing jobs that require skills and expertise (as opposed to the lower-paying ones that just require being in the right place at the right time with some market power) are easier to create and hold on to if you can be part of a globalized value chain than otherwise. This is largely fake.

Trade agreements: This is a nothingburger: completely fake.

As somebody who strongly believes that supply curves slope up--are neither horizontal nor vertical--and that demand curves slope down--are neither horizontal nor vertical--I think that Larry Summers is misguided here when he talks about how "companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource." This was certainly true since the 1950s with the move of American manufacturing to the south, and the rise of deceptively-named "right-to-work" laws. But the threat to outsource is zero-sum on a national level: the balance of payments balances. Individual sectors lose--and manufacturing workers have been big losers. But that is, I think, only because of our macro policies. If we were a normal global North manufacturing power--a Germany or a Japan--exporting capital and running a currency policy that did not privilege finance, he would not be talking a out how "companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource." He would be talking about how the opportunity to participate in global value chains increases the productivity of semi-skilled and skilled manufacturing workers in the U.S.

Thus I think Larry conceded too much here. Blame macro policy. Blame technology. Blame the conflict between the market society's requirements that only property rights matter and that everything pass a profitability test against people's strong beliefs that even if they have no property rights they have rights to stable communities, stable industries, and stable occupations. But, to channel Pascal Lamy, look not at the finger but at the moon here.

However, Larry is right on his main point: NAFTA really ain't the problem:

Lawrence Summers: Revoking Trade Deals Will Not Help American Middle Classes: "There is a debate to be had about the impact of globalisation on middle class wages and inequality...

Tom aka Rusty -> Peter K.... , February 20, 2017 at 09:27 AM
For Delong to be right on trade, thousands of rust belt politicians, journalists, and business leaders and a few hundred thousand workers would have to be delusional.

He is right in the sense that it is too late to revoke NAFTA, the damage is done.

[Feb 21, 2017] Debt slavery and high unemployment are two the most direct method of keeping wages low

Feb 21, 2017 | economistsview.typepad.com
J ohnH -> New Deal democrat... February 20, 2017 at 07:31 AM , 2017 at 07:31 AM
I expect that if you look at the pre-bellum South, there will be plenty of examples of stagnant wages, low interest rates...

In Mexico, wages never rose regardless of monetary policy.

The point that I've been making for a while: despite a few progressive economists delusions for rapid economic growth to tighten wages, it won't happen for the following reasons.

1) most employers will just say 'no,' probably encouraged centrally by the US Chamber of Commerce and other industry associations. Collusion? You bet.

2) employers will just move jobs abroad, where there's plenty of slack. Flexible labor markets has been one of the big goals of globalization, promoted by the usual suspects including 'librul' economists like Krugman.

3) immigration, which will be temporarily constrained as Trump deports people, but will ultimately be resumed as employers demand cheap, malleable labor.

New Deal democrat -> JohnH... , February 20, 2017 at 07:35 AM
If what we get is easy money, no inflation, and stagnant wages, then that is the Coolidge bubble. We know how that ends.
Peter K. -> JohnH... , February 20, 2017 at 07:36 AM
I disagree. It happened in late 90s. The ideas you mention are factors, including the decline of unions.

What has happened in recent decades is that asset bubbles - like the dot.com and housing bubbles - have popped sending a high pressure economy into a low pressure one with higher unemployment.

Neoliberal economists often talk about "flexible labor markets" as desirable but I don't think Krugman ever has. Maybe he has in a roundabout, indirect way.

JohnH -> Peter K.... , February 20, 2017 at 07:58 AM
Peter K still insists on propagating the myth that the 1990s was a period of easy money that led to increasing wages. Not so:
https://fred.stlouisfed.org/series/FEDFUNDS

Fed funds rates were consistently about double the rate of inflation.

The fact that the economy boomed and wages increased was due to the tech boom--an unrepeatable anomaly. The Fed and Clinton administration unsuccessfully attempted to stifle it with high rates and budget balancing.

To make sure that wages never rose again, Clinton signed China PNTR, granting China access to WTO, ushering in the great sucking sound of jobs going to China. Krugman cheered.

Peter K. -> JohnH... , February 20, 2017 at 08:28 AM
Again I just disagree with you.

"Fed funds rates were consistently about double the rate of inflation."

That doesn't matter. What matters is if they were tightening or loosening. Where they reducing access to credit or expanding it.

The real history is that Democrats on the FOMC wanted to raise rates - as Dean Baker has discussed.

Greenspan decided not to raise rates for various reasons and unemployment stayed low at around 4 percent with wages sharing in productivity gains until the Dot.com stock bubble popped.

I see no reason why you should believe labor markets will never get tight again and that even if they do it won't lead to increased worker bargaining power and higher wages.

Your reasoning and logic isn't sound.

Peter K. -> Peter K.... , February 20, 2017 at 08:30 AM
Some people were afraid of inflation but it never came. But wages did share in productivity gains.
JohnH -> Peter K.... , February 20, 2017 at 03:17 PM
There are numerous reasons why wages won't increase even if labor markets tighten...you just don't want to acknowledge the nefarious consequences of neoliberal policies: business collusion, offshoring, immigration, and the tax system's preference for returns of returns to capital over wages, which preferences technology.
pgl -> JohnH... , February 20, 2017 at 10:36 AM
The real interest rate was around 2.5% per your own argument which was a lot lower than real rates in the 1980's. So by any reasonable standard - we did have easy money.
JohnH -> pgl... , February 20, 2017 at 01:35 PM
lol!!! 2.5% real Fed funds rates as cheap money? Who are you kidding???

If pgl is good at anything, it's producing nonsense!

Julio -> JohnH... , February 20, 2017 at 08:35 AM
Another round of tax and regulatory giveaways can create a short-term boom and keeping jobs at home.

Of course, with the giveaways they're hitting the zero lower bound...

JohnH -> Julio ... , February 20, 2017 at 03:21 PM
"Another round of tax and regulatory giveaways can create a short-term boom," as part of the race to the bottom for wages...IOW Republicans and their Democratic allies will have succeeded when American wages are about the same as wages in China or Mexico. But, per their logic, then jobs will be plentiful because there will be no need to off-shore.
pgl -> JohnH... , February 20, 2017 at 09:11 AM
"the pre-bellum South"? You mean slavery. Yeah - wages were incredibly low.
JohnH -> pgl... , February 20, 2017 at 01:37 PM
Yep...slavery is the most direct method of keeping wages low. The policies I outlined--monopsony, offshoring, and immigration--are all a fall back, to be used when industry can't use their best policy.
libezkova -> JohnH... , February 20, 2017 at 12:02 PM
If the neoliberal elite can't part with at least a small part of their privileges, the political destabilization will continue and they might lose everything.

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." -- John Kenneth Galbraith

ilsm -> libezkova... , February 20, 2017 at 12:53 PM
You may know that JK Galbraith served on the US' evaluation of strategic bombings effect in WW II.

He is one of the minority whose opinion was suppressed by the military industry complex which concluded outside the A bomb no relation to bombing and victory was proven, including both industry output and energy production in Germany.

Allied bombing did kill a lot of civilians, which if Germans or Japan had won bomber commanders would have been hanged.

Julio -> libezkova... , February 20, 2017 at 05:44 PM
"...the political destabilization will continue and they might lose everything."

Or they might find a way to end the political destabilization. You know, we're not arresting you, we just want to know, in the war on Muslim terrorists and Mexican criminals, are you with us or against us? You'd be surprised (or maybe you wouldn't!) how the question is enough to quiet everybody down.

Julio -> Julio ... , February 20, 2017 at 05:46 PM
Just heard an interview clip with candidate Trump defending his Muslim ban as being the same as the Japanese interment, and saying we're in a war.

[Feb 20, 2017] Tech Jobs Took a Big Hit Last Year

Feb 20, 2017 | tech.slashdot.org

Barb Darrow, writing for Fortune: Tech jobs took it on the chin last year. Layoffs at computer, electronics, and telecommunications companies were up 21 percent to 96,017 jobs cut in 2016 , compared to 79,315 the prior year. Tech layoffs accounted for 18 percent of the total 526,915 U.S. job cuts announced in 2016, according to Challenger, Gray & Christmas, a global outplacement firm based in Chicago. Of the 2016 total, some 66,821 of the layoffs came from computer companies, up 7% year over year. Challenger attributed much of that increase to cuts made by Dell Technologies, the entity formed by the $63 billion convergence of Dell and EMC. In preparation for that combination, layoffs were instituted across EMC and its constituent companies, including VMware.

[Feb 20, 2017] People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed. The voters no longer believe them. They're like the boy who

Feb 20, 2017 | economistsview.typepad.com
Peter K. -> Peter K.... February 20, 2017 at 08:13 AM , 2017 at 08:13 AM
https://www.ft.com/content/cd4e8576-e934-11e6-967b-c88452263daf

Revoking trade deals will not help American middle classes

The advent of global supply chains has changed production patterns in the US

by Larry Summers
FEBRUARY 5, 2017

Trade agreements have been central to American politics for some years. The idea that renegotiating trade agreements will "make America great again" by substantially increasing job creation and economic growth swept Donald Trump into office.

More broadly, the idea that past trade agreements have damaged the American middle class and that the prospective Trans-Pacific Partnership would do further damage is now widely accepted in both major US political parties.

As Senator Daniel Patrick Moynihan once observed, participants in political debate are entitled to their own opinions but not their own facts. The reality is that the impact of trade and globalisation on wages is debatable and could be substantial. But the idea that the US trade agreements of the past generation have impoverished to any significant extent is absurd.

There is a debate to be had about the impact of globalisation on middle class wages and inequality. Increased imports have displaced jobs. Companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource. The advent of global supply chains has changed production patterns in the US.

My judgment is that these effects are considerably smaller than the impacts of technological progress. This is based on a variety of economic studies, experience in hypercompetitive Germany and the observation that the proportion of American workers in manufacturing has been steadily declining for 75 years. That said I acknowledge that global trends and new studies show that the impact of trade on wages is much more pronounced than a decade ago.

But an assessment of the impact of trade on wages is very different than an assessment of trade agreements. It is inconceivable that multilateral trade agreements, such as the North American Free Trade Agreement, have had a meaningful impact on US wages and jobs for the simple reason that the US market was almost completely open 40 years ago before entering into any of the controversial agreements.

American tariffs on Mexican goods, for example, averaged about 4 per cent before Nafta came into force. China had what was then called "most favoured nation" trading status with the US before its accession to the World Trade Organization and received the same access as other countries. Before the Korea Free Trade Agreement, US tariffs on Korea averaged a paltry 2.8 per cent.

The irrelevance of trade agreements to import competition becomes obvious when one listens to the main arguments against trade agreements. They rarely, if ever, take the form of saying we are inappropriately taking down US trade barriers.

Rather the naysayers argue that different demands should be made on other countries during negotiations - on issues including intellectual property, labour standards, dispute resolution or exchange rate manipulation. I am sympathetic to the criticisms of TPP, but even if they were all correct they do not justify the conclusion that signing the deal would increase the challenges facing the American middle class.

The reason for the rise in US imports is not reduced trade barriers. Rather it is that emerging markets are indeed emerging. They are growing in their economic potential because of successful economic reforms and greater global integration.

These developments would have occurred with or without US trade pacts, though the agreements have usually been an impetus to reform. Indeed, since the US does very little to reduce trade barriers in our agreements, the impetus to reform is most of what foreign policymakers value in them along with political connection to the US.

The truth too often denied by both sides in this debate is that incremental agreements like TPP have been largely irrelevant to the fate of middle class workers. The real strategic choice Americans face is whether the objective of their policies is to see the economies of the rest of the world grow and prosper. Or, does the US want to keep the rest of the world from threatening it by slowing global growth and walling off products and people?

Framed this way the solution appears obvious. A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

Peter K. -> Peter K.... , February 20, 2017 at 08:16 AM
" The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges."

People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed.

The voters no longer believe them. They're like the boy who cried wolf.

[Feb 20, 2017] With high unemployment rate employers can more broadly discriminate

Feb 20, 2017 | economistsview.typepad.com
Peter K. : Reply Monday, February 20, 2017 at 10:35 AM , February 20, 2017 at 10:35 AM
PGL says "reverse hysteresis" is fair dust.

More trolling from out neoliberal friend?

https://economix.blogs.nytimes.com/2014/03/03/undoing-the-structural-damage-to-potential-growth/?_r=0

Economix - Explaining the Science of Everyday Life

Undoing the Structural Damage to Potential Growth
By JARED BERNSTEIN MARCH 3, 2014 11:00 AM

What follows is macroeconomics, but I'll start with the micro - a microcosm, in fact, of the larger idea I'm hoping to get at here.

I think it was around 1998, and I was on a tram between terminals at O'Hare Airport in Chicago. Two young men, who clearly worked for the airport (they had a bunch of badges dangling around their necks) were trying to figure out how they knew each other, while I eavesdropped. Turned out they had met each other in prison.

At the time, I was beginning a research project on the benefits of full employment, and my first thought was, "Aha - another example of how tight labor markets pull in the hard-to-employ." This was also the era of work-based welfare reform, and while analysts worried that employers would avoid those with welfare histories, strong demand turned out to an antidote to such preferences.

Basically, profiling based on gender, race and experience is a luxury that employers can't afford when the job market is really tight. That is not to imply, of course, that employers broadly discriminate, but there is strong evidence that many do, most recently against the long-term unemployed. In tight markets, however, they face a choice of indulging their preferences or leaving profits on the table, and profits usually win.

Now, put this story aside for a second and let's turn to the macro. A few months ago, I reported on a study by a few Federal Reserve economists with pretty striking results of the damage done to the economy's future growth rate by the deep and protracted downturn known as the Great Recession. The Congressional Budget Office just published a similar analysis, resulting in the chart below showing growth in gross domestic product as projected in 2007, before the recession, and a revised projection from this year. By 2017, the budget office predicts that the new and decidedly not-improved level of G.D.P. will be 7.3 percent below the old projection.

What does 7.3 percent of lost gross domestic product actually mean? Well, last year G.D.P. amounted to about $16.8 trillion, and 7.3 percent of that comes to around $1.2 trillion. Conventional estimates translate that into more than 10 million jobs.

It would be very good to avoid that fate. The thing is, both the Fed economists and the Congressional Budget Office basically argue that while their estimates are admittedly uncertain, that fate cannot be avoided - it's baked into the economic cake by the assumption that once your trend growth rate slows as ours has, it does not come back barring some positive, unforeseen shock. Here is how the Fed guys put it:

Policy makers cannot undo labor market damage once it has occurred, but must instead wait for it to fade away on its own accord; in other words, there is no special advantage, given this specification, to running a high-pressure economy.

I disagree! I think the damage can be at least partly reversed precisely by running "a high-pressure economy." I saw it myself that day in the airport.

Technically, I'm talking about "reverse hysteresis." When a cyclical problem morphs into a structural one, economists invoke the concept of hysteresis. When this phenomenon takes hold, the rate at which key economic inputs like labor supply and capital investment enter the economy undergoes a downshift that lasts through the downturn and well into the expansion, reducing the economy's speed limit. But what I'm suggesting here is that by running the economy well below conventional estimates of the lowest unemployment rate consistent with stable inflation, and doing so for a while, we can pull workers back in, raise their career trajectories, improve their pay and their living standards, and turn that downshift to an upshift that raises the level and growth rate of G.D.P.

Won't that be inflationary? Three points. First, if anything, the current economy is suffering from inflation that is too low (same with Europe), so near-term growth-oriented policy seems clearly safe in this regard. Second, the precise relationship between full employment and inflation is poorly understood. When that latter-1990s story above was taking place, economists frequently and incorrectly warned that full employment would dangerously juice inflation. Third, the correlation between these two variables - inflation and labor market tightness - has become far weaker in recent years (i.e., the Phillips Curve has flattened, for those who like the jargon).

How do we reverse the hysteresis process (which is to ask: How do we get back to very tight labor markets)? In earlier posts, I've suggested a number of policies that would help, including investment in public goods, direct job creation, reducing the trade deficit and work-sharing. Still, you may well be wondering, "Wait a minute - this dude wants us to go with him down this path because of a conversation he overheard 16 years ago?"

O.K., I'll admit that the economic journals are not busting with evidence in support of reverse hysteresis. But those of us who closely monitored full-employment economies have observed and documented significantly positive labor supply and investment outcomes. (True, a lot of that investment has flowed into bubbles; I'm not saying this idea solves every problem.)

The employment rates for young African-American adults, like the guys I saw in the airport, averaged around 70 percent in the 1970s and '80s, but hit 80 percent in the late 1990s; they are in the mid-60s now. The employment rates for single mothers also hit new highs in those years. The labor force participation rate, itself an important victim of hysteresis right now, hit its all-time high at the end of the 1990s expansion. In other words, full employment pulled a lot of new people into the job market.

As part of the full-employment project I'm running at the Center on Budget and Policy Priorities (and have written about before on this blog), a number of top economists are looking into the relationships between fiscal policy, and hysteresis and reverse hysteresis. They are coming up with some compelling findings, which I'll share once they are ready. For now, allow me to assert the following: We have shown we can do a lot of economic damage. With the political will, sorely lacking these days, it can also be undone.

Peter K. -> Peter K.... , February 20, 2017 at 10:38 AM
"What does 7.3 percent of lost gross domestic product actually mean? Well, last year G.D.P. amounted to about $16.8 trillion, and 7.3 percent of that comes to around $1.2 trillion. Conventional estimates translate that into more than 10 million jobs."

https://www.bloomberg.com/view/articles/2016-04-28/president-obama-s-economic-disappointment

Obama's Economic Disappointment by Narayana Kocherlakota

In January 2009, at the beginning of Obama's first term, the nonpartisan Congressional Budget Office issued a 10-year forecast for the U.S. economy, including such indicators as unemployment, gross domestic product, the budget deficit, government debt and interest rates. Here's a table comparing the CBO's expectations for the year 2015 to what has actually happened:

NGDP forecast to grow 33 percent, actually grew 22 percent.

Real GDP, forecast 20 percent, actual 10.

----------------

Peter K. -> Peter K.... , February 20, 2017 at 10:42 AM
https://www.federalreserve.gov/newsevents/speech/yellen20150327a.htm

Yellen

"A final argument for gradually adjusting policy relates to the desirability of achieving a prompt return of inflation to the FOMC's 2 percent goal, an objective that would be advanced by allowing the unemployment rate to decline for a time somewhat below estimates of its longer-run sustainable level. To a limited degree, such an outcome is envisioned in many participants' most recent SEP projections. A tight labor market may also work to reverse some of the adverse supply-side developments resulting from the financial crisis. The deep recession and slow recovery likely have held back investment in physical and human capital, restrained the rate of new business formation, prompted discouraged workers to leave the labor force, and eroded the skills of the long-term unemployed.15 Some of these effects might be reversed in a tight labor market, yielding long-term benefits associated with a more productive economy. That said, the quantitative importance of these supply-side mechanisms are difficult to establish, and the relevant research on this point is quite limited."

[Feb 12, 2017] What The Jobs Report DIDNT Tell You Last Week

Notable quotes:
"... First of all, the unemployment rate in the USA actually increased from 4.7% to 4.8%, despite the job growth. ..."
"... Simply put, due to the way the Bureau of Labour Statistics is gathering its data, almost 700,000 people have been 'removed' from the civilian population. The total size of the civilian population is rebalanced on a yearly basis, in January. ..."
"... The smaller size of the civilian population caused the labor force participation rate to increase by 0.2%, and this by itself caused the unemployment rate to increase as well, despite the job creation number. ..."
"... But perhaps even more important is the extremely disappointing update on the average hourly earnings ('AHE') . The AHE increase fell to just 0.1% in January on a month/month comparison, but the real catch is in the details. ..."
Feb 12, 2017 | www.zerohedge.com

Ever since the gold report was published, the gold price moved up. This caught several investors by surprise, as some of them even continued to dump gold, scared by what appeared to be a good jobs report.

'Appeared to be', because?

Yes, 227,000 new jobs were created , and we can't deny that's a positive evolution. However, the increased job number is also the only positive thing in the jobs report, and there are two other issues that haven't really been highlighted.

Two issues that could, and probably will, have an impact on the interest rate decisions later this year.

First of all, the unemployment rate in the USA actually increased from 4.7% to 4.8%, despite the job growth.

How is that possible?

Simply put, due to the way the Bureau of Labour Statistics is gathering its data, almost 700,000 people have been 'removed' from the civilian population. The total size of the civilian population is rebalanced on a yearly basis, in January.

Source: Bureau of Labor Statistics

The smaller size of the civilian population caused the labor force participation rate to increase by 0.2%, and this by itself caused the unemployment rate to increase as well, despite the job creation number.

And as the unemployment rate is one of the key factors the Federal Reserve is looking at to determine whether or not a rate hike is appropriate, this small increase could have an impact on the decision making process. And keep in mind this is the second consecutive increase in the unemployment rate as the December unemployment rate also came in higher than the unemployment rate in November (and this did not include any population rebalancing exercise).

But perhaps even more important is the extremely disappointing update on the average hourly earnings ('AHE') . The AHE increase fell to just 0.1% in January on a month/month comparison, but the real catch is in the details.

Exactly because the 0.1% increase is focusing on a monthly update, the revision of the wage increase in December is actually telling you something more serious is going on. The December wages have been revised down by 0.2%, so if that would NOT have happened, the average hourly wage would have DECREASED in January.

... ... ...

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[Feb 04, 2017] The End of Employees

Notable quotes:
"... Start focusing on the predators at the top of the pyramid scheme and then watch how those same culprits and their networks "come to the rescue" in order to capitalize on the "pain and suffering" they help to create. I see a pattern, don't you? ..."
"... Don't forget student debt. Not only are many recent graduates underemployed or unemployed, they're in the hole tens of thousands. Further incentive not to make any sort of financial commitment. Student debt should be cancelled to promote earlier family formation. ..."
"... It's almost a negative feedback loop. ..."
"... Very true. Capitalism only works as long as enough people (or states) are able to take up ever-larger debt, to close the gap (called "profit") between expensive goods and comparatively cheap labour. ..."
"... Good to point out Gat Gourmet. Almost all outsourced jobs in the beginning of places where I have worked were once part of the company. ..."
"... Still, it's hard not to notice there could be nothing more convenient to the corporate and governmental powers-that-be than a nonprofit that takes it upon itself to placate, insure, and temper the precarious middle-class. ..."
"... So which ivy-league management school / guru is most culpable in unleashing the whole lean-mean-outsourcing-machine monster because it's slowly destroying my ability to remain in IT. ..."
"... "how the big company love of outsourcing means that traditional employment has declined and is expected to fall further." – ..."
"... Story of my life! I'm still trying to get paid for freelance work that I did in December. This payment delay is wreaking havoc with MY cash flow. ..."
"... Another area of friction and waste with IT consulting and other contracting, is that an employee of a company simply and efficiently plugs into their existence administrative system (HR, timekeeping, payroll, etc). ..."
"... I work in engineering at a gigantic multinational vehicle manufacturer and the role of "consultants" has been expanding with time. Rather than consultants being people with specific technical expertise who work on one subsystem component with clear interfaces to other things, it now encapsulates project managers and subsystem / function responsible people who need to have large networks inside the company to be effective. ..."
"... Considering the huge amount of time it takes to get a new hire up and running to learn the acronyms and processes and the roles of different departments, it's a bit absurd to hire people for such roles under the assumption that they can be quickly swapped out with a consultant from Company B next week. ..."
"... It's pretty clear that management sees permanent employees on the payroll as a liability and seeks to avoid it as much as possible. ..."
"... Because they, unlike us, understand class. I can state for a fact that the Big Three auto companies are well aware of how much cheaper health care costs are for them in Canada and how much better off they would be here, cost-wise, with a national health care system where McDonald's and Wal-mart have to pay the same per hour or per employee cost as they do. But it turns out cost isn't everything. Corporate (capitalist) solidarity rules. ..."
"... Michelle Malkin ..."
"... “The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction”. ..."
Feb 04, 2017 | www.nakedcapitalism.com

The Wall Street Journal has an important new story, The End of Employees , on how the big company love of outsourcing means that traditional employment has declined and is expected to fall further.

Some key sections of the article:

Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.

The men and women who unload shipping containers at Wal-Mart Stores Inc. warehouses are provided by trucking company Schneider National Inc.’s logistics operation, which in turn subcontracts with temporary-staffing agencies. Pfizer Inc. used contractors to perform the majority of its clinical drug trials last year .

The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted

For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs.

No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people.

As you can see, the story projects this as an unstoppable trend. The article is mainly full of success stories, which naturally is what companies would want to talk about. The alleged benefits are two-fold: that specialist contractors can do a better job of managing non-core activities because they are specialists and have higher skills and that using outside help keeps companies lean and allows them to be more "agile".

The idea that companies who use contractors are more flexible is largely a myth . The difficulty of entering into outsourcing relationships gives you an idea of how complex they are. While some services, like cleaning, are likely to be fairly simple to hand off, the larger ones are not. For instance, for IT outsourcing, a major corporation will need to hire a specialist consultant to help define the requirements for the request for proposal and write the document that will be the basis for bidding and negotiation. That takes about six months. The process of getting initial responses, vetting the possible providers in depth, getting to a short list of 2-3 finalists, negotiating finer points with them to see who has the best all-in offer, and then negotiating the final agreement typically takes a year. Oh, and the lawyers often fight with the consultant as to what counts in the deal.

On the one hand, the old saw of "a contract is only as good at the person who signed it" still holds true. But if a vendor doesn't perform up to the standards required, or the company's requirements change in some way not contemplated in the agreement, it is vasty more difficult to address than if you were handling it internally. And given how complicated contracting is, it's not as if you can fire them.

So as we've stressed again and again, these arrangements increase risks and rigidity. And companies can mis-identify what is core or not recognize that there are key lower-level skills they've mis-identified. For instance, Pratt & Whitney decided to contract out coordination of deliveries to UPS. Here is the critical part:

For years, suppliers delivered parts directly to Pratt’s two factories, where materials handlers unpacked the parts and distributed them to production teams. Earl Exum, vice president of global materials and logistics, says Pratt had “a couple hundred” logistics specialists. Some handlers were 20- or 30-year veterans who could “look at a part and know exactly what it is,” he adds .

Most of the UPS employees had no experience in the field, and assembly kits arrived at factories with damaged or missing parts. Pratt and UPS bosses struggled to get the companies’ computers in sync, including warehouse-management software outsourced by UPS to another firm, according to Pratt..

The result was $500 million in lost sales in a quarter. Pratt & Whitney tried putting a positive spin on the tale, that all the bugs were worked out by the next quarter. But how long will it take Pratt & Whitney to recover all the deal costs plus the lost profits?

There's even more risk when the company using contractor doesn't have much leverage over them. As a Wall Street Journal reader, Scott Riney, said in comments:

Well managed companies make decisions based on sound data and analysis. Badly managed companies follow the trends because they're the trends. A caveat regarding outsourcing is that, as always, you get what you pay for. Also, the vendor relationship needs to be competently managed. There was the time a certain, now bankrupt technology company outsourced production of PBX components to a manufacturer who produced components with duplicate MAC addresses. The contract manufacturer's expertise obviously didn't extend to knowing jack about hardware addressing, and the management of the vendor relationship was incompetent. And what do you do, in a situation like that, if your firm isn't big enough that your phone calls get the vendor's undivided attention? Or if you're on different continents, and nothing can get done quickly?

We've discussed other outsourcing bombs in past posts, such as when British Airways lost "tens of millions of dollars" when its contractor, Gate Gourmet, fired employees. Baggage handlers and ground crew struck in sympathy, shutting down Heathrow for 24 hours. Like many outsourced operations, Gate Gourmet had once been part of British Airways. And passengers blamed the airline , not the wprkers.

Now admittedly, there are low-risk, low complexity activities that are being outsourced more, such as medical transcription, where 25% of all medical transcriptionists now work for agencies, up by 1/3 since 2009. The article attributes the change to more hospitals and large practices sending the work outside. But even at its 2009 level, the use of agencies was well established. And you can see that it is the sort of service that smaller doctor's offices would already be hiring on a temp basis, whether through an agency or not, because they would not have enough activity to support having a full-time employee. The story also describes how SAP has all its receptionists as contractors, apparently because someone looked at receptionist pay and concluded some managers were paying too much. So low level clerical jobs are more and more subject to this fad. But managing your own receptionists is hardly going to make a company less flexible.

Contracting, like other gig economy jobs, increase insecurity and lower growth. I hate to belabor the obvious, but people who don't have a steady paycheck are less likely to make major financial commitments, like getting married and setting up a new household, having kids, or even buying consumer durables. However, one industry likely makes out handsomely: Big Pharma, which no doubt winds up selling more brain-chemistry-altering products for the resulting situationally-induced anxiety and/or depression. The short-sightedness of this development on a societal level is breath-taking, yet overwhelmingly pundits celebrate it and political leaders stay mum.

With this sort of rot in our collective foundation, the rise of Trump and other "populist" candidates should not come as a surprise.

I would add this. It was deplorable for Trump to have fired Acting AG Sally Yates after she ordered Justice Department lawyers to stop defending Mr. Trump’s executive order banning new arrivals to the U.S. from seven Muslim-majority countries.

But Sally Yates was a hero for another reason. Yates was cracking down on systemic abuses by holding top healthcare executives personally accountable for false Medicare and Medicaid claims and illegal physician relationships.

Now it's personal: Top execs made to pay for companies' false claims
http://www.modernhealthcare.com/article/20161001/MAGAZINE/310019964/now-its-personal-top-execs-made-to-pay-for-companies-false-claims

BeliTsari , February 3, 2017 at 6:38 am

I remember hoping: Well, maybe Obama will actually get some decent folks into the Judiciary bring kids home from Iraq, maybe try for Medicare over 55 (to the advantage of the insurance & Pharma sectors?) But the one thing I'd actually expected him to accomplish was enact https://www.congress.gov/bill/110th-congress/senate-bill/2044 which would get the Kleptocrats a few more years out of the moldering corpse of American Labor (and not hurt multinationals, who'd off-shored, outsourced or speciously re-classified their largely undocumented, 3rd party, contingency/ gig employees decades previously).

Wage-theft Democrats was a new concept to some of us more easily deluded working class Yankees, reeling from Bush. I think a strong fantasy life's essential nowadays.

jrs , February 3, 2017 at 3:06 pm

No kidding on that law, so basic. Why can't we have that law passed? (and other nice things)

BeliTsari , February 4, 2017 at 3:52 pm

I imagine that this is among the pesky downsides of living in our YOOJ autocratic neo-Confederate theocratic kleptocracy; wage theft has always been right at the top of both parties' platforms? If they can't hide it, who will they blame it on?

GlassHammer , February 3, 2017 at 6:52 am
  • "people who don’t have a steady paycheck are less likely to make major financial commitments, like getting married and setting up a new household, having kids"
  • "more brain-chemistry-altering products for the resulting situationally-induced anxiety and/or depression."

Decline in family formation and a populace seeking to anesthetize itself are indications of a civilization in decline. Our problem is much bigger than employment.

Disturbed Voter , February 3, 2017 at 7:02 am

You can employ deplorables, you can enslave deplorables, you can kill deplorables. The only way that a "return maximizing" system won't choose killing, is if the unit cost of killing is higher than enslavement or employment. I can hope that the bureaucratic effect of increasing costs will work faster on the cost of killing or enslavement. Reducing the cost of employment (regulations) wouldn't hurt.

BeliTsari , February 3, 2017 at 7:26 am

We'd guessed this was why Dickens, Niccolò Machiavelli, Frederick Douglass, E. A. Blair & Marx were being burnt by the DeVos Christians. Why teach management for FREE, when the drooling Know Nothings will PAY to send their dead-eyed vipers to seminars or A Beka online curricula?

redleg , February 3, 2017 at 1:13 pm

It does hurt workers, contract or not.

Eliminate environmental protections and the entire industry that investigates, researches, enforces, litigates, and mitigates environmental impacts are likewise eliminated. These are generally highly skilled professions, and has wide ranging impacts from workers all the way to the global ecosystem. Then there are economic ripple effects on top of that.

If we are going to eliminate an entire career tree, health insurance is a better choice.

jrs , February 3, 2017 at 3:10 pm

Not sure what this has to do with the article, but yes people will LOSE jobs to Trump, skilled and socially beneficial jobs like at the EPA.

For heaven knows what, jobs building useless walls to nowhere I guess, which somehow in Trumps warped mind is a more productive line of work (it won't even work to curtail immigration).

BeliTsari , February 4, 2017 at 5:36 pm

Thank you for your astute, pertinent & seldom mentioned comment (which to those of us in QA, is something we've believed central to the issue, not a tangent or unexpected side benefit of our sharecropper corporatocracy).

We'd noticed contract buy-outs & forced early-retirement in the steel industry, in the 90's, our clients' engineers (scruffy & cantankerous, who'd stand by us if we were right & replace us if we got out of hand) were all replaced by clueless, gullible desk jockeys, devoid of empirically honed judgement eventually, we'd have 2-3 gnarled old timers, amidst crews of neophytes (first they tried very well trained & knowledgeable foreign nationals, then pensioners, let go from the vendors) finally, they tried to 1099 the desperate ones, on the run from skip-chasers, deputies & repo-men.

They'd try sending us half way across the country, mention nothing, then see what we'd do (once we figured out we'd earned no overtime?)

We'd be in Indian or Russian owned mills where 80% of the employees were totally undocumented foreign nationals, many of the balance wildly underpaid temps.

And the good-old-boy management resembled characters outa Harriet Beecher Stowe. Lots of our counterparts were straight back from Afghanistan & Iraq, verifying that most of their gig- economy contingency employment had all been the same, regardless of industry sector: off-shored aircraft, as well as bridge, structural, water, nuclear, inspectors what regulation?

Dave , February 3, 2017 at 11:49 am

Leveraging guilt to rationalize the Invitation of the least educated into your nation from the most barbaric failed states and cultures in the world is another sign of civic decay.

MP , February 3, 2017 at 12:21 pm

or those with potential who are "educated" and are "victims" of false advertising campaigns I mean propaganda

Dave , February 3, 2017 at 12:38 pm

Yup, many of the Taxi and Uber drivers around here arrived and took out private loans to get "educated" and now are deep in debt and are too ashamed to go home.

MP , February 4, 2017 at 9:26 am

Start focusing on the predators at the top of the pyramid scheme and then watch how those same culprits and their networks "come to the rescue" in order to capitalize on the "pain and suffering" they help to create. I see a pattern, don't you?

Barbarians are at the gates but you may be looking in the wrong place. Beware all types of people are "vulnerable" and they will more easily identify with other human beings living under a variety of diminished circumstances. Victim shaming won't be a viable option in the not so distant future.

JEHR , February 3, 2017 at 2:50 pm

Dave, I hope you are not including Syria in your "failed states and cultures" description. Syrians are very well educated and will add much to any nation's economy.

It is not a sign of "civic decay" in the Syrian culture, but a sign of civic decay in a nation that will not accept people from a war zone. An invitation should not be dependent on one's education but on one's need and desire to survive a war zone..

wilroncanada , February 3, 2017 at 4:42 pm

Iraqis were also comparatively educated, right up through university, under its autocratic leader. Libyans were, by and large, well educated, or at least getting so, under its autocratic leader. The most poorly educated, probably, are those countries which have been under US or European hegemony for generations: a lot of Central and south America, a lot of Africa, etc. Not to mention the US itself, which has been colonizing its own hinterland for many decades. The same applies to countries like Canada, Australia, etc. particularly in terms of their indigenous populations.

Felix_47 , February 3, 2017 at 6:20 pm

How about the worst drought in 900 years, and an exploding population? That had nothing to do with the problem?

Peter , February 3, 2017 at 7:07 pm

Don't forget student debt. Not only are many recent graduates underemployed or unemployed, they're in the hole tens of thousands. Further incentive not to make any sort of financial commitment. Student debt should be cancelled to promote earlier family formation.

thoughtful person , February 3, 2017 at 6:57 am

This trend matches up with the trends of dropping life expectancy, especially among the lower half of income earners, and with slowing economies globally.

It's almost a negative feedback loop.

Politcal implications: the rise of far right politics; if you are a monarchist, or want to create an aristocracy, these trends are probably in your interest.

Praedor , February 3, 2017 at 8:54 am

Sure, it is partly psychological but it also has direct connection (by DESIGN) to the fact that such people don't have healthcare, even with Obamacare insurance. The idiots that sing the praises of Obamacare and how millions now have insurance seem to think that means those people have HEALTHCARE to go with it.

Insurance is theft. Insurance is not even remotely "healthcare". Much of those newly insured have their insurance, thanks to a government subsidy, but STILL lack healthcare because their premiums and deductibles are too high to allow them to see doctors. Thus, they're dying or going to die sooner due to untreated maladies, but at least they paid insurance company CEOs their bonuses with their subsidized insurance payments!

Bugs Bunny , February 3, 2017 at 9:41 am

Mutual insurance however is (was) socialist by nature. The true mutuals were crushed out of existence by share for share conversions to private companies that ripped off policy holders and gave a big payday to the C suites and the lawyers. Thanks to inept state insurance commissioners and assemblies for that one.

d , February 3, 2017 at 1:14 pm

while having health insurance doesnt mean you have health care, not having it does mean not having health care at all, short of having a life or death condition, as hospitals (for now an way) are only required to stabilize you. they arent required to cure you.

but then the high deductible insurance is one of those scams that some politicians gave us because they could suggest that the patient (customer) could just shop around for better deals. course that depends on us patients knowing what medical treatment is best for us, and which is the cheapest of those., the former pretty much requires patients to be as knowledgeable as doctors. the latter means we have to know what the treatments cost. could luck with that

David , February 3, 2017 at 7:14 am

I would force policy-makers in every advanced western nation to read and reflect on the last paragraph, because it describes a mindset and a series of practices that are now found everywhere in western economies.

As David Harvey reminds us in his book on the Contradictions of Capitalism, Marx identified long ago that there was a contradiction between holding down employees wages, and still expecting them to have the purchasing power to buy the goods their cheap labour was making.

This problem has become more acute with time, simply because we buy a lot more "stuff" than they did in the 19th century, and we take a lot longer to pay for it, often on credit. Houses, cars, household goods, even computers, are now significant expenditure decisions, repaid at least over months, if not years and even decades. The social corollary of mass home ownership, after all, is some assurance that you will be employed over the life of the mortgage. Otherwise, not only won't you buy the house, you won't improve or extend it, or even maintain it, so a whole series of other purchases won't get made, and the construction and maintenance industries will have less work. Instead, you'll save money, so removing purchasing power from the economy.

I assume there are people in large private sector companies clever enough to under stand this, but as always they are focused on how much money they can extract from the system in the next few years. After that, if the system crashes, well, who cares, They're all right.

susan the other , February 3, 2017 at 12:59 pm

old tricks. John D. Rockefeller became a zillion times richer after he was forced to divest himself of his majority interest in his various companies.

And back then it was a simple case of anti-trust. There were no benefits to reclaim as profit or revenue or whatever.

This won't work in today's world because there really isn't anything left to exploit – but half-baked ideas die hard sometimes.

Altandmain , February 3, 2017 at 1:43 pm

There's a quote on this one:

http://quoteinvestigator.com/2011/11/16/robots-buy-cars/

Henry Ford II: Walter, how are you going to get those robots to pay your union dues?

Walter Reuther: Henry, how are you going to get them to buy your cars?

The Economist Article this one refers to is pretty awful, and totally ignores the wage-productivity gap.

Here's an interesting article on that:
https://www.salon.com/2013/05/30/millennials_dont_hate_cars_they_cant_afford_them/

ThePanopticoin , February 3, 2017 at 4:44 pm

Very true. Capitalism only works as long as enough people (or states) are able to take up ever-larger debt, to close the gap (called "profit") between expensive goods and comparatively cheap labour. Watching developments in recent years, this very source of profit and thus base of the economic system is, even on a global level, quite limited

David Barrera , February 4, 2017 at 2:36 am

Sure. Marx Capital 1 on the crisis of production. Marx capital 2 on the crisis of realization but this constitutes just one undesirable aspect-this one indeed very macro- among the many others which the expansion of the "contracting-subcontracting chain" has brought and will bring about.

The Wall Street Journal article is-as it is to expect- late, blind to the core problems of workers and incapable to see and understand the true practical raison ( & reasons) d'ĂŞtre of outsourcing. I guess Yves Smith purpose was just to broadly replicate WSJ article

stukuls , February 3, 2017 at 7:34 am

Good to point out Gat Gourmet. Almost all outsourced jobs in the beginning of places where I have worked were once part of the company. The entire art department save two management employees were played off and rehired by a new company doing the same work with less benefits.

Then that company was later disolved. I have seen this many times in the corporate design field now. Usually ends with disaster and he hire of folks some back to full time but most to freelance. So I guess in a way it works out for the company in the end and not for the worker. Amazing the amount of money a company is willing to lose this way then use the same to pay workers better.

Arizona Slim , February 3, 2017 at 8:18 am

But-but-but freelancing is SO hip and cool! Just ask the Freelancers Union!

Arizona Slim , February 3, 2017 at 10:13 am

Here is the organization's official website:

https://www.freelancersunion.org/

And here is a critique, which I agree with:

http://www.dissentmagazine.org/article/the-i-in-union

H. Alexander Ivey , February 3, 2017 at 10:45 pm

An excellent critique, for those who were wondering. The take away paragraph, summing up the actual work done and purpose of, the Freelancers Union:

Still, it's hard not to notice there could be nothing more convenient to the corporate and governmental powers-that-be than a nonprofit that takes it upon itself to placate, insure, and temper the precarious middle-class.

As we sixties people use to say: "Right on!"

Marco , February 3, 2017 at 8:18 am

So which ivy-league management school / guru is most culpable in unleashing the whole lean-mean-outsourcing-machine monster because it's slowly destroying my ability to remain in IT.

BeliTsari , February 3, 2017 at 8:40 am

https://www.jstor.org/stable/40584994?seq=1#page_scan_tab_contents Indentured servitude had pretty strong adherents, before chattel slavery gained ascendancy in the colonies. You might as well credit Pharaoh Khufu?

Katharine , February 3, 2017 at 9:21 am

I don't know the answer to your question, but you would have to go back over twenty years to find it. What I find remarkable is that even though everybody affected in the early stages could see what a dumb, destructive idea it was, the MBA types never caught on, even though most of them were not so far up the hierarchy they could not ultimately be affected.

just_kate , February 3, 2017 at 12:34 pm

Jack Welch

Gaylord , February 3, 2017 at 8:39 am

Contractors need Guilds or Trade Associations that are well organized and legally able to set minimum standards for billing and performance. This is an area where Trade Unions have failed with respect to some professions, and apparently (from what I've heard) the RICO statutes need to be amended to allow for this. It's time to rig the other side to make companies think twice before replacing employees with temp workers or contractors, to keep jobs within the US, and to provide a cushion and a "floor" to those that take the risk of entrepreneurship, preventing a race to the bottom.

akaPaul LaFargue , February 3, 2017 at 12:10 pm

Yes! Geographically bound temp unions or hiring halls for all temp workers allied with low-wage worker associations. This is NOT something that established unions want, so who will agitate for it?

jrs , February 3, 2017 at 3:21 pm

Something like the I.W.W is what I'd like to see. Yea I know the response is: they are still around? Well not what they were long ago of course, but with the prison strike, yes around and rising.

Northeaster , February 3, 2017 at 8:40 am

"how the big company love of outsourcing means that traditional employment has declined and is expected to fall further." –

This line pissed me off this morning more than most other mornings. I literally just said goodbye to a long-time colleague (Big Pharma) who is being outsourced as of today. The kicker(s):

  1. The job is not high tech
  2. Employee(s) trained their replacement who are H-1B from India
  3. The company is moving the division to India

Of note, my state (MA) is responsible for over one-quarter of all H-1B's every year. Thankfully a few in the industry are helping get the word out, like Nanex's Eric Hunsader yesterday. The outsourcing, off-shoring, and H-1B abuse has to stop, but not sure The People have the will to hold political office holders accountable enough to truly change this paradigm.

https://twitter.com/nanexllc/status/827185042761859073

Northeaster , February 3, 2017 at 9:00 am

Edit: MA is in the top 10, California is number one:

https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2016/H-1B_Selected_Statistics_FY2016_Q4_updated.pdf

Vatch , February 3, 2017 at 9:56 am

Norm Matloff's blog often covers H-1B issues. Here's one of his recent posts:

https://normsaysno.wordpress.com/2017/01/13/h-1b-reform-proposal-a-great-start-or-a-cruel-ruse/

Ann , February 3, 2017 at 1:10 pm

He has an op-ed piece in the Huffington Post today:

http://www.huffingtonpost.com/entry/trump-h-1b_us_5890d86ce4b0522c7d3d84af

sgt_doom , February 3, 2017 at 6:54 pm

Agreed, but I've been saying the exact same thing since 1980, so I've been lobbying and being a volunteer activist against this for many years, and yet I still run into women (not too many men anymore) in their 60s and 70s who believe offshoring of American jobs, and insourcing foreign visa replacement workers is fantastic (truly, we are a dumbed down society today, where they routinely protest on behalf of the financial hegemons).

Best book on this (and I am no conservative and have never voted r-con) is Michelle Malkin's book (with John Miano), Sold Out!

This has been going on for a long time, and by design: with every "jobless recovery" one-fifth of the workforce is laid off, and one-half of that one-fifth will never find another job, while one-half of the remainder, will only find lower-paying jobs.

And each and every time, more jobs are restructured as temporary or contractor type jobs. We've had a lot of "jobless recoveries" to date.

A recent study from Lawrence Katz and Alan Krueger found that 94% of the new jobs created over the past some years were all part-time, while a study from Rutgers University a year or so ago found that one-third of the new jobs created couldn't be verified as actually existing!

Nothing particularly new here, as it has been going on for quite some time (another great book is Ron Hira's book, Outsourcing America ).

Damian , February 3, 2017 at 8:46 am

In every category of labor – blue and white collar – the press is on to increase the supply and reduce the demand for labor.

The book ends: The Clintons in 92′ put thru the WTO / NAFTA – shut down 10's of millions of jobs and factories – blue & white collar. Obama did the same, with anticipating Hillary would be elected, put forth the TTP to enable unlimited H1-b for tech workers from off shore. The Neo Liberal Democrats were at the forefront of of this 25 year Plan for labor devaluation (with Republican help).

The Immigration Policy by government both illegal and legal were at the epicenter of increasing the supply in all categories with various programs while Obama also increased the regulations to wipe out more factories and deliberately reduce demand.

The solution is eliminate immigration in all forms until the 95 Million are employed and wages rise by the equivalent of what was lost in the past 15 years plus Tariffs to enable a marginal cost compared to imports to allow domestic factories to expand demand.

Increase the demand and lower the supply of labor will mean potentially a switch will occur from 1099 to W-2 as companies have to secure labor reliability in a short labor market which is squeezed.

The Millennials sooner or later will figure it out. Identity Politics which enables a greater supply of labor and diversion of attention to intangible values at the expense of tangible values has to be substituted for Labor Only Politics.

These young people have been duped based on the recent focus of the demonstrations. They don't understand they were screwed deliberately and with great malice by "Going with Her".

sgt_doom , February 3, 2017 at 6:56 pm

I've been keeping count over the years, and as close as I can find, over 170,000 production facilities were shipped out of the country. (Or, as David Harvey phrased it: "Identity politics instead of class analysis.")

Scott , February 3, 2017 at 8:58 am

One aspect of outsourcing that the article does not hit upon is the impact on company cash flows, which has some importance to large outsourcing initiatives. A company must pay its employees within 6 (it might be 7) days of the end of the pay cycle, which is typically two week. By contrast, when outsourcing, at the end of the month the contractor will provide an invoice, the company will then pay according to its payment cycle. This could be 30, 45, 60, 90, or even 120 days. The contractor still must pay its bills, in essence it's providing a low cost loan to firm (which often has a lower cost of capital). This approach, including the extension of payments has been largely driven by financial/business consultants.

Arizona Slim , February 3, 2017 at 10:15 am

Story of my life! I'm still trying to get paid for freelance work that I did in December. This payment delay is wreaking havoc with MY cash flow.

Scott , February 3, 2017 at 11:25 am

It can actually get worse – they might not pay you at all, hoping that you'll file a lawsuit, which will be interpreted according to the contract, rather than legislation which covers employment issues. The litigation costs might exceed any payments you'd receive.

My guess is that this wouldn't happen to an individual working under a 1099 (as word might get around), and very large firms often have leverage (not providing continuing services), but medium-size firms often get held up for months and years (especially once the contract has ended).

redleg , February 3, 2017 at 10:16 pm

Or they can go Chapter 7 during that time, where your almost 6 figures in billables gets paid 4 years later as mid- 2 figures.

Left in Wisconsin , February 3, 2017 at 10:49 am

Excellent point.

Another thing the article glosses over is that most outsourcing is simply wage cutting. I have never once seen confirmation of the notion that "specialist" firms provide better services at comparable labor costs than firms can do in-house. The double-bubble is that firms (and public sector employers) often spend more on outsourcing than they would doing the work in house despite the wage savings, which all accrue to the outsourcer of course.

diogenes , February 3, 2017 at 12:38 pm

When the airlines went on their deliberate BK spree in the 90's, they outsourced flying to regional carriers. Regional a/c (45-90 seaters) have higher CASM's than the a/c the airlines actually owned. In brief, it is cheaper to transport 100 passengers on a 100 seat a/c than to transport 100 passengers on two 50 seat a/c. That's been a fact since the Wright brothers broke the ground.

FWIW, SouthWest never went the regional route, never went BK and pays their unionized employees quite well.

The BK spree was all about breaking labor, not operational efficiencies that would actually save money.

d , February 3, 2017 at 1:23 pm

but now it seems the majors are not to happy with the regionals , cause customers cant tell the difference between them, the next problem is that for some reason the regionals cant find pilots. seems that pilots dont want to work for less than 30,000 a year.

Harris , February 3, 2017 at 4:53 pm

The FAA increased the number of hours required to be a pilot to 1,500 from 250.

Yves Smith Post author , February 4, 2017 at 4:45 am

Yes, but that is a one-time benefit. Once you've shifted the payment cycle, your quarterly reported cash flow will be more or less the same.

PKMKII , February 3, 2017 at 9:24 am

Another area of friction and waste with IT consulting and other contracting, is that an employee of a company simply and efficiently plugs into their existence administrative system (HR, timekeeping, payroll, etc).

With a consultant, there has to be reconciliation between the vendor's records and the company's records, which means work hours burned matching everything up. And that assumes they do match up neatly; If the vendor says "our consultant worked 50 hours this week, pay them as such" and whoever oversees the consultant at the company claims they only approved for 40 hours, now you've got a mess on your hands, could potentially go to the lawyers.

rusti , February 3, 2017 at 10:03 am

The idea that companies who use contractors are more flexible is largely a myth. The difficulty of entering into outsourcing relationships gives you an idea of how complex they are. While some services, like cleaning, are likely to be fairly simple to hand off, the larger ones are not.

I work in engineering at a gigantic multinational vehicle manufacturer and the role of "consultants" has been expanding with time. Rather than consultants being people with specific technical expertise who work on one subsystem component with clear interfaces to other things, it now encapsulates project managers and subsystem / function responsible people who need to have large networks inside the company to be effective.

Considering the huge amount of time it takes to get a new hire up and running to learn the acronyms and processes and the roles of different departments, it's a bit absurd to hire people for such roles under the assumption that they can be quickly swapped out with a consultant from Company B next week.

It's pretty clear that management sees permanent employees on the payroll as a liability and seeks to avoid it as much as possible.

Jim Haygood , February 3, 2017 at 12:24 pm

" It's pretty clear that management sees permanent employees on the payroll as a liability. "

No doubt correct. But why is that? Over time, mandates on employers - particularly large employers - just keep escalating. Health care; pensions; overtime; layoff notifications: regulators just keep raising the ante. Employers respond by trying to reduce their profile and present a smaller target to their predators. Staying under 50 employees wins a lot of exemptions from federal regulations.

Taken to an extreme, some developing countries (Argentina being one example) have European-style labor regulations guaranteeing job security and mandating generous compensation when employees are laid off. With hardscrabble small businesses being in no position to shoulder such risks, the result is that about 40 percent of employment is trabajo en negro , with no benefits or protections whatsoever - a perfect example of unintended consequences.

Editorial comments such as "these [contracting] arrangements increase risks and rigidity" ignore that government employment regulations also increase risks and rigidity. There's a balance of power. Overreaching, such as Obama's surprise order to vastly increase the number of employees subject to overtime pay, leads to employer pushback in the form of more contracting and outsourcing. Getting whacked out of the blue with a big new liability is unfair.

diogenes , February 3, 2017 at 12:47 pm

Actually, the overtime rules were an attempt to restore overtime that GWB took away:

http://www.nytimes.com/2004/08/23/us/controversial-overtime-rules-take-effect.html?_r=0

Concur about costs, and health care is the big one. Every other industrialized nation we compete against has national health care. Given that, why doesn't business support Medicare for all and get health costs off their books? Plus it would be a damsite easier to start up a business if one had health care.

susan the other , February 3, 2017 at 1:16 pm

Yes. I've never understood why corporations aren't all over this.

Left in Wisconsin , February 3, 2017 at 8:08 pm

Because they, unlike us, understand class. I can state for a fact that the Big Three auto companies are well aware of how much cheaper health care costs are for them in Canada and how much better off they would be here, cost-wise, with a national health care system where McDonald's and Wal-mart have to pay the same per hour or per employee cost as they do. But it turns out cost isn't everything. Corporate (capitalist) solidarity rules.

H. Alexander Ivey , February 3, 2017 at 10:56 pm

Yes, yes, damn yes!! It's about your class, not your race, not your education, not your gender. As Lambert might say, identity politics (your race, your education, your gender) is used to keep your eye off the prize: economic opportunity and security.

DH , February 3, 2017 at 2:21 pm

It is also easier to have part-time workers because they are still covered by health insurance in some sort of national health insurance system. In the US, the part-time workers will have high turnover as they look for full-time jobs to get access to health insurance.

Workers are also more likely to start their own businesses to provide services since the health insurance is just a fee they pay instead of an astronomical non-group insurance bill. COBRA insurance premiums are ginormous if you need to continue coverage after you leave a company.

Economists have been decrying the lack of employee mobility and small business formation over the past decade or so. Health insurance is probably a primary reason for this. Obamacare hasn't been around long enough and with enough certainty to change that dynamic yet.

jrs , February 3, 2017 at 3:37 pm

It's probably part of it, though I suspect the bad labor market is part of it as well. It's one thing to quit a job to start a business when you think "if it doesn't work out, I can always go back to my old career and easily be hired", another when quitting a good job means one might not land another ever.

susan the other , February 3, 2017 at 1:24 pm

haven't seen any more info on Hollande's "Flex – Security" plans to give corporations a way to lay off workers to improve the corporation's revenue. French Labor was having none of it and then Hollande went negative in the polls and was done for. Our contracting out former corporation departments sounds like bad quality control at best. If the state – whatever state you can name – is going to prop up all corporations everywhere because they can no longer successfully compete then something is fundamentally wrong with the system that demands such murderous and mindless competition.

d , February 3, 2017 at 1:32 pm

well there also that wage theft rules, that employers don't like. course if you look at work mans comp, you will find that it no longer works to protect employees any more. and maybe that is also why employers are get rid of employees. plus there is all of that needing to manage them. but you still end up having to manage vendors too, and while i suppose you could hire another vendor to manage the vendors (not really sure this will work out well), it still leaves the biggest problem

since consumers are about 70% of the entire economy (always wonder if this is true. because almost all corporate 'investment' is done because of customer demand), seems like this business fad, will end up with fewer customers (which seems to be the way its working too, as evidenced by the falling sales figures from companies, even Apple), so it like business is like lemmings, going a cliff, because some one else started

Lune , February 4, 2017 at 3:09 pm

So are you a proponent of Medicare-for-all? It would be a tremendous benefit to corporations to get out of the healthcare business and also increase employees' willingness to become freelancers and consultants, since they'd never have to worry about healthcare.

The truth is that citizens expect a certain amount of social welfare and security. This can be provided by 1) individuals themselves, 2) private players e.g. corporations, or 3) public players e.g. govt. Each has downsides. If you expect individuals to provide for themselves, it will less inefficient than having professional managers, and individuals will cut down on other consumption and save more, thereby hurting an economy such as ours which is highly dependent on consumption. This leaves companies and government. If companies lobby against public welfare programs like nationalized health insurance, unemployment insurance, social security, etc., they shouldn't be surprised if government foists those requirements back on them through back-door regulations.

To be fair to companies, most of the ones engaged in the "real economy" e.g. manufacturing, actually wouldn't mind medicare for all, or some other program that relieves them of the burden of providing healthcare to their employees. But they're being drowned out by the financial economy of Wall St., banking, insurance, etc. who depend on putting more money in the hands of individuals from whom they can extract much higher fees than they ever could from govt or corporate HR depts.

If companies don't want increased health mandates, for example, their enemy wasn't Obama: it was the private health insurance companies that didn't want a public plan.

Lune , February 4, 2017 at 3:17 pm

Sorry, I meant individuals will be less *efficient*.

Altandmain , February 3, 2017 at 1:45 pm

Yeah when I worked for one of the big 3 at an assembly plant, I felt that the use of temporary contractors could have very negative implications.

Most of the staff though were reasonably well paid, although asked to work long hours. I think though that overall, highly paid permanent workers pay for themselves many times over.

DJG , February 3, 2017 at 10:11 am

One aspect of the whole fandango that I don't get is how the IRS allows whole departments within a company to be outsourced: If people show up at your plant or office every day to work on your tasks, they are your employee, not a contractor. Is this melting away of the idea of an employee because of lack of enforcement or some change in IRS rules that I am not aware of?

Basically, if you control a worker's day, and if that worker works regularly for you, the person is your employee. I don't see how companies get away with this sleight of hand–avoiding, at the most basic legal level, who is on staff or not. [Unless the result, as many note above, is to increase class warfare.]

goldie , February 3, 2017 at 1:35 pm

The company doesn't get away with it if someone is willing to whistleblow to the IRS and said company fails the IRS 20-Factor Test (IC vs. employee). The nice thing there too, is that the tax burden will be on the company and not the employee. While I don't advocate being a stoolie, if a company wants to screw me over turn-about is fair play. I do the best I can to avoid those kinds of companies in the first place.

sgt_doom , February 3, 2017 at 7:02 pm

" One aspect of the whole fandango that I don’t get is how the IRS allows whole departments within a company to be outsourced . . "

If I understand your question correctly it is because a federal regulation was enacted by congress (I believe one of them was faux-progressive, Jim McDermott, no longer in congress but co-founder of the India Caucus, to replace American workers with foreign visa workers from India) which forbids oversight of the foreign visa program - and yes, they established a federal regulation killing oversight of the program by the government!

Suggested reading:

Sold Out, by Michelle Malkin and John Miano

fooco1 , February 4, 2017 at 2:54 am

Someone quoted Norm Matloff (a known bigot) above. You are now quoting anchor child Filipino bigot Michelle Malkin of all people ? It's not helping your case.

The H1-B program is a few hundred thousand legal tax paying people a year. There are 21 million Mexican illegals in this country. What do you think has more downward pressure on wages ? .005% H1-B (yeah, you read that right) of the total immigrant/wage pressure ? It's idiotic and a purely bigoted worldview.

Yves Smith Post author , February 4, 2017 at 3:08 am

We are supposed to regard "a few hundred thousand" as bupkis when they are concentrated in one sector?

The H1-B visa program has has a huge impact on wages in the IT sector and has virtually eliminated entry-level computer science jobs. This is strategically foolhardy, in that the US is not creating the next generation of people capable of running critical infrastructure.

And the illegal immigrants do pay taxes: sales, gas, and property taxes through their rents. And many actually do pay FICA. The Treasury recognizes that certain Social Security numbers are reused many times, and it's almost certainly for illegal immigrants. In fact, the IRS encourages illegal immigrants to "steal" Social Security numbers:

http://www.forbes.com/sites/robertwood/2016/04/13/irs-admits-it-encourages-illegals-to-steal-social-security-numbers-for-taxes/

That article whinges about possible tax credit scamming, but even that estimate is well below what they pay in FICA, $12 billion. And pretty much none of them will draw benefits.

This is from memory, but I believe they collect over $4 billion from these SSN per year. And most of these jobs are seasonal and/or too low wage for them to pay much in the way of income taxes when they are being paid in cash.

fooco1 , February 4, 2017 at 7:31 pm

H1-B is not in one industry, the .005% is spread across entry level jobs in all industries: finance, automotive, insurance, arts, film, automation, etc. The total amount of H1-B is minuscule, vanishingly close to zero in a country of 300+ million and 20+ million illegals.

You don't seem to be complaining about the tens of millions that used to concentrated in one sector..actual manufacturing. Wonder why ? Here's a hint: that sector used to make computer peripherals, keyboards, mice, terminals, monitors, LCD's, chips, motherboards, pretty much everything in the USA.

Employees in china, taiwan, etc pay zero USA taxes and they displaced millions of manufacturing jobs. And ironically, you are using an entirely outsourced computer (that actually displaced tens of millions of jobs in the aggregate) to complain about the minuscule .005% H1-B effect. A few hundred thousand entry level coding jobs (which are ridiculously simple and lo-tech, google 13 year olds getting Microsoft certified to see how low down on the value chain this is). You genuinely think writing a few for-loops (I am simplifying a little but you get the idea) is hard ?

Certainly, way way less capital intensive and way way less barrier to entry than Hi-Tech manufacturing. It's all going to be outsourced much faster than manufacturing was, since there is literally no barrier to entry. And H1-B is a good thing, relatively speaking, compared to full on outsourcing (just like manufacturing was).

Like I said, the only explanation for these anti H1-B posts is plain old bigotry. No other explanation comes close.

fooco1 , February 4, 2017 at 8:08 pm

Might as well finish my train of thought..then I'm outta here.

There are less H1-B visas this year than refugees , Refugees (not to mention the 20 million illegals) also put downward pressure on wages across all industries, but of course, those are all food servicing/picking/janitorial jobs and who cares about those people right ? (sarcasm for the impaired)

So, coming back to H1-B's..let's take the logical alternative and ban all H1-B's entirely and deport the ones on H1-B visas. What happens then ?

1) They can do the job exactly as well remotely (all they need is email/internet/skype).
2) They get paid even less (but more than zero).
3) They pay no taxes.
4) Their output is words..code is the same as prose and math. Good luck banning math/words..if it can be printed on a t-shirt, it ain't bannable. (See the famous bernstein crypto case from the early 90's for a illustration of this).
5) And finally..there are zero new jobs added for native USA'ians (which would now cost more, given the alternative).

It makes the situation far worse than it is today. There is fewer local coffee shop selling coffee, fewer rental units getting rented, fewer groceries getting bought, cars being purchased, etc.

For a easily displaceable and low barrier to entry coding gig, there isn't any easy answer. H1-B's are actually the best solution (or at the very least neutral), not the problem.

FluffytheObeseCat , February 4, 2017 at 7:22 am

The H1-B visa program is operated so as to wreck the bargaining power of native born young U.S. workers. Young Americans are increasingly likely to be nonwhite AND from the less valued (not Asian) subgroups of nonwhite. The damage H1-Bs do to our white Baby Boomers is almost incidental at this point; they are aging out of the workforce. And given the intense age bigotry of the IT subculture, they are not a factor within it at all at this point.

H1-B visas lock our striving, capable working class young people out of upward mobility. Kids who are now graduating from say, San Jose State with skills as good as those of South Asians don't get jobs that they are qualified for, because they are shut out of entry to the business. They are disdained in Silicon Valley because the majority of entry level conduits to employment are now locked up (via social contacts, and "who-you-know" relationships) by men from the subcontinent.

Your race argument is pernicious and I suspect, promoted in the full the knowledge of this fact. It is a great shame that we are relying on kooks like Malkin to promote obvious truths, but the shame belongs to our morally derelict 'liberal' chattering class, not those who listen to her and her ilk for lack of other sources.

vegeholic , February 3, 2017 at 10:22 am

An underappreciated aspect of contracting versus cultivating your own employees is that it hollows out the organization to the point that it may no longer have competence to perform its mission. Having an apparent success at contracting out menial tasks, the temptation is to keep going and begin to contract out core functions. This pleases the accountants but leaves the whole organization dependent on critical talent that has very little institutional loyalty. When an inevitable technical paradigm shift occurs, who can you count on to give you objective and constructive advice?

Costs of training and cultivating employees are high, and it is tempting to think that these costs can be eliminated by using contractors. It is strictly an apparent, short-term gain which will in due time be revealed as a strategic mistake. Do we have to learn every lesson the hard way?

Portia , February 3, 2017 at 10:55 am

yes, and when I read that Pfizer farms out research, I also wondered if retention of the outsource company contract is results-related. could new drug results hinge on a company wanting to keep their Pfizer contract by telling them what they want to hear?

Ann , February 3, 2017 at 1:06 pm

Agreed. Every time a company offshores jobs or goes through another round of layoffs, it loses its institutional memory. This is particularly acute in the mainframe IT systems that prop up the TBTFs (yep, they offshored these too). After a while, nobody understands exactly how these systems work and can only get to the bottom of them by reading code, which is a pretty flawed way to learn the business. This has been going on for years and nobody cares.

sgt_doom , February 3, 2017 at 7:03 pm

Amen to that, something I've been preaching for over 35 years now!

wilroncanada , February 3, 2017 at 6:14 pm

It pleases the accountants, that is, until their jobs too are outsourced. First they came for the janitors

Denis Drew , February 3, 2017 at 10:35 am

Centralized bargaining - a.k.a., sector wide labor agreements - is the only strategic answer to contracting out. Done in continental Europe, French Canada, Argentina, Indonesia.

(Take a vacation from reality with Soma - one gram and I don't give a damn.)

L , February 3, 2017 at 10:40 am

The one word I don't see in your excellent writeup is loyalty . Companies, like countries depend to a great extent on social constraints to keep people committed to the group. You cannot monitor all people all the time and doing so causes them to turn against you. But companies staffed with contractors and temps and temps supervising contractors have no loyalty to the company. Ergo no one employee has any reason to go the extra inch or to turn down the chance to sell out for personal gain should the opportunity arise.

All that imposes real costs that companies conveniently ignore because they are not always realized in share price.

PhilM , February 3, 2017 at 5:54 pm

I was going to add the same thought, but use the label "goodwill." It is something that appears on balance sheets in enormous amounts depending on what the accountants think it may represent.

There is a "goodwill bank" in the labor pool of any given company, and when the balance hits zero, the company will fail, "emigrate" its capital, or go public to the greater fools. Companies are engaged in a savage race to the bottom that is inherent in corporate structure: executives are now playing with somebody else's money, and somebody else's life. If corporate liability were suddenly returned to the days of the partnership, what a change we would see. And those days were not so long ago: Wall Street remembers the 1960s.

PS What a treat to come here and see informative journalism and commentary instead of the monkey cage.

oliverks , February 3, 2017 at 11:52 am

My daughter was recruited and interviewed by Genentech and then sent to work for an organization called PPD. PPD did nothing in this relationship, other than take money from Genentech pocketed about 1/2 of that and then pay her the rest. I really couldn't figure out what the heck the point of this was, other than some long running strategy to ultimately depress salaries of Genentech chemists.

DH , February 3, 2017 at 2:29 pm

One of my kids works in a unionized metal foundry (they still exist in the US!). When they need new workers, they bring several in through a temp agency for several months. If they can cut it and are acceptable, then they get pulled into the union or into the plant management team. This allows them to try out several people on a rent-to-own basis, but in the long run they become loyal company employees with very low turnover.

jrs , February 3, 2017 at 3:45 pm

Contract-to-hire is not new. The problem from an employee perspective is trying to evaluate when a company is actually serious about hiring if the contractee does a good job, and when it's just empty promises and they have no intent of making full time job offers at all.

DH , February 3, 2017 at 2:31 pm

BTW – the Genentech scientists probably get a bunch of benefits like bonuses and stock options, etc. that are not available to the contract workers. They probably have more protections if they are terminated or laid off whereas the contract workers would be done that day. The really good contract workers may get offers to work at the company for the long-run.

j84ustin , February 3, 2017 at 12:14 pm

Outsourcing is done in the public realm, too; my first job after grad school was with a major housing authority – except it wasn't for them (despite me having a "housingauthority.org" email address). I worked for a contractor of the housing authority, who paid us shit and treated us like cattle. I lasted three months.

j84ustin , February 3, 2017 at 12:36 pm

***but I was still a W2 employee! silver lining.

jrs , February 3, 2017 at 3:48 pm

Oh yes it definitely happens in the public realm, a lot with local government, more and more it seems.

akaPaul LaFargue , February 3, 2017 at 12:19 pm

One area not discussed in this post is municipal outsourcing. What this means in practice is the loss of organizational memory . assuming that records are not adequately maintained since the "old-timers" were still around. But with the loss of human memory banks, no new ones (digital?) have taken their place. Further, when consultants are hired for a specific project, when they have completed that project, what they have learned as ancillary knowledge is lost cuz the end-product is all that counts, not the process.

Dave , February 3, 2017 at 12:57 pm

i.e. Rip up the entire street to find where the pipe is because the old public works director who was replaced with a bright young woman with a degree before he qualified for his pension, got even and deleted the maps on the software. :-)

wilroncanada , February 3, 2017 at 6:41 pm

Didn't Yves mention this loss of institutional memory in reference to fianancial services, or was it banks, and their IT?

Further to government outsourcing:
Back a few years my wife and I worked for a school district on the East coast of Canada. The janitorial service had been outsourced a few years previously, with the former head janitor becoming the main contractor, who then hired other cleaning staff to work for him. He/she was already being squeezed to reduce his rates, leading to work not done or his working from 8AM to midnight to save an after-school employee. So–lower employment overall, all at minimum wage, including the main contractor.

One district had bucked the province-wide trend by keeping its own cleaning staff. Visiting the schools in that district those few years later, one could see the result, in vastly superior level of cleanliness, better co-ordination between admin and teaching staff with cleaners, and much better relations with students as well.

The staff weren't bosses, the cleaners weren't minions, and the students weren't customers. They were a team.

Glen , February 3, 2017 at 12:21 pm

I don't think there will be a change in this because it's too profitable for the CEOs to strip mine the companies assets (knowledgeable employees are an asset) for maximum "shareholder value" (always replace "shareholder value" with "my compensation"). I suppose this will change when all companies are stripped to the bone and go under. But we now call these "too big to fail" and prop them up with taxpayer dollars.

We need to change incentives. These might help:

Make corporations really pay taxes so that it makes sense to invest in the company rather than strip it.

Don't prop up TBTF companies, let them fail so that many small companies can grow.

Stop all the fraud and corruption. Send corrupt CEOs to jail.

Medicare for All would be a boon for businesses, especially the smaller and mid-sized ones.

Herb Kelleher, CEO of Southwest, was once asked where he ranked shareholders vs employees. He replied employees were first (because if the employees are not happy, then the customers are not happy), customers (they pay the bills), and shareholders (they buy and sell shares in seconds). If the company is successful, the shareholders will come. We somehow need to get back to these company values. A successful company starts with the employees.

Arizona Slim , February 3, 2017 at 2:12 pm

Thank you, thank you, THANK YOU, Glen!

JimTan , February 3, 2017 at 12:58 pm

Wow – good post.

This is a pretty ugly development in our history. The 'end of employees' is a very accurate description of what is going on in our gig economy related to a specific legal contradiction. In the U.S., we've adopted a vast body of labor laws ( many in response to the Industrial Revolution and Great Depression ) that are primarily designed to protect "employees" from exploitation. Buried deep in our tax law is a second designation for worker called "independent contractor", defined as a self-employed person providing services to other businesses that is exempt from most labor laws on the principle that a self-employed person can't exploit themselves. The key here is labor laws protect 'employees' from 'employer' abuses. Changing a workers classification from employee to ( self-employed ) contractor, will change an employers classification to customer, and remove the workers legal protections from exploitation. Labor law protections include minimum wage and hours, workplace safety and health, wrongful dismissal protections, anti-discrimination protections, employee benefits security, and worker compensation protections. This contradiction is allowing many companies to sidestep centuries of laws enacted to stabilize and and protect our society. Some companies push this power imbalance even further by transferring many of the business costs associated with their revenue to employee contractors ( see Uber ).

Hopefully when there is enough public outcry, regulators and prosecutors will decide to challenge these interpretations of existing laws and force businesses back in line regardless of their political influence.

Arizona Slim , February 3, 2017 at 2:09 pm

Call it what it really is - the frig economy. Because it keeps frigging us over.

JimTan , February 3, 2017 at 2:24 pm

Incidentally, the slippery logic that removes labor law protections by classifying a worker as self-employed ( both employer and employee ) might also grant businesses protections from their workers via consumer protection laws against fraud and unfair practices ( when businesses become customers of their now self-employed former employees ).

vegeholic , February 3, 2017 at 1:44 pm

As has been stated several times, sometimes government entities are the worst offenders here. Grover Norquist & Co. insisted on shrinking the size of government. The obedient elected officials and managers immediately replaced employees with contractors and could claim that they had indeed reduced the size of government. Unfortunately the budget probably went up since we now have to provide profit for the rent extracting contract vendors.

redleg , February 3, 2017 at 10:37 pm

They replaced govt employees with their contractors.
FIFY
Dual purpose- Eliminate the government's ability to govern while capturing the tax revenue.

Democrita , February 3, 2017 at 2:11 pm

A few years ago I was working for a family of local weekly papers, run on a shoestring (of course) with pathetic salaries for the tiny staff. At one point, they heard about possibly outsourcing design–layout of modular pages–to cheap labor in Romania. But when they ran the numbers .our in-house designers were already cheaper than the Romanians!

Second point: At my current magazine I am one of just two full-time staffers on the edit side. Our copy-editor/proofreader is paid on an hourly basis, and works off-site. Our designer works on a monthly retainer, off-site. And so on.

That makes the relationship between us and our workers competitive and antagonistic: They try to do the least amount of work, and we try to pay the least amount of money. So when the publisher wants to be "innovative" or try something different, the designer resists. He doesn't want to spend any more time on us than he normally does. So we don't do anything well, we get by with just good enough.

Point 3 – institutional knowledge: One of our key competitive advantages has been/is being eroded because there are things we haven't done in two years due to turnover. When I arrived and took up one such project, hugely important to the company's bottom line, no one could tell me how it was done. Everyone who had been involved in it was gone. We've now spent several months reinventing this particular wheel.

But the publisher doesn't see that as money. He only sees money as money.

DH , February 3, 2017 at 2:24 pm

BTW – the financial sector is ripe for this. Automation is taking over many positions and people in active investing is getting slashed big-time. Ironically, places like Vanguard may actually be some of the last bastions of actual employees.

Detrei , February 3, 2017 at 2:35 pm

The problem with these short term contract jobs are immense. Employees that don't have a steady income have difficulty getting loans for cars or homes. They certainly have less protection too. Our son worked for SKY TV as a part time employee through a temp agency for 3 years, working 40 hour weeks. But when an unstable full time employee assaulted him, in front or several witnesses, he was the one fired on the spot without explanation. He was a non-person. The temp agency didn't want to get involved for fear of losing their contract. With no union, no rights and little money, there was little he could do. They knew he couldn't afford a lawyer and involving the police wouldn't get his job back. This goes on all the time now. 20 years ago would have been unthinkable. I see a revolution coming, in many countries

Pelham , February 3, 2017 at 2:39 pm

Given the long evident fact that our corporate owners and their servants in government will not do a bloody thing to make life better for us, what can we do? As a first step toward any solution, we need to recognize that nothing is possible within the narrow boundaries of our political and economic system.

Vatch , February 3, 2017 at 3:03 pm

What you describe as a first step seems a lot like a claim of inevitable failure. Rather than expect failure, I recommend as a first step that we try to block a few of Trump's predatory cabinet nominations. Andrew Puzder, the nominee to head the Labor Department, and Steven Mnuchin, nominated to be the Secretary of the Treasury, seem to be very relevant to the scope of this article. Also Tom Price, nominated to be the Secretary of Health and Human Services. Tell your Senators that you don't want them to be confirmed. It's easy, although you might need to make a few extra phone calls, because the Congressional phone lines are often busy these days.

https://www.senate.gov/senators/contact/

Sorry, I know I'm being repetitious. But it's better to do something positive than to bewail our political impotence.

JEHR , February 3, 2017 at 3:04 pm

Or everything is possible within Witness–Trump as Pres.!!!!!

JEHR , February 3, 2017 at 3:03 pm

I ask, Why can't banks be fully automated? You wouldn't need CEOs and COOs and CFOs in banks because IT can do all those jobs automatically. Then we would find out that we only need ONE bank–the central bank and, voila, the banks no longer can create money by making loans. (I'm sure there is a weak point in this argument!!!) However, I can see something like this happening in the future if only we separate investment banking from commercial banking.

Sound of the Suburbs , February 3, 2017 at 3:20 pm

Marx saw capitalism as an endless class struggle between the bourgeoisie and the proletariat.

He wasn’t far wrong.

1920s – high inequality, high banker pay, low taxes for the wealthy, robber barons, reckless bankers, globalisation phase (bourgeoisie in the ascendency)

1970s â€" low inequality, worker and union power, high taxes on the wealthy (proletariat in the ascendency) (probably more true in the UK than the US)

2000s â€" high inequality, high banker pay, low taxes on the wealthy, robber CEOs, reckless bankers, globalisation phase (bourgeoisie in the ascendency)

The pendulum swings back and forth and always swings too far in both directions.

If the human race could take a more sensible, big picture view they might see it as a balance between the supply side (bourgeoisie) and the demand side (proletariat).

The neoliberal era has been one where a total ignorance of debt has held sway.

Redistributive capitalism was removed to be replaced with a capitalism where debt based consumption has become the norm. without a single mainstream economist realising the problem.

The world is maxing out on debt, this system is set to fail due to a lack of demand. The Bourgoisie have been in the ascendency and made their usual mistake.

“The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction”.

Keynes thought income was just as important as profit, income looks after the demand side of the equation and profit looks after the supply side.

He has the idea of balance.

Just maximising profit â€" The Bourgeoisie looking after their own short term, self interest with no thought of the longer term.

1) Money at the top is mainly investment capital as those at the top can already meet every need, want or whim. It is supply side capital.

2) Money at bottom is mainly consumption capital and it will be spent on goods and services. It is demand side capital.

You need to keep the balance.

Too much capital at the bottom and inflation roars away.

Too much capital at the top and there is no where sensible to invest and the Bourgeoisie indulge in rampant speculation leading to the inevitable Wall Street Crash, 1929 and 2008.

Today’s negative yield investments?
Too much capital at the top, no one wants it and you have to pay people to take it off your hands.

Sound of the Suburbs , February 3, 2017 at 5:07 pm

We are actually using 1920s economics, neoclassical economics.

No wonder everything looks familiar, the Bourgeoisie have no imagination.

“Stocks have reached what looks like a permanently high plateau.”Irving Fisher 1929.

In 2007, Ben Bernanke could see no problems ahead.

Their beliefs were based on an absolute faith in markets based on neoclassical economics which states markets reach stable equilibriums.

We should actually learn from mistakes, not repeat them.

1920s levels of inequality â€" what a surprise it’s the same economics.

We have moved on to the 1930s now:

1930s/2010s â€" Global recession, currency wars, rising nationalism and extremism

1940s â€" Global war

Something to look forward to.

jerry , February 3, 2017 at 5:24 pm

"You need to keep the balance." The post war era was balance, that was the middle of the pendulum swing, we have never seen you're next sentence:

"Too much capital at the bottom and inflation roars away." When? Name one instance outside of extraordinary political situations like weimar germany and zimbabwe where this has occurred?

Inflation is the boogey man that the elite throw around to scare us into submission. They don't care when its inflation of house prices, they don't care when its inflation of healthcare costs, education costs, etc. etc. But they damn sure start sweating a lot when its the cost of labor that goes up. Shocker.

Check my article about this very topic (shameless self promotion) : https://marginallyattachedblog.wordpress.com/2017/01/04/inflation-worries-from-trump-fiscal-stimulus/

FreeMarketApologist , February 3, 2017 at 3:28 pm

"Gate Gourmet had once been part of British Airways. And passengers blamed the airline."

You can transfer expenses, you can transfer legal and regulatory liability risk, you can transfer financial risk, but it is virtually impossible to transfer reputational risk. Companies who think they can do so (or ignore the fact) do so at their own peril.

Barbara , February 3, 2017 at 4:37 pm

My d-i-l, a research professional, has survived five down-sizings, assuming an additional work load each time. The last time she also got a small promotion (well, you'd think they'd give her something positive after all this). To myself I thought, they're going to wear this woman out till she has nothing left to give and dump her.

It's worse. The corporation (company is a concept from my early working days) just announced that everyone would have to bid for their projects(jobs). What this means of course is "how much are you willing to give?" not to mention pitting one employee against another.

Not prescient enough, was I?

jerry , February 3, 2017 at 5:30 pm

Love the article.

I "work" (temp/contract/no benefits) at a large multinational electronics company in cust service and have seen this first hand. In response to a couple years of dropping profits, they outsourced the entire department (couple hundred employees) to the Philippines. They cut full time employees, replace them with temps for half the pay, because people will do it, and we live in desperate times with no bargaining power.

As someone mentioned, its a negative feedback loop, less demand, less employment, less demand, until the whole world is greece. We won't make it through another world war, the world is too globalized, too connected, too advanced technologically. We need a relatively peaceful populist revolution – which we seem to be seeing the first real signs of – or our species is done for.. and the sad part is I'm not even exaggerating.

sgt_doom , February 3, 2017 at 7:07 pm

Best overall reading list on this subject:

Sold Out by Michelle Malkin

Outsourcing America by Ron Hira

America: Who Stole the Dream? by Donald L. Barlett

One Nation Under Contract by Allison Stanger

Dick Burkhart , February 4, 2017 at 6:07 pm

One point you missed is that a company cannot manage, let alone write a contract very well unless it has sufficient expertise on staff. It is not sufficient to hire a consultant unless that arrangement is more or less permanent. Too many things can go wrong, as they often do even with competent staff when projects are complex or innovative.

[Jan 28, 2017] Solution for rempant unempolyment and underemployment in the USA requres sacrifies of the rich, which they are unwilliong to do

Notable quotes:
"... Your analysis is wrong. The wealthy elites backed Jeb! Bush and Rubio. Trump picked up the economic nationalism of Jeff Session, Steve Bannon and talk radio. The rubes voted for Trump in the primary even though the wealthy spent a lot on their candidates. The rubes want to scapegoat both parties (Bill Clinton and the corrupt Republican insiders - drain the swamp). ..."
"... Trump channeled the anger of the rubes. Hillary didn't get the turnout that hope and change Obama got. She flip-flopped on the TPP while Obama spent his remaining months trying to pass it. Now it's dead. ..."
"... The actual solutions will require sacrifice from the rich. Even more important (and difficult); it will require that we abandon the narrative of the rugged individual who "takes care of himself" and "don't need no gobinment". The future belongs to countries that can build up effective systems to educate each individual to the fullest extend of their capabilities (not their wallets) - thereby making sure that critical human resources do not go to waste. The future doesn't belong to the dying empire of the US. ..."
"... Obama averaged 1.7 percent annual GDP growth over his 8 years after the largest financial crisis since the Great Depression. ..."
"... This is very true. Even if you want to quibble about whether trade is somewhat more important than Delong says it is. The real problem is the US does not have a functioning workforce policy. ..."
"... And trade is more easily scapegoated- I mean who can argue against technological progress? The overall problem will not be addressed by focusing all attention on job loss due to trade. ..."
"... Excellent comment by jonny bakho. Much better than Delong's I think. ..."
"... But it is also true that scapegoating trade can get you votes, so there is a political problem. ..."
Jan 28, 2017 | economistsview.typepad.com
jonny bakho : , January 28, 2017 at 03:53 AM
Worker dislocation by factory closings and layoffs is an issue the US does not address very well for lack of a workforce policy

Dislocations can be caused by offshoring and trade
Dislocations can be caused by technological advance.
We make more goods today with fewer workers; from 30 percent to 8.6 percent
As DeLong points out, 18 of the 21% loss is due to technology.
0.1% is due to NAFTA and trade agreements.

The problem of worker dislocation will never be addressed if all the focus is on the 0.1% and the 18% is ignored.

The wealthy elites are happy to scapegoat NAFTA because addressing dislocation properly would require transfer payments. The wealthy always want to avoid paying their fair share so they are more than happy to blame NAFTA and cheer on the pols who scapegoat trade. The wealthy don't tolerate pols that propose to truly address the issue in ways that involve transfer payments.

It is easy to drum up anti trade sentiments using xenophobia, racism and nativism. It is more difficult to get people to be introspective and consider changing what they do

Peter K. -> jonny bakho... , January 28, 2017 at 06:18 AM
Your analysis is wrong. The wealthy elites backed Jeb! Bush and Rubio. Trump picked up the economic nationalism of Jeff Session, Steve Bannon and talk radio. The rubes voted for Trump in the primary even though the wealthy spent a lot on their candidates. The rubes want to scapegoat both parties (Bill Clinton and the corrupt Republican insiders - drain the swamp).

Dean Baker:

"The 2016 GDP growth brought the average for the eight years of the Obama administration to 1.7 percent."

Trump channeled the anger of the rubes. Hillary didn't get the turnout that hope and change Obama got. She flip-flopped on the TPP while Obama spent his remaining months trying to pass it. Now it's dead.

DeDude -> jonny bakho... , January 28, 2017 at 06:50 AM
You are absolutely correct. The actual solutions will require sacrifice from the rich. Even more important (and difficult); it will require that we abandon the narrative of the rugged individual who "takes care of himself" and "don't need no gobinment". The future belongs to countries that can build up effective systems to educate each individual to the fullest extend of their capabilities (not their wallets) - thereby making sure that critical human resources do not go to waste. The future doesn't belong to the dying empire of the US.
jonny bakho -> DeDude... , January 28, 2017 at 09:35 AM
Yes. The wealthy will need to sacrifice to fund these programs. And yes, the idea of every man for himself (rugged individual) needs to be abandoned.

Unfortunately, racism gets in the way of educating ALL Americans and hurts all poor people, not just blacks and Hispanics. Abandoning white male patriarchy will require sacrifice on the part of many.

Peter K. -> jonny bakho... , January 28, 2017 at 08:21 AM
"It is easy to drum up anti trade sentiments using xenophobia, racism and nativism."

Only in bad times. People want scapegoats.

Obama averaged 1.7 percent annual GDP growth over his 8 years after the largest financial crisis since the Great Depression.

More people voted for Hillary, but Sanders ran a popular campaign. Trump wont the primary and electoral college by playing to the uneducated's fears and attacking the elite as corrupt.

Yes he scapegoated trade and offshoring, but he provided an explanation for the stagnating incomes and shrinking middle class that voters have been experiencing for decades.

Jerry Brown -> jonny bakho... , January 28, 2017 at 08:43 AM
Jonny backho:

"Worker dislocation by factory closings and layoffs is an issue the US does not address very well for lack of a workforce policy.

Dislocations can be caused by offshoring and trade
Dislocations can be caused by technological advance

We make more goods today with fewer workers; from 30% to 8.6%. As Delong points out 18 of the 21% loss is due to technology.
.1% is due to Nafta and trade agreements.

The problem of worker dislocation will never be addressed if all the focus is on the 0.1% and the 18% is ignored."

This is very true. Even if you want to quibble about whether trade is somewhat more important than Delong says it is. The real problem is the US does not have a functioning workforce policy.

And trade is more easily scapegoated- I mean who can argue against technological progress? The overall problem will not be addressed by focusing all attention on job loss due to trade.

Excellent comment by jonny bakho. Much better than Delong's I think.

Jerry Brown -> Jerry Brown... , January 28, 2017 at 08:47 AM
But it is also true that scapegoating trade can get you votes, so there is a political problem.

[Jan 21, 2017] The Travesty Is We Have 23.5 Million Americans Aged 25-To-54 Outside The Labor Force

Notable quotes:
"... we have, in addition to 7.5 million officially unemployed (a number that is closer to 15 million when all the hidden unemployment is accounted for), 23.5 million Americans aged 25-to-54 who reside outside the confines of the labor force. And at a time when job openings are at record highs. ..."
"... Even the most ardent ''supply-sider" would admit that labor input is key to the outlook and this should really be at the top of the agenda - closing the widening and unprecedented gap between job openings and new hiring. There simply is no replacement for excellent education achievement with respect to maximizing labor productivity. ..."
"... So about all those job openings? Do they all pay a living wage ? ..."
"... So about all those job openings? They are FAKE job openings. They basically want to hire someone with $100K/year worth of experience & qualifications for $30K/year. And then when no one applies, the companies whine that they need H1B visa to fill the void. ..."
"... It boggles my mind, the kind of bullshit experienced by an acquaintance who is a Waitress, on top of all the shitty employers and scummy customers, she has to pay taxes on Estimated Tips, by a Percentage of Transactions regardless of whether she actually Received a Tip. ..."
"... The government assumes a tip exists at 8% and the waitress must pay on the assumption or the business owner gets pissed off because he/she will catch shit from the IRS at Tax time. Black people only tip on the 29th of February if it is a full moon, a trick they learned from the cheap Canadian bastards who got the idea from the Asians who also, mostly, do not tip. An establishment owner selling Beer/ Wine/ Liquor is responsible for the customers action after leaving the establishment, if they get in a wreck / DUI, ..."
"... That is just the Bar / Restaurant biz. Mc Donalds and the Fast food scam clan are often getting 50% of an employees wages paid through special programs for hiring recently released Felons, drug rehab grads and recent immigrants to name a few, so you already paid for half that burger and fries before you ordered it and Mc Donald is doing quite nicely, thank you. I could go on into the Construction and Manufacturing realms but life is short. ..."
Jan 21, 2017 | www.zerohedge.com
Some observations on recent negative trends in productivity, employment mismatch, and labor training and education from the increasingly more bearish David Rosenberg, who notes that the Trump's proposed policies may end up helping growth on the margins, but fail to focus on what is really important, making tens of millions of US workers competitive and qualified for today's jobs market.

From Breakast with Rosie, via Gluskin Sheff

I don't think we have a productivity problem - in fact, the demise of productivity is vastly overstated and that is because the Bureau of Labor Statistics (BLS) is likely vastly overstating labor input, and I'm talking here about how hours worked are estimated.

But the real travesty, and what I think deserves top priority (but I don't see it), is that we have, in addition to 7.5 million officially unemployed (a number that is closer to 15 million when all the hidden unemployment is accounted for), 23.5 million Americans aged 25-to-54 who reside outside the confines of the labor force. And at a time when job openings are at record highs.

The problem is that unqualified applicants for these openings also are at a record high . The number of jobs available that are not being filled because the skill set is absent is at an unprecedented level - and this was an overriding theme in the latest edition of the Fed's Beige Book.

The question is what is in the policy playbook to redress this situation?

What we need is a policy playbook that makes education, apprenticeship and training a major priority - the one plank that I had hoped would be yanked out of Bernie Sanders' platform.

While deregulation and simplifying the tax code obviously are constructive segments of the Trump plan, they are not the most important obstacles in the way of growth. Neither is globalization.

Even the most ardent ''supply-sider" would admit that labor input is key to the outlook and this should really be at the top of the agenda - closing the widening and unprecedented gap between job openings and new hiring. There simply is no replacement for excellent education achievement with respect to maximizing labor productivity.

I see scant attention being paid to this file - su rely this is more important than U.S. involvement in Brexit or trying to play a role in breaking up the European Union, don't you think?

johngaltfla -> FredFlintstone •Jan 21, 2017 4:44 PM

This figure is what terrifies Yellen and Obama. Steve Mnuchin and Trump have both called the formula Obama changed to estimate the unemployment/employment rates pretty much total bullshit.

Once the figures are revised back to 2006 we will probably find a steady 9%+ REAL unemployment rate since 2007, and that tarnishes Janet's bullspray from her mouth and Obama's precious and fading fast legacy.

Wulfkind -> FredFlintstone •Jan 21, 2017 4:53 PM

So about all those job openings? Do they all pay a living wage ? That is to say...can they pay a person enough money to cover all normal living expenses ( not including debt you didn't need to obtain but including debt like a mortgage or rent )....with enough left over to save ? Also....will those jobs be linked to inflation so over time your once living wage does not stagnate and drop below inflation so that you are actually taking a pay cut every year from then on out ? My suspicion is no. These fools only count the number of job postings without looking into the quality of said jobs. And if they are shit jobs they'll just go to wetbacks anyway and thus not help real Americans. Thus....the high number of people not in the labor force.

rbg81 -> Wulfkind •Jan 21, 2017 5:24 PM

So about all those job openings? They are FAKE job openings. They basically want to hire someone with $100K/year worth of experience & qualifications for $30K/year. And then when no one applies, the companies whine that they need H1B visa to fill the void.

Or undocumented who will work 14 hour days for minimum wage (or less) and not complain.

therover -> rejected •Jan 21, 2017 5:13 PM

So glad I am on the same side of the fence as you. I keep telling people when they ask where my 17 year old son is going to school or what his SAT scores none of their business and fuck that path of higher education bullshit where you spend 100K+ on some degree that will probably get you no where. That 100K+ that I have saved up is going to build him a woodshop filled with tools so he can hone his creative skills in wood working or lead to a path toward carpentry, or it's going to buy him a van filled with plumbing equipment so he can work with his uncle as a plumber. As part of that path, going to community college for some business courses and striving to getting first a 2 year associates that if needed, can matriculate to a 4 year degree in business ( for his OWN BUSINESS). Not spending tons of cash right out of the gate on a 4 year school. Shit..I know that scenario... been there done that. Plus every parent knows their child (at least the should) and my guy takes his time with stuff so I know that first year or so at that 50K plus a year school will be wasted. Bottom line is he will be getting something other than a worthless degree when he ends up flipping pancakes at an IHOP or waiting on tables at an Applebees. Not to say they are meaningless/dead end jobs...they are if you spent 100K+ on a degree and STILL HAVE THAT JOB.

Peak Finance •Jan 21, 2017 4:51 PM

I simply don't believe this:

The problem is that unqualified applicants for these openings also are at a record high. The number of jobs available that are not being filled because the skill set is absent is at an unprecedented level

I think this is a lie to justify the continuation of immigration and the hateful damaging H1B program. I remember their bullshit lies from the early 00's , posting want adds for people with "10 years of Java Experience" when Java had come out like 2 year prior, and other impossible requests, and then being unable to fill those jobs were allowed to ship in people from overseas.

Falling Down -> Peak Finance •Jan 21, 2017 5:00 PM

Correct. The only real shortages are in certain skilled trades, in certain metros.

Giant Meteor -> Peak Finance •Jan 21, 2017 6:14 PM

Indeed. Labor arbitrage.

besnook •Jan 21, 2017 4:58 PM

i know several people from my parents generation who got jobs in major corporations upon high school graduation who were hired by the companies for their aptitude and trained into the skill the comapny needed. a couple were trianed engineers and another a chemist besides pipe fitter, ironworker and mechanic.

companies don't do that anymore because stockholders won't let them do it. there are some privately held companies who still do it.

Giant Meteor -> besnook •Jan 21, 2017 5:27 PM

Companies don't do that anymore because that would step on the toes of the Educational Industrial Complex gravy train. Professional courtesy is all. Loyalty and human potential is no longer factored in ... Lets not even get started on the government jerbs ....

Twee Surgeon -> Giant Meteor •Jan 21, 2017 6:42 PM

A major problem too, is getting past the Human Resources Department in a larger company in the Productive industries (Machine,Construction,Refinery, etc.) First you meet the ancient grey goddess with the chains on her eyeglasses and she will direct you to the Interviewer who will be Jennifer Eye-candy, Kanisha Token-Black or Juan De Bilingualo, who all have a diploma from a college but know nothing about the industry at hand, you are more likely to get hired on the Excellence of your new Nike tennis shoes than anything related to the Skills required for the position. If you can get past the women in Human Resources and talk to the guy that actually runs the shop and look each other in the eye and talk about 'Making Stuff', then you might have the job. That is how that works.

QQQBall -> besnook •Jan 21, 2017 7:26 PM

besnook. Exactly. not just engineers, but service reps, sales people, etc., that then were promoted up thru the ranks of the same company. My lady retired from AT&T as a project manager at like 54 yo.

She was hired after taking a test that only 4 peeps in the room passed. worked her way up - they had reciprocal/mutually beneficial investments in each other. She is smart and had a degree from UC here in Kali. Now, no loyalty either way in most cases.

Twee Surgeon -> DrData02 •Jan 21, 2017 6:21 PM

Exactly, people are finding other ways to get by. I'm not sure how many ZH'ers have experienced the modern non-corporate job market. Unless you have a .gov job you are pretty much The next disposable android who can be worked to death and replaced when the bearings are shot or an inconvenience arrives. Employers don't want to Hire because it's too expensive due to various regulations, taxations and obligations to the City, State, County and Federal government, all of which are Constantly Expanding and must pay for the ever increasing pay-roll size and the unfunded liabilities and the pension plan and the grant for the new skate board park etc, and so on, forever and ever.

It boggles my mind, the kind of bullshit experienced by an acquaintance who is a Waitress, on top of all the shitty employers and scummy customers, she has to pay taxes on Estimated Tips, by a Percentage of Transactions regardless of whether she actually Received a Tip.

The government assumes a tip exists at 8% and the waitress must pay on the assumption or the business owner gets pissed off because he/she will catch shit from the IRS at Tax time. Black people only tip on the 29th of February if it is a full moon, a trick they learned from the cheap Canadian bastards who got the idea from the Asians who also, mostly, do not tip. An establishment owner selling Beer/ Wine/ Liquor is responsible for the customers action after leaving the establishment, if they get in a wreck / DUI,

Whatever, and that was all from Ronald Ray-guns era, the Small Business and Independence messiah. (The Dramm shop Act, I think, Google has that hidden though.)

That is just the Bar / Restaurant biz. Mc Donalds and the Fast food scam clan are often getting 50% of an employees wages paid through special programs for hiring recently released Felons, drug rehab grads and recent immigrants to name a few, so you already paid for half that burger and fries before you ordered it and Mc Donald is doing quite nicely, thank you. I could go on into the Construction and Manufacturing realms but life is short.

The Problem with the USA is the Government, I'm not holding my breath for Trump to make a change, I remember the song and Dance when Ronny won the White house. Nothing fucking changed for most people. It just began the Road to Barry Obama and here we are.

Donewithit22 •Jan 21, 2017 5:35 PM

This is only a problem when people start to realize the systems that we have in place are by nature a ponzi scheme. I partner and I dropped out of the workforce 2011ish. We realized by the time we paid for health care, which was now mandated, city tax, state tax, fed tax, s/s tax etc....what was the point of going to work.....

We both have degree and are in our mid 30's.

we sold everything we had bought land and have build a homestead doing most things ourselves. we do odd jobs for extra cash and we live better , less stress then we used too. we are going on vacation to Peru in about 3 weeks for 15 days and we often do a few days here or there just to see the US. We love not being in the labor pool and we are both sorry we didnt do this sooner.

thisguyoverhere •Jan 21, 2017 5:38 PM

In the skilled trades there are many former welders, ironworkers, boilermakers and fitters, over 60 years old, working as consultants. These men (and some women) command high rates, the respect of their union halls or fellow tradesman because of their body of knowledge and experience. Much of that knowledge will not be passed on, will be lost because these experienced 'field engineers' (the real thing, no bull$hit diploma) are sick of the politics and seeing the honest labor of skilled workers being siphoned off while some spoiled brat takes a sallary in 'the office'. I have a degree. I learned more usefull skills in 6 months than 4 years of school. We have a structural problem within our framework of 'educating' the next generation. The result, many today have the cultivated tastes, but no capital to purchase the lifestyle.

Son of Captain Nemo •Jan 21, 2017 5:55 PM

"The problem is that unqualified applicants for these openings also are at a record high. The number of jobs available that are not being filled because the skill set is absent is at an unprecedented level - and this was an overriding theme in the latest edition of the Fed's Beige Book." Because U.S. corporations would rather spend the time and expense seeking the lowest labor rate to do the job than retraining an existing workforce that has been dormant or obsolete because of lack of work or "No work" at all... This includes bending the rules for H1B and related visas... Even if we have a war on terror and a Department of Homeland Security we've been waging since 2002 which places "very high standards" on what moves in and out of the Country since 9/11! Go figure!!!

Duc888 •Jan 21, 2017 8:03 PM

Speaking specifically of those aged 16 to say......30 Largely unemployable. Lord knows I've tried to employ a dozen or so in the last few years.

  1. Won't put down the gdamned smart phone.
  2. Don't want to get their hands dirty.
  3. Apparently they've spent so much time pushing buttons on a game controller while growing up they skipped what young guys have done while growing up in the last 75+ years, you know, taking shit apart, putting shit back together, screwing it up, modifying shit, putting it back together a second time and generally learning how shit works.
  4. Complete and total lack of knowledge of the use of common hand tools and rudimentary pneumatic powered tools.
  5. Absolutely no attention span.
  6. Absolutely no common sense.
  7. See know value in actually learning any skills involved in a trade, they want / need instant gratification.
  8. Absolutely no critical thinking skills, (If I do this...the likely outcome will be A._______ B._________ or C.________

They have no training in creating some type of mental flow chart in their head to have at least some basic predictive skills.} 9. They have more excuses for missing work than any ten guys I knew while growing up. 10. most do not have access to reliable transportation to get to the work site / job. Seems like the feminization has worked wonderfully.

[Jan 21, 2017] If we look at the numbers for involuntary part-time workers, it dropped from 6.8 million in December of 2014 to 5.6 million in December of 2016.

Jan 21, 2017 | economistsview.typepad.com
anne : January 20, 2017 at 07:53 AM , 2017 at 07:53 AM
http://cepr.net/blogs/beat-the-press/people-are-choosing-to-work-part-time-why-is-that-so-hard-for-economic-reporters-to-understand

January 20, 2017

People are Choosing to Work Part-Time, Why Is that So Hard for Economic Reporters to Understand?

It is really amazing how major news outlets can't seem to find reporters who understand the most basic things about the economy. I guess this is evidence of the skills shortage.

Bloomberg takes the hit today in a piece * discussing areas where the economy is likely to make progress in a Trump administration and areas where it is not. In a middle "muddle through" category, we find "Full-Time Work Is Likely to Stay Elusive for Part-Timers." The story is:

"Trump has highlighted the number of part-time workers in the U.S. economy, saying 'far too many people' are working in positions for which they are overqualified and underpaid. While the proportion of full-time workers in the labor force remains below its pre-recession high, it's made up most of the ground lost during the downturn. But it hasn't budged much in the last two years, even as the job market has gotten tighter. Some economists point to the gig economy as the driving force (pun intended) behind part-timers. Others see a broader shift in the labor market that's left many workers stuck with shorter hours, lower wages and weaker benefits."

Okay, wrong, wrong, and wrong. In its monthly employment survey (the Current Population Survey - CPS), the Bureau of Labor Statistics asks people whether they are working more or less than 35 hours a week. If they are working less than 35 hours they are classified as part-time. The survey then asks the people who are working part-time why they are working part-time. It divides these workers into two categories, people who work part-time for economic reasons (i.e. they could not find full-time jobs) and people who work part-time for non-economic reasons. In other words the second group has chosen to work part-time.

If we look at the numbers for involuntary part-time workers, it dropped from 6.8 million in December of 2014 to 5.6 million in December of 2016. That is a drop of 1.2 million, or almost 18 percent. That would not seem to fit the description of not budging much. Of course Bloomberg may have been adding in the number of people who chose to work part, which grew by 1.4 million over this two year period, leaving little net change in total part-time employment.

Of course there is a world of difference between a situation where people need full-time jobs, but work part-time, because that is the only work they can find and a situation in which people work part-time because they don't want to spend 40 hours a week on the job. Most of us would probably consider it a good thing if people who wanted to spend time with their kids, or did not want to full time for some other reason, had the option to work part-time. This is what in fact has been happening and it has been going on for three years, not two.

Come on Bloomberg folks -- did you ever hear of the Affordable Care Act (a.k.a. "Obamacare")? As a result of Obamacare workers are no longer dependent on employers for health care insurance. This means that many people have opted to work part rather than full time. This has opened up full time jobs ** for people who need them, even though it has left total part-time employment little changed.

In total, the number of people involuntarily working part-time has fallen by 2.2 million since the ACA has been in effect, while the number choosing to work part-time has risen by 2.4 million. The sharpest increase in voluntary part-time employment has been among young mothers *** and older workers **** just below Medicare age.

It is really incredible that this shift from involuntary part-time to voluntary part-time is not more widely known. It is a very important outcome from the ACA.

* https://www.bloomberg.com/graphics/2017-how-well-know-if-trump-is-making-america-great-again/

** http://cepr.net/blogs/cepr-blog/obamacare-and-part-time-work-part-2-involuntary-part-time-employment

*** http://cepr.net/blogs/cepr-blog/the-affordable-care-act-still-family-friendly

**** http://cepr.net/blogs/cepr-blog/obamacare-is-good-for-older-workers-too

-- Dean Baker

libezkova -> anne... , January 20, 2017 at 10:34 AM
My impression here is that in this particular issue Dean Baker is out of touch with reality.

Question: how many people in this 1.2 million drop because they retired at 62 forced to take a half of their SS pension, or left workforce?

Also, can you consider Wal-Mart or Shop Right cashier working 36 hours for $7.5 an hour and without any benefits (as he/she can't afford them) fully employed.

Single mothers are probably the most important category to analyze here.

sanjait -> anne... , January 20, 2017 at 01:33 PM
This is an example of how the libertarian and Republican conceptions of liberty and freedom are so off the mark.

When people can afford to work part time instead of full time to do things like raise children, attain higher education or start companies, that is freedom. When the inaccessibility of health insurance forces them to work full time when they would otherwise prefer not, that is not enhanced freedom.

[Jan 11, 2017] Discrimination thru stupid job descriptions is catching up to the economy

Jan 11, 2017 | www.nakedcapitalism.com
cocomaan , January 10, 2017 at 4:04 pm

Coulnd't get the JOLTS, November 2016 links to work, but the skills gap is wild.

At an institution of higher ed I'm familiar with, both faculty and administrative positions continue to be unfilled. There are very few candidates even for entry level positions. Failed searches are now the norm. It's feast or famine: either people are perfect for the job and have many options, or have no related experience at all.

I wonder if the labor force participation rate is starting to catch up with the job market. That is, there are a lot of healthy adults who have dropped out of the workforce who would be the people you'd want in those positions.

Or that the job market is not nearly as liquid as they'd have you believe, and people can't relocate from where they are because of adult children who live with them, or things of that nature. All kinds of weird things now in the job market. I know someone who commutes a significant distance to work that has to look for another job because their workplace's health care plan only covers a geographic area close to that job.

alex morfesis , January 10, 2017 at 4:59 pm

Discrimination thru stupid job descriptions is catching up to the economy paying 12 per hour five years experience required nonsense job descriptions designed to help the accredited and credentialed have a leg up

There seem to be three types of employment categories

real jobs that might last through 12 quarters

gigs

and surfdumb/$lavery gigs where your hours are messed with, your schedule is messed with & you are expected to pay for the stupid uniform some bean counter thinks is branding

IMUO it is not a skills gap it is the demanding of irrelevant capacities and experience that almost always have very little to do with the actual tasks required

[Jan 11, 2017] Jared Bernstein questions Paul Krugman's sudden concern about crowding out

Jan 11, 2017 | economistsview.typepad.com
New Deal democrat : , January 10, 2017 at 05:36 AM
Today Jared Bernstein (see sidebar on right of this blog) questions Paul Krugman's sudden concern about crowding out. I agree.

In the first place, conditions have not changed drastically in the last two months. Krugman's would have more credibility on this subject had he voiced similar concerns at any point before the election. I don't remember him having any problems with Hillary's infrastructure spending plan for example.

Also, looking at two of my favorite metrics for underemployment -- Not in Labor Force but Want a Job Now, and Part Time for Economic reasons -- are each about 1,000,000 above their numbers in the late 1990s and the 2005-06 peaks. Since the jobs situation is clearly decelerating from its peak two years ago, I do not believe this 2,000,000 shortfall is ever going to be filled before the next recession.

In short, I really don't see the basis for a "crowding out" argument at this time.

pgl -> New Deal democrat... , January 10, 2017 at 06:01 AM
If we are below full employment (I think we are in part for reasons you note) then concerns about crowding out are indeed premature. But if we were at full employment (again I have my doubts) then this issue should be part of (not the end all) policy discussions.
Fred C. Dobbs -> pgl... , January 10, 2017 at 06:22 AM
1 in 3 Workers Employed in Gig Economy,
But Not All By Choice
http://www.usnews.com/news/articles/2016-10-11/1-in-3-workers-employed-in-gig-economy-but-not-all-by-choice
US News - Andrew Soergel - Oct 11, 2016

A new study published by the McKinsey Global Institute estimates the U.S. holds between 54 million and 68 million "independent workers," which it defines as "someone who chooses how much to work and when to work, who can move between jobs fluidly and who has multiple employers or clients over the course of the year." It includes individuals working on short-term contracts and those who rent or sell goods and services.

"A full-time job with one employer has been considered the norm for decades, but increasingly, this fails to capture how a large share of the workforce makes a living," the report said. "Digital platforms are transforming independent work, building on the ubiquity of mobile devices, the enormous pools of workers and customers they can reach and the ability to harness rich real-time information to make more efficient matches." ...

Independent work: Choice,
necessity, and the gig economy
http://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy?cid=soc-web

Peter K. -> New Deal democrat... , January 10, 2017 at 07:35 AM
To me the "crowding out" argument put forward by Krugman and conservative economists demonstrates a bias against the government. They want monetary policy not fiscal policy to be the means by which investment and employment levels are managed by the government.

J.W. Mason has interesting blog post about the Zero Lower Bound.

"In the dominant paradigm, this is a specific technical problem of getting interest rates below zero. Solve that, and we are back in the comfortable Walrasian world. But for those of us on the heterodox side, it is never the case that the central bank can reliably keep output at potential - maybe because market interest rates don't respond to the policy rate, or because output doesn't respond to interest rates, or because the central bank is pursuing other objectives, or because there is no well-defined level of "potential" to begin with. (Or, in reality, all four.) So what people like Gourinchas and Rey, or Paul Krugman, present as a special, temporary state of the economy, we see as the general case.

One way of looking at this is that the ZLB is a device to allow economists like Krugman and Gourinchas and Rey - who whatever their scholarly training, are aware of the concrete reality around them - to make Keynesian arguments without forfeiting their academic respectability."

http://jwmason.org/slackwire/rogoff-on-the-zero-lower-bound/

JohnH -> New Deal democrat... , January 10, 2017 at 08:02 AM
What's shocking to me is that, according to 'liberal' economists like PK and pgl, the goal of monetary and fiscal policy is not just full employment but rising real wages.

So far the economy has somehow managed to reach low unemployment, though nowhere near maximum employment (the Fed's mandate.) And real wages, except for supervisory personnel, have yet to show real growth.

Nonetheless PK and pgl want to preempt any move to maximum employment and rising real wages by advocating that Trump avoid any fiscal stimulus!!!

Methinks that these 'liberals' are really conservatives in sheeps clothing...or maybe working in New York has given them too close an affinity to the Wall Street worldview.

New Deal democrat -> JohnH... , January 10, 2017 at 08:16 AM
The common thread between your comment and Peter K's, I think, is that there is intelligent deficit spending and then there is counterproductive deficit spending.

It's pretty clear that significant infrastructure spending, like the building of canals in the 19th century (because water transportation is so cheap in terms of energy needs), doesn't crowd out, because of all of the growth it produces. On the other hand, if government just gives away money that will be parked unproductively, that will tend to crowd out.

The bottom line is that Krugman's concern is premature. There may be a hidden agenda, of course, that his real concern is that the GOP wants big deficits in order to "starve the beast" and attempt to justify cuts in programs like social insurance.

Peter K. -> New Deal democrat... , January 10, 2017 at 08:31 AM
I agree with Jared Bernstein who says the Republicans' tax cuts for the rich can be opposed on their own merits or demerits.

Fear of deficits has been too often used by the Pete Petersons and Republicans to advocate against government spending. The economics isn't clear.

http://jaredbernsteinblog.com/paul-krugman-goes-all-crowd-out-on-us-is-he-right/

JohnH -> New Deal democrat... , January 10, 2017 at 08:34 AM
Exactly. I prefer Bernie's approach: work with Trump if he wants to improve the lives of ordinary Americans, oppose him if he simply wants to enrich the wealthy.

Stimulus that boosts employment and wages is still needed. Opposing any stimulus now is not appropriate.

Peter K. -> JohnH... , January 10, 2017 at 08:37 AM
I agree but I doubt Paul Ryan or the Freedom Caucus will allow any government spending of the kind Sanders would approve of.

Possibly Trump will want some drama and mix it up with Republicans over an infrastructure bill.

I just think they might need some Democrats to pass the measure and am not clear on the legistlative mechanics.

Bush was able to pass his tax cuts for the rich on a simple majority vote because of the "reconciliation" maneuver.

JohnH -> Peter K.... , January 10, 2017 at 09:25 AM
I expect enough Democrats will be readily available to assist Trump. If not, there are parliamentary procedures that can be used...procedures that Democrats refused to sully themselves using for the common good.
Peter K. -> New Deal democrat... , January 10, 2017 at 08:35 AM
"if government just gives away money that will be parked unproductively, that will tend to crowd out."

I guess I agree with you that government or private investment has to be judged on the merits of each case.

But just look at the epic housing bubble. It would have been better if the government had taken that money and just gave it out to the average citizen to spend.

Dan Kervick -> New Deal democrat... , January 10, 2017 at 08:12 AM
I think Krugman is basically lobbying for the Fed to Volckerize any potential positive economic impact of Trump spending with a big anti-inflationary rate hike, which he & his party cronies can then blame on crowding out and the "market" response to excessive government borrowing. They want a quick hard recession that they can use to win Congress in 2018. Remember that the orthodox BS about monetary policy is that the Fed doesn't in any way set, determine or engineer rates, but just uses anti-price-stickiness nudges to help the market achieve the "neutral" equilibrium rate rate it is in some sense "trying" to get to on its own. So, if the Fed trashes the economy, they & Krugman will say its hands are clean.

Remember:

1. Krugman is a party hack in the first place;

2. Krugman represents the faction of the party that has no solid ideas about how to fix what is wrong with our country and our planet; so they can only succeed politically if the other side fails worse;

3. Krugman is on record as believing that the US has suffered something like a coup engineered by a conspiracy between the FBI and Vladimir Putin. So at this point, given the politically extreme circumstances he thinks prevail, there is no reason to think he is beyond making things up for the cause, as exigencies require.

Peter K. -> Dan Kervick... , January 10, 2017 at 08:28 AM
Of course you are right, Krugman advocates different economics depending on whether a Democrat or Republican is in office.

But I am not strongly against the idea of the Fed raising rates too quickly, despite the morale shadiness of the idea.

They seem intent on doing it anyway even if Hillary had won.

Yes ultimately I guess I would be in favor Yellen "helping" Trump (or low wage workers) as Trump regularly accused her of doing for Obama during the campaign.

It would improve workers' bargaining power and lives. But a Republican loss in 2018 would also help.

Hobson's choice. Pick your poison.

More fundamentally, I think Krugman is pushing a conservative view of economics which happens to line up with mainstream academic economics.

Peter K. -> Peter K.... , January 10, 2017 at 08:32 AM
The other thing is that if Trump gets some of his policies through the Fed would eventually be facing asset bubbles again.
Dan Kervick -> Peter K.... , January 10, 2017 at 08:47 AM
"More fundamentally, I think Krugman is pushing a conservative view of economics which happens to line up with mainstream academic economics."

Yes, this is a real problem. Krugman has a fundamentally conservative ("New Keynesian") view of the economy and how it should work. It's a free enterprise & market economy that generally just needs some helpful stimulatory nudges from the government: monetary nudges most of the time; fiscal nudges when we're in the special circumstances of a liquidity trap.

The problem is that by laying down all of these orthodox, conservative markers, our ability to do anything truly dramatic and socially innovative is damaged over the long haul.

pgl -> Dan Kervick... , January 10, 2017 at 08:56 AM
Keynesians are the new conservatives? Is this like Wednesdays are the new Thursdays? Party on!
Dan Kervick -> pgl... , January 10, 2017 at 09:21 AM
"New Keynesians"

New Keynesianism was neither Keynesian nor New Classical, but somewhere in between the two. It modified the New Classical approach based on rational expectations and efficient markets by accepting that prices were sometimes sticky in the short run and markets sometimes imperfect. Two of the leading figures of New Keynsianism were Paul Krugman and Gregory Mankiw.

Ultimately, the differences between the New Classicals and the New Keynsianians are relatively minor. Both accept the long-run optimizing efficiency of a liberal capitalist economy, but disagree only over how much government and central bank gear-greasing is needed.

pgl -> Dan Kervick... , January 10, 2017 at 09:33 AM
I have stated many times - I'm an old fashion Keynesian. Krugman is too. So take your straw man to the set of The Wiz.
Dan Kervick -> pgl... , January 10, 2017 at 10:01 AM
Krugman is not really an old-fashioned Keynesianism. He was one of the creators of "New Keynesiansim". Also read his introduction to Keynes's General Theory. He pours cold water on the really important policy suggestions at the end of the book in Book VI, which he mistakenly suggests Keynes's did not seriously intend.

Even more old-fashioned "Hicksian" Old Keynesianism is just one version of conventional liberal macro, which is primarily a tool for the countercyclical stabilization of our day-to-day capitalist economy. That's not enough to fix what is wrong with our planet or or domestic society, both of which are facing deeper, more structural economic crises that are very grave. We're going to have to be much more radical and ambitious.

Peter K. -> Dan Kervick... , January 10, 2017 at 09:03 AM
Yes as Jared Bernstein writes

"One implication Paul draws from these dynamics is that Republicans, motivated not by improving the economy but by bashing Obama and the D's, inveighed against deficits when we needed them and are about to shift to not caring about them when deficits – again, according to the model – could actually do some harm.

But how reliable is this crowd-out hypothesis? It's actually pretty hard to find a correlation between larger budget deficits and higher interest rates in the data.

...

So is Paul making a mistake to continue to depend on the model that has heretofore served him-and anyone else willing to listen-so well? My guess is that deficit crowd-out is not likely to be a big problem, as in posing a measurable threat to growth, anytime soon, even if deficits, which are headed up anyway according to CBO, were to rise more than expected.

The global supply of loanable funds is robust and, in recent years, rising rates have drawn in more capital (pushing out the LM curve). Larger firms have enjoyed many years of profitability without a ton of investment so they could use retained earnings (the fact of unimpressive investment at very low rates presents another challenge to this broad model). And most importantly, while we're surely closer to full employment, there are still a lot of prime-age workers who could be drawn in to the job market if demand really did accelerate.

(This, by the way, is the only part of Paul's rap today that I found a bit confusing. He's a strong advocate of the secular stagnation hypothesis, wherein secular forces suppress demand and hold rates down, even in mature recoveries. His prediction today seems at odds with that view.)"

http://jaredbernsteinblog.com/paul-krugman-goes-all-crowd-out-on-us-is-he-right/

Bernstein isn't that radical. He was chief economist for Joe Biden in the White House.

I think the epic housing bubble, financial crisis and slow recovery are causing to people to push back against the New Keynesian compromise and search for a better economics, which just may be an older type of economics.

John San Vant -> New Deal democrat... , January 10, 2017 at 11:14 AM
This is incorrect. Full Time employment has accelerated after a slowdown earlier this year while part time employment yry was noticeably lower in the 4th quarter. That created the illusion of slowdown in NFP. The U-6 was quite quite different.

This will probably reverse in the first half of 2017 as yry full time employment growth goes ahead of 2016 boosting overhead NFP and continuing to lower U-6 down to 8.7-8% by June.


New Deal democrat -> John San Vant... , January 10, 2017 at 11:53 AM
Here is the data in support of my argument:

https://fred.stlouisfed.org/series/LNS12032194
https://fred.stlouisfed.org/series/NILFWJN

Compare now vs. 1999 and 2007. Each is about 1 million higher than during those periods.

anne -> New Deal democrat... , January 10, 2017 at 12:11 PM
Nicely done:

https://fred.stlouisfed.org/graph/?g=ckxp

January 10, 2017

Part-time for economic reasons, 1994-2016

https://fred.stlouisfed.org/graph/?g=ckxr

January 10, 2016

Not in labor force but want a job now, 1994-2016

John San Vant -> New Deal democrat... , January 10, 2017 at 12:12 PM
You are undermining your argument with those graphs. The point is, NFP will likely reaccelerate unless there is another slowdown. Most likely that gap will close in the coming year.

I think need to let the inventory slump go. It was a mistake and it being recorrected.

New Deal democrat -> John San Vant... , -1
I hope I am wrong and you are right.

But ... If you check out YoY growth in payrolls, it tends to be very regular and in-noisy, peaking in roughly mid-cycle. The only exceptions have been where we managed to avoid a recession during a Fed tightening cycle.

YoY employment peaked at the end of 2014, and has been decelerating ever since. So unfortunately I disagree with you.

[Jan 08, 2017] Contingent labor as in being on call for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job.

Jan 08, 2017 | economistsview.typepad.com
point -> pgl... , January 07, 2017 at 05:37 AM
It seems the lightning speed spread of contingent labor in the 2010s should be evidence of this. Contingent labor as in being "on call" for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job. The employer demanding contingent labor is essentially demanding uncompensated work hours.

In any event, the practice seems to have become near universal by a couple years ago, suggesting a level of employer market power far in excess of what one would think by looking at numbers like the official unemployment rate. It may also suggest that labor market monopsony may exist at quite small employer size.

cm -> point... , January 07, 2017 at 08:39 AM
What you describe is in general not due to monopsony. There is still a substantial number of independent retail and other companies that are not (explicitly) coordinating their actions and job function designs.

It is just regular supply and demand dynamics, in combination with social feedback (actors observing what "peers" are getting away with and trying the same, and after a while it works its ways into a new normal).

In corporate lingo it is known as "best practices" - don't innovate process, just copy what has worked elsewhere.

RC AKA Darryl, Ron -> cm... , January 07, 2017 at 09:46 AM
Unfortunately, in the contemporary corporate Zeitgeist "best" usually means "worst", at least from the POV of employees.
Zeppelin Hindenburg Delivery -> cm... , January 07, 2017 at 09:58 AM

retail and other companies that are not (explicitly) coordinating
"

Although they have an app for coordinating plus incentive to coordinate, they fully understand that by the time they begin coordinating the game is over. The game for brick and mortar retail is now hanging by a tread.

16% of retail is now intertube orders being shipped out by USPS, Fedex, Amazon airship drone & UPS. For the next 2 years the 16% will double each year then slowly expand toward the 99% asymptote. Sure!

When you ski at Aspen you will see old-time-y shops for retail, shops that only the wealthy will use for more than window-shop. Plenty time for best practices but

no time to
innovate
!

Libezkova -> cm... , January 07, 2017 at 10:53 AM
cm,
"companies that are not (explicitly) coordinating their actions and job function designs."

That happens by default.

Wall-Mart dominates retail (5K stores I think out of over 11,593 stores and clubs in 28 countries) and it is a very cruel company. Other companies copy Wall-Mart practices.

They have no "social conscience" at all and try to drive their labor as hard as possible paying as little as possible. In other words, they can be viewed as a corporate psychopath.

[Jan 07, 2017] Contingent labor as in being on call for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job.

Jan 07, 2017 | economistsview.typepad.com
point -> pgl... , January 07, 2017 at 05:37 AM
It seems the lightning speed spread of contingent labor in the 2010s should be evidence of this. Contingent labor as in being "on call" for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job. The employer demanding contingent labor is essentially demanding uncompensated work hours.

In any event, the practice seems to have become near universal by a couple years ago, suggesting a level of employer market power far in excess of what one would think by looking at numbers like the official unemployment rate. It may also suggest that labor market monopsony may exist at quite small employer size.

cm -> point... , January 07, 2017 at 08:39 AM
What you describe is in general not due to monopsony. There is still a substantial number of independent retail and other companies that are not (explicitly) coordinating their actions and job function designs.

It is just regular supply and demand dynamics, in combination with social feedback (actors observing what "peers" are getting away with and trying the same, and after a while it works its ways into a new normal).

In corporate lingo it is known as "best practices" - don't innovate process, just copy what has worked elsewhere.

RC AKA Darryl, Ron -> cm... , January 07, 2017 at 09:46 AM
Unfortunately, in the contemporary corporate Zeitgeist "best" usually means "worst", at least from the POV of employees.
Zeppelin Hindenburg Delivery -> cm... , January 07, 2017 at 09:58 AM

retail and other companies that are not (explicitly) coordinating
"

Although they have an app for coordinating plus incentive to coordinate, they fully understand that by the time they begin coordinating the game is over. The game for brick and mortar retail is now hanging by a tread.

16% of retail is now intertube orders being shipped out by USPS, Fedex, Amazon airship drone & UPS. For the next 2 years the 16% will double each year then slowly expand toward the 99% asymptote. Sure!

When you ski at Aspen you will see old-time-y shops for retail, shops that only the wealthy will use for more than window-shop. Plenty time for best practices but

no time to
innovate
!

Libezkova -> cm... , January 07, 2017 at 10:53 AM
cm,
"companies that are not (explicitly) coordinating their actions and job function designs."

That happens by default.

Wall-Mart dominates retail (5K stores I think out of over 11,593 stores and clubs in 28 countries) and it is a very cruel company. Other companies copy Wall-Mart practices.

They have no "social conscience" at all and try to drive their labor as hard as possible paying as little as possible. In other words, they can be viewed as a corporate psychopath.

[Jan 07, 2017] A neolib victory, with participation rate for 24 to 54 still in the dumps

Notable quotes:
"... A neolib victory, with participation rate for 24 to 54 still in the dumps. ..."
"... Krugman is an arrogant elitist who is good at math but has no real grasp of the real world (much like Trump has no grasp of reality). ..."
Jan 07, 2017 | economistsview.typepad.com
Fred C. Dobbs :

As observed, Dems don't like deficits when GOPsters do them, and the GOP doesn't like them unless they do them.

PK: 'And meanwhile I and other Keynesians are getting mail accusing us of being the hypocrites: "You were for deficits when Obama was in, now they're bad!"

But as I just said, the situation has changed.' ...

As even I have noted, deficits are *useful* when employment is down and infrastructure needs building. We haven't done enough of that lately, for sure.

Like with that wall, maybe.

Reply Friday, January 06, 2017 at 12:54 PM Fred C. Dobbs said in reply to Fred C. Dobbs... , January 06, 2017 at 01:24 PM
Paul Krugman ‏@paulkrugman · 4 hours ago

Labor markets are much closer to normal than they were in 2010-2012. So giving different policy advice is rational, not hypocritical

https://twitter.com/paulkrugman/status/817415994700402688

ilsm -> Fred C. Dobbs... , January 06, 2017 at 01:41 PM
A neolib victory, with participation rate for 24 to 54 still in the dumps.
anne -> Fred C. Dobbs... , January 06, 2017 at 01:55 PM
https://fred.stlouisfed.org/graph/?g=cirl

January 4, 2017

Average Hourly Earnings of All Private Workers and Quits Rate, 2007-2016

(Percent change)

Jesse : , January 06, 2017 at 12:59 PM

It may not be overwhelming in its effect, but he did DO something, and had an effect, made an example.

Gee, what a terrible thing to do.

What the Wall Street Dems have done is feel the average worker's pain, hand out some questionably progressive programs like the Heritage Foundation's ACA, and explain why it was all necessary in the name of free trade and globalization.

And the rubes like it. What a bunch of dopes.

Uh huh.

ilsm -> Jesse... , January 06, 2017 at 01:40 PM
Trump is neither neolib nor neocon enough for the non-deplorables.
sanjait -> Jesse... , January 06, 2017 at 03:47 PM
Hey, Rube:

Remember when the "Wall Street Dems" saved the ENTIRE US-branded auto manufacturing industry?

Trump hands out crumbs and the rubes think he's a leader.

Libezkova -> sanjait... , January 06, 2017 at 04:51 PM
>" Remember when the "Wall Street Dems" saved the ENTIRE US-branded auto manufacturing industry?"

Did not they save their friends investment portfolios (and some saved their own). Collapse of auto sector means plunge of S&P500, because of interconnection with other sectors. the lowest point of S&P 500 during this period was around 670. I think they have no other options.

Tom aka Rusty : , January 06, 2017 at 01:27 PM
a show intended to impress the rubes,

At least now we know what Krugman thinks of working people, as in people who do honest work.

Krugman is an arrogant elitist who is good at math but has no real grasp of the real world (much like Trump has no grasp of reality).

ilsm -> Tom aka Rusty... , January 06, 2017 at 01:39 PM
it ain't deplorables who Trump attracted it is us whom the crooks and neolibs [like poor pk of the] DNC drive away in disgust.
sanjait -> Tom aka Rusty... , -1
Krugman didn't call working people rubes, you lying sack.

[Jan 07, 2017] On an average month, there are 1.5 million "involuntary" job separations (as opposed to voluntary quits), or 75,000 per working day.

Notable quotes:
"... On Thursday, at a rough estimate, 75,000 Americans were laid off or fired by their employers. Some of those workers will find good new jobs, but many will end up earning less, and some will remain unemployed for months or years. ..."
"... In an average month, there are 1.5 million "involuntary" job separations (as opposed to voluntary quits), or 75,000 per working day. ..."
"... Krugman refuses to admit the possibility that Trump may actually have shifted the cost-benefit of moving jobs abroad. Now corporations will have to weigh the cost of being condemned in the court of public opinion for moving jobs abroad...negative publicity that they can ill afford. ..."
Jan 07, 2017 | economistsview.typepad.com

Economist's View

... ... ...
The Age of Fake Policy, by Paul Krugman, NY Times : On Thursday, at a rough estimate, 75,000 Americans were laid off or fired by their employers. Some of those workers will find good new jobs, but many will end up earning less, and some will remain unemployed for months or years.
If that sounds terrible to you..., I'm just assuming that Thursday was a normal day in the job market. ... In an average month, there are 1.5 million "involuntary" job separations (as opposed to voluntary quits), or 75,000 per working day. Hence my number. ...
Global Freezing -> ilsm... , January 06, 2017 at 02:45 PM

assuming that Thursday was a normal day in the job market. ... In an average month, there are 1.5 million "involuntary" job separations (as opposed to voluntary quits), or 75,000 per
"

Bless your fat bones pK!
At last you have saved the day!

Tell me something! How many of the 75,000 were fired because their employer figured he could stay in business longer if he didn't have to raise their wages by virtue of the *minimum wage regulation*?

How many of such lost jobs could have been saved had our governmental gals and guys opted for maximum wage regulation instead? For example a maximum wage regulation that would have cut your fat salary in half to reduce the inequality in this fair city? A maximum wage regulation would require less overhead in light of the fewer wage earners at the top of the heap but generate more of wage dispersion since there is more fat to cut at the apex of the pyramid than fat to gain at entry level salaries.

Can't you just see it now? pK and his wealthy colleagues staging a violent demonstration? An objection from the mob? pK heaving industrial strength cherry bombs at innocent constables?

Cell phone movies galore going

viral on the
internet
!

kurt -> Global Freezing... , January 06, 2017 at 04:10 PM
Just in case you are an honest broker and just not actually aware of the policy preference differences between Republicans and Democrats (and between someone like Kudlow and someone like Krugman) - one of these key policy difference is that Democrats have a policy platform to raise, rather than lower, the top marginal rate (the amount of money that triggers the highest tax rate on all dollars earned after reaching that point). A higher marginal rate, usually any rate that exceeds 70%, is in practice a maximum wage.

Also - the minimum wage is really low in historic value. It isn't likely to be what causes job loss.

JohnH : , -1
Krugman refuses to admit the possibility that Trump may actually have shifted the cost-benefit of moving jobs abroad. Now corporations will have to weigh the cost of being condemned in the court of public opinion for moving jobs abroad...negative publicity that they can ill afford.

By contrast, Obama had eight years to use the bully pulpit...but could never figure out what it was...

Now if Krugman and Democrats only had a plan for saving jobs. Sadly, they can muster nothing more than a 'just suck it up,' because the jobs are gone for good...

ilsm -> JohnH... , -1
jumped shark, a lot of folks took a few days off from embarrassing themselves after the crooked neocon was beaten.
JohnH : , -1
Meanwhile China will invest $361 Billion into renewable energy by 2020, 40% of it into solar. It will create 13 million jobs.
http://www.reuters.com/article/us-china-energy-renewables-idUSKBN14P06P

Where is Democrats' War on Climate Change? Where is Krugman's?
[Of course, pgl, the 'progressive liberal' mocks job creation potential of solar power...just like Trump.]

Instead of bashing Trump 24/7, Democrats and Krugman would be better served promoting a green, high employment future.

anne -> pgl... , -1
Important point.

Knowing how large infrastructure spending will be relative to the size of an economy is important. Chinese planners will be spending $860 billion between 2017 and 2020 on alternative energy and high-speed rail projects or $360 and $500 billion respectively.

The $860 billion comes to $215 billion yearly or 2.6% of current Gross Domestic Product taken in simple dollar terms.

[Jan 03, 2017] Fake News on Germany's Unemployment Rate at the New York Times

Jan 03, 2017 | economistsview.typepad.com
anne : , -1
http://cepr.net/blogs/beat-the-press/fake-news-on-germany-s-unemployment-rate-at-the-nyt

January 3, 2017

Fake News on Germany's Unemployment Rate at the New York Times

Alright, that is not entirely fair, but when the NYT told readers * that Germany's unemployment rate is 6.0 percent it seriously misled readers. The issue is that this figure refers to Germany's unemployment rate as calculated by Germany's government. This measure counts workers who are employed part-time, but want full-time jobs, as being unemployed. By contrast, the standard measure of the unemployment rate in the United States counts these workers as being employed.

This would be reasonable if the German government measure was the only one available, but it isn't. The Organisation for Economic Co-operation and Development calculates a harmonized unemployment rate that is essentially the same as the unemployment rate generally used for the United States. By this measure ** Germany's unemployment rate is just 4.0 percent.

The NYT can be partially forgiven since this was a Reuters story that it made available on its web site. (I don't know if it ran in the print edition.) Still, it would not be hard to add a sentence either explaining the difference or alternatively including the OECD measure.

In this same vein, and it's a new year, let me also harp on the practice of printing other country's growth rates as quarterly figures. While the rate of GDP growth is always expressed as an annual rate in the United States, most other countries express their growth as a quarterly rate. Typically this raises the U.S. growth rate by a factor of four. For example, a 0.5 percent quarterly growth rate translates into a 2.0 percent annual rate. (To be precise, the growth rate should be taken to the fourth power. For low growth rates this will typically be the same as multiplying by four.)

Anyhow, articles often appear in the NYT and elsewhere that just print the growth rate as a quarterly rate, frequently without even pointing out that it is a quarterly rate. This gives readers an inaccurate impression of the growth rate in other countries.

It really should not be too much to expect a newspaper to convert the growth rates in annualized rates. After all, the reporters are more likely to have the time to do this than the readers. And, this is supposed to be about providing information to readers, right?

* http://www.nytimes.com/reuters/2017/01/03/business/03reuters-germany-economy-unemployment.html

** https://data.oecd.org/unemp/harmonised-unemployment-rate-hur.htm

-- Dean Baker

[Dec 27, 2016] Facing Layoff, An IT Employee Makes A Bold Counteroffer

Carnival Corp. told about 200 IT employees that the company was transferring their work to Capgemini, a large IT outsourcing firm
Notable quotes:
"... Senior IT engineer Matthew Culver told CBS that the requested "knowledge transfer activities" just meant training their own replacements , and "he isn't buying any of it," writes Slashdot reader dcblogs . ..."
"... Foreign workers are willing to do a job at a lower salary in most if not all cases b/c the cost of living in their respective countries is a fraction of ours. ..."
Dec 26, 2016 | it.slashdot.org
(computerworld.com) 134

Posted by EditorDavid on Sunday December 25, 2016 @05:05PM from the Bob-Cratchit-vs-Scrooge dept.

ComputerWorld reports:

In early December, Carnival Corp. told about 200 IT employees that the company was transferring their work to Capgemini, a large IT outsourcing firm. The employees had a choice: Either agree to take a job with the contractor or leave without severance. The employees had until the week before Christmas to make a decision about their future with the cruise line.

By agreeing to a job with Paris-based Capgemini, employees are guaranteed employment for six months, said Roger Frizzell, a Carnival spokesman.

"Our expectation is that many will continue to work on our account or placed into other open positions within Capgemini" that go well beyond the six-month period, he said in an email.

Senior IT engineer Matthew Culver told CBS that the requested "knowledge transfer activities" just meant training their own replacements , and "he isn't buying any of it," writes Slashdot reader dcblogs . "After receiving his offer letter from Capgemini, he sent a counteroffer.

It asked for $500,000...and apology letters to all the affected families," signed by the company's CEO. In addition, the letter also demanded a $100,000 donation to any charity that provides services to unemployed American workers. "I appreciate your time and attention to this matter, and I sincerely hope that you can fulfill these terms."

And he's also working directly with a lawyer for an advocacy group that aims to "stop the abuse of H-1B and other foreign worker programs ."

Re:Dear Matthew ( Score: 5 , Insightful) by Anonymous Coward writes: on Sunday December 25, 2016 @06:00PM ( #53553189 )

Foreign workers are willing to do a job at a lower salary in most if not all cases b/c the cost of living in their respective countries is a fraction of ours.

I would be willing to do my job at a fraction of what I am paid currently should that (that being how expensive it is to live here) change. It is equally infuriating to me when American companies use loopholes in our ridiculously complicated tax code to shelter revenues in foreign tax shelters to avoid paying taxes while at the same time benefiting from our infrastructure, emergency services, military, etc..

Its assholes like you that always spout off about free market this or that, about some companies fiduciary responsibilities to it's shareholders blah blah blah... as justification for shitty behavior.

Re:Dear Matthew ( Score: 2 ) by ShanghaiBill ( 739463 ) writes: on Sunday December 25, 2016 @06:13PM ( #53553247 )
It is equally infuriating to me when American companies use loopholes in our ridiculously complicated tax code to shelter revenues in foreign tax shelters to avoid paying taxes

So who are you infuriated at? The companies that take advantage of those loopholes, or the politicians that put them there? Fury doesn't help unless it is properly directed. Does your fury influence who you vote for?

... while at the same time benefiting from our infrastructure, emergency services, military, etc.

No. Taxes are only sheltered on income generated overseas, using overseas infrastructure, emergency services, etc. I am baffled why Americans believe they have a "right" to tax the sale of a product made in China and sold in France.

Re:Dear Matthew ( Score: 2 ) by PolygamousRanchKid ( 1290638 ) writes: on Sunday December 25, 2016 @06:33PM ( #53553303 )
I am baffled why Americans believe they have a "right" to tax the sale of a product made in China and sold in France.

In a seriously silly Monty Python sketch about taxes, someone mildly suggested:

"I think we should tax foreigners, living abroad."

Kinda sorta the same idea . . .

Re:Dear Matthew ( Score: 3 ) by fibonacci8 ( 260615 ) writes: on Sunday December 25, 2016 @08:43PM ( #53553777 )

I suppose it's related to the idea that intellectual property "rights" granted by a country of origin should still have the same benefits and drawbacks when transferred to another country. Or at the very least should be treated as an export at such time a base of operations moves out of country.

Re:Dear Matthew ( Score: 5 , Insightful) by Rob Y. ( 110975 ) writes: on Sunday December 25, 2016 @06:37PM ( #53553317 )

Except that calling, say iOS sales 'generated overseas' when the software was written in the US, using US infrastructure, etc . And the company is making the bogus claim that their Irish subsidiary owns the rights to that software. It's a scam - not a loophole.

Re:Dear Matthew ( Score: 5 , Insightful) by geoskd ( 321194 ) writes: on Sunday December 25, 2016 @07:35PM ( #53553547 )
It's a scam - not a loophole.

They are the same thing. The only way to ensure that there are no tax dodges out there is to simplify the tax code, and eliminate the words: "except", "but", "excluding", "omitting", "minus", "exempt", "without", and any other words to those same effects.

Americans are too stupid to ever vote for a poltiician that states they will raise taxes. This means that either politicians lie, or they actively undermine the tax base. Both of those situations are bad for the majority of americans, but they vote for the same scumbags over and over, and will soundly reject any politician who openly advocates tax increases. The result is a race to the bottom. Welcome to reaping what you sow, brought to you by Democracy(tm).

Re: ( Score: 2 ) by ShanghaiBill ( 739463 ) writes:

Except that calling, say iOS sales 'generated overseas' when the software was written in the US, using US infrastructure, etc .

That makes no sense. Plenty of non-American companies develop software in America. Yet only if they are incorporated in America do they pay income tax on their overseas earnings, and it is irrelevant where their engineering and development was done.

It has nothing whatsoever to do with "using infrastructure". It is just an extraterritorial money grab that is almost certainly counterproductive since it incentivizes American companies to invest and create jobs overseas.

Re: Dear Matthew ( Score: 2 , Insightful) by Anonymous Coward writes:

Yes, taxes are based on profits. So Google, for instance, makes a bunch of money in the US. Their Irish branch then charges about that much for "consulting" leaving the American part with little to no profits to tax.

Re: ( Score: 2 ) by SwashbucklingCowboy ( 727629 ) writes:

Oh get real. Companies make it appear that nearly all income is generated overseas in order to get around that. It's mostly a scam.

Re:Dear Matthew ( Score: 4 , Insightful) by msauve ( 701917 ) writes: on Sunday December 25, 2016 @07:45PM ( #53553601 )

"I am baffled why Americans believe they have a "right" to tax the sale of a product made in China and sold in France."

Because the manufacturing and sales are controlled by a US based company, as is the profit benefit which results. If a US entity, which receives the benefits of US law, makes a profit by any means, why should it not be taxed by the US?

[Dec 27, 2016] Suicide rates rise after jobs move overseas, study finds

Notable quotes:
"... In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers. ..."
"... Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said. Automation has made manufacturing much more specialized, requiring more education and fewer workers, leaving parts of the country struggling to figure out how to reinvent their economies. ..."
"... "We will probably never have as many manufacturing jobs as we had in 1960," Dunn said. "The question is how do we train workers and provide them opportunities to feel productive. What's clear from the election is an increasing number of people don't have those opportunities or don't feel that those opportunities will be available." ..."
"... Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (2010–2011): A review of coroners׳ records ..."
Dec 27, 2016 | economistsview.typepad.com
Fred C. Dobbs : December 27, 2016 at 03:37 AM

Suicide rates rise after jobs move overseas, study finds
http://www.bostonglobe.com/business/2016/12/26/suicide-rates-rise-after-jobs-move-overseas-new-study-funds/yVhFkZOslgnODKEjTfcDTK/story.html?event=event25
via @BostonGlobe - Deirdre Fernandes - December 27, 2016

FALL RIVER - In this struggling industrial city, changes in trade policy are being measured not only in jobs lost, but also in lives lost - to suicide.

The jobs went first, the result of trade deals that sent them overseas. Once-humming factories that dressed office workers and soldiers, and made goods to furnish their homes, stand abandoned, overtaken by weeds and graffiti.

And now there is research on how the US job exodus parallels an increase in suicides. A one percentage point increase in unemployment correlated with an 11 percent increase in suicides, according to Peter Schott, a Yale University economist who coauthored the report with Justin Pierce, a researcher at the Federal Reserve Board.

The research doesn't prove a definitive link between lost jobs and suicide; it simply notes that as jobs left, suicides rose. Workers who lost their jobs may have been pushed over the edge and turned to suicide or drug addiction, lacking financial resources or community connections to get help, the authors suggest.

The research contributes to a growing body of work that shows the dark side of global trade: the dislocation, anger, and despair in some parts of the country that came with the United States' easing of trade with China in 2000. The impact of job losses was greatest in places such as Fall River and other cities in Bristol County, along with rural manufacturing counties in New Hampshire and Maine, vast stretches of the South, and portions of the Rust Belt.

"There are winners and losers in trade," Schott said. "If you go to these communities, you can see the disruptions."

The unemployment rate in Fall River remains persistently high and at 5.5 percent in September was a good two points above the Massachusetts average. Nearly one in three households gets some sort of public assistance.

Opposition to global trade policies became a rallying cry in Donald Trump's campaign, propelling him into the White House with strategic wins in the industrial Midwest and the South. Trump has threatened to impose tariffs on Chinese goods and has bashed recent US trade pacts. ...

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 03:41 AM

... Previous trade deals, including the 1994 North American Free Trade Agreement with Canada and Mexico, chipped away at US manufacturing towns. But economists say the decision to normalize relations with China was far more disruptive. Some economists have estimated the United States may have lost at least 1 million manufacturing jobs from 2000 to 2007 due to freer trade with China.

In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers.

Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said. Automation has made manufacturing much more specialized, requiring more education and fewer workers, leaving parts of the country struggling to figure out how to reinvent their economies.

"We will probably never have as many manufacturing jobs as we had in 1960," Dunn said. "The question is how do we train workers and provide them opportunities to feel productive. What's clear from the election is an increasing number of people don't have those opportunities or don't feel that those opportunities will be available."

Officials in Fall River and Bristol County said they are trying to provide appropriate training, including computer programming, a prerequisite for many manufacturing jobs.

They also point out there have been recent victories.

  • Amazon.com opened a distribution warehouse in Fall River and has been hiring in recent months to fill 500 jobs.
  • Companies are eyeing Taunton for its cheaper land, access to highways, and state tax breaks.
  • Norwood-based Martignetti Cos., among the state's largest wine and spirits distributors, last year agreed to move its headquarters to a Taunton industrial park.

Mayor Tom Hoye said Taunton has also been more active in recent years, holding community meetings and expanding social services for residents facing distress and drug addiction.

Despite the hits the city and its residents have taken, there is reason to be optimistic about the future, he said.

Jobs are returning, and the county's suicide rate dropped from 13 per 100,000 people in 2014 to 12 per 100,000 in 2015.

"We're reinventing ourselves," Hoye said on a recent morning as he sat in an old elementary school classroom that has served as the temporary mayor's office for several years.

"It's tough to lift yourself out of the hole sometimes. But we're much better off than we were 10 years ago."

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 03:55 AM
'The research doesn't prove a definitive
link between lost jobs and suicide; it
simply notes that as jobs left,
suicides rose.'

Pierce, Justin R., and Peter K. Schott (2016). "Trade Liberalization and Mortality:
Evidence from U.S. Counties," Finance and Economics Discussion Series
2016-094. Washington: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/econresdata/feds/2016/files/2016094pap.pdf

http://faculty.som.yale.edu/peterschott/files/research/papers/pierce_schott_pntr_20150301.pdf

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 04:00 AM
(Note: The 2nd link is to a
different paper, same authors.)

'The Surprisingly Swift Decline
of US Manufacturing Employment'

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 04:27 AM
Understanding vulnerability to self-
harm in times of economic hardship
and austerity: a qualitative study
M C Barnes, et al.

'This is the first UK study of self-harm
among people experiencing economic or
austerity-related difficulties.'

December 2015

http://bmjopen.bmj.com/content/6/2/e010131.full.pdf

---

Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (2010–2011): A review of coroners׳ records
Caroline Coope, et al

Journal of Affective Disorders
Volume 183, 1 - September 2015

http://www.sciencedirect.com/science/article/pii/S0165032715002694/pdfft?md5=bebc4ce035acbeeee6cb0b9bd586a5e3&pid=1-s2.0-S0165032715002694-main.pdf

Chris G -> Fred C. Dobbs... , -1
Suicide rates rise after jobs move overseas, study finds

That's consistent with the GOP's notion of how to most effectively cover health problems: shoveled dirt.

[Dec 27, 2016] Trump should say, Thanks, Obama!

Notable quotes:
"... I would say both parties are for the rich and both do their best to distract their respective base with talk of abortion or race, while neither would like these red meat distractions disappear by being in any solved. ..."
"... Why do they like these particular distractions? Because the rich don't care about either. ..."
"... Trump broke the mold by talking about jobs in a meaningful way immigration and exporting factories both boost unemployment, suppressing wages while boosting profits; these topics have been forbidden since Ross Perot spoke of millions of jobs going south on account of Nafta, exactly what happened. ..."
"... 8mm official unemployment. 16mm reduced participation since 2005 in 25-54 age group. ..."
"... 24mm total, not counting part timers that want full time and 10mm fewer voted for dems in 2016 than 2008. ..."
"... Exactly the same number that voted for Romney voted for trump, so Hillary lost obamas third term not because of a wave of trump racists but because there was somehow dissatisfaction among former dem voters regarding the great jobs program, low cost healthcare, and prosecution of bankers and other elites that drove the economy off the cliff. Granted, nominating the second most unpopular person in America might not guarantee success ..."
Dec 27, 2016 | www.nakedcapitalism.com
John k, December 26, 2016 at 2:33 pm

Dems are the party of the rich and poor.

Really? When did they do something that benefitted the poor?

I would say both parties are for the rich and both do their best to distract their respective base with talk of abortion or race, while neither would like these red meat distractions disappear by being in any solved.

Why do they like these particular distractions? Because the rich don't care about either.

Trump broke the mold by talking about jobs in a meaningful way immigration and exporting factories both boost unemployment, suppressing wages while boosting profits; these topics have been forbidden since Ross Perot spoke of millions of jobs going south on account of Nafta, exactly what happened.

8mm official unemployment. 16mm reduced participation since 2005 in 25-54 age group.

24mm total, not counting part timers that want full time and 10mm fewer voted for dems in 2016 than 2008.

Exactly the same number that voted for Romney voted for trump, so Hillary lost obamas third term not because of a wave of trump racists but because there was somehow dissatisfaction among former dem voters regarding the great jobs program, low cost healthcare, and prosecution of bankers and other elites that drove the economy off the cliff. Granted, nominating the second most unpopular person in America might not guarantee success

Anyway, Trump should say, Thanks, Obama!

Synoia , December 26, 2016 at 2:40 pm

8mm official unemployment. 16mm reduced participation since 2005 in 25-54 age group.
24mm total, not counting part timers that want full time

Obama's legacy. Read it and weep.

John k , December 26, 2016 at 3:23 pm

I mis spoke.
Nominating her had risks, but it assured Bernie would not be president, and Bernie was a far greater risk to bankers and the other dem paymasters than trump. Remember, for them it was existential, bernie would have jailed bankers. Trump is one of the oligarchs.
With her nom bankers let out a sigh of relief and could thankfully murmur, 'mission accomplished!'

WheresOurTeddy , December 26, 2016 at 3:29 pm

Bernie would not be president only if they Bobby Kennedy'd him.

It didn't come to that. They just fixed the primary.

Vatch , December 26, 2016 at 7:12 pm

If Sanders had won the Democratic nomination, and he had been "Bobby Kennedy'd", people besides the conspiracy enthusiasts would have started to notice a pattern. Instead, there are millions of people who actually believe that Sanders lost the primaries to Clinton fair and square. Some of us know better. . . .

As for patterns, Trump's nominations for cabinet level offices are showing a pattern: billionaires, hecto-millionaires, overt vassals of the ultra-rich, and at least one (alleged) criminal: Ryan Zinke.

Yves Smith , December 26, 2016 at 10:22 pm

The one unambiguously positive feature of Obamacare was Medicaid expansion, which does help the poor.

marym , December 26, 2016 at 10:47 pm

It does help people, but increased privatization and estate recovery make it not unambiguous.

ambrit , December 27, 2016 at 4:42 am

True. Because of estate recovery, I am doing without medical "insurance" of any kind. As I tell Phyllis, if I get anything serious, just put me in my ragged old canvas chair in the back yard and keep the beer coming until I stop complaining.

This entire Medicade story is curious. I had thought that any self respecting oligarchy would want reasonably powerful clients to buttress the oligarch's power and influence. Instead, the Medicade Oligarchy buys into a "power base" of the poor and disenfranchised. The funds for this complex relationship are supplied, as best as I can discern, by the central government. What will the Medicade Oligarchs do when the "X" Oligarchs cut off or even just restrict the flow of funds from the central government?

Cry Shop , December 27, 2016 at 5:36 am

Not just estate recovery. Loading Medicaid with more claimants, particularly poor, ethnic minority claimants, was a great way to stress it's gonig to need a neo-liberal cure, if the neo-cons don't use the opportunity Obama gave them to out right kill it. Medicaid isn't Medicare, and the retired folks know it. They, the retires, would kill it in a second if they could get an extra $100 per annum in free drugs.

ambrit , December 27, 2016 at 5:46 am

I'm not too sure about the "Retired" "Poor" divide anymore. The two groups are converging and merging. Any animus experienced here would be the result of restriction of total benefits available. In other words, an artificially engineered conflict.
Once the "old folks" realize that they, as a class, are the poor, all bets will be off.

marym , December 27, 2016 at 8:44 am

Once the "old folks" actually are poor enough to qualify for Medicaid (dual eligible) they are at risk for being tossed off Medicare into Medicaid managed care .

marym , December 27, 2016 at 8:50 am

Nor is Medicare Medicare, in the sense of being a fully public program. Medicare Advantage, Medicare supplemental insurance, and prescription drug insurance are all privatized.

Tully , December 27, 2016 at 11:41 am

the funds supplied by the central government. No.
they are supplied by the taxpayers.
That is the system – taxpayers subsidize private sector profits.

steelhead , December 26, 2016 at 2:59 pm

43 years. The decline started in 1973, the year I graduated from high school.

Nittacci , December 26, 2016 at 3:00 pm

"I'm guessing that upwards of 90% of United States voters work for wages"

How is that possible with a 62% labor participation rate? Do you believe unemployed, retired, students and stay-at-home parents don't vote?

grayslady , December 26, 2016 at 5:48 pm

Yes, I had a problem with that phrase, as well; especially as older people (read "retired") are known to have the highest percentage of actual voters. Assuming that the 90% is an overstatement, I don't believe it negates the point that all ages and all races can find common ground on certain issues–Medicare for All being one of those issues. Seniors would definitely get behind an improved Medicare, just as students, unemployed, working poor, and others would support such a sensible universal health care program.

ambrit , December 27, 2016 at 4:46 am

" sensible universal health care program."
Sensible for whom? For the presently entrenched oligarchs, the system in use now is perfectly sensible.

Baldacci , December 26, 2016 at 9:31 pm

Only 30-35% of the total US population votes in any one election. 90% would be possible.

funemployed , December 27, 2016 at 9:34 am

They old though – retired folks love them some voting. Work or have worked for wages, or had vital domestic labor supported by a wage earning family member would surely get us over 90 IMO. (sorry for quibbling Lambert. I think we all get the point. Thanks for the lovely essay)

[Dec 27, 2016] The government's 20th century growth as a factory underestimates service sector growth and our continued share shrink in 20th century

Dec 27, 2016 | economistsview.typepad.com
AngloSaxon : December 26, 2016 at 10:24 PM , 2016 at 10:24 PM
In my opinion, probably not. The government's 20th century "growth as a factory" underestimates service sector growth and our continued share shrink in 20th century industrial production means our "potential" growth is by this factory methiod, in decline. If we grow 3% it is a gaudy number by the government's own statistical backwardness.

To regenerate American factory growth is not possible right now under a market system. I mean, it simply isn't. If we tried, we would crater industrial growth as well with consumption cuts.

likbez -> AngloSaxon... , -1
Growth of the service sector is also under attack due to increasing "robotization", replacing salaried workers with "perma-temps" and underpaid contractors (Uber) as well as offshoring of help desk and such.

What's left? Military Keynesianism ?

[Dec 27, 2016] On Krugman And The Working Class - Tim Duys Fed Watch

Notable quotes:
"... Excellent critique. Establishment Democrats are tone-deaf right now; the state of denial they live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity politics for non-white, non-male, non-heterosexual is what the Democratic party is about today and has been the last decade or so. ..."
"... That's the effect of incessant Dem propaganda pitting races and sexes against each other. ..."
"... And Democrats' labeling of every Republican president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger created by discriminatory policies that punish [white] children and young adults, particularly boys. ..."
"... So, to make up for the alleged screw job that women and minorities have supposedly received, the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes. No experience, no certificate......but she has a management degree. But I guess you don't know how to do the job to manage it. ..."
"... Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. ..."
"... Evolution of political parties happens organically, through evolution (punctuated equilibrium - like species and technology - parties have periods of stability with some sudden jumps in differentiation). ..."
"... If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans since Lincoln. They will lose even more seats. ..."
"... The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot box to change the party. The same way the "Tea Party" revolution decimated the Republicans and led to Trump. Natural selection at work. ..."
"... The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt ..."
"... I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally speaking, the longer hispanics are in the US, the more likely they tend to vote Republican. ..."
"... The Democratic Establishment and their acolytes are caught in a credibility trap. ..."
"... I also think many Trump voters know they are voting against their own economic interest. The New York Times interviewed a number who acknowledge that they rely on insurance subsidies from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't know what she will do if Obamacare is repealed but is quite happy with her vote. ..."
"... Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words, he is an over educated, political hack who has yet to learn to keep his overtly bias opinions to himself. ..."
"... Funny how there's all this concern for the people whose jobs and security and money have vanished, leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work ethic, shall we? ..."
"... Clinton slammed half the Trump supporters as deplorables, not half the public. She was correct; about half of them are various sorts of supremacists. The other half (she said this, too) made common cause with the deplorables for economic reasons even though it was a devil's bargain. ..."
"... I have never commented here but I will now because of the number of absurd statements. I happen to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend that trump and the Republican Party has their interest in mind is completely absurd. As for the white working class, please tell me what programs either trump or the republican have put forward to benefit them? I have lost a lot of respect for Duy ..."
"... The keys of the election were race, immigration and trade. Trump won on these points. What dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead, emphasize economic equality and security, for all working class. ..."
"... Krugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in public opinion, for legitimate reasons. ..."
"... All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and mind, to what Thomas Frank has been saying, and they will know where they went wrong and most likely what to do about it, if they can release themselves from their fatal embrace with Big Money covered up by identity politics. ..."
"... Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa. ..."
"... The neoliberals with their multi-culti/love them all front men have had it good for a while, now there's a reaction. Deal with it. ..."
Dec 27, 2016 | economistsview.typepad.com
Jason Nordsell : , November 27, 2016 at 08:02 AM
Excellent critique. Establishment Democrats are tone-deaf right now; the state of denial they live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity politics for non-white, non-male, non-heterosexual is what the Democratic party is about today and has been the last decade or so.

The only way Dems can make any headway by the midterms is if Trump really screws up, which is a tall order even for him. He will pick the low-hanging fruit (e.g., tax reform, Obamacare reform, etc), the economy will continue to recover (which will be attributed to Trump), and Dems will lose even more seats in Congress. And why? Because they refuse to recognize that whites from the middle-class and below are just as disadvantaged as minorities from the same social class.

If white privilege exists at all (its about as silly as the "Jews control the banks and media" conspiracy theories), it exists for the upper classes. Poor whites need help too. And young men in/out of college today are being displaced by women - not because the women have superior academic qualification, but because they are women. I've seen it multiple times firsthand in some of the country's largest companies and universities (as a lawyer, when an investigation or litigation takes place, I get to see everyone's emails, all the way to CEO/board). There is a concerted effort to hire only women and minorities, especially for executive/managerial positions. That's not equality.

That's the effect of incessant Dem propaganda pitting races and sexes against each other. This election exposed the media's role, but its not over. Fortunately, Krugman et al. are showing the Dems are too dumb to figure out why they lost. Hopefully they keep up their stupidity so identity politics can fade into history and we can get back to pursuing equality.

bob -> Jason Nordsell... , November 28, 2016 at 03:02 PM
"There is a concerted effort to hire only women and minorities, especially for executive/managerial positions."

Goooooolllllllllllllly, gee. Now why would that be? I hope you're not saying there shouldn't be such an effort. This is a good thing. It exactly and precisely IS equality. It may be a bit harsh, but if certain folks continually find ways to crap of women and minorities, then public policies would seem warranted.

Are you seriously telling us that pursuing public policies to curb racial and sexual discrimination are a waste of time?

How, exactly, does your vision of "pursuit of equality" ameliorate the historical fact of discrimination?

Jason Nordsell -> bob... , November 29, 2016 at 10:17 AM
You don't make up for past discrimination with discrimination. You make up for it by equal application of the law. Today's young white men are not the cause of discrimination of the 20th century, or of slavery. If you discriminate against them because of the harm caused by other people, you're sowing the seeds of a REAL white nationalist movement. And Democrats' labeling of every Republican president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger created by discriminatory policies that punish [white] children and young adults, particularly boys.

Displacement of white men by lesser-qualified women and minorities is NOT equality.

Paid Minion -> bob... , December 26, 2016 at 01:29 PM
So, to make up for the alleged screw job that women and minorities have supposedly received, the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes. No experience, no certificate......but she has a management degree. But I guess you don't know how to do the job to manage it.

God forbid somebody have to "pay some dues" before setting them loose as suit trash.

This will not end well.

Richard -> Jason Nordsell... , November 30, 2016 at 03:45 PM
You had me nodding until the last part.

Back when cultural conservatives ruled the roost (not that long ago), they didn't pursue equality either. Rather, they favored (hetero Christian) white men. So hoping for Dem stupidity isn't going to lead to equality. Most likely it would go back to favoring hetero Christian white men.

Todd : , November 27, 2016 at 08:46 AM
"...should they find a new standard bearer that can win the Sunbelt states and bridge the divide with the white working class? I tend to think the latter strategy has the higher likelihood of success."

Easy to say. What would that standard bearer or that strategy look like?

Bill -> Todd... , November 27, 2016 at 08:59 AM
Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. Big mistake that we are now paying for...
Bob Salsa -> Bill... , November 28, 2016 at 12:56 PM
Basic political math - Sanders would have been eaten alive with his tax proposals by the GOP anti-tax propaganda machine on Trump steroids.

His call to raise the payroll tax to send more White working class hard-earn money to Washington would have made election night completely different - Trump would have still won, it just wouldn't have been a surprise but rather a known certainty weeks ahead.

dwb : , November 27, 2016 at 10:47 AM
Evolution of political parties happens organically, through evolution (punctuated equilibrium - like species and technology - parties have periods of stability with some sudden jumps in differentiation).

Old politicians are defeated, new ones take over. The old guard, having been successful in the past in their own niche rarely change.

If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans since Lincoln. They will lose even more seats.

The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot box to change the party. The same way the "Tea Party" revolution decimated the Republicans and led to Trump. Natural selection at work.

In 1991, Republicans thought they would always win, Democrats thought the country was relegated to Republican Presidents forever. Then along came a new genotype- Clinton. In 2012, Democrats thought that they would always win, and Republicans were thought to be locked out of the electoral college. Then along came a new genotype, Trump.

A new genotype of Democrat will have to emerge, but it will start with someone who can win in flyover country and Texas. Hint: They will have to drop their hubris, disdain and lecturing, some of their anti-growth energy policies, hate for the 2nd amendment, and become more fiscally conservative. They have to realize that *no one* will vote for an increase in the labor supply (aka immigration) when wages are stagnant and growth is anemic. And they also have to appreciate people would rather be free to choose than have decisions made for them. Freedom means nothing unless you are free to make mistakes.

But it won't happen until coastal elites like Krugman and Pelosi have retired.


swampwiz -> dwb... , November 28, 2016 at 12:59 AM
My vote for the Democratic Tiktaalik is the extraordinarily Honorable John Bel Edwards, governor of Louisiana. The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt (i.e., deleted E-mails on her illegal private server) as well - and she still only lost by 1% in the tipping point state (i.e., according to the current count, which could very well change).
bob -> dwb... , November 28, 2016 at 03:09 PM
You know what will win Texas? Demographic change. Economic growth. And it is looking pretty inevitable on both counts.

I'm also pretty damned tired of being dismissed as "elitist", "smug" and condescending. I grew up in a red state. I know their hate. I know their condescension (they're going to heaven, libruls are not).

It cuts both ways. The Dems are going into a fetal crouch about this defeat. Did the GOP do that after 2008? Nope. They dug in deeper.

Could be a lesson there for us.

Smugly your,

dwb -> bob... , November 28, 2016 at 06:27 PM
Ahh yes, all Texas needs is demographic change, because all [Hispanics, Blacks, insert minority here] will always and forever vote Democrat. Even though the Democrats take their votes for granted and Chicago/Baltimore etc. are crappy places to live with no school choice, high taxes, fleeing jobs, and crime. Even though Trump outperformed Romney among minorities.

Clinton was supposed to be swept up in the winds of demographics and the Democrats were supposed to win the White House until 2083.

Funny things happen when you take votes for granted. Many urban areas are being crushed by structural deficits and need some Detroit type relief. I predict that some time in the next 30 years, poles reverse, and urban areas are run by Republicans.

If you are tired of being dismissed as "elitist", "smug" and condescending, don't be those things. Don't assume people will vote for your party because they have always voted that way, or they are a certain color. Respect the voters and work to earn it.

Jason Nordsell -> bob... , November 29, 2016 at 10:27 AM
The notion that hispanic=democrat that liberals like bob have is hopelessly ignorrant.

I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally speaking, the longer hispanics are in the US, the more likely they tend to vote Republican.

The Democratic Party's plan to wait out the Republicans and let demographics take over is ignorant, racist and shortsighted, cooked up by coastal liberals that haven't got a clue, and will ultimately fail.

In addition to losing hispanics, Democrats will also start losing the African American vote they've been taking for granted the last several decades. Good riddance to the Democratic party, they are simply unwilling to listen to what the people want.

RJ -> bob... , December 06, 2016 at 11:20 PM
You might be tired of it, but clearly you are elitist, smug, and condescending.

Own it. Fly your freak flag proudly,

Tom : , November 27, 2016 at 11:42 AM
This is a really shoddy piece that repeats the medias pulling of Clintons quote out of context. She also said "that other basket of people are people who feel that the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures, and they're just desperate for change. It doesn't really even matter where it comes from. They don't buy everything he says, but he seems to hold out some hope that their lives will be different. They won't wake up and see their jobs disappear, lose a kid to heroin, feel like they're in a dead-end. Those are people we have to understand and empathize with as well."

Now maybe it is okay to make gnore this part of the quote because you think calling racism "deplorable" is patently offensive. But when the ignored context makes the same points that Duy says she should have been making, that is shoddy.

dwb -> Tom... , November 27, 2016 at 12:07 PM
There are zero electoral college votes in the State of Denial. Hopefully you understand a)the difference between calling people deplorable and calling *behavior* deplorable; b) Godwin's Law: when you resort to comparing people to Hitler you've lost the argument. Trump supporters were not racist, homophobic, xenophobic, or any other phobic. As a moderate, educated, female Trump supporter counseled: He was an a-hole, but I liked his policies.

Even my uber liberal friends cannot tell me what Clinton's economic plan was. Only that they are anti-Trump.

Trump flanked Clinton on the most popular policies (the left used to be the anti-trade party of union Democrats): Lower regulation, lower taxes, pro-2nd amendment, trade deals more weighted in favor of US workers, and lower foreign labor supply. Turn's out, those policies are sufficiently popular that people will vote for them, even when packaged into an a-hole. Trump's anti-trade platform was preached for decades by rust belt unions.

The coastal Democrats have become hostages to pro-big-government municipal unions crushing cities under structural deficits, high taxes, poorly run schools, and overbearing regulations. The best thing that can happen for the Democrats is for the Republicans to push for reforms of public pensions, school choice, and break municipal unions. Many areas see the disaster in Chicago and Baltimore, run by Democrats for decades, and say no thank you. Freed of the need to cater to urban municipal unions, Democrats may be able to appeal to people elsewhere.

Nick : , November 27, 2016 at 01:16 PM
Where can you move to for a job when wages are so low compared to rents?
The young generations are not happy with house prices or rents as well.
Giant_galveston -> Tim C.... , December 05, 2016 at 08:43 PM
Tim, I believe you've missed the point: by straightforward measures, Democratic voters in USA are substantially under-represented. The problem is likely to get much worse, as the party whose policies abet minority rule now controls all three branches of the federal government and a substantial majority of state governments.
Tim C. : , November 27, 2016 at 02:50 PM
This is an outstanding takedown on what has been a never-ending series of garbage from Krugman.

I used to hang on every post he'd made for years after the 2008 crisis hit. But once the Clinton coronation arose this year, the arrogant, condescending screed hit 11 - and has not slowed down since. Threads of circular and illogical arguments have woven together pathetic - and often non-liberal - editorials that have driven me away permanently.

Since he's chosen to ride it all on political commentary, Krugman's credibility is right there with luminaries such as Nial Ferguson and Greg Mankiw.

Seems that everyone who chooses to hitch their wagon to the Clintons ends up covered in bilge..... funny thing about that persistent coincidence...

dazed and confused : , November 27, 2016 at 02:58 PM
"And it is an especially difficult pill given that the decline was forced upon the white working class.... The tsunami of globalization washed over them....in many ways it was inevitable, just as was the march of technology that had been eating away at manufacturing jobs for decades. But the damage was intensified by trade deals.... Then came the housing crash and the ensuing humiliation of the foreclosure crisis."

All the more amazing then that Trump pulled out such a squeaker of an election beating Clinton by less than 2% in swing states and losing the popular vote overall. In the shine of Duy's lights above, I would have imagined a true landslide for Trump... Just amazing.

Jesse : , November 27, 2016 at 04:29 PM

The Democratic Establishment and their acolytes are caught in a credibility trap.

dimknight : , November 27, 2016 at 11:48 PM
"I don't know that the white working class voted against their economic interest".

I think you're pushing too hard here. Democrats have been for, and Republicans against many policies that benefit the white working class: expansionary monetary policy, Obamacare, housing refinance, higher minimum wage, tighter worker safety regulation, stricter tax collection, and a host of others.

I also think many Trump voters know they are voting against their own economic interest. The New York Times interviewed a number who acknowledge that they rely on insurance subsidies from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't know what she will do if Obamacare is repealed but is quite happy with her vote.

Doug Rife : , November 28, 2016 at 07:17 AM
There is zero evidence for this theory. It ignores the fact that Trump lied his way to the White House with the help of a media unwilling to confront and expose his mendacity. And there was the media's obsession with Clinton's Emails and the WikiLeaks daily release of stolen DNC documents. And finally the Comey letter which came in the middle of early voting keeping the nation in suspense for 11 days and which was probably a violation of the hatch act. Comey was advised against his unjustified action by higher up DOJ officials but did it anyway. All of these factors loomed much larger than the deplorables comment. Besides, the strong dollar fostered by the FOMC's obsession with "normalization" helped Trump win because the strong dollar hurts exporters like farmers who make up much of the rural vote as well as hurting US manufacturing located in the midwest states. The FOMC was objectively pro Trump.
Nate F : , November 28, 2016 at 07:57 AM
I was surrounded by Trump voters this past election. Trust me, an awful lot of them are deplorable. My father is extremely anti semetic and once warned me not to go to Minneapolis because of there being "too many Muslims." One of our neighbors thinks all Muslims are terrorists and want to do horrible things to all Christians.

I know, its not a scientific study. But I've had enough one on one conversations with Trump supporters (not just GOP voters, Trump supporters) to say that yes, as a group they have some pretty horrible views.

Giant_galveston -> Nate F... , December 05, 2016 at 08:38 PM
Yep. I've got plenty of stories myself. From the fact that there are snooty liberals it does NOT follow that the resentment fueling Trump's support is justified.
Denis Drew : , November 28, 2016 at 08:41 AM
One should note that the "The racist, sexist, homophobic, xenophobic, Islamaphobic - you name it ... " voted for Obama last time around.

When the blue collar voter (for lack of a better class) figures out that the Republicans (Trump) are not going to help them anymore than the Dems did -- it will be time for them to understand they can only rely on themselves, namely: through rebuilding labor union density, which can be done AT THE STATE BY PROGRESSIVE STATE LEVEL.

To keep it simple states may add to federal protections like the minimum wage or safety regs -- just not subtract. At present the NLRB has zero (no) enforcement power to prevent union busting (see Trump in Vegas) -- so illegal labor market muscling, firing of organizers and union joiners go completely undeterred and unrecoursed.

Recourse, once we get Congress back might include mandating certification elections on finding of union busting. Nothing too alien: Wisconsin, for instance, mandates RE-certification of all public employee unions annually.

Progressive states first step should be making union busting a felony -- taking the power playing in our most important and politically impacting market as seriously as taking a movie in the movies (get you a couple of winters). For a more expansive look (including a look at the First Amendment and the fed cannot preempt something with nothing, click here):
http://ontodayspage.blogspot.com/2016/11/first-100-days-progressive-states-agenda.html

Labor unions -- returned to high density -- can act as the economic cop on every corner -- our everywhere advocates squelching such a variety of unhealthy practices as financialization, big pharam gouging, for profit college fraud (Trump U. -- that's where we came into this movie). 6% private union density is like 20/10 bp; it starves every other healthy process (listening blue collar?).

Don't panic if today's Repub Congress passes national right-to-work legislation. Germany, which has the platinum standard labor institutions, does not have one majority union (mostly freeloaders!), but is almost universally union or covered by union contracts (centralized bargaining -- look it up) and that's what counts.

Gary Anderson : , November 28, 2016 at 09:47 AM
Trump took both sides of every issue. He wants high and low interest rates. He wants a depression first, (Bannonomics) and inflation first, (Trumponomics), he wants people to make more and make less. He is nasty and so he projected that his opponent was nasty.

Now he has to act instead of just talk out of both sides of his mouth. That should not be as easy to do.

C Jones : , November 28, 2016 at 10:31 AM
Hi Tim, nice post, and I particularly liked your last paragraph. The relevant question today if you have accepted where we are is effectively: 'What would you prefer - a Trump victory now? Or a Trump type election victory in a decade or so? (with todays corresponding social/economic/political trends continuing).
I'm a Brit so I was just an observer to the US election but the same point is relevant here in the UK - Would I rather leave the EU now with a (half sensible) Tory government? Or would I rather leave later on with many more years of upheaval and a (probably by then quite nutty) UKIP government?
I know which one I prefer - recognise the protest vote sooner, rather than later.
Bob Salsa : , November 28, 2016 at 12:48 PM
Sure they're angry, and their plight makes that anger valid.

However, not so much their belief as to who and what caused their plight, and more importantly, who can and how their plight would be successfully reversed.

Most people have had enough personal experiences to know that it is when we are most angry that we do the stupidest of things.

Lars : , November 28, 2016 at 05:58 PM
Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words, he is an over educated, political hack who has yet to learn to keep his overtly bias opinions to himself.
Douglas P Anthony : , November 29, 2016 at 08:16 AM
Tim's narrative felt like a cold shower. I was apprehensive that I found it too agreeable on one level but were the building blocks stable and accurate?

Somewhat like finding a meal that is satisfying, but wondering later about the ingredients.

But, like Tim's posts on the Fed, they prompt that I move forward to ponder the presentation and offer it to others for their comment. At this time, five-stars on a 1-5 system for bringing a fresh approach to the discussion. Thanks, Professor Duy. This to me is Piketty-level pushing us onto new ground.

JohnR : , November 29, 2016 at 12:07 PM
Funny how there's all this concern for the people whose jobs and security and money have vanished, leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work ethic, shall we?
Raven Onthill : , November 29, 2016 at 04:12 PM
Clinton slammed half the Trump supporters as deplorables, not half the public. She was correct; about half of them are various sorts of supremacists. The other half (she said this, too) made common cause with the deplorables for economic reasons even though it was a devil's bargain.

Now, there's a problem with maternalism here; it's embarrassing to find out that the leader of your political opponents knows you better than you know yourself, like your mother catching you out in a lie. It was impolitic for Clinton to have said this But above all remember that when push came to shove, the other basket made common cause with the Nazis, the Klan, and so on and voted for a rapey fascist.

Rick McGahey : , November 30, 2016 at 02:44 PM
"Economic development" isn't (and can't) be the same thing as bringing back lost manufacturing (or mining) jobs. We have had 30 years of shifting power between labor and capital. Restoring labor market institutions (both unions and government regulation) and raising the floor through higher minimum wages, single payer health care, fair wages for women and more support for child and elder care, trade policies that care about working families, better safe retirement plans and strengthened Social Security, etc. is key here, along with running a real full employment economy, with a significant green component. See Bob Polllin's excellent program in https://mitpress.mit.edu/books/back-full-employment

That program runs up against racism, sexism, division, and fear of government and taxation, and those are powerful forces. But we don't need all Trump supporters. We do need a real, positive economic program that can attract those who care about the economics more than the cultural stuff.

Sandra Williams : , December 01, 2016 at 12:20 AM
How about people of color drop the democrats and their hand wringing about white people when they do nothing about voter suppression!! White fragility is nauseating and I'm planning to arm myself and tell all the people of color I know to do the same. I expect nothing from the democrats going forward.
Robert Hurley : , December 01, 2016 at 11:04 AM
I have never commented here but I will now because of the number of absurd statements. I happen to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend that trump and the Republican Party has their interest in mind is completely absurd. As for the white working class, please tell me what programs either trump or the republican have put forward to benefit them? I have lost a lot of respect for Duy
Giant_galveston -> Robert Hurley... , December 05, 2016 at 08:32 PM
Couldn't agree more.
RJ -> Robert Hurley... , December 06, 2016 at 11:26 PM
No one should advocate illegal immigration. If you care about being a nation of laws.
olga.shaumyan@gmail.com : , December 01, 2016 at 06:13 PM
I think much of appeal of DJT was in his political incorrectness. PC marginalises. Very. Of white working class specifically. it tells one, one cannot rely on one's ideas any more. In no uncertain terms. My brother, who voted for Trump, lost his job to PC without offending on purpose, but the woman in question felt free to accuse him of violating her, with no regard to his fate. He was never close enough to do that. Is that not some kind of McCarthyism?
Eclectic Observer : , December 05, 2016 at 10:55 AM
Just to be correct. Clinton was saying that half (and that was a terrible error-should have said "some") were people that were unreachable, but that they had to communicate effectively with the other part of his support. People who echo the media dumb-ing down of complex statements are part of the problem.

Still, I believe that if enough younger people and african-americans had come out in the numbers they did for Obama in some of those states, Clinton would have won. Certainly, the media managed to paint her in more negative light than she objectively deserved-- even if she deserved some negatives.

I am in no way a fan of HRC. Still, the nature of the choice was blurred to an egregious degree.

Procopius : , December 05, 2016 at 08:40 PM
"The tough reality of economic development is that it will always be easier to move people to jobs than the jobs to people."

This is indisputable, but I have never seen any discussion of the point that moving is not cost-free. Back in the '90s I had a discussion with a very smart person, a systems analyst, who insisted that poor people moved to wherever the welfare benefits were highest.

I tried to point out that moving from one town to another costs more than a bus ticket. You have to pay to have your possessions transported. You have to have enough cash to pay at least two months' rent and maybe an additional security deposit.

You have to have enough cash to pay for food for at least one month or however long it takes for your first paycheck or welfare check to come in. There may be other costs like relocating your kids to a new school system and maybe changing your health insurance provider.

There probably are other costs I'm not aware of, and the emotional cost of leaving your family and your roots. The fact that some people succeed in moving is a great achievement. I'm amazed it works at all in Europe where you also have the different languages to cope with.

Kim Kaufman : , December 07, 2016 at 10:03 PM
I'm not sure the Hillary non-voters - which also include poor black neighborhoods - were voting against their economic interests. Under Obama, they didn't do well. Many of them were foreclosed on while Obama was giving the money to the banks. Jobs haven't improved, unless you want to work at an Amazon warehouse or for Uber and still be broke. Obama tried to cut social security. He made permanent Bush's tax cuts for the rich. Wars and more wars. Health premiums went up - right before the election. The most Obama could say in campaigning for Hillary was "if you care about my legacy, vote for Hillary." He's the only one that cares about his legacy. I don't know that it's about resentment but about just having some hope for economic improvement - which Trump offered (no matter how shallow and deceptive) and Hillary offered nothing but "Trump's an idiot and I'm not."

I believe Bernie would have beat Trump's ass if 1) the DNC hadn't put their fingers on the scale for Hillary and 2) same with the media for Hillary and Trump. The Dems need more than some better campaign slogans. They really need a plan for serious economic equality. And the unions need to get their shit together and stop thinking that supporting corrupt corporate Dems is working. Or perhaps the rank and file need to get their shit together and get rid of union bosses.

IHiddenDragon : , December 10, 2016 at 09:01 AM
The keys of the election were race, immigration and trade. Trump won on these points. What dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead, emphasize economic equality and security, for all working class.

Lincoln billed the civil war as a war to preserve the union, to gain wide support, instead of war to free slaves. Of course, the slaves were freed when the union won the war. Dems can benefit from a similar strategy

IHiddenDragon : , December 10, 2016 at 09:05 AM
Krugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in public opinion, for legitimate reasons.

Besides, a lot voters are tired of stale faces and stale ideas. They yearn something new, especially the voters in deep economic trouble.

Maybe it's time to try some old fashioned mercantilism, protectionism? America first is an appealing idea, in this age of mindless globalization.

Jesse : , December 26, 2016 at 11:08 AM
All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and mind, to what Thomas Frank has been saying, and they will know where they went wrong and most likely what to do about it, if they can release themselves from their fatal embrace with Big Money covered up by identity politics.

But they cannot bring themselves to admit their error, and to give up their very personally profitable current arrangement. And so they are caught up in a credibility trap which is painfully obvious to the objective observer.

c1ue : , December 26, 2016 at 12:11 PM
Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa.

It seems quite clear that the vast majority of commenters live as much in the ivory tower/bubble as is claimed for their ideological opponent.

It is also quite interesting that most of these same commenters don't seem to get that the voting public gets what the majority of it wants - not what every single group within the overall population wants.

The neoliberals with their multi-culti/love them all front men have had it good for a while, now there's a reaction. Deal with it.

[Dec 26, 2016] Stoics Do Care about Social Justice: A Response to Irvine by Eric O. Scott

Notable quotes:
"... complacency ..."
"... Lives of the Eminent Philosophers ..."
"... De Constantia ..."
"... highly recommended ..."
"... A Slap in the Face: Why Insults Hurt-And Why They Shouldn't ..."
"... Thank you to Kristen de K., John Martin, Charmika Stewart, and Arianna Scott for their very helpful feedback on earlier versions of this article. ..."
"... writes the blog ..."
"... . He is interested in moral practice as a way of life, and in how secular and religious people can find common ethical ground (a question which Socrates raised in Plato's ..."
"... ). In real life, he is a PhD student in computer science at George Mason University, where he does research on machine learning and evolutionary algorithms. ..."
Dec 26, 2016 | exeter.ac.uk
20 Replies ... ... ...

We Stoics always have to navigate a fragile balance when we present our ideas to the world. Many of our most powerful and appealing psychological tools revolve around accepting events that happen and recognizing that they are ultimately outside of our control. The reason that Stoicism is relevant to such a large and diverse array of people today is exactly because it purports to offer a powerful solution to almost any source of distress: "retire into yourself" ( Meditations , 7.28). We are perpetually at risk, however, of having our doctrine of "indifference" toward externals misconstrued for a "neglect" of externals. The benefits of inner peace speak for themselves-but the extreme emphasis that our philosophy puts on personal virtue as an "inner citadel" puts us in an understandably delicate position, politically speaking.

Any speech extolling the merits of inner peace and apatheia goes wrong-and in fact becomes positively toxic-the moment that the audience begins to suspect that our school advocates for complacency in the face of social injustice. A great deal of the world's harms are not inevitable, and in fact are immanently preventable (fate permitting), if only we humans could get our act together. If Stoicism teaches that we should be passive toward these fixable harms, or if our school is quick to "blame the victim" for their own unhappiness while simultaneously ignoring injustice, then our philosophy is immoral, and ought to be immediately rejected as such.

Of course, Stoicism teaches no such thing! To the contrary, we believe that no man or woman can be moral (or Happy) unless they work tirelessly for the benefit of all humanity. Justice and Benevolence must be a guide to all of our actions-"any action of yours," in fact, "which has no reference, whether direct or indirect, to these social ends, tears your life apart!" ( Meditations , 9.23). We do not believe that our doctrine of inner peace is mutually exclusive with Justice in any way whatsoever. "It is difficult, to be sure, to unite and combine these two states of mind," says Epictetus, "the vigilance of one who feels attracted by outside objects, and the composure of one who feels indifferent to them; but all the same it is not impossible" ( Discourses , 2.5.9).

People are right to be concerned, though, that Stoicism might teach an inappropriately shallow sort of fatalism. The more unilateral emphasis we put on the inner fortress as a shield against injustice, the more rational reason people have for fearing that we are abandoning our natural responsibility to work diligently in defense of the downtrodden. Moreover, there are well-founded reasons for being concerned that the ancients themselves failed to emphasize Justice as much as they should have. "About the institution of slavery," say the authors of the introduction to the Chicago University Press's series of Seneca translations, "there is silence, and worse than silence: Seneca argues that true freedom is internal freedom, so the external sort does not really matter."

I believe that contemporary Stoics need to be absolutely unambiguous about the fundamental moral imperatives that are essential to our ethics. Say it loud and clear: the way that we treat each other-and the way that we allow others to be treated by our society-is not "indifferent" at all. Stoicism is a system of virtue ethics, not only therapy, and as such it demands that each practitioner strive to be a force for Justice and Benevolence at all levels of society.

The Need for Charity

There is a little anecdote, preserved in Diogenes Laertius, where we find Zeno confronting a man who had been strongly critical of Antisthenes. Zeno apparently felt that the man had not done his due diligence as a critic, and he reprimanded the man strongly for it: "are you not ashamed," he said, "to pick out and mention anything wrong said by Antisthenes, while you suppress his good things without giving them a thought?" ( Lives of the Eminent Philosophers , 7.1.19). Donald Robertson likes to retell this story and interpret it as illustrating a strong normative principle: if we are going to criticize a person or school, we ought to engage the best of their thinking along with the worst, and to acknowledge what their ideas have to teach us about virtue. This is an idea that philosophers sometimes refer to as the " principle of charity ." Far from prohibiting or undermining criticism, the principle of charity is supposed to make us better, more just, and more incisive critics of flawed ideas.

Threading the needle of Stoic Justice becomes doubly difficult when a Stoic tries to go about offering advice to activists about how they can better run their movement. In many cases, criticism of activism effectively amounts to telling victims of hardship, injustice, and oppression how we think they ought to bear their plight more virtuously. This is a very difficult thing for anyone to do in a fair and sensitive way-it requires a lot of research and a generous dose of the principle of charity. It is virtually impossible to achieve, moreover, if it is not clear whether you actually, in fact, care about the injustice in question in the first place.

Unfortunately, this is exactly the sort of can of worms that Bill Irvine stirred up at Stoicon 2016 in his presentation on what he has called "insult pacifism." If you missed the talk, it closely follows a post he published the previous week on the Oxford University Press blog, titled " How would the ancient Stoics have dealt with hate speech? "

Irvine's central point is that we can teach people to be resilient to injustice. Insults don't need to be emotionally damaging, and when we judge them to be inherently bad and horrible, we end up suffering unnecessarily. Channeling the advice of the Stoics, Irvine argues that a stance of non-retaliation, or of "receiving these people's insults as jokes" (as Seneca puts it in De Constantia ), can not only protect us from emotional disturbance, but can in fact send a highly effective normative signal: "on failing to provoke a rise in his target," says Irvine, "an insulter is likely to feel foolish."

I am completely on board with the notion of insult pacifism. I was raised to value the principle that evil is best repaid with kindness (Romans 12:20), and "that ye resist not evil: but whosoever shall smite thee on thy right cheek, turn to him the other also" (Matthew 5:39). I'm delighted at Irvine's effort to popularize similar Stoic ideas in his books and elsewhere. In my own personal practice, in fact, I am currently trying to use pacifism toward automotive insults to counter my own tendency toward road rage: pacifism comes highly recommended when you are barreling down the highway in a 3,000 pound projectile!

Irvine's manner of treating the topic leaves a great deal to be desired, however, and I fear that it only reinforces the notion that Stoics are disinterested in Justice in general, and that modern Stoicism, far from taking a charitable interest in contemporary activism, is indifferent or even hostile to the concerns of marginalized people.

Irvine's Criticism of Social Justice

First, Irvine's Stoicon presentation is lopsided in that he is largely silent on the need for Stoics to work for Justice at all-a weakness that is shared by his 2013 book, A Slap in the Face: Why Insults Hurt-And Why They Shouldn't (Oxford University Press). But his approach indeed becomes "worse than silence" when he chooses to frame his talk as a one-sided criticism of contemporary social justice activism.

In the chapter of his book titled "Societal Responses to Insults"-which could have included a discussion on how we can work to make the world a better, more Just place for everyone-Irvine opts only to zero in on what he calls the "political correctness code" that emerged in the 1970's and has since, in his opinion, gotten way out of hand. "If Stoic philosopher Epictetus had been alive to watch the rise of hate speech laws, and, more generally, the political correctness movement," concludes Irvine, "he would have shaken his head in disbelief. According to him, the best way to spare people the pain of being insulted is not to change the world so that they never feel insults; it is instead to change people so that they are, in effect, immune to insults" (p. 182).

Now, there is plenty worth criticizing when it comes to activism on college campuses and society more broadly. Whatever nuances may be involved, I don't for a moment pretend that all of the widely publicized cases in which students have inappropriately stifled free speech, inhibited their own exposure to challenging ideas, or capriciously assaulted the academic freedom of university professors in the name of "safe spaces" are defensible (if this specific issue is of relevance to you, I encourage you to have a look at the 102-page report that PEN America released this week; a short summary can be found here ). I myself accept the Stoic view that anger is always irrational and vicious-a position which, if I'm not careful, easily gets me into hot water with the activist community!

The problem is not that Irvine has criticized these abuses of popular social justice ideas, or even that he apparently finds the concept of microaggressions to be useless (though, personally, I would implore him not to throw the baby out with the bathwater). Rather, the problem is that, in the same way that he has approximately nothing to say in defense of Justice despite our school's well-known reputation for a shallow fatalism, Irvine chooses to show no sympathy-and instead only active contempt-for the fundamental concerns that motivate activism.

For contrast, I invite you to have a look at the nuanced criticism of trigger warnings that Massimo Pigliucci wrote last year-which delved headlong into similarly sensitive waters, but only served to spark a very productive and cordial conversation among a diverse readership. I think it forms an exemplary model of how Stoics can treat such difficult topics while remaining true to Zeno's advice, and while making it clear that we do care deeply about Justice.

Irvine, meanwhile, admits that he is "puzzled" by the surge in concern over social justice issues on college campuses. He is perplexed that students feel "humiliated and even downtrodden" by the behavior of their peers, when in previous decades these issues were not very high in the public consciousness. Rather than engaging the many complex reasons that these students and other activists might give for their societal concerns, Irvine chooses to blanketly suggest that the systemic injustice so many are working to dismantle is simply a product of the imagination of feeble-minded youths: the infamous "hypersensitivity" of the activist. He lays the blame for the most recent round of sensitivity in efforts to teach people to recognize microaggressions, which are "such will-o'-the-wisp things that it takes training to spot them." And the idea of microaggressions, he believes, is motivated-not by a concern that the longstanding systemic injustices that plague the United States are enabled and aggravated by deep and pernicious social norms-but by a singular and simple purpose: to find new and innovative ways to feel "insulted."

In short, just as Zeno worried, Irvine opts to "pick out and mention" everything that is wrong with contemporary activism, but to "suppress the good things without giving them a thought." He allows the imprudent behavior of a misguided minority of activists-behavior which otherwise very much deserves to be criticized-to completely overshadow and eclipse the efforts of those who are working seriously and virtuously to bring Justice to the world. This approach is incomplete, reactive, and cavalier, and it is doubly problematic in a talk that explicitly purports to give marginalized people advice on how best to cope with oppression and hate speech.

Pigliucci, meanwhile, also strongly rejects what he sees as the general thrust of student activism with regard to trigger warnings. But he takes care to acknowledge the legitimate concerns, where they exist, that motivate the various voices involved in the controversy. Faculty have a human and professional duty, he says, "to be sensitive, rather than dismissive, to students' concerns." The result is not just a presentation that is less likely to offend, but one that comes across as better researched, commonsensical, and highly persuasive. These are the fruits of charity.

No doubt, Irvine only meant to use a few vicious behaviors by some college students as an illustrative example for his ideas. I'm sure that Irvine does believe that Justice is important (even if he chooses not to emphasize it for fear of exacerbating existing abuses in the activist community). Instead, however, his contribution to Stoicon gave a strong impression that modern Stoicism is indifferent or even hostile to the social concerns of historically marginalized groups and minorities-such as women, people of color, and LGBTs. Between his deafening silence on the moral imperative to Justice and his uncharitable characterization of activist's concerns, his presentation lends credence to the erroneous idea that because Stoics believe that "true freedom is internal freedom," they also believe "the external sort does not really matter."

The Alienating Effect on Minorities

As Irvine delivered his pithy summary of campus activism, the predominantly white male audience laughed heartily-oblivious, it seems, to the sensitivity of the subject.

In the meantime, my wife-a black, female graduate student who is probably better educated in the scientific literature on microaggressions than both Irvine and 90% of the Stoicon audience-was having a very different social experience. She had come along to New York as a favor to me, to see what this philosophy is that I've become so interested in lately, and to learn about how it relates to Cognitive-Behavioral Therapy and REBT. But in that moment, she became acutely aware of one simple fact: it did not appear that ethnic minorities or their distinctive concerns are welcome or wanted, much less understood, in the modern Stoic community. "Alienating" is perhaps too weak a word to describe how she experienced Stoicon.

Stoicism is remarkable among the world's major religio-philosophical traditions for its history of including the voices not just of emperors and wealthy statesmen but also of people with physical disabilities, mental illness, and chronic pain, victims of torture and PTSD, and prisoners serving life sentences. But when marginalized people encounter Stoicism today, do they come away believing that Stoicism has something to offer them? Or do they come away with the impression-right or wrong-that Stoicism is just one more system created by privileged people who are out of touch with the severity of the world's fixable injustices?

If people find modern Stoicism's advice for victims of injustice off-putting, it may have more to do with the choices we make about how to go about presenting that advice than with what the ancients have said. Being resilient to insults and being an active agent for Justice are not inimical objectives, and while I accept Irvine's call to the former, I would caution him that he has gone too far in his neglect of the latter.

Stoics for Justice

Stoicism is not a political theory. I agree with Pigliucci when he says that demanding a specific social vision from our school is a "category mistake." To the contrary, he says that "one can be a Stoic conservative or progressive, as well as a Stoic atheist or theist. But as long as we all practice virtue and attempt to become better people, we will be more likely to engage in constructive dialogue over what and how to change society for the better."

I believe that Stoicism can do amazing things in the world of politics and philanthropy if we create a space for those "constructive dialogues" to take place-especially if those dialogues are rooted in Zeno's principle of charity, and if they implement the Socratic model, in which we "stop at point after point, and make out what each person is willing to admit and what he denies" (Cicero, De Finibus , 2.3).

Moreover, I strongly suspect that the Stoic emphasis on the four cardinal virtues offers a uniquely powerful antidote to the pervasive miscommunication, polarization, and rancor that seemingly attend all political arguments. A Stoic is someone who cares about personal resilience and Temperance, but who also cares deeply about Justice. If we present ourselves this way, the world should never have reason to be confused on this point, or to doubt our support for both social justice (whatever exactly that means) and personal virtue. Our school teaches that virtue is one, after all, and that if we separate it into pieces, we destroy it.

In my opinion, Stoicon left something to be desired when it comes to getting these values across (notwithstanding Christopher Gill's excellent and helpful presentation on the history of Stoic activism). But the conversations at Stoicon were neither the first nor the last word on the matter.

That is why, starting now, some of us are coming together to form a Facebook group called " Stoics for Justice ," as a space to push Stoic philanthropy forward and to find ways of working together to pursue the "common benefit" (as Marcus liked to say). Whether you prefer radical activism aimed at disrupting oppressive power structures, or whether you see your role in the world as focused on community building, education, and hands-on philanthropy-or, yes, even therapeutic training in becoming resilient to insults-you should be able to find a role to play in any hypothetical Stoic-led movement for Justice and Benevolence.

Come join us at Stoics for Justice and let us know how you think we might move Stoic philanthropy forward on the issues you care about most!

Thank you to Kristen de K., John Martin, Charmika Stewart, and Arianna Scott for their very helpful feedback on earlier versions of this article.

Eric "Siggy" Scott writes the blog Euthyphroria . He is interested in moral practice as a way of life, and in how secular and religious people can find common ethical ground (a question which Socrates raised in Plato's Euthyphro ). In real life, he is a PhD student in computer science at George Mason University, where he does research on machine learning and evolutionary algorithms.

[Dec 26, 2016] Stoicism A QuickStart Guide To Stoic Philosophy, Wisdom, Wealth, Happiness, and Fulfillment! - Kindle edition by Marcus Colema

Dec 26, 2016 | www.amazon.com
By Naila B McKenzie on November 11, 2016 Format: Kindle Edition
I reflected on life after reading this

" My thoughts after reading this book: we do not know what the future holds and we have to accept the fact that life is full of surprises whether bad or good, we have to face them. Life is short so we better make every moment count. We have to be steadfast, strong and in control of ourselves. And finally, we are often not satisfied with what life has to offer because we always let our emotions dominate us rather than seeing the logic behind every situation. I know it will take time for me to internalize all of these, but it makes sense to me now why most stoics lead a happier life than most of us.

5 stars Excellent guide to stoicism! By Athea Howard on November 1, 2016 Format: Kindle Edition | Verified Purchase This is a very readable, easily understood book; a short guide to the philosophy of stoicism. The author gives a history of this philosophy, some good suggestions of practical uses of stoicism, and ends with how he personally practices stoicism. I have to conclude that stoicism has a great deal to contribute to a psychologically balanced, happy attitude. It makes us aware of how we often sabotage ourselves by negative or unrealistic thinking.

[Dec 26, 2016] Amazon.com Stoicism Today Selected Writings (Volume 1) (9781502401922) Patrick Ussher Books

Dec 26, 2016 | www.amazon.com
By Karl Janssen on July 20, 2015 Format: Paperback Verified Purchase
Applying ancient philosophy to modern life

" Stoicism is an ancient school of philosophy founded in Athens in the 3rd century BC. It is a practical philosophy, intended as a guide for how to live one's life. The Stoics stressed that we have no control over what happens in our lives, only control over our perceptions. They advocated living one's life in accordance with nature (not "nature" as in grass and trees, but "nature" as in the order of the universe). By concentrating one's thoughts and choices on what is good and virtuous, and disregarding the "indifferent" distractions of everyday life, one can avoid negative emotions like fear, anger, grief, and frustration, and live a life of happiness and tranquility.

In recent years, there has been a burgeoning resurgence in Stoicism, with modern writers producing manuals on how to apply Stoic principles to life in today's world, such as William B. Irvine's A Guide to the Good Life. Along similar lines, Stoicism Today is a blog published out of the University of Exeter in England, edited and largely written by a team of British philosophers. This 2014 book, edited by Patrick Ussher, is the first volume of writings reprinted from the blog. 36 articles are included in the collection, covering a mixed bag of Stoic-related topics.

The collection starts out strong with essays summarizing and explaining the core concepts of Epictetus, Marcus Aurelius, and Seneca. These ancient Roman writers are the most prominent Stoics whose teachings survive today. The 21st-century writers clarify the ancient Stoic precepts and discuss their applicability to modern life. Though the bloggers hold PhDs in philosophy and command a thorough understanding of their subject, they do a great job of expressing these complex concepts in language that is accessible to the general reader, without dumbing down the subject matter.

While the first half of the book provides a good, broad education on Stoicism, the second half covers a diverse assortment of topics and perspectives. A section called "Life Stories" consists of accounts by people of various walks of life on how they use Stoicism in their daily lives and work, including a lawyer, a doctor, and a woman who suffered a traumatic brain injury. The most fascinating and inspiring story is that of Sam Sullivan, a quadriplegic who became mayor of Vancouver. Next is a section on how Stoicism can be applied to parenthood and the education of children. This is followed by a section on Stoicism and psychotherapy which will mostly appeal to psychiatric professionals, as it will likely be over the head of most general readers. Three articles deal with the concept of Stoic "mindfulness" and its relation or lack of relation to Buddhism. Finally, the book falls apart somewhat with its final section on Stoicism in popular culture. It includes an excerpt from a Stoicism-infused novel about prison inmates which is OK, but also a sample chapter from a horrible science fiction novel. The book's final selection is a pretty good examination of the portrayal of Stoicism in the Star Trek television series.

This collection by its very nature is a hodgepodge, and the selections vary greatly in quality as well as subject matter. The core team of philosophers are good writers for the most part, but the ensemble cast of guest bloggers is hit and miss. Nevertheless, if you've read all the Stoic classics and are looking for further advice on how to put Stoicism into practice, you're bound to find something here that will interest you. Had A Calming Effect By Elizabeth Echavarria on March 24, 2016 Format: Kindle Edition | Verified Purchase After getting through some of the stories I was able to gain some perspective on what it means to be stoic and utilize some stoic principles in my own life.

4.0 out of 5 stars STOICISM: Shift your values to what is truly good, beautiful and virtuous By Ernest Kienzle on December 27, 2014 Format: Paperback | Verified Purchase STOICISM TODAY is the Western counterpart to Buddhism. 2014, the year of the Stoic, heralds the awakening of a new golden age of practical, living philosophy led by Stoic physics, logic, and ethics. Actually, Stoicism was never asleep. Read articles in this book by modern philosophers, therapists, and professionals who reveal the link between ancient stoic techniques and modern challenges in the world we live in.

[Dec 26, 2016] Insult Pacifism A Reply to Eric O. Scott

Notable quotes:
"... In my recent remarks, I was passing on the advice I think the ancient Stoics would offer to modern targets of insults... The Stoics' advice: shrug or, better still, laugh them off. This advice is a consequence of the Stoic insistence that we divide the things in our life into two categories: those we can control and those we can't. We can't control whether other people insult us. We can very much control, though, how we respond to those insults, and in particular, we can respond in a way that minimizes the harm they do us. College students would do well to give this Stoic strategy a try. ..."
"... When we examine the lives of Stoics, we find that many of them were targets of injustice. Musonius Rufus, for example, was exiled to the desolate island of Gyaros, but he did not spend his time there complaining about the unfairness of it all. This is in large part because he refused to play the role of victim, a refusal that doubtless made his exile far more endurable than it otherwise would have been. More generally, when we look at the Stoics, we cannot find a "victim" among them-and if we could, Stoicism probably wouldn't have remained a viable philosophy of life for two thousand years. ..."
"... is professor of philosophy at Wright State University in Dayton, Ohio, and the author of ..."
"... For more on his life and other writings, visit his author website . ..."
Dec 26, 2016 | exeter.ac.uk

Let me begin by thanking Eric O. Scott for taking the time to respond to my Oxford University Press blog and my STOICON talk (I start talking at 58:00; sorry about the poor quality of the audio!). As I like to tell my students, if what we seek is the truth, we have the most to gain from those who challenge our views, since they will be the quickest to discover our mistakes.

The Stoics were very much interested in transforming themselves into better human beings. As part of their program of self-transformation, they attempted to develop their own character. Such efforts might have included doing things that they were afraid of doing, simply as an exercise in overcoming fear. Or it might have included intentionally interacting with difficult people, simply so they could practice preventing anger from arising within them.

But besides being concerned with their own well being, Stoics felt a social duty to make their world a better place. This could be done, they knew, by introducing other people to Stoicism, but it could also involve helping extract non-Stoics from the trouble they got themselves into as a result of their misguided views regarding what in life is valuable. Marcus Aurelius is a prime example of a Stoic who took his social duty very seriously, but despite being the emperor, he failed to bring about a just society. The Rome that he ruled still allowed or even encouraged slavery and acts of human cruelty.

It is easy for us to judge Marcus harshly, but before we do so, we should realize that future generations are likely to do the same to us. Eric Scott says we live in an unjust world. I agree entirely, but I think I have a different perception of that injustice than he does. It is this difference in perception, which I will now explain, that makes me critical of some of the campus protests that have recently been in the news.

... ... ...

In my recent remarks, I was passing on the advice I think the ancient Stoics would offer to modern targets of insults... The Stoics' advice: shrug or, better still, laugh them off. This advice is a consequence of the Stoic insistence that we divide the things in our life into two categories: those we can control and those we can't. We can't control whether other people insult us. We can very much control, though, how we respond to those insults, and in particular, we can respond in a way that minimizes the harm they do us. College students would do well to give this Stoic strategy a try.

I was surprised, by the way, that Scott would refer to those who experience injustice as "victims." They are certainly targets , but the Stoics would tell us that they are victims only if they choose to see themselves as such. They would add that if you choose to play the role of victim, your suffering will be intensified.

When we examine the lives of Stoics, we find that many of them were targets of injustice. Musonius Rufus, for example, was exiled to the desolate island of Gyaros, but he did not spend his time there complaining about the unfairness of it all. This is in large part because he refused to play the role of victim, a refusal that doubtless made his exile far more endurable than it otherwise would have been. More generally, when we look at the Stoics, we cannot find a "victim" among them-and if we could, Stoicism probably wouldn't have remained a viable philosophy of life for two thousand years.

... ... ...

William B. Irvine is professor of philosophy at Wright State University in Dayton, Ohio, and the author of A Guide to the Good Life: The Ancient Art of Stoic Joy and A Slap in the Face: Why Insults Hurt And Why They Shouldn't . For more on his life and other writings, visit his author website .

  1. Alan Pitman 19th Nov, 2016 at 11:32

    I cannot help but agree. Identity politics and political correctness diminishes agency and casts entire groups as "victims" – this strikes me as in opposition to the stoic call to individuality and self examination, and as William argues, formulating strategies for living that sometimes reveal harsh truths.

    As William also points out there is much logical incoherence and moral inconsistency at the heart of political correctness. I would draw your attention to Professor Jordan Peterson, a Canadian academic and Psychologist currently challenging key tenants of campus style social justice and at risk of losing his position at the University of Toronto.

    1. O.D. 19th Nov, 2016 at 14:31

      Outstanding post! "Political Correctness" and "Social Justice" are only concerned with silencing debate, and they need to be confronted wherever and whenever they try and push their misguided beliefs.

  1. Duff 19th Nov, 2016 at 20:01

    When a friend who is not a Stoic is experiencing external challenges such as the loss of a loved one or debilitating physical illness, I could respond in one of two ways:

    1) I could tell this person that their hardship is illusory for it is outside of the sphere of choice, and thus they are being irrational by causing themselves needless suffering. I could talk about how they would be better served by hardening themselves against all externals, and about how people in developing nations have it far worse so their concerns are unimportant. I could talk about how they are exemplifying a politically correct culture of crybullies that is just attention seeking and needs to get over it.

    2) Or instead I could listen to their story, I could offer my sympathy and condolences. I could empathize by imagining what it would be like to be in their position. I could seek to understand why this person is so affected by this event. And then perhaps after all that, I could ask them what is in their control to do now, or perhaps make a suggestion for how they might respond wisely and effectively to the external event.

    Which option is more virtuous? I would propose the latter is the clear winner for a practicing Stoic.

    Even if you feel like your friend is upset over nothing - for as Epictetus recommended to say to all externals, "this is nothing to me" - it is still more virtuous to empathize and at least *pretend* for the moment that externals really do cause people to feel bad.

    Then after some time, perhaps it would be useful and wise to offer a perspective that could help your friend to become more resourceful and respond more effectively.

    Even you completely disagree with a particular activist or an entire activist movement, justice is still one of the four central virtues of Stoicism. Seneca frequently talked in his letters about being human to people, even when they suffer "needlessly" from externals. Marcus Aurelius talked about loving all people as our brother (or sister), even those annoying people who bother you every day because they don't know good from evil.

    When we ignore justice, or diminish the experiences of those who suffer from unjust systems, we lose out on an opportunity to practice virtue with practical wisdom. I think the Stoic Sage is clearly the person who listens and empathizes first, and that's the type of person I aim to become.

  1. Palamedes 26th Nov, 2016 at 01:05

    Review your premiss: The concept of a 'just' of 'fair' world is very modern. The Spartans trained their youth that the world was NOT fair or just. No Stoic ever claimed our world to be ei