Obamunism! Unemployment Claims Jump

First time claims for unemployment came in at 428,000 against the “experts” expectation of 410,000; continuing claims are at 3,726,000 against an expectation of 3,700,000.  What I really want to know – in both first time and continuing claims, the expectation was that they would decline.  Who expected this?  Why?  What bit of information out there would lead any financial prognosticator to expect a decline in unemployment?

I think we’ve simply got a bunch of idiots – public and private sector – running the economy.  People who don’t know how things are made, mined and grown and can only predict things based upon assumptions on borrowed and printed money.  For crying out loud, things are lousy out there…you’d at least expect some caution and have the prediction be for things to remain as lousy as they were last week, not get better.

Aside from that, we are seeing more and more indicators of a double dip recession here in the United States while Europe shows ever more signs of financial implosion (day by day there is a new rumor floated of some miracle money to come through to bail out Europe…eventually, they’ll run out of rumors).  Obama’s jobs bill will do nothing to get us back to work but even if we manage to make things improve, the coming crash of Europe will be a huge hit to our economy.  Only a complete re-working of our economic life to make all taxation and regulation geared towards wealth creation will get us permanently out of this mess…and that can’t happen as long as any liberal, anywhere, has a say in what goes on.

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20 thoughts on “Obamunism! Unemployment Claims Jump

  1. David

    “Only a complete re-working of our economic life to make all taxation and regulation geared towards wealth creation will get us permanently out of this mess…and that can’t happen as long as any liberal, anywhere, has a say in what goes on.”

    Mark, there are probably a lot of liberals you can agree with. They aren’t happy with the economy or Obama’s performance either. There’s significant overlap in values between the two parties. They’re just separated by cleverly chosen wedge issues that make people think they’re making a choice when they vote for one party over another.

    1. Mark Edward Noonan Post author

      David,

      Yet to come across a single liberal who understands that our problem is one of production…we simply do not produce as much wealth as is necessary to service/pay down our debt and allow a rising amount of disposable income over time. Borrowing or printing money – even if in some circumstances Keynesianism can be correct – is poison right now. We need a crash course not in hiring teachers and repairing bridges but in making, mining and growing things. This means, fundamentally, tax reform to ensure that the tax system does not in any way, shape or form hinder capital formation and investment while at the same time reforming our regulatory system to clear the blockages which prevent someone from opening/expanding a factory, mine or farm.

      I realize that mining copper out of the ground, growing corn in a field and manufacturing shoes isn’t as sexy as “green jobs” or computer programming, but it is what we need to do if we are to recover.

      1. cory

        There are things we can do to try to incentivize employing people from this country (we should probably get rid of a corporate tax altogether and shift the burden onto capital gains and individual income tax rates, for instance), but one of the largest factors working against the solution your proposing is our increasing number of free trade agreements. The only way to get manufacturing jobs back from Southeast Asia is to make it cost less to produce here than to produce and ship from there. That’s really, really hard to do with an open market when they work for so much less than our workers that they couldn’t afford to eat much less have a place to live in this country. And even they are starting to lose outsourced jobs from us to other countries because their wages have gone up too much.

        What is your solution? Do you expect business owners to pay more for their production out of the goodness of their hearts, or do you have another idea on how we can compete with 12 year olds working 16 hour days for less pay in a day our cheapest workers make in half an hour?

      2. David

        Mark,

        I completely agree that deindustrialization and subsequent financialization of our economy has been absolutely devastating. I’m all for bringing back the manufacturing sector, and I agree that you can’t eat software. You’d probably consider me a liberal as well.

        I have a little bit of trouble with the idea that taxes are holding us back though. Corporations are sitting on record levels of cash and not spending it to make more stuff. Is that a tax issue or a demand issue?

      3. Mark Edward Noonan Post author

        Cory,

        Labor costs are far less in slave-labor States like China, but when you factor in the fact that American workers are vastly more productive per hour worked (it is hard to fully quantify, but a conservative estimate would be that it takes about 5 Chinese workers to produce in an hour what 1 American worker can make) and the fact that things made in China have to be shipped a very long way, I believe that the real reason so many of our factories are shipped to China is because of the hostile tax and regulatory environment of the United States. In China, as long as you bribe the right aparatchiks you can do whatever you please…health and safety concerns be darned. In the United States, if your factory even looks cross eyed at an allegedly endangered guppy you’re in for lawsuits and fines.

        Additionally, I don’t favor free trade but, instead, what I call “Freedom Trade” – free trade with any other free nation out there, complete embargo of all un-free nations.

      4. Mark Edward Noonan Post author

        David,

        At least a trillion dollars held by US corporations are parked overseas because to repatriate it would require a huge tax hit…just eliminating the tax on repatriated profits would bring in a gigantic sum of money…and money that isn’t borrowed or printed. The US corporate tax does burden our corporations more than foreign corporate taxes burden foreign firms. Major tax reform is needed – as for me, I’d even go as far as eliminating the corporate tax completely as, in the end, all corporate taxes are eventually paid by the worker and consumer in the form of higher prices, lower wages or a combination of the two…but there probably won’t be the political ability to do that any time soon.

        It is time for our tax code to make the United States our “most favored nation”…whatever the burden is with our competitors, our tax burden should be 10% less…

      5. Cory

        I’m dubious that the 5:1 ratio is actually measuring like positions (I’d have to see the source of the figure to confirm), but even if I do give it to you, I think you underestimate the wage disparity. At a quick glance, I find sources indicating that the monthly wage at a Foxconn factory is about $130 US dollars. Even if you spread that over a 28 day February, you still only get to about $.75 an hour assuming nice 8 hour work days (which are highly unlikely). Five times that is still $3.75 an hour. That’s still less than half of minimum wage here. That cost difference very quickly subsumes considerations like shipping.

        I’m not saying that it can’t be done, or that there aren’t hostile regulations compounding the problem. But some of the regulations we are talking about we can’t really afford to drop even if China is. Chinese factories expose workers and water sources to dangerous levels of fun things like heavy metals, don’t take basic safety precautions to prevent workers from losing fingers and limbs, andput children to work when their age can still be measured with a single digit.

        So even if we touch all the regulations and taxes that we reasonably can to help, we’ll still be at a disadvantage. They are probably all good things to do, but the fact that we’re focusing on them is indicative of the whole debate being one of he wedge issues David was talking about. It’s like when we talk about government spending cuts and talk all day about discretionary spending when we need to be talking meaningfully about either medicaid, medicare, military spending, or revenue increases: the politicians want to seem wildly divided so they quibble about the little things but they are too scared to touch the things that really matter. So yes, there is progress to be made in the areas you are describing, but I don’t think it is rational to fixate on cutting a payroll tax here and removing a sheet of paperwork there when there are much bigger, systemic problems causing our trade deficits.

        And I’ll also throw out there that I also agree, as a self-described liberal, that getting our manufacturing jobs back is vital. I’m more apt to complain about people in the financial and investment portions of our economy than programmers and “green jobs” (you can at least sell software to people in other countries and replace oil and coal imports with solar power), but we really do fundamentally agree on the issue.

      6. RetiredSpook

        we simply do not produce as much wealth as is necessary to service/pay down our debt and allow a rising amount of disposable income over time.

        Bingo, Mark! That is it in a nutshell, and the U.S. isn’t the only country facing that same dilemma. We’ll see how it plays out, but I wouldn’t bet that the global economy will recover without a great many people and institutions suffering a great deal of pain.

      7. Mark Edward Noonan Post author

        Cory,

        It is, as I said, hard to quantify…China doesn’t have one minimum wage but allows various regions to set it…and you can bet that a huge amount of corruption gets worked in to it. According to a Wikipedia article, China’s minimum wages run from $122 to $200 a month. The United States is $1,257.00, or about 10 times the lowest Chinese minimum wage. But, of course, the Chinese workers who produce for the US market aren’t paid the minimum wage…they are, it is to be assumed, among the highest paid wage-earners in China. It is extraordinarily hard to find solid data on China’s per capital productivity…but to give you an idea, an American produces about $59 in GDP for each hour worked…a German $53…a Mexican $20; from what I can find, China’s productivity is far less, per capita, than Mexico’s.

        There is a genuine labor-cost advantage in China…but when you factor in productivity and transportation costs, it becomes small; and it would reverse and become an American advantage if our tax and regulatory system was set up to encourage domestic production. Remember, China has had cheap labor compared to the United States from Day One of the United States…it is only become utilized as a labor pool over the past 25 years…as the tax and regulatory burden on US business has grown. Fix that, and our factories will come home from China.

      8. Cory

        Comparing mean GDP produced per worker is also completely pointless unless you compare like positions, and even if you do, it isn’t really fair. Chinese factories are more likely to replace capital investments in equipment with more paid workers because labor is less expensive. But at the same time, that means the overall cost of running a factory in China is lowered in a bunch of indirect ways by lower labor costs as well. On top of that, these numbers have already been inflated over time as more people outsource to China, but that means we’re seeing more and more factories pop up in other countries where labor wages are still even lower. There are a lot of poor countries to exploit before the problem fixes itself.

        And I there are a whole bunch of huge reasons beyond local regulation as to why outsourcing to China was not an issue until the last 25 years. Farther back it was due to lack of solid communication and transportation halfway around the world. More recently, it doesn’t even make sense to suggest we even could have shipped labor there during say the reign of Mao Zedong. Do you really think that any changes we’ve made on our side could possibly be more important to the issue than the massive economic reform we saw there in the 1980s (the beginning of your 25 year timeline)? I know it doesn’t fit your neat little narrative, but business regulations (aside from opening trade up) in the US isn’t even in the same ballpark. It isn’t even in the same game.

      9. Mark Edward Noonan Post author

        Cory,

        I was thinking not just of recent times, but of all times…we imported Chinese labor to help build the western railroads because it was so cheap. We could easily have built steel mills in China…and relative shipping costs would not have been much different from today (still by ship across the ocean, then by rail around the United States). I concede that China’s labor is cheaper than ours – but it is far less productive per man-hour and when you add that to transportation costs, the advantage becomes small…and it would reverse if we didn’t lay as many mind bogglingly stupid restrictions on our own productivity. Its not a matter of the Chinese factory being allowed to dump poison in to Chinese rivers while American factories cannot…we have OSHA and EEOC provisions which require massive man-hours to comply with but do nothing to actually help the American worker…they are a brute cost of doing business which provide no tangible benefit. And that is just OSHA and EEOC…every agency of the government piles on, and where the federal government allows a little room, State and local governments jump in.

        I assert, quit boldly, that we can make a better hammer for less cost than a comparable hammer made in China and shipped to the United States…this is my assertion and I find no evidence anywhere to dispute it.

      10. Cory

        I’ll be the among the first to say that organizations like OSHA have some amazingly stupid safety requirements, but say they don’t provide any tangible benefit is a lie. To continue on with the OSHA example, since OSHA has mandated 100% tie off for climbing cell towers, deaths by tower climbers have dropped off dramatically. Just because they make us waste a bunch of time listing every chemical in the building doesn’t mean that their core function can’t produce some positive result.

        And you keep talking about shipping costs from China as if they are a meaningful number. As near as I can tell from researching this, the cost of shipping say an iPad 2 from China via over sea is less than $1 a unit (shipping a 40′ container would cost about $5000, and each container can store more than 2200 cubic feet worth of goods). For comparison, it takes about $325 to manufacture that same iPad. That’s a total cost increase of about a third of a percent. Again, it doesn’t even make the scoreboard.

      11. Cory

        Bulk sea shipping is going to be one of the last places we’ll feel it. The reason the cost is so low is that you can move so much freight with so little fuel. Most of even that <$1 shipping cost on the iPad2 that I came up with would go to cover paying the ship's crew and the cost of building/maintaining the ship. Costs go up significantly for the land-based shipping portions of the distribution, but products made in this country still have to get moved around by trucks, so that isn't a problem unique to outsourced manufacturing.

        By the time we get to the point where it would matter, we'll have much worse problems to worry about than outsourcing if we haven't invested in alternatives to fossil fuel.

  2. cory

    You probably should not try to discuss numbers that you don’t even understand. The tabulation of expected unemployment claims aren’t based on a bunch of people’s feeling about how the economy is doing in a particular week. Talking about the state of the economy on a weekly basis hardly even makes sense (short of something like a stock market or bank run event).

    Instead, they are just adding up predicted and known layoffs and subtracting predicted and known hiring events. For instance, when McDonalds hired a bunch of new workers all on one day earlier this year, it would have made them decrease their predicted unemployment claims by the same amount (or actually some formula generated numbers based on the hiring numbers to be more specific).

    This week, there were big unemployment announcements from Cisco and Bank of America that weren’t necessarily accounted for, so the predictions were somewhat off. Nobody was trying to make a statement about whether our economy was good, bad, or indifferent. You are reading too much into it.

    1. neocon1

      corky

      cory September 16, 2011 at 12:44 am #

      You probably should not try to discuss numbers that you don’t even understand.

      Bwwwwaaaaaaaa ha ha ha ha
      riiiight stooge.

      1. neocon1

        meanwhile Ochimpy has all but closed down drilling, the NLRB is screwing NC and Boeing, The EPA is running wild and people are taking jobs elsewhere why?

      2. watsonredux

        I see NeoClown’s mommy let him on the computer this morning, and he’s lying as usual. “All but closed down drilling”? Hardly. Gulf of Mexico drilling is back to normal levels. About 1.1 million barrels of oil were produced in the gulf in 2008. This year it’s 1.4 million barrels. Projections point to a peak of 1.6 million barrels by 2013. “All but closed down”? Hardly.

        Maybe you should not try to discuss numbers you don’t even understand, Clown.

      3. Bodie

        “Maybe you should not try to discuss numbers you don’t even understand, Clown.”

        But then he can’t discuss numbers at all.

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