Archive for the ‘economics’ Category

I already pointed out that the unique labor demands of growing and picking cotton led to slavery being extremely profitable in the pre-Civil War South, to the point where slavery would have never died out naturally until the advent of herbicides and mechanical cotton picker machines in the 1950’s. I mentioned how slavery was continued somewhat in the sharecropping system that arose after the war, and the system of segregation that insured that blacks had little choice but to work in the fields or starve since they were blocked from most other jobs by the segregation regime. I also mentioned that my grandmother and grandfather on my mother’s side, both poor whites, were sharecroppers when they married, living in a one-room tar-paper shack with no indoor plumbing or electricity (the toilet was an outhouse) and working like dogs to grow and pick cotton, and how one of my mother’s least-favorite memories was picking cotton as a child.

So back to my question: Why are there so many uneducated poor white trash people in the South?

Well, it’s for the same reason that the South embraced segregation so heavily: by keeping most white people poor and uneducated, it meant that the Southern aristocracy could obtain cheap labor for their fields.

In short, Southern poverty was a deliberate decision of the Southern aristocrats who lost the military phase of the Civil War but won the peace afterwards. They deliberately organized their society so that schools beyond K-8 were too expensive for poor people. They deliberately kept industries that might have employed large numbers of poor whites in high paying jobs out of their states. It wasn’t until the mechanization of cotton production that desegregation could happen in the South, nobody dared push it before then because the South *would* have risen up again. It wasn’t until the surplus poor white population was no longer needed for cotton that industries like textiles and the auto industry were allowed to come to the South to employ the surplus poor white population, and the taxes to build good schools were never passed even then because educated people were a threat to the aristocracy.

The end result of that third world society — a sea of poverty and a small set of aristocrats on top — was that these states were poor. The aristocrats didn’t care. They could have had more money if they’d allowed the peasants to become prosperous and educated, but they cared more about being on top than about absolute wealth. It’s no surprise that in the 1960’s and 1970’s, as the power of the old Civil War descended aristocrats collapsed, the affluence of the South grew immensely. Even into the 1980’s, it seemed that the South was going to rejoin the rest of the United States.

Then progress stopped. Because a new aristocracy arose. An aristocracy that, like the old one, also was more interested in maintaining their power than in absolute wealth, though in many cases, like the Koch brothers of Oklahoma, they do have immense absolute wealth. And maintaining their power is easier with an uneducated populace. Thus the constant attempts to prohibit accurate teaching of biological science in Southern schools (modern biology simply cannot be explained without the theory of evolution), the prohibiting of teaching critical thinking skills in most Southern schools, and so forth. By keeping the poors stupid, ignorant, and superstitious, the poors don’t look up at their aristocrats and start measuring the aristocrats’ necks for nooses. By keeping the poors fixated on guns, gays, god, and godless Liberals, the poors don’t notice that the aristocrats have been fucking them up every goddamn orifice for the past two hundred forty fucking years.

All in all, it’s a nice scam. But it *has* required that they shut down prosperity again, which they’ve done via de-industrialization, replacing high-paying factory jobs with low-paying service jobs. Yet the rubes still haven’t caught on: their poverty isn’t accidental. It’s planned.

And the motherfuckers who planned it are getting away with it. Again. Because turns out that not only are the majority of Southerners ignorant, they’re also stupid, lacking the common sense to realize that it’s no accident that the Northeast and the West Coast are affluent and prosperous while they are mired in poverty…

So it goes. As it was, it is again, yessiree. When you have an entire class of people that benefits from keeping the majority poor and ignorant, only an idiot would blame liberals for that. But idiots are one thing not in short supply.

– Badtux the Economics Penguin


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Amazon depends upon a nomadic retiree army to meet customer demand during the holiday season. Most of these retirees are in their late 60’s or 70’s, but some are even in their 80’s. Amazon prefers them to hiring young people because retirees grew up in an era where people were honest and worked hard and didn’t slack off all the time and didn’t steal their employer blind, and while the retirees are slower than young people, they’re steady — they don’t ditch work on a whim, they don’t quit in the middle of the season, they are, indeed, perfect serfs.

Now, if these retirees were doing this just for some additional spending money, that’d be one thing. But most of them are homeless nomads living on a pittance, who travel around the country working odd jobs like the Amazon warehouse in order to make ends meet. Most had their retirement funds stole from them by Wall Street and are reliant upon Social Security checks that are woefully inadequate. Many use the funds they get from their nomadic odd jobs to save up for repairs to their RV, or towards a newer RV. In many cases, travel to a job may cost almost as much money as they get from the job, but they either travel to the job or they don’t get the job, so…

This is what retirement is going to be like for most of my generation, the generation after the Baby Boomers. The leading edge of the Boomers got there first… but clearly retirement for the rest of us is going to be nothing like what retirement was for our parents. We’re going to be serfs working on Massa’s farm until the day we die. Serfin’ USA, y’all!

– Badtux the Serfin’ Penguin

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The average age of minimum wage workers is now 35 years of age. 78% of minimum wage workers have a high school diploma. 12% of minimum wage workers have an associate degree, and 19% of minimum wage workers have a bachelor’s degree or higher (that’s 31% of minimum wage workers with a college degree).

Today’s economy sucks for anybody who isn’t a computer geek or a marketing whiz, pure and simple. When 1/3rd of minimum wage workers have a college degree, something has clearly gone wrong with our economy.

And it certainly isn’t going to get better under Trump. Every single one of his proposals transfers money from low-wage people and the middle class to the wealthy. FUrthermore, the robots are coming. There are 3.5 million professional truck drivers in the United States. Every single one of them is going to be unemployed within twenty years. There are 3.4 million cashiers in the United States. Within 20 years, they’ll all be unemployed — you will check out by waving your smartphone at the door gate while walking out with your items — they’ll be automatically checked out via RFID and NFC. That’s if you don’t order it from home and have it delivered by a robot-driven car that’s filled with your order by a robot stock picker.

So what do we do? I don’t have the foggiest damned idea, I know capitalism as it currently exists, our economy as it currently exists, is doomed, and any ideas I have for replacing it aren’t very good. But I do know that the solution isn’t tax cuts for the rich.

– Badtux the Baffled Penguin

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In the early 1980’s, as I was studying economics and examining the details of various corporations, one thing became clear: The entire U.S. economy was dependent upon continued economic growth. Continued economic growth that was unsustainable given that there are resource limitations. For example, General Motors. General Motors’ entire pension system depended upon General Motors having more employees paying into the pension system every year. If instead General Motors went into decline and fewer employers were paying into the pension system every year, the pension system would collapse. Then there was the entire debt financed takeover craze of the early to mid 1980’s. It depended upon the corporations being taken over to continue improving in scale and absolute profit every year. If the corporations instead declined and had less business, less absolute profit, then they would be unable to service their debt and would collapse.

Which in fact is what has happened, multiple times. over the past thirty years.

Now we’re moving into a second phase, as the top 1% have increasingly monopolized disposable income in the United States. Retailers, too, depended upon constant growth in order to meet their debt service. But people aren’t buying because they don’t have money. Thus over 1,000 retailers closed in the last week of May. Retailers everywhere are hurting. Current estimates are that we’re going to see 400,000 jobs lost in the retail industry by the end of the year.

Now let’s look at another huge, huge thing that’s coming up. There’s around 3.5 million long distance truck drivers in the United States. Within the next ten years, approximately 3 million of them are going to be replaced by robots as robot-driven trucks become a reality for long haul trucking. The remaining drivers will be short-haul drivers handling jobs that the robots aren’t flexible enough to handle.

What we’re seeing, I believe, is the Cheyne–Stokes death rattles of capitalism itself. Robots have increasingly displaced humans in industrial jobs. It used to take thousands of human beings on an assembly line to assemble a car. Now it takes hundreds of robots, and a few dozen human beings. Now it’s moving downstream. Robots (thanks to the World Wide Web and e-tailing) are now rendering retail workers’ jobs obsolete. Robots are increasingly rendering warehousing workers’ jobs obsolete — Amazon, for example, uses pick-and-place robots extensively in their latest warehouses to deliver goods from warehouse shelves to the workers who do final packaging for stuff going out the door. Next, truck drivers’ jobs are gone. In fifty years, my own job — writing computer software — will be automated. What do people do once any possible jobs are taken up by robots? There’s actually only three possibilities here — either we go to guaranteed basic income scheme and people do whatever they want as a hobby, or a lot of people die, or Luddites ban the robots from large numbers of jobs that are reserved for humans. The last “solution” isn’t long-term stable, the first solution isn’t politically palatable to the 1% who determine who is elected to political office, so….

Man. It’s the other white meat.

Just sayin’.

– Badtux the Depressingly Apocalyptic Penguin

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The solar energy business is now big business — there were 260,000 workers in the solar industry in the US last year, an increase of 51,000 workers from last year. Meanwhile, the entire coal mining industry employs less people than Arby’s — only 76,500 total. Productivity per worker in the mining industry has improved to the point where increases in demand no longer result in new hiring, they result in more productivity for the existing workers as they work more hours. So even if the Trump Administration managed to incentivize building new coal-powered power plants, it wouldn’t result in an orgy of hiring — instead, productivity in tons per worker would improve back to its recent peaks again.

In short, laid-off coal workers need to be retraining to be solar installers. Except — nobody in Appalachia is putting solar panels on their homes. They’re all too poor for that. So the workers would need to move away from Appalachia to get jobs in the solar industry. But they refuse to do that — less than 0.5% of workers who go through a retraining program are willing to relocate.

At some point, we need to make people responsible for the consequences of their own choices, rather than continually pander to them with stupid lies like those coal mining jobs coming back. They’re gone. They got replaced by robots, mostly, or by techniques such as mountain-topping that don’t require miners underground. At some point as robots flood into more and more industries, we’re going to have to come up with some other way of regulating scarcity other than by how much value people’s labor is worth in the economy. But until then, people have to at least be willing to accept what jobs are available, even if they require relocating like the solar jobs, or require that these manly men do “women’s work”. And if they refuse to do so… I don’t see why we should be getting all whiny and liberal-splainy about their bad choices. Let them eat the consequences of their own choices — even if it means they’re basically committing suicide via “deaths of despair”.

– Badtux the Vicious Penguin

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That’s the question, now that yet another single-payer plan has been floated for California.

30% of California’s population is on Medi-Cal. 13.3% of California’s population is on Medicare. Then there are an unknown number of military retirees with VA and TriCare benefits. These overlap slightly, so figure that around 40% of California’s population already is on single-payer. 5.6% receive coverage via Covered California (“Obamacare”). 7.1% are uninsured. Of the remainder of insured Californians, almost 50% get their health insurance via their employer. Of that number, roughly 50% of employees with employer-provided insurance are covered by a self-insured plan that is regulated by the federal government via ERISA, not by the state.

The question is this: can California create a single-payer health insurance plan out of this mess? Average family income in California is around $85,000 and average family health insurance in California is $15000, so to cover 60% not already on single-payer, you’d need to have let’s call it a 10% Healthcare Tax on California incomes. And if you’re going to give the lowest quintile a tax cut on that, it’ll have to be higher.

So: Is it possible? Sure. The money is being spent already, it’s just going through insurance companies rather than through a state single-payer plan. Is it *probable* that Californians would vote to tax themselves that much? It doesn’t seem likely. The people at the top end of the income scale — the people who’d end up paying much more than they’re paying now, since 10% of a $250,000 income is $25,000 — would squawk loudly, and they have the politicians in their pockets. Still. It’s financially possible. It’s just a matter of political will. Unfortunately, political will has been in short supply lately…

– Badtux the Healthcare Penguin

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“The entire economy of gold consists of digging it out of the ground in one place and putting it back into the ground in another place.” -Keynes

Gold is a shiny metal. It has little intrinsic value other than in the electronics industry and dentistry. You cannot eat it. You cannot drink it. You can wear jewelry made from it, but it won’t protect you from the cold or the rain. If someone is breaking into your home, gold will not kill them. Gold has, at times, been used as money, but it has value only insomuch as it can be traded for things with intrinsic value like food and fuel and guns without which an individual or a nation cannot survive. At present, it cannot be traded for such things — you cannot go into a supermarket and buy a can of beans with gold — thus is simply another asset, not money.

Currencies are, in the end, backed by the production of goods and services in an economy purchasable by said currency, not by assets. The whole point of a currency is their utility at purchasing goods and services. It’s interesting that some of the assets of the Bundesbank may actually be fictional. But as long as there are goods and services purchasable by Euros, the Euro will continue to have value. The same with the U.S. dollar.

— Badtux the Economics Penguin

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