Fed Chair Says 4 to 5 Years To “Normal” Unemployment

Ben Bernanke says it could be four or five years before the U.S. unemployment rate returns to a “more normal” 5-6 percent range. But when it does, the Federal Reserve chairman worries, the nation could wind up with two sharply divided classes based on education.

In a rare interview that aired last night on “60 Minutes,” Bernanke said, “two societies” are developing, “and it’s based very much, I think, on educational differences …  If you’re a college graduate, unemployment is five percent. If you’re a high school graduate, it’s 10 percent or more. It’s a very big difference. It leads to an unequal society and a society which doesn’t have the cohesion that we’d like to see. ”

His other concern, he told interviewer Scott Pelley, is how long it’s taking for even skilled people to find jobs, once they are unemployed.

“The other aspect of the unemployment rate that really concerns me is that more than 40 percent of the unemployed have been unemployed for six months or more. And that’s unusually high. And people who are unemployed for such a long time, their skills erode. Their attachment to the labor force diminishes and it may be a very, very long time before they find themselves back in a normal working position.”

From the start of the recession in December 2007 and the end of last year, Bernanke said 8.5 million jobs were lost. Though a million have returned, “At the rate we’re going, it could be four, five years before we are back to a more normal unemployment rate. Somewhere in the vicinity of say five or six percent. ”

(Job counts from the U.S. Bureau of Labor Statistics peaked in December 2007 when 137.95 million people were employed, and December 2009 when 129.588 million had jobs. )

The 60 Minutes interview was conducted before Friday’s job numbers from the BLS were released. That report, which was counter to the expectations of many economists, as well as to reports from private sector groups, said only some 39,000 jobs were added in November.

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While disappointing, the BLS data is imperfect and the initial numbers are typically revised in the next month’s release. So it may be that when December’s report is out (on Jan. 7th), we could see an increase in the job numbers.

The Conference Board today said its Economic Trends Index improved in November and is now at 99.0, up from the revised 97.6 in October. The index is an aggregate of eight labor-market indicators, including temp job hiring, unemployment claims, industrial production, and open jobs.

While the improving index doesn’t mean a quick turnaround in jobs, it points in the direction of moderate improvement. Said Gad Levanon, associate director, macroeconomic research, at The Conference Board,  “The disappointing employment numbers released last Friday are at odds with most of the leading indicators included in the Employment Trends Index. While we are not expecting economic activity or employment to grow rapidly anytime soon, we do expect employment to continue to moderately increase, following the trend of recent months.”

Still, Bernanke said during the interview, the recovery is so fragile it may not be self-sustaining. “It’s very close to the border,” he said. “It takes about two and a half percent growth just to keep unemployment stable. And that’s about what we’re getting.”

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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38 Comments on “Fed Chair Says 4 to 5 Years To “Normal” Unemployment

  1. I think there are going to be a number of trends working here over the next few years:

    1) You’re going to see huge numbers of highly-indebted, risk-averse, and anxious folks who are going to be quite desperate to get ANY kind of work, which will lead to a very significant number of mal-employed people (aka: folks in “sucky” jobs which are all they can get), who will be willing to go through all sorts of hoops/ take all sorts of crap for the golden dream of a stable, well-paid, benefited, fulltime position.

    2 ) Lots of hardworking people who played by the rules for years, did the best they could, and got the shaft. Think: blue-collar workers, men (vis-à-vis women, those who don’t have college degrees, older people, and minorities. The work a lot of them do (or did) may take a really long time (if ever) to recover. We may see a continuation of the trend we saw in 1980 (Reagan Democrats) and this year (Tea Party Republicans)- it will be relatively easy for the “Powers That Be” to divert the attention/anger/frustration of the first four of these groups (blue-collar workers, men, those who don’t have college degrees, older people) away from the actual culprits (the PTB) toward the last of these (minorities). It’s possible we may see the growth of a substantially larger “informal economy” (black market, grey market).

    3) Millions of Baby Boomers who won’t go away: middle-aged and older folks have seen their retirement savings and home equity evaporate, so they can’t afford to retire. That will put a serious crimp in the demand for new workers in many categories.

    Paradoxically, it may become increasingly difficult for recruiters to hire people, as employers may continue to become increasingly demanding in what they want and fighting over the handful of superstars while large numbers of solid, experienced, and capable candidates are left waiting in the wings.

    What do you think?

    Keith
    keithsrj@sbcglobal.net

  2. Keith, any number of events could change that script. we remain a very, very affluent society, but one breaking into two social classes. For the upper, life will probably be OK and recruiters will be kept busy – it takes a big investment to make a new doctor or engineer and they will be in demand. And there will be demand for people who can climb ladders and care for old people too.

    But until there are global trade and wage rules to create reasonably level playing fields, there will be large imbalances and a disturbing loss of value of too many American lives.

    OTH, electric cars that drive themselves and advanced genetic medicine will reorder our lives…..or the lives of our children.

  3. “But until there are global trade and wage rules to create reasonably level playing fields, there will be large imbalances and a disturbing loss of value of too many American lives.” — Marty, this is 100% correct, IMNSHO. 30 years ago, all employment competition was local. Today, it’s global: you vs 6 billion. Until we implement trade policy to equalize for slave wages and no pollution controls, etc., we will continue to the downward spiral.

  4. Robert we are fellow travelers- that’s the number one issue. Plus of course, too low top marginal tax rates in our economy and too much defense spending. If we bear the costs of empire, we need to take the benefits too. Bush 41 was the last President to understand that.

  5. Marty: Spot on. The conservative movement has been perverted from a limited govt/balanced budget movement to a “low taxes” movement over the last 30 years, and is now harmful. The Low Tax fanatics are unable to explain why post WWII we had huge growth with 90% top tax rates and no stock options. It is absurdly low marginal tax rates and stock option games that have allowed assisted the executive class in exploiting the powerless low level worker class.

  6. I agree with both Martin and Robert. I also think it is in the interest of the PTB to keep things essentially as they are- as they tend to reap most of the rewards and face few of the penalties for unregulated globalization. In the meantime people in prosperous countries should try to avoid/get out of jobs which are susceptible to no-sourcing (elimination), through-sourcing (automation), or outsourcing (being sent away). Thus:

    Occupations with the Most Job Openings: Graduate Degree
    Occupation Total Job Openings 2008–2018
    Postsecondary teachers 553,000
    Doctors and surgeons 261,000
    Lawyers 240,000
    Clergy 218,000
    Pharmacists 106,000
    Educational, vocational, and school counselors 94,000
    Physical therapists 79,000
    Medical scientists, except epidemiologists 66,000
    Mental health and substance abuse social workers 61,000
    Instructional coordinators 61,000

    Occupations with the Most Job Openings: Bachelor’s Degree
    Occupation Total Job Openings 2008–2018
    Elementary school teachers, except special education 597,000
    Accountants and auditors 498,000
    Secondary school teachers, except special and vocational education 412,000
    Middle school teachers, except special and vocational education 251,000
    Computer systems analysts 223,000
    Computer software engineers, applications 218,000
    Network systems and data communications analysts 208,000
    Computer software engineers, systems software 153,000
    Construction managers 138,000
    Market research analysts 137,000

    Occupations with the Most Jobs Openings: Associate’s Degree or Postsecondary Vocational Award
    Occupation Total Job Openings 2008–2018
    Registered nurses 1,039,000
    Nursing aides, orderlies, and attendants 422,000
    Licensed practical and licensed vocational nurses 391,000
    Computer support specialists 235,000
    Hairdressers, hairstylists, and cosmetologists 220,000
    Automotive service technicians and mechanics 182,000
    Preschool teachers, except special education 178,000
    Insurance sales agents 153,000
    Heating, air conditioning, and refrigeration technicians 136,000
    Real estate sales agents 128,000

    Source: U.S. Bureau of Labor Statistics
    …………………………………

    It seems that with the exception of some of the SW/IT and accounting/auditing jobs, most of these positions are immune to N, T, O vulnerability.

    Cheers,

    Keith

  7. Keith great info there. Robert, lets not forget demonizing industrial unions, which create a strong middle class (see: Germany) and empowering public unions, which rent-seek as a reason for existing. But not only GOP- lots of dems have bought into the same stupid rationale that backs a “flat-tax”, namely that we all benefit equally from public investments.

    But a guy earning five million a year has benefited a lot more than a guy making $50K (even if the $50K guy is a government worker)- explain to me how you can make five million without major public investments in contracts, schools, roads, power systems, etc.

    The whole Ayn Rand scheme is bullshit to the core. A fair and effective division of labor is one of the engines of human happiness, and we have let it break down in America.

  8. Marty, amen to /all/ that. IMO, Henry Ford was the man who put America on the path to industrial greatness when he used his company’s productivity increases to pay his workers far more than he had to. That started a virtuous circle of higher wages/more demand. Today, you are a hero for forcing wages down, not up. Sick and sad.

  9. I reserve sick and sad for “looking forward, not backward”, but of course you are correct that a more affluent society in general is better for the (slighly less rich as a result) rich people who enable it. We will learn the hard way: the only way Americans really learn.

    That’s why the electric car will rise beyond anyone’s expectations- Bin Laden (still dead since 2002) well and truly killed the golden goose, even if they price gas a 79 cents a gallon.

  10. Thanks, Martin. I agree with you. The anti-union movement has done fair damage to the middle-class.

    IMHO the American people are remarkably resilient and creative when confronted with major in-your-face crises, as we did during the Depression and WWII. However, we have shown remarkably little ability to deal with chronic economic and social problems. Consequently, I don’t see much of a chance for significant structural improvement unless we suffer a major economic shock: instead, we’ll pass a watered-down, gutted, and toothless debt-reduction package which tinkers a little around the edges of things and slows the deterioration a bit. We get a snail’s-pace reduction in the UE, like a slightly better version of Japan in the ’90s. The PTB continue to prosper, and the lower down on the socio-economic ladder you are, the more your own prospects/fortunes decline. Finally, the Chinese gradually (so as not to cause a panic) start pulling away from the dollar and we turn into a super-Ireland having to be bailed out by the IMF.

    Hope I’m WAY too pessimistic and wrong….

    -kh

  11. I’m not sure I’ve read comments this chock-full of pretzel logic in a long time. I especially like the pigeon-holing of entire classes of Americans, off-handed allusions about unions being the core of “the middle-class”, and flat-tax advocates being discounted because we all wouldn’t “benefit equally from public investments”. Brilliant!

    Just exactly who are the “Powers That Be”? And what exactly are they “Be-ing”? And why don’t they “Be” somewhere else? Because apparently “they” have created quite a mess for “us”.

    It all looks so clear to me now.

  12. @Dave:
    Didn’t want to go all “Da Vinci Code” on you, Dave.
    There aren’t any formal “Powers That Be”. However, IMHO the wealthiest 2% of the population wields disproportionate and increasing political and economic influence at the expense of the other 98%- “it’s their country, we just live here”. Two major organizations working to further their interests include the Republican Party and Fox News. You may feel that unlimited and unchecked economic power is a good thing for us all- that the invincible “invisible hand” solves all problems with the best-possible solutions, or maybe you feel that “You’ve got yours, now everybody else get theirs through the sacred power of Positive Mental Attitude, the Entrepreneurial Spirit, and an Up-By-My-Bootstraps Approach” and that anybody who isn’t rich is a whiney loser at best entitled to charitable crumbs.” Well, I DON’T.

    Cheers,

    Keith

  13. @Dave:
    Didn’t want to go all “Da Vinci Code” on you, Dave.
    There aren’t any formal “Powers That Be”. However, IMHO the wealthiest 2% of the population wields disproportionate and increasing political and economic influence at the expense of the other 98%- “it’s their country, we just live here”. Two major organizations working to further their interests include the Republican Party and Fox News. You may feel that unlimited and unchecked economic power is a good thing for us all- that the invincible “invisible hand” solves all problems with the best-possible solutions, or maybe you feel that “You’ve got yours, now everybody else get theirs through the sacred power of Positive Mental Attitude, the Entrepreneurial Spirit, and an Up-By-My-Bootstraps Approach” and that anybody who isn’t rich is a whiney loser at best entitled to charitable crumbs.” Well I DON’T.

    Cheers,

    Keith

  14. Yea all that book learnin and fancy words just leads to pretzel logic and we all know that the true answers are the simple answers, right?

    Better if they are a few thousand years old, but simple will do.

    Except social mobility can be measured and described. More pretzel logic of course: Intergenerational Social Mobility across OECD Countries

    And a ten-year old understands that if you flat tax $20K at 10%, it drills a poor person, while someone making ten million a year still has nine-million dollars, and will suffer no real changes to quality of life for her and her family.

    The differing value of marginal utility for money at higher levels of income is why poor people play the lottery, but simple folk (not the elites who shop at Target) don’t worry about those kinds of abstract concepts- Flat Tax !

    Now, who could say that the benefits of public investments are shared equally when financial risk is socialized and profits are privatized ? After TARP, really ?

  15. Thanks for the additional clarification. At first I thought your logic was flawed, but now I understand that the “Powers That Be” are the wealthiest 2% of Americans and they’re all Republicans watching Fox News.

    I also understand that since we can measure and describe “intergenerational social mobility”, it will make it that much easier to regulate the “differing value of the marginal utility” of money.

    This, of course, is what that ten-year old must learn is the new definition of “fair”.

    Oh, and before I forget… nice article John. Has anyone commented on it yet?

  16. Well the article is about the fed chair, who appears to run our more and more centrally planned economy, so yea, it’s a political discussion.

    Yes, it’s incredibly easy to regulate the marginal utility of dollars with what we call “marginal tax rates”. When those rates were high for very high earners, we had a much better society going by most measures, including social mobility.

    No, nearly every ten-year old already knows what’s fair and what’s not- they have great sensors for that. Nobody here is pretending that every elite in America is a GOP or FOX trooper: only that class war is real, the majority of Americans are losing that war at the moment, and that one of our two major parties has decided to protect and promote the elite minority by operating as a parlimentary party in a presidential system. That’s why they all vote the same (as a block)on every issue- and being radicals populists, they can afford to.

    I think the public polling is clear- more than 75% dont want the Bush tax cuts extended to the top 2%, but it’s all just words that don’t mean anything anyway.

    So lets get this straight, and put away the pretzel logic. There is nothing wrong with America, and anything that may be wrong anyway is a result of markets that are not free enough and/or too much government (on every level). Nobody has any bad intent, and no groups have used maladapted levers in the politcal proceess to help themselves at anyone else’s cost. There, that was easy.

    After all, we live in best of all possible worlds.

  17. Thanks again, Martin….
    Something I heard today- too lazy to track down all the *details.. $1 spent on unemployment benefits creates $1.50 in value as it circulates through the economy as it is spent, but a $1 in a tax cut to the wealthiest (>$250k?) generates only $0.40, because it is largely saved. It also looks like studies indicate that tax cuts don’t create all that many * jobs……

    *But I have this.

    http://www.politico.com/news/stories/1210/46007.html
    Which tax cuts actually create jobs?
    22 Comments RSSEmailPrint

    A man looks over job postings at a job fair in Phoenix, Arizona. | AP Photo Close
    By HARRY J. HOLZER & EDWARD B. MONTGOMERY | 12/6/10 1:13 PM EST

    Friday’s employment report contained more grim news on jobs. Unemployment rose to nearly 10 percent, while one in six workers is underemployed. By most estimates, it will take another five years or more before unemployment dips below 6 percent.

    The human costs are enormous for young and less-educated workers, and for the long-term unemployed. These effects are likely to be most severe in distressed communities — especially in Michigan, California, Florida, Nevada and elsewhere — where unemployment remains extremely high.

    Continue Reading
    Text Size
    -+reset Listen
    Latest on POLITICO
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    POLITICO 44

    As Congress debates whether to extend all of the Bush tax cuts, we should consider their costs and also their effects on jobs. Extending the cuts just to those with incomes below $250,000 will cost about $255 billion annually, while including the remaining 2 percent of wealthy households adds another $55 billion to the annual tab. Over the next decade, this will cost $3 trillion to $4 trillion — a staggering sum, equal to about five times the price of the stimulus bill. And this while the public debt is growing enormously.

    But can these tax cuts help create jobs? Unfortunately, the job creation track record of the Bush tax cuts was weak. Between January 2001 and the start of the recession in December 2007, the economy created a little more than five million jobs — or only about 60,000 per month. Even in the post-recession recovery period between 2003 and 2007, employment growth averaged only about 1 percent a year — slower than any decade since 1940.

    So, while the political debate has been limited to extending these cuts for most versus all Americans, evidence suggests that neither can create many jobs.

    On the other hand, by altering the structure of this tax relief, the nation could have a more targeted set of tax cuts tied directly to what we need — more jobs and more skills for the workers who fill them.

    What kinds of tax cuts could do this?

    For starters, Congress could pass a new tax credit for all private employers who create jobs above a certain base line -– perhaps 2 percent of their payroll. This would be consistent with recent proposals from Sen. Mark Warner (D-Va.) and others for a payroll tax “holiday” for one year. But, to make it both cheaper and more cost effective, the credit should be larger and focused only on net job creation.

    «1
    2
    »

    Read more: http://www.politico.com/news/stories/1210/46007.html#ixzz17bDa9w3h

    **http://couriernews.suntimes.com/opinions/letters/2504079-474/president-marriage-bush-cuts-job.html

    Despite Republicans’ claims, linking tax cuts for the rich to job creation is a statistical fallacy

    United States Bureau of Labor Statistics data show that job growth during President Clinton’s eight years in office was over 11 percent for each of his four-year terms. He came in at a time when there were 109.7 million non-farm jobs and handed the keys to the White House to President Bush at a time when there 132.4 million such jobs.
    resident Bush proceeded to implement his tax cuts. In his first term in office, no jobs were created. The country actually lost about 16,000 jobs over the four years. In President Bush’s second term, with his tax cuts in place, job growth was 0.2 percent. President Bush turned over the keys to the White House to President Obama when there were 133.5 million non-farm jobs.

    With his tax cuts in place, President Bush achieved the worst rate of job creation over a four-year term since Herbert Hoover’s second term, 1929-1933.

    And now the Republicans tell us we need to keep the Bush tax cuts on income in excess of $250,000 because these tax cuts are job creators.

  18. Thanks again, Martin….
    Something I heard today- too lazy to track down all the *details.. $1 spent on unemployment benefits creates $1.50 in value as it circulates through the economy as it is spent, but a $1 in a tax cut to the wealthiest (>$250k?) generates only $0.40, because it is largely saved. It also looks like studies indicate that tax cuts don’t create all that many * jobs……

    Cheers,
    Keith

    *But I have this.

    http://www.politico.com/news/stories/1210/46007.html
    Which tax cuts actually create jobs?
    22 Comments RSSEmailPrint

    A man looks over job postings at a job fair in Phoenix, Arizona. | AP Photo Close
    By HARRY J. HOLZER & EDWARD B. MONTGOMERY | 12/6/10 1:13 PM EST

    Friday’s employment report contained more grim news on jobs. Unemployment rose to nearly 10 percent, while one in six workers is underemployed. By most estimates, it will take another five years or more before unemployment dips below 6 percent.

    The human costs are enormous for young and less-educated workers, and for the long-term unemployed. These effects are likely to be most severe in distressed communities — especially in Michigan, California, Florida, Nevada and elsewhere — where unemployment remains extremely high.

    Continue Reading
    Text Size
    -+reset Listen
    Latest on POLITICO
    Resolution blocks civilian terror trials
    Dick Morris: Obama is ‘fleeing’
    House sends DREAM Act to Senate
    Levin seeks instant rematch with Neal
    LePage plans to stick with Snowe
    Tax deal gains steam toward passage
    POLITICO 44

    As Congress debates whether to extend all of the Bush tax cuts, we should consider their costs and also their effects on jobs. Extending the cuts just to those with incomes below $250,000 will cost about $255 billion annually, while including the remaining 2 percent of wealthy households adds another $55 billion to the annual tab. Over the next decade, this will cost $3 trillion to $4 trillion — a staggering sum, equal to about five times the price of the stimulus bill. And this while the public debt is growing enormously.

    But can these tax cuts help create jobs? Unfortunately, the job creation track record of the Bush tax cuts was weak. Between January 2001 and the start of the recession in December 2007, the economy created a little more than five million jobs — or only about 60,000 per month. Even in the post-recession recovery period between 2003 and 2007, employment growth averaged only about 1 percent a year — slower than any decade since 1940.

    So, while the political debate has been limited to extending these cuts for most versus all Americans, evidence suggests that neither can create many jobs.

    On the other hand, by altering the structure of this tax relief, the nation could have a more targeted set of tax cuts tied directly to what we need — more jobs and more skills for the workers who fill them.

    What kinds of tax cuts could do this?

    For starters, Congress could pass a new tax credit for all private employers who create jobs above a certain base line -– perhaps 2 percent of their payroll. This would be consistent with recent proposals from Sen. Mark Warner (D-Va.) and others for a payroll tax “holiday” for one year. But, to make it both cheaper and more cost effective, the credit should be larger and focused only on net job creation.

    «1
    2
    »

    Read more: http://www.politico.com/news/stories/1210/46007.html#ixzz17bDa9w3h

    **http://couriernews.suntimes.com/opinions/letters/2504079-474/president-marriage-bush-cuts-job.html

    Despite Republicans’ claims, linking tax cuts for the rich to job creation is a statistical fallacy

    United States Bureau of Labor Statistics data show that job growth during President Clinton’s eight years in office was over 11 percent for each of his four-year terms. He came in at a time when there were 109.7 million non-farm jobs and handed the keys to the White House to President Bush at a time when there 132.4 million such jobs.
    resident Bush proceeded to implement his tax cuts. In his first term in office, no jobs were created. The country actually lost about 16,000 jobs over the four years. In President Bush’s second term, with his tax cuts in place, job growth was 0.2 percent. President Bush turned over the keys to the White House to President Obama when there were 133.5 million non-farm jobs.

    With his tax cuts in place, President Bush achieved the worst rate of job creation over a four-year term since Herbert Hoover’s second term, 1929-1933.

    And now the Republicans tell us we need to keep the Bush tax cuts on income in excess of $250,000 because these tax cuts are job creators.

  19. Hate the politics, but I love the math! Let’s put everybody earning $250K.

    Net result: All our money will have 1.5 times more “value” and therefore businesses will effectively earn 50% higher profits. All the Powers That Be can keep on “Be-ing”, and everybody goes home happy. Case closed.

  20. My bad. Last post dropped part of the first line. It should say:
    “Let’s put everybody earning less than $250K on Unemployment Benefits”.

    Darn. Re-posting diminishes the intended sarcastic effect.

  21. How about we implement some policies that help to create large numbers of decent-paying, decent-benefitted jobs? (If helping the wealthiest actually did this, then I’d be in favor of it, but the evidence isn’t there.) How about a program that retrains millions of mal-skilled workers in declining industries and provides incentives for their rehiring? How about a program of job-sharing like Germany’s (http://www.npr.org/blogs/thetwo-way/2009/12/is_germanstyle_jobsharing_cure.html) to reduce the impact of unemployment on employers and employees alike. ? How about a health -care system like France’s (http://www.businessweek.com/magazine/content/07_28/b4042070.htm) where nobody has to worry about going bankrupt if they or their loved ones get sick?

    No, it’s better we live in a country that for decades has been making it *better and better for millionaires and worse and worse for most everybody else (http://www.dailyfinance.com/story/disturbing-statistics-on-the-decline-of-americas-middle-class/19676292/).

    Cheers,

    Keith


    *…But a growing cadre of economic analysts note the steady erosion of the middle class, and the loss of its massive buying power. In a recent article, my Daily Finance colleague Charles Hugh Smith laid out a fairly clear argument for the disappearance of the middle class, at least in terms of wealth. As Smith notes, the top 20% of the American populace holds roughly 93% of the country’s financial wealth, and the top 1% of the country holds approximately 43% of the money in the U.S. Meanwhile, the middle 20% of the population — what would, officially, be called the middle class — holds only 6% of the country’s total assets. While disturbing, even this minuscule share of the wealth pie dwarfs the bottom 40% of the country, who control less than 1%.

    See full article from DailyFinance: http://srph.it/bJM6gL

  22. So long as people continue to insist that a government policy, program, or handout is the answer for everything, we’ll continue to have misplaced, entitlement-focused, you-owe-me-becuse-you’re-rich-and-I’m-not anger, in a large group of people. You can pigeon-hole them anywhere you feel comfortable putting them – lower, middle, inside-out or upside down – if it helps you make your government give-away argument.

    A discussion of who should pay more taxes in the context of the “good” that the government can create through policy, program, or entitlement is absolutely ludicrous. The government SUCKS at conceiving, starting, running, or maintaining anything that the private sector could be doing. I defy any reader to name ANY program run by the government under ANY political party that is profitable or efficient. Forget that – name one that’s even SOLVENT.

    A discussion of the good the government could do would be a very short discussion if “good” had to truly be defined. But nobody can agree because “good” has been slowly, and mistakenly defined as MONEY. If you take it from rich people (those slimy turds) and give it to poor people (those pitiable, struggling, doe-eyed babies) that’s now called “doing good”.

    So let’s all jump on the government re-training bandwagon! Let’s make some programs! Write some policies! Let’s do some “good” for those “mal-employed” folks! Throw some “incentives” at them! Pass me over a piece of that wealth pie!

    Now scroll up and look at that list of professions with the most job openings. I’m 55. When do I start my RN training?

    Now wake up and look for a helping hand. You’ll find one at the end of each arm. Or, keep screaming for someone else to help. And in doing so, you define your class.

  23. Dave I wish our society had better answers for you. If they raise the social security retirement age to 69, job training at 55 seems pretty reasonable.

    Money is life. It’s the sweat and life energy of people who work – on every level. When we are talking about unfair economic policies, we pay in life. When government protects life, like our military or the FAA, it usually does a pretty good job.

    The fixation with hand-outs and bootstraps means little when production and reward are decoupled. When LeBron turns virtually tax free tens of millions into more drywall for his crib, (the same goes for the titans of Wall Street), how can it move our society very far forward- either against other nations on Earth or against what the best and most fair politcs could bring ?

    When the elites (of both parties) run wild, we get a rotted American society, which has been economically, politically and morally stained by aggressive war, an increasing police and prison state, unchecked kleptocracy, an increasingly authoritarian political and popular culture where torture (don’t tase me bro) and absurd levels violence are the measure of real strength, and a justice system incapable of holding elites accountable.

    My partner travels around the world for our company, and he has changed his tune about what it means to be an American today.

    There is a balance- a sway- in every society where the elites are either restrained, or where they are not restrained. Every argument you make favors the elites in the end, and yet you are not amomg the elite, unless I misread what you are saying.

    What’s the disconnect ?

    and PS, I self-identify as a left-libertarian conservative, so go-figure.

  24. Interesting that an identity outside of a moral value system figures into your post. When we define ourselves through someone elses eyes, we are giving others permission to define us and we feel the need to pick the “right” team. With our current Republican/Democrat idiocy at the forefront we’re forced into left-right, right-wrong, good-bad, rich-poor, good-evil (ad nauseum) thinking. This is our government, defining us, and pitting people against people, by policy, program, and design. Government IS the problem.

    The reference to LeBron’s “crib” is an example of rich versus poor, but you’ve stopped thinking when one team (the have nots) seems to be getting shorted by his materialism. Every piece of drywall was manufactured, sold, transported, and installed… was it not? Who did this, and how was it possible? Simply put, because LeBron paid for it. If the drywall went to build a homeless shelter, would it cost any less to manufacture, sell, transport, or install? Absolutely not. Why was this not part of your “balance” reference?

    We are taught to hate him because of what he has, and to ignore the other aspects of his situation. This is not balance, this is classism. He is clearly an “elite” that you seem to think requires some sort of restraining. Shall we look at his charitable donations and judge him further? And if not up to a government prescribed standard, punish him for it? Excepting of criminal activity, who he is does not concern me, who I am does.

    Have we “de-coupled” production and reward because he makes so much for playing a simple game? If so, please tell me which government program is paying his salary, or the salaries of the thousands of workers employed in the sports industry. It is a self-supporting system… which political team is supposed to loathe that?

    I “favor” fairness and consequence – knowing full well that life is not, and never will be, fair. I favor actions and responsibility – knowing full well that irresponsible people exist. I favor failure and the value of it – knowing full well that failing hurts. I favor success and the value of it – knowing full well that all will not be successful. There is no disconnect here. On the contrary, these are integrally related values, not teams or government sponsored programs.

  25. Not sure how it’s class envy when I want my OWN taxes to go (so long as everyone else making what I make pays too). That’s the thing: as long as making money means you can live better and lord it over the other guy, the exact amount that goes back to the state in any given year should vary with the real, democratic needs of the state. Sometimes taxes should be low (boom years in peacetime) and others very high (when the gov needs to spend for the common good or fight wars). In normal times, with higher marginal rates, there is more incentive for managers to build long-term business value because taking it out in comp alone (at very high levels) will be a worse use of the funds. And reward decoupled from production means executive pay v. everyone else, along with pro-sports, hollywood, and tons of other economic activity that would be redirected toward better uses if the marginal rates were higher. Thats why exec pay has gotten out of control, or in your mind, is there no amount too high for a “top” CEO ?

    And hell, why take it from some idiot like me- here is what David Stockman, Ronald Reagan’s budget director, has to say on the matter when asked on “60 minutes”

    STAHL: “Well, you’ve come out and said that all the Bush tax cuts should be eliminated. Not just on the rich, but on the middle class as well. Explain why.”

    STOCKMAN: “Well, we just can’t afford them. We couldn’t afford them when they were adopted in 2001 and 2003. Since then, we’ve had two giant unfinanced wars, a huge bailout of Wall Street. This trillion-dollar stimulus program, and we have now created so much national debt, and such large permanent deficits that we’re going to have to do some very difficult and painful things to close the gap, or we’re going to destroy the economy, and render the federal government insolvent. As hard as that is to believe, we’re edging in that direction.”

    And what’s wrong with these people ?

    A Quinnipiac University poll from March that found 60 percent of Americans favored raising taxes on those earning more than $250,000. This is not surprising: Americans generally favor raising taxes on the rich, as long as they are not defined as rich themselves.

    But there was a surprising finding in the poll: Among families earning more than $250,000, fully 64 percent favor raising taxes on themselves. How can that be ?

    And regarding LeBron and his drywall, you basically think that any economic activity is equal as long as it’s consensual- there simply are not things that people do that are more or less valuable to the society or everyone’s long-term future. If the entire GNP went to booze, strippers, and gambling that’s just fine because Government is evil and FREEEEEEEEDOM!!!!

    The deficit scolds always say no household would run like that…but how about a family where dad does blow his whole paycheck on booze and strippers… who are we to say how he should spend HIS money ?

  26. Thanks again, Martin.

    Dave, I’m surprised you haven’t mentioned a country which seems to be doing it in a way you’d admire. It has a strongly pro-business climate, weak labor unions, minimal social safety nets, and a motivated active population dedicated to self-improvement who’s willing to try most anything and doesn’t expect handouts. This country has had a phenomenal economic growth rate and is called the People’s Republic of China.

    I don’t think that the Chinese will take over the world (the way we thought the Arabs would do in the 1970s and the Japanese in the 1980s), but I do think that their version of capitalism is giving the Anglo-American version a run for its money. IMHO, our economic system doesn’t appear to be the best for either encouraging economic growth or making sure that it’s fairly distributed. (I think we’re still best at encouraging innovation, however.)

    One last thing, Dave: When people who say government is evil and incompetent get into power, they prove themselves correct.

    Cheers,

    Keith

  27. So long as you continue to equate “democratic needs of the state” with government programs it’s apparent my point has been completely missed.

    I’ll post for the last time by copying and pasting:

    A discussion of who should pay more taxes in the context of the “good” that the government can create through policy, program, or entitlement is absolutely ludicrous. The government SUCKS at conceiving, starting, running, or maintaining anything that the private sector could be doing. I defy any reader to name ANY program run by the government under ANY political party that is profitable or efficient. Forget that – name one that’s even SOLVENT.

  28. One last thing, Keith: I said neither that the government is evil nor incompetent. But I would tend to agree with the premise.

    What I said was that government, as the solution to moral problems through the imposition of programs and policies, actually exacerbates the problem. In nearly every attempt history has proven the government not only incapable of “solving” problems of a value-based nature, they’ve incurred monumental debts, designed incomprehensible administrative behemoths, and institutionalized an entitlement mind-set.

    On China, you’re correct, I didn’t mention them, but in many ways I do admire them. Neither did I mention several dozen other countries – looking remarkably like our destiny. In fact, I didn’t mention several states that look that way too.

  29. Here’s a related topic: Are Republicans for free trade?

    P-ED CONTRIBUTOR
    Throwing Free Trade Overboard
    By ROBERT E. LIGHTHIZER
    Robert E. Lighthizer, a lawyer, was a deputy trade representative in the Reagan administration.
    Published: November 12, 2010

    DESPITE his failure to conclude a trade deal with South Korea this week, President Obama has put free trade at the top of his agenda. That’s in part because the White House and the newly empowered Republican leadership see it as one of the few places where they can work together.

    But those expectations could be upset by an unexpected force: the Tea Party. Strangely, for a movement named after an 18th-century protest against import levies, Tea Partyers are largely skeptical about free trade’s benefits — according to a recent poll by NBC and The Wall Street Journal, 61 percent of Tea Party sympathizers believe it has hurt the United States.

    The movement has already forced the Republicans to alter their agenda in several policy areas. Should the same thing happen with free trade, America’s stance toward open markets and globalization could shift drastically.

    At first glance, the Tea Party’s position may seem contradictory: its small-government, pro-business views usually go hand in hand with free trade. But if you consider the dominant themes underlying its agenda, it makes sense that the movement would be wary about free-trade policies. For starters, Tea Partyers are frustrated with Washington, and that includes its failure to make free trade work for America. Our trade deficit in manufactured goods was about $4.3 trillion during the last decade, and the country lost some 5.6 million manufacturing jobs.

    And while the Tea Party supports market outcomes, its members appear to believe that the rest of the world is stacking the free-trade deck against us. They have a point: most policymakers agree that the Chinese currency is grossly and deliberately undervalued, that China fails to respect intellectual property rights and that it uses government subsidies to protect its own manufacturing base. Meanwhile, the movement says, the United States does virtually nothing in response.

    The Republican establishment will argue that its trade agenda is consistent with Tea Party ideals, that its goal is to get government out of the way and allow American companies to thrive in competitive markets.

    But Tea Partyers will ask, what good does it do to reduce the role of our government if foreign governments are free to rig the rules, attack American industries and take American jobs? As a result, the otherwise pro-market Tea Party may find its economic program far more at home with a nationalist trade policy that confronts foreign abuses and fights for American companies.

    Tea Partyers also have an instinctive aversion to deficits, and they are undoubtedly concerned that our enormous trade imbalances — which require us to sell hundreds of billions of dollars in assets each year — will leave our children dependent on foreign decision makers. Indeed, the value of foreign investments in the United States now exceeds the value of American investments abroad by $2.74 trillion, and China alone has roughly $2.5 trillion in foreign currency reserves, primarily dollars.

    Deficits, moreover, aren’t just a statistic; they raise serious concerns about America’s global leadership role. The Tea Party will demand to know why, if our trade policy is so successful, so many experts believe that the 21st century will belong to China, not the United States.

    And the Republican establishment will have to deal with the fact that Tea Party heroes like Alexander Hamilton, Theodore Roosevelt and Ronald Reagan had no problem restricting imports to promote our national interest. Given the Tea Party’s desire to restore America’s greatness, it will push Washington to stand up to China and re-establish American pre-eminence, even at the cost of the country’s free-trade record.

    Finally, trade is an issue where Tea Party concerns about “elites” thwarting the will of the voters will resonate.

    In this case, the elites include both Democrats and Republicans. You would need a high-powered microscope to tell the difference between Bill Clinton and George W. Bush on the subject of trade. Even during this slow economic recovery, Mr. Obama is pushing for a new market-opening round of talks at the World Trade Organization.

    Among Republicans, not one major elected figure expresses the skepticism toward free trade held by over three-fifths of Tea Partyers. In the face of soaring trade deficits and talk of American decline, the Tea Party may ask whether this is yet another area where the establishment has simply gotten it wrong.

    In short, the apparent contradiction between the Tea Party’s fiscal conservatism and its skepticism about free trade may not be a contradiction at all. If the Tea Party continues to influence the Republican agenda, it may not only spell bad news for the South Korea free trade agreement — it could also mean a fundamental reorientation of our country’s attitude toward trade and globalization.

    —————

    Cheers,

    Keith

  30. Clarification: “…but in many ways I do admire them.” In many more ways I do not. Although those Reds do have a pretty talented baseball team.

  31. @Dave: another country you might admire: Chile under Augusto Pinochet.

    As far as what the bi-partisan Congressional Budget Office says would work best to increase DGP and employment go here:
    http://www.cbo.gov/ftpdocs/108xx/doc10803/01-14-Employment.pdf.
    It says increasing aid to the unemployed ranks 1st out of 11 options (as being most effective), and reducing income taxes in 2011 ranks last (as being least effective). BTW, reducing employer payroll taxes (which wasn’t included in this tax compromise) ranks 2nd.

    Cheers,

    Keith

  32. As a side note to any of my stakeholders ever reading this thread: I’m not killing hours composing these comments because I use Voice Rec (built into Windows 7) to dictate- it’s way, way, way, faster than typing, and I’m sometimes cutting and pasting old text too. I’d guess 45 min to an hour total on this thread, and hey, everyone needs a hobby.

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