Category Archives: Full Employment

Disability Has Decreased Our Unemployment from 10.2% to 7.5%!

Cumulative Foodstamp Disability vs Jobs

Unemployment exploded from 4.7% in 2007 to a high of 10.2% in 2009 before falling to 7.5% this month. Our government would have us believe that America is slowly on its way to fixing its joblessness problem. Yet, between 2009 and now, the percentage of Americans working has actually dropped from 59.8% to 58.5%!

Down from 63.7% before the economic implosion, 58.5% is the real number the government is touting as job improvement when our joblessness is actually worsening. If you think the way the U.S. government represents joblessness figures is purposely confusing, raise your hands.

Let’s break it down….

Since 2009, the U.S. population has grown 10 million from 305 to 315 million people. The number of working age people grew by 10 million during that time to 245 million people.

Multiplying 305 by 59.8% and 315 by 58.5%, the economy added 3 million jobs, not enough to keep up with population growth. So far, so good….

But if unemployed people dropped from 10.2 to 7.5% during that same time even though the percent of people working did not increase, what happened to this 2.7%, or 5.5 million people?

Well, states smartly put 4.7 million people on disability. States pay for welfare but the federal government pays for disability. So, at a cost of $2,500 per worker, states have geared up to pay private companies to dubiously transfer people that would have been on welfare to federal disability. Historically, 99% of people added to disability never leave it. The remaining unemployed have been absorbed by the welfare system.

Before anyone stands up to bash the current administration for obscuring how bad our economy really is, kindly settle your tushes back down and listen. This disability scheme has certainly been used as a buffer for the economic implosion, but it is not new to this administration. Since China opened its doors in 1979, our disability ranks have swelled from 2.3% of our workforce to 6.1%.

This is a hidden cost of owners of capital investing in jobs overseas. This is a hidden cost of Detroit’s economic policies. Unemployment is getting WORSE, NOT BETTER! MORE people are idle, NOT LESS! The economic implosion created a nation of disabled. If a broken spirit is a disability, perhaps the numbers don’t lie.

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Filed under American Governance, Economic Crisis, Federal Budget, Full Employment, Jobs

Detroit and America Must Choose to Banish Catch 22

Catch 22 is a phrase in the book by the same name that has come to mean a problem that has no solution, for it contains a circular argument, like those that have plagued Detroit for the past 63 years. These problems have been blamed for the misery of millions. Are they truly Catch 22?

Problem #1

To bring more business and population to Detroit, crime must be reduced. But crime cannot be reduced unless there are jobs that pay living wages. And jobs will not be created unless there are incoming businesses, which will not come because there is too much crime.

……………………………………………Catch 22….

Problem #2

Crime will not be reduced unless would be criminals can find jobs to replace benefits of crime. To do so, those jobs must pay living wages. But a majority of the unemployed are illiterate and undereducated and do not qualify for jobs that pay living wages. Therefore, they cannot obtain jobs that will pay living wages. Without a living wage, crime will not be reduced.

……………………………………………Catch 22….

Problem #3

America’s unemployed need jobs. To employ Americans, a minimum legal wage must be paid. But the world competes to make and sell widgets, and world wages to make widgets are less than America’s minimum legal wage. Therefore widgets must be made overseas and sold to Americans. Making widgets overseas keeps Americans unemployed and without jobs.

……………………………………………Catch 22….

For the past 63 years, since the peak of employment and population, the leadership of Detroit, as well as most major cities in America, has accepted the Catch 22 paradigm that their economic problems are unsolvable and therefore, not really a burden that is theirs to carry. Accepting the Catch 22 paradigm means they condemn America to high unemployment and high crime in our inner cities. Accepting the Catch 22 paradigm means that millions of lives will go unfulfilled and wasted, that millions of children go unfed each night, and that our nation suffers as we commit the least of ours to an arduous lifelong pursuit of happiness.

Catch 22 paradigms are roadblocks that keep America’s political leadership from helping America to reach optimal output and productivity. Catch 22 paradigms are impediments that keep Americans from reaching their highest opportunity for all to pursue happiness.

Catch 22 paradigms, however, are merely paradigms that are placed in the collective consciousness of America by those that wish them to exist. America is conditioned to accept them yet they need not be accepted. Owners of capital benefit from them. Political leaders benefit from them. The rest of America does not benefit from them. If America accepts these paradigms, they continue. If America simply rejects these paradigms, they vanish.

Catch 22 paradigms support the efforts of owners of capital to create maximum wealth but cost trillions of dollars and millions of jobs in the American economy. America could force American capitalists to spend their dollars in America. But our history, principles, and laws support the freedom of owners of capital to spend their dollars in whatever part of the world provides the highest returns.

To force owners of capital to spend their dollars in America would require a change of laws that would turn on our principles of freedom for all Americans. We cannot turn our back on our heritage of freedom. Therefore, we accept that the economic engine of America, the capital of our wealthy elite will be spent in other parts of the world, costing trillions of dollars of loss and millions of jobs in our economy.

…………………………………………………Catch 22

Solutions do exist to Catch 22. American owners of capital can make profits in America to employ our workforce without forcing them to spend dollars here if political compromise is made to allow equivalent profit. Jobs can be created that include a living wage, if political compromise allows for living wages. Crime can then be reduced and the pursuit of happiness can be lifted to a higher plane. And believe it or not, all of this can be accomplished without spending more tax dollars, which is the ultimate cry of those shouting Catch 22.

These real and viable solutions, however, require political compromise. America’s economic problems have arisen from deep seated differences of vision that drive conservative and liberal parties alike to pursue their own visions without compromise, producing the political vacuum that must exist for Catch 22 paradigms to live.

In Detroit, one vision is for all that have made it through the gauntlet and that have risen at least to the middle class to escape to the suburbs, and to make Downtown a playground fortress against the poverty of the inner city, while giving up the rest of Detroit’s citizens to Catch 22. The other vision is to form a grass roots effort to fight the plight caused by Catch 22 to all of Detroit’s citizens, yet without attacking Catch 22 as a mere paradigm. They therefore accept its paradigm that economic suffering must continue. Detroit’s two opposing visions have fought compromise since the riots of 1967 brought their opposing views into the political light.

Problems that such a lack of compromise creates in Detroit then cause the city to fester without solution. Polarized city political leaderships acquiesce to the meager capital investments left for their cities as they pursue their opposing political visions. Polarized state political leadership compete with other states for limited capital investments by promising owners of capital that they will not have to share the tax burdens of the state. And polarized federal political leaders pass legislation to allow for owners of capital to make maximum profits overseas at the expense of jobs at home.

Political leaders become convinced that their political interests lie closer to the owners of capital than to those of the rest of their constituency. Without having to compromise across the aisle, they pass Catch 22 legislation that make it easier for owners of capital to invest dollars overseas while escaping the uncompromising political fighting that continues at home. Political leaders’ efforts on behalf of America’s elite become an easier route to remaining in political power than having to bend in political compromise on behalf of America.

Detroit’s solution rests in ending Catch 22. America’s solution rests in ending Catch 22. The solution to ending Catch 22 rests in political compromise that puts Detroit’s future, America’s future ahead of political expediency. Viable solutions exist. Jobs can be created. Owners of capital can be rewarded in America. Much suffering can be banished. The American economy can return to prosperity.

No Catch 22….

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Filed under American Governance, American Politics, Bureaucracy, Economic Crisis, Free Trade, Full Employment, Jobs, Multinational Corporations, social trajectory, U.S. Tax Policy

Is Saving Detroit Worth The Effort? (Yes)

detroit kids

Thus far, I have outlined Detroit school principles and Detroit work responsibility principles, two sets of principles amongst others that will be important to outline as the basis for a holistic solution. Yet already the solution set to accomplish just these two sets of principles might seem extremely difficult to some. To accomplish the two sets of principles that I have outlined thus far, for example, would take a great deal of cooperation between local, state, and potentially federal governments on both sides of the aisle and would force a paradigm shift that would be difficult to accomplish even with both major political parties working in concert. For this reason, many would simply scoff at my principles as unrealistic.

Yet, no other set of principles set forth thus far have been implemented in the past 60 years of Detroit’s decline that have resulted in the city’s turn around. And no principles being presented contemporaneous solve Detroit’s immediate growth problems either. Without a bold set of principles that sets the bar as high as the stars, Detroit cannot expect to even hit the moon. And right now, Detroit’s revival depends on hitting the moon.

I am suggesting that Detroit reach for a difficult task (that is reachable) to avoid a terrible alternative of bankruptcy and further decline. The alternatives thus far presented to Detroit by others show a strong and good future yet without a viable path forward. The thriving path forward requires that the city grow robustly, but the initiatives thus far presented project a slow growth.

Could Detroit achieve slow growth from Downtown and key city centers without a bold jobs initiative? Perhaps, yes, perhaps no….the answer depends on how deeply city services must be cut to balance the city’s budget and how much more crime and blight will be exacerbated by such cuts. The answer also depends on how many city assets will be sold off to forestall bankruptcy or whether bankruptcy will cause the city to lose its ability to borrow for the future.

A seemingly more complex but actually more viable solution is one that aggressively pursues a much higher rate of city growth. If a viable solution can project a realistically higher growth trajectory, it will also project a balanced budget at higher city revenue levels that can put Detroit in a position to borrow, not to pay for further operating deficits, but to create assets for the City’s future prosperity.

Since Coleman Young’s terms in office until now, Detroit has attempted to lure businesses to the city to provide jobs to keep Detroiters from leaving. The city has had some successes but not nearly enough to save Detroit from having to endure the emergency manager’s executions.

A net 1.1 million people have left Detroit since 1950, to find work and to escape Detroit’s growing crime. Now that the rate of exodus has slowed in Detroit, city leaders might be able to bring residents back if they can first bring businesses back. Yet to do so, they must convince business owners to relocate their businesses in Detroit instead of other alternatives. Detroit’s blight and crime rate make the effort formidable.

Even more formidable, the city’s leaders find themselves in two catch 22 dilemmas. First, without reversing its crime rate, Detroit will not bring in new businesses quickly enough to overcome mounting deficits. If the city cannot grow quickly enough, it will resort to selling off assets to pay debts and the sale of those assets could cripple the city. Yet, without bringing in enough businesses to provide good paying jobs, Detroit cannot reverse its crime rate. This is the circular argument that has haunted the city’s mayors for the past four decades, the catch 22.

The second circular argument is even more insidious than the first in that to lower crime, jobs must provide living wages. Yet, the type of jobs that most unemployed Detroiters qualify for pay the lowest wages. Half of working Detroiters aged 25 and under have jobs that pay minimum wage. Minimum wage is already too low to keep a worker out of poverty. Bringing in more jobs that pay minimum wage to hire unemployed Detroiters does not take them out of poverty. Without reducing Detroit’s poverty, crime will not significantly decrease. And if crime is not lowered, even those minimum wage jobs will not come to the city, hence catch 22 squared.

Since jobs could not be lured into the city to decrease crime, city leaders resorted to entertainment businesses like casinos and sports arenas, and gentrification, creating mini-walled off cities within the city, to increase the tax base, yet the pace of growth from these pursuits did not compensate for the losses due to depopulation, and now Detroit faces the impending possibility of bankruptcy.

The principles I have outlined for schools and business development will lower crime but both depend on breaking the circular arguments. If they can be broken, jobs can be brought in that provide current residents with livable wages, and Detroit can significantly lower its crime rate.

With lowered crime, the vision that Detroit is now presenting to the business community of a better Detroit will be viable. Detroit’s vision of the future city, combined with significant incentives for businesses to invest in the city, can then help the city bring in more jobs. More jobs will increase property values, which will in turn create higher city revenues that will lead to reinvestment in the city’s livability and a path toward a thriving Detroit.

To break the circular argument, however, two things must simultaneously occur. First, businesses must be convinced to hire 100,000 employees from the ranks of Detroit’s largely illiterate unemployed. Second, businesses must be convinced to pay new hirees a living wage that is above minimum wage, when half of Detroit workers under the age of 25 are being paid minimum wage. This is the herculean task that has perplexed a good many people without a solution. Therefore, Detroit faces bankruptcy.

Yet, the fact that no viable solution has been proposed in 40 years does not mean there isn’t one. The solution requires a paradigm shift. It requires the collaboration of both sides of the political aisle, and of local, state, and possible federal government leaders. Is saving Detroit worth all that effort?

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Filed under American Governance, American Politics, American Schools, City Planning, Full Employment, Job Auction Plan, Job Voucher Plan, Jobs, Racism, social trajectory

Mayor Dennis Archer – Detroit Mayor 1994-2001, Democrat

Dennis Archer, previously a Michigan Supreme Court Justice, was elected mayor for two terms from 1994 through 2001. He promised to “build coalitions of all races, creeds, and economic levels to produce real improvement in the troubled city” and blasted Coleman Young for having run a political machine that “defended Detroit against the hostile forces from the white suburbs.”

In his campaign, Mayor Archer stated, “I represent. I represent the people who can’t get their garbage picked up on time … their streetlights to stay on all night … their phone calls answered at city hall. I stand before you representing children who are more concerned about surviving the school day … the homeless, the disenfranchised and the working poor who want affordable housing, and a clean and decent place in which to live.” He was an honorable mayor with a good record.

Mayor Archer was credited for ratcheting down animosity between black political leaders and white business leaders during his term. His accomplishments included:

• 11 billion in projects
• $100 million for empowerment zone
• Facelift to the downtown Renaissance complex when GM purchased it and moved their headquarters there.
• New Tiger Stadium
• Three Downtown casinos

Downsides listed included:

• A cumbersome bureaucracy facing new businesses
• Running thin on city services including police

The three casinos employ 8,000 people and provide $150 million in taxes to Detroit.

The baseball stadium was financed partially by Detroit taxpayers who went in debt $115 million to fund the stadium. The stadium added about 1,000 jobs in and around the stadium and added about $5 million a year in city revenues.

During Mayor Archer’s term Unemployment dropped across the United States from 6.1 to 4.0 %. In Detroit, unemployment dropped from 15.8% to 7.3% as Detroit’s population dropped from 1,000,000 to 904,000. Murder rate dropped from 58 to 44 per 100,000.

The figures suggest that in 1994, 421,000 people were working in Detroit, and in 2000 417,000 people continued working. Now 270,000 are working in Detroit out of a population of 730,000. The combination of job growth in the United States and Mayor Archer’s implementation of Downtown growth staved off unemployment.

The type of jobs from the casinos and ballpark fit the demographics of Detroit’s unemployed population, low skilled workers, and provided recreation that add livability value. The empowerment zone jobs added similarly. The saving of the downslide of the Renaissance saved such jobs and added surrounding service jobs. Mayor Archer did well in slowing the decline of jobs.

Yet, the loss of population due to crime continued its rapid downward slide.

Detroit’s Budget deficits started in 2005 and have grown to $387 million this year of a $1 billion budget.

Takeaway from Mayor Archer’s term:

Decent paying jobs added that can be readily absorbed by available unemployed workforce, will be when offered

Crime rates went down as employment went up…..

Detroit’s black population during the term stopped growing for the first time in a century and white flight continued its steep rate of decline. The following decade, middle income blacks would leave the city as well. And with their flight, a dropping population would finally cross the threshold that would thrust Detroit into deficit spending.

Livability added by a sports stadium, 3 casinos and an upgrade to a downtown shopping complex were peripheral to the population’s livability perception of Detroit. Crime was the overriding factor. Even though the murder rate for instance dropped from 58 to 44 per 100,000, it was still 10 times that of the suburbs. A better economy made migration more possible, white flight continued and Black in migration stalled.

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Filed under American Governance, American Politics, Bureaucracy, City Planning, Full Employment, Jobs, Racism, social trajectory

Unemployment Exists Because Capitalism Wishes for it to Exist

unemployment-grads-cartoon1Why is the world able to create an internet that connect billions of people in real time, yet it is unable to match the chronically underemployed with the hundreds of millions in the world that exist without even their basic needs being met? The answer of course is capitalism. In America, where 1 in 60 Americans is a millionaire, these spectacular results can be directly attributed to capitalism. Yet, where 1 in 6 is undernourished and 25% are underemployed, capitalism is also the culprit. Capitalism is the dominant cause for both our nation’s prosperity and for our failing underclass. If full employment of our people is a goal, then capitalism will require repair of its major flaws. To understand how capitalism impacts unemployment, let’s first look at its impact on trade.

Trade has improved man’s lot. Just a century ago, a man would come upon the earth, begin to work in his youth, and continue working until infirmed to live a year in the care of his children before departing the earth at age 50. Now, after preparation for industry through his teens, a man toils for 45 years to improve his life. He then retires for 10 years, consuming his savings until lingering two years in an institution and departing in his mid 70s. This advancement was made possible by the expansion of trade.

Trade improves life by increasing one’s marginal value of happiness, health, and longevity. When two people barter for goods or services, they expect to gain, at minimum, par value in the trade, at least a unique difference in their life if not an expansion in their life’s core value. For a trade to occur, each must expect that the other’s goods will provide this marginal value, thus increasing life’s value to both parties.

The marginal value of each traded good or service comes from some combination of hours of toil and raw material that has been taken from the earth. The hours of toil may have come from hundreds of sources depending on the complexity of its “equivalency hours”. As an example, equivalency hours for a house might include a 1,000 hours of direct assembly, but also hours in the construction of all the house’s sub components. The finished product reflects indirect hours to build the lighting fixtures, quarry and polish the granite cabinet tops, design its architecture, manufacture and construct the saw mills and dry wall plants that supply the sub products, and thousands of other integrated time components.

For so many to add their labor to the creation of a sophisticated, complex product, its marginal value to life must be deemed high. The more innovative and engineered, and the more integrated the sub-products become, the higher its hour equivalency becomes. By increasing hour equivalency of one product, thousands of degrees of freedom of sophistication break out into the economy. These degrees of freedom can be used to create even more sophisticated products with highly prized equivalency hours taking from and contributing to the same growing economy, creating marginal value for the entire nation as perceived by other economies willingness to trade.

A nation’s flow of trade then can be enhanced by fewer, more integrated, and more highly sophisticated equivalency hours that trade on par with other nation’s relatively more hours of lesser sophistication plus greater tonnage of raw materials in a balance of national equivalency. Some say that this stratification of hour equivalency causes an imbalance of trade, exacerbating structural unemployment throughout the world that now threatens to drag the advanced economies into depression. Yet, no matter what degree of productive sophistication societies reach, they should always be able to balance equivalency hours to enable trade between their own citizens and with the rest of the world.

Others say that workers are no longer required in such great numbers to create sophisticated products because the hour equivalency of sophisticated products is being dramatically reduced through increased productivity. Therefore, the resulting decrease in national hour equivalency creates structural unemployment. At the same time that the complexity of toil is increasing in our products, each product requires less man-hours, freeing up labor to idleness.

Yet if labor is freed, then that labor should be available to create additional goods for trade with others that are also currently idle and available to create goods to trade in return. Natural supply and demand for goods and services can and should expand to fill all available equivalency hours. Yet since it does not, some artificial barrier keeps this natural balance from occurring.

If we find that trade is limited while millions remain structurally unemployed for years, at some point we must allow ourselves to question the status quo rationale for why structural unemployment exists. We must seriously begin to ask the question, “What are the real limitations to trade?” What causes equivalency hours to be left unconsumed, manifested as high unemployment?

There are natural reasons for unemployment, which are asymptotic limits to trade, that have hardly ever been approached. If they were, perhaps mankind could rest on the understanding that nothing can be done to change our structurally unemployed fate. Yet these should really be the only rationale we should accept for such widespread unemployment:

* Saturation: Every person on earth has filled his desires to own every product or service

* Obsolescence: All lesser products have been replaced with others that fulfill our needs

* Raw material depletion: Elements have simply been consumed from the face of the earth

*Economic Nirvana: All humans are working to the limits of a healthy blend of body and soul. All have maximized their potential to contribute to society through an expansion of their natural skills through education and technology. All of society’s needs that can be fulfilled by the limits of science are being met. Work has been directed to its highest societal priorities given our times. A balance has been reached of work toward creating future innovation, toward planting seeds for tomorrow’s champions, and toward maximizing society’s output for each other.

Perhaps economic nirvana will never be reached, but there are also temporary, artificial constraints caused by an inability of man’s imperfect economic systems through either central planning or the invisible hand to perfectly match natural demand. These constraints of course can be modified to lessen their impact on unemployment. Yet even without modification, they do not come close to causing the devastating worldwide unemployment we face:

* Distribution limitations: The product cannot endure the limits of man’s ability to reach all consumers intact

* Inefficient market cycles: Causing temporary mismatches in growth of worker and consumer priorities

Therefore, if natural and temporary constraints are not the cause of increasing structural unemployment that is devastating the Western world, a more destructive artificial constraint to structural unemployment must exist. To understand this constraint with clarity, we must first examine the value of currency in an economy.

The complex array of man’s products and services creates a market with such a wide spectrum of hour equivalencies that one could only hope to clear the market by using currency as an intermediary in the transaction. Currency, having been secured by stashes of gold as recent as 42 years ago, created the illusion of a safe medium that could be used by buyers and sellers to clear trades without barter. With currency, buyers and sellers have expanded world trade exponentially over the past five centuries.

Yet while currency solved one of man’s great problems, it also added a naked fungibility to some of mankind’s greatest character flaws, greed and power. As an intermediate step toward fiat currency, currency required the backing of gold as a source of security. Ubiquitous yet rare enough, Gold became Western gold merchants alchemy, along with property rights laws, to strip the wealth of kings and peasants alike. Using gold, they inserted themselves into every commercial transaction as market makers, extracting with every transaction a percentage of the trade, that they then accumulated into real assets. Today this accumulation represents amongst their descendancy, the band of 1500, half of the world’s wealth.

As opposed to the assets held by the majority of the worlds inhabitants, the goal of true wealth, that of the band, is to grow ownership of assets which are non-depreciating; land, rare metals, minerals, stored energy and water. All other assets, whether real or contractual, are depreciating, most barely able to survive the generation in which they are born. Currency depreciates but is necessary as a transferring medium and thus 20% of the band’s portfolios are liquid. Industry is a good investment, as in aggregate it appreciates. Individual business values rise for a time and can be used to advance positions in real assets, but as with all other depreciating assets, individual businesses eventually fail and take their spot in the dust heap of all other depreciating assets.

For the past 500 years, the lineage of the band of 1500 has executed a goal of accumulating non-depreciating wealth that once acquired, is passed down from generation to generation. The means of extracting real wealth is the basis of the system of capitalism. The means and ends of Capitalism are certainly not limited to the band of 1500. It is this hope and share of Capitalism’s benefits that keeps all encumbered to its mechanisms as we all witness semblances of those ascending toward the ranks of the 1500. With this possibility intact, capitalism endures as the means for all of us to prosper. Yet those in the stratosphere of the system have the intergenerational means to sustain their prosperity.

The modern world has become conditioned by experience and by law to accept capitalism as the dominant method of commerce, including debt derived money, interest, and return on equity. The economic model of capitalism requires owners of wealth to invest equity and to lend currency to enterprises that will employ the world’s people. Because the band of 1500 owns half of the world’s wealth, the world is dependent on the band of 1500 to participate in employment and growth, for they are the capitalists of capitalism. If they do not invest, if they restrict credit, jobs do not materialize and the world’s output suffers.

Capitalism would be less flawed if the goals of the band of 1500 were aligned with full employment, but they are not. The world’s non-depreciating assets are finite and human population is growing. If each new soul wishes to gain non-depreciating wealth of land, rare metals, raw materials, stored energy, and water, then their accumulation must be gained at the expense of others. For the band of 1500 to continue to accumulate real wealth, the rest of the world must hand it over to them a bit at a time as the world churns in business cycles with apparent wins and losses that ultimately create net real asset wins for the band and net real asset losses for most of the remaining seven billion on the earth.

Capitalism uses the business cycle as the tool that accomplishes the feat of accumulation. During each cycle, the masses produce value in equivalency hours, consume, and invest. Yet, their investment results in a net loss of non-depreciating assets. 80 percent of new businesses fail every business cycle. 80 percent of investors lose money in the stock market. Real values of equivalent housing decreases. 80 percent of people retire at the end of their working life with less than two years income in liquid assets, and if they are lucky, a depreciating home. The vast majority leaves the planet penniless.

On the other hand, in every business cycle, the band of 1500’s wealth increases. Their liquid assets are invested in the churn while their non-depreciating assets are protected from the down turn through control of the money supply. Liquid assets are invested in the beginning of each business cycle to share in equity and interest returns. Real assets are collected from failing businesses and foreclosed personal assets in the trough of the cycle. In collapses of the capitalist system, currency is pumped into the economy to shore up temporary devaluations of price signals of real, non-depreciating assets while excess supply is secured from the market through controlled purchases directed at these assets using devaluing currency.

The system of Capitalism then relies on the liquid assets of the band of 1500 that are employed in the economy as the capital and base of loaned currency. These assets are then directed to where they can best accumulate real assets, typically in industry that is in the rising phase of its growth, as well as in providing the means by which the seven billion can indebt themselves to the capitalist system through long term loans to purchase depreciating assets.

The limiting factor in the growth of human civilization then, under the capitalist system, is the amount of assets that exist in liquid form as held by capitalists for the transference of man’s endeavors into real, non-depreciating assets. These limits were originally set by the amount of gold that had been extracted from the earth, and then later set by central banks as a means to limit exposure to capitalist collapse. Yet in all cases, the limiting factor is the participation of capitalists from the accumulations of their real wealth.

Could the world simply go around capitalists? Could the world create a new fiat system not tied to old money or real assets? Yes…In so doing, the entirety of mankind could expand its capacity to work toward the betterment of all men, keeping somehow the self-advancement features of capitalism that drive men to succeed, while eliminating the scarcity and maximization of marginal return limitations imposed on us by our current system, thus propelling mankind toward full employment.

Is this a viable option? No, not really, at least not in the short term of a generation or two…We are already witnessing the wild haired expansion of the world’s money supply in the makings of a currency war, as a system control imposed on the masses by today’s capitalists. By placing all the world’s currencies on the ropes, they have left little hope for any attempt at advancing a worldwide currency to succeed in the near term. And any rising third world power that attempts to create a market using its own currency is quickly thwarted and compelled to use the world’s reserve currencies, those held by the band of 1500, as its means of world trade.

China is creating a dominant market that is advancing its own system to circumvent status quo fiat currency. China is quickly expanding a currency system that relies on the talents and treasures of its trading partners and third world raw material vendors. Yet even though China’s system is modified so as not to discriminate amongst third world nations, China’s economic system simply exchanges one set of capitalists with another.

No viable threat to the capitalist system of trade exists or will rise in the near future. Therefore, if structural unemployment is to be solved, then modification of the existing capitalist structure is in order. Capitalists will continue to execute a goal of real wealth accumulation. Therefore, incentives that tie capitalist intergenerational maintenance of real wealth to the requirement that capitalists provide enough investment for full employment is the key to achieving optimum economic output. Unlike liquid assets, real wealth is less fungible and tied to the property laws of the land.

Since our current, long-lived economic system is an inevitability, then creating a business environment that makes the United States the optimum location for job growth investment is the least confrontational option. America’s trade laws, infrastructure, and employment costs must echo that of the world, if the world cannot be coerced to bend to our economic infrastructure. Since that time in our hegemony is beyond us, it is time for America to adapt.

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Filed under Economic Crisis, Full Employment

US economy is as simple as US CH IOU.

Slide1Person U buys trinket H from Person C and gives a U IOU. Person C doesn’t want trinket S and instead saves U IOU from person U. With no demand for trinket S, person U is laid off. But he still wants another trinket H so he gives person C another U IOU, which Person C saves again.

After a few years, person C has more demand for trinket H and uses U IOUs to buy a factory from Person K, who then uses U IOUs that travel throughout the region but never go back to purchase trinket S from Person U. Meanwhile Person U continues to purchase more trinkets S with more IOUs.

U debt grows. U unemployment grows. U trade deficit grows. U economists suggest that to put person U back to work, government U will put other Persons U to work, pay them more IOUs that they can then give to Person U for trinket S and that then he can go back to work. So now to “fix” the problem, people are put to work in government instead of making trinket S, so that they can buy trinket S, yet the debt still grows.

Economist U says this is a perfect solution for Person U can now buy trinkets from Person C, Government person U can buy trinkets from Person U and the only thing that seems odd is that the U IOUs continue to grow. But IOUs represent work that must be done eventually to compensate those holding the IOUs. And if Person U holds more IOUs than he can possibly repay in his lifetime, person C eventually becomes concerned.

Eventually, Person C figures out that Person U can no longer repay the IOUs with the amount of labor available to Person U. Person C then decides that the IOUs circulating are not worth the amount of repayment labor originally intended. Person C then tells Person U in order to buy trinket H, Person U must give Person C two IOUs.

In this way, person C begins to make person U repay his debt. Person U must now labor twice as long to obtain trinket H. Person U becomes “poorer” due to now having to labor harder to repay decades of IOUs paid to Person C. This perfect solution touted by Economist U as a way to fix unemployment is not so perfect after all.

Person C has profited from not buying trinket S over the years. Person C has grown employment, bought factories, grown GDP, and increased real assets at home. Yet, Person C has paid a price in choosing eventually to not accept U IOUs at the same face value as before. For now, while choosing to make person U give two IOUs for trinket H, person C also accepts that all the IOUs he holds are only worth half of what they were a moment before.

Person C’s economy is now robust but his wealth is a little less now than before. Person U’s economy is now fragile and hollow. Person U must labor twice as hard now to buy trinket H. Even though his labor is worth less buying trinket H, he will still labor the same number of hours to repay his debt. Yet a pyrrhic victory is won for now other countries holding IOUs will buy his labor that is worth less.

In summary, for decades Person U bought trinket H thinking it was inexpensive but in reality it really bought him unemployment and borrowing to pay for trinket H. Then later, to repay his debt, Person U became poorer and sold trinket S cheaply into the market to repay Person C for the trinket H that he borrowed U IOUs to pay for earlier. Going forward, Person U has less GDP and less factories for decades as he attempts to catch up.

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A Social Contract Exists Between Business and the Government of the People

While classical corporatism has other meanings, the context of corporatism to which I refer is really neo-corporatism, the power shifting that occurs between owners, managers and labor for economic sharing. it’s this whole shift of power from individuals to the state to the corporations that defines our modern day and controls our every pattern of life. I continue to question the flaws of corporatism in that it does not meet the goals of man’s orignal intent.

Corporations came into existence because kings wanted them for their own aggrandizement and because other aggressive men saw this as an entrance to sharing power with kings. Corporations were not intended by their original form to be the answer for full employment. Yet through the centuries this orignal intent has been replaced by an unwritten social contract of employment for the good of the community.

As society evolved, craftsmen found that work other than that on the farm could sustain them and their apprentices and thus businesses were formed, again with no social contract other than that which could be gained by the mutual benefit of seller and buyer.

But within man is the natural state of altruism. It is in our DNA. We cannot walk by others in squalor without a tinge to help. This tendency then manifests itself in government for government is merely the mirror of our sense of self. So governments evolve a structure of social safety nets to help the less fortunate among us. With such artificial constructs, how then do we provide for the needy except through various abnormal means such as taxation and such impositions on businesses as the minimum wage?

Now through advances in innovation and productivity, businesses have provided more and more for the common good and thus the level of squalor that we can conceive of allowing within our community continues to lessen. We expect that the least among us should be provided for through higher and higher standards. Such standards as these could not possibly be provided for if man were to be turned away from society to exist on his own living on only that which he could carve out of the wilderness.

And even if he could, there is no wilderness for men to exist within, for our modern capitalism has divvied all lands to provide the capital for modern business to thrive and for government to use as a means for the common safety net of its citizens. Therefore, the modern construct of corporatism that our nations have agreed will be the means to provide for the common good no longer provides an escape or alternative for the rugged individual.

We must therefore agree that a social contract exists whereby the capture of land and capital by government and business must also provide for those less fortunate and must provide for the employment of all to exist and to contribute to the community. This social contract that has haphazardly evolved is broken and must be fixed by an equally evolving paradigm of the right of all men to full employment.

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Business exists for the Sustenance of Mankind

For those that continue to harp that businesses do not exist for the purpose of creating jobs, let me set the record straight. Business has the responsibility of 100% effective and sustainable employment. In this “modern” era, mankind has fallen susceptible to the idea that business is an organism coexisting in time with men, finding arms lengths symbiosis whereby each feeds off the other but neither have a responsibility further than from what can be gained.

This odd paradigm that business does not have the purpose of creating jobs is an erroneous fiction of our time. While it may be quite true when viewed from the perspective of an individual business including the sole purpose of its owners and managers to make profit, the idea that the purpose of business does not include providing employment is one that has mutated in the evolution of the era of individualism.

Before our time, in the era of Kings, men held other misconceptions such as the purpose of land. It was widely held that land should not provide each serf his own castle but instead should connect all in servitude to the king (similarly to connecting all mankind as a series of batteries connected by wires to provide the electrical power for the nation of computers as seen in the movie “The Matrix”). Kings would grant temporary sharing of power to corporations to reward those who would risk life to advance the kingdom.

Yet in their quest for more, Kings allowed this power sharing to gain a foothold and their power spread too thin amongst the businesses. In this devolvement of power, the era of kings diminished and the era of fiat money derived from gold renting rose. With it, a new paradigm of business came to being. Businessmen gathered the trappings of power; money, ideas, inventions, innovations, labor, these were those that provided aggressive men the means to acquire kingdoms unto themselves. Yet in the beginning, these new mini-kingdoms existed within the realms of the nation-state, still subject to the whims of the king.

Ultimately, as businessmen acquired a majority of power, they demanded and received their due. A new paradigm arrived whereby these captains of industry exchanged seats with the rulers and the rulers bowed to them, becoming puppets to their whims instead. Now the new kings of business shared their power with the people to hold them in abeyance. But as the masses rose in opposition to workplace excesses, power once again shifted and all prospered in a moment of whimsical balance created only by the transfer of time and power toward its ultimate destiny.

We now have a period of imbalance that will only worsen over time. Businesses will continue to garner power from the transition toward the corporate state. And with the power shift, the middle class will suffer even more from this unnatural imbalance. Mankind is meant to be communal. Not that all should be equal or share equally but that all should contribute to the common good. Systems that provide that opportunity include businesses. Business owners are cogs in the wheel of life and have the responsibility to employ all in the community for the common good.

Yet individual businesses should not have to employ any more than that which is needed by increased innovation and productivity. Therefore, if excess unemployment exists, an artificial constraint, unnatural, ungodly, and unsustainable exists; one that is only imposed on man by those that would seek to enrich their own mini-kingdoms. And now that the era of kings is dead, those mini-kingdoms hide out in the marshes of government bureaucracy. Therefore, the bindings of government that have created it must be loosened, and a new paradigm of mutuality between government and business must be created with the outcome of full employment.

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Republicans Lost 2012 Election Because of a Confidence Crisis

By the numbers, this year was not a great victory for the Democrat Party. Yet, it was a great failure of the Republican Party to win the confidence of Independents.

For those that want to call this a democratic mandate, some historical reference is in order. Looking back at previous second term elections, we see that 2012 provides the least significant “mandate” for a returning President in recent history.

1972 Nixon won by 18 million votes, a spread of 21.2 percent of the popular vote. His approval/disapproval rates were 62/28 just prior to the election.

1984 Reagan won by 16.8 million votes, a spread of 18.2% of the popular vote.
His approval/disapproval rates were 58/33 just prior to the election.

1996 Clinton won by 8.2 million votes, a spread of 8.5% of the popular vote.
His approval/disapproval rates were 54/36 just prior to the election.

2004 Bush won by 3 million votes, a spread of 2.4% of the popular vote.
His approval/disapproval rates were 53/44 just prior to the election.

2012 Obama won by 2.6 million votes, a spread of 2.2% of the popular vote. His approval/disapproval rates were 52/45 just prior to the election.

More voters were disenfranchised in 2012 versus 2008 for 119 million voted this year compared to 131 million in 2008.

In 2012, Democrats continued to enjoy greater number of registered voters than Republicans. In fact, Democrats have 18% more registered voters than Republicans, and 6 million more Democrats than Republicans voted in 2012. Republicans win national elections when more independents affiliate with their views than with those of the Democrats. Yet in 2012, Republicans failed to make up this 6 million-vote party vote gap when only 3.5 million more Independents voted with the Republicans than with the Democrats.

What was the greatest factor in the independent voting gap in 2012? JOBS! 23 million Americans were either unemployed or underemployed. Add in their spouses and 40 million people were concerned in 2012 about where they would find money to make mortgage payments or even to buy groceries. 5.5 million Americans are the so-called 99ers have long since stopped collecting unemployment checks and whose need for immediate employment is dire. Add to this list the 15.7 million Americans whose homes are underwater, and what we have is a confidence crisis in America.

Polls did not ask these folks affected by this confidence crisis who they believed in 2012 would most likely support them with a social safety net, but if they had, the numbers would have been overwhelmingly in favor of the Democrats. For the Republicans to have won in 2012, they would have had to overcome this confidence crisis by ensuring that those affected by joblessness could quickly become employed by the Republican job plan. Otherwise, those voting for Romney would be in an even direr financial crisis than now. Obviously, Romney did not overcome their fears.

What was required for Romney to win in 2012 was a jobs plan that could ensure immediate employment of those that voted for him, such as my plan that can be found at The electorate measured up his jobs plan and found it wanting.

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America Faces a Worldwide Economic Revolution

In the midst of America’s great economic crisis, factions from every point in the political spectrum have raised issues as causes for America’s demise. Yet most of America’s problems, when examined in the light of day, are simply symptoms of our greater issues or even just political noise, offering no real hope in deducing the core of our dilemma. America will ultimately begin a path toward our thriving future. Yet, to do so, we must first clarify the true essence of our core problems before we can agree on viable solutions.

To that end, let’s peel back the political onion to examine what some say are our core issues, and then continue to peel until we briefly reach and peer into the collective complexity of our true core. Fret not however. An onion can make one cry because of its many stinky layers, but America’s solution knives, even those identified within these bindings, can cut through all of them.

Over the past three decades, we Americans spent our way to a debt mountain and a housing bubble that will take years to correct. Factions such as the Tea Party have risen up to chastise our government and to slow its ballooning debt even as record Federal deficits are predicted to continue for at least the next decade. Theirs is a worthy cause for what seems a politically irresolvable dilemma. But even if America comes together to solve our debt issues, reducing our debt will only remove a symptom of our nation’s core problem.

If we are to reduce America’s debt without defaulting on our worldwide financial obligations, we must once again employ all able Americans in productive, well paying jobs. Yet in the midst of our bursting housing bubble, we discovered that for three decades America had also created a false employment bubble, which burst as our economy faltered. As a result of our jobs deficit, America is now in danger of lingering in a severely dampened economy for many years to come, certainly another critical symptom.

America has fallen into a monetary contraction resulting from a combination of our housing debt overhang, our poor credit and a lack of jobs. A viable turnaround solution to this monetary implosion should be immediately implemented to begin America’s journey toward our thriving path, and Congress and the President must support it. Yet, while our slowly eroding jobs base, diminished credit and housing debt overhang must be simultaneously corrected if we are to have any hope of more than a token recovery, our monetary implosion, however frightening, is still at the edge of America’s core problem.

Faced with such dismal prospects for debt reduction and job creation, America is now forced to choose between two competing constituencies. Our very concept of freedom almost demands that we support free enterprise, for it has helped America’s multinational corporations compete in the world’s rapidly transforming marketplace. Yet, the immense worldwide scale of free enterprise is now tearing apart our middle class, assaulting the American worker, and we seem powerless to even slow its destructive path. This choice between competing alternatives of either 1) supporting American businesses in their quest to rise above world competition or of 2) supporting the American worker, who is being diminished by those same corporations’ conquests, begins to converge toward the core of America’s problems. Over the past thirty years, emerging nations have conducted mercantilist attacks on America’s gross national product. Yet, our government has resisted creating the economic weapons required to defend our nation against modern hybrids of global competition.

America is already thirty years behind the curve of economic revolution. We are seemingly only observers to a world in which free enterprise is a both a bulwark of defense used by nations against those that would employ mercantilist offenses against them, and also an offensive siege weapon used by emerging corporate-states to destroy the classical defenses of nations that would attempt to resist their growing invasive economic powers.

During these thirty “standstill” years of observing the world’s economic revolution, America’s baby boomer generation rose to positions of power in business and government. In the comfort of our former world prestige, our baby boomers enjoyed the luxury of basking in decades of societal actualization. We focused our attention on America’s internal problems at the expense of creating a competitive manufacturing base. Our political struggles over competing societal goals of social justice and military superiority blinded us to our emerging jobs crisis. Yet, the hungry world fiercely competed for and took from us our very own consumers and employers.

America’s consumers naively embraced the world’s competition for our dollar. We enjoyed the low priced fruits of a desperate world’s labor, not understanding the impact that our purchases would have in the destruction of American jobs, the explosion of our debt, and the diminishment of future opportunities for America’s growth. For awhile, the savings we enjoyed from globalization offset our slowly diminishing purchasing power. Yet, over three decades, our purchases raised the world’s productivity, brought an onslaught of global competition to our shores, and ultimately replaced the American worker with an army of overseas laborers.

Eastern nations adopted hybrid economies of neo-mercantilism to rise above the fray of neo-colonialism and to position Asia for a century of prosperity. Unchecked by any natural defenses against them, neo-mercantilist nations joined forces with international banks and emerging corporate giants to concentrate the world’s economic power for China’s 21st century rise toward hegemony. In the process of this world economic shift, America’s future competitors, the corporate-states, were born.

Fierce, global competition required American businesses to employ all manners of competitive measures including intercontinental scale efficiencies. As the world would soon come to realize, the international skills multinational corporations learned to survive included those necessary to pit nations against each other and to overcome the regulatory frameworks nations imposed in vain attempts to restrict corporations’ intrusions into domestic markets.

In the process, these commercial behemoths of corporatism trampled on America’s two hundred year foundation of classical free enterprise. Within the context of our government’s regulatory framework for fair competition, America’s version of free enterprise envisioned all nations playing by our rules of engagement. In the past thirty years of economic revolution, America instead became Redcoats in the global economic war. Our structured business legal system was a bright red target easily slaughtered by guerrilla warfare of nations and corporate-states intent on pillaging America’s capital and intellectual property.

As defined by our anti-trust laws, America’s isolationist views of perfect competition required that our industries limit any one competitor’s size to well under what could be called a monopoly within our borders. Our legislated size limits were smaller than the mega-factory direct foreign investments required to compete globally. As a result, even if not the root cause of business flight, America nonetheless needlessly influenced American businesses offshore in their bid for massive customer markets such as India’s and China’s.

Some of American corporations’ resulting worldwide operations have grown into virtual states. In their unquenched quest for profit, they have created international offensive siege weapons to easily circumvent the purposes of such antiquated American concepts contained within the Sherman Antitrust Act. Many of our historically American-centric enterprises have since blurred their connections with America. Consequently, the Sherman Act has become increasingly challenged by free market advocates as an albatross of regulation. Alternately, it has been condemned by those charged with protecting the rights of consumers and domestic small businesses in America as a weak, antiquated tool of defense.

Globalization has brought competing American interests to the brink yet we dare not allow political dysfunction to keep America on the sideline of global competition any longer. We somehow must now collaborate to support America’s multinational industries’ quests while simultaneously protecting our own competitive domestic market. We must provide a pro-business environment that places America’s businesses on par with those of other countries while stopping international corporations from employing siege weapons of free enterprise against our citizens. We must provide competitive yields for capital in America to ensure America’s posterity by reversing the tide of capital outflows from our country. And we must ensure that our loose federation of American businesses can compete globally against neo-mercantilist countries. America must define the post neo-mercantilist era.

We will soon be living in a land full of global corporate giants that employ modern offensive economic weapons to consume nations. Yet unlike the neo-mercantilist countries that have attempted to create hybrid, state run industries immersed in private capitalism to compete with these futuristic monstrosities, America has not yet even begun to create its weaponry against neo-mercantilists such as China, and certainly has no viable plans against emerging corporate-states.

As America faces the prospects of diminished power in this 21st century economic revolution, we must adapt to the corporate power realities that all nations will face. Our future thriving path strategies will inevitably merge the goals of our giant, American born, corporate-states with those of our nation and its citizens. Yet our government must go beyond such surface strategies to create America’s post neo-mercantilist framework to harness the power of corporate-states for the betterment of our citizens and for all nations.

If we are to create a thriving outcome from the 21st century economic revolution for all on our finite planet, America must seek out the core of our problems and create a model for other nations to follow. Our thriving path forward begins here.

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