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Benson's Economic & Market Trends
In Presidential politics, when you get
beyond the culture wars, wedge issues, religious right, taxing the rich,
pro-choice, nuking the gays, the Tea Party Movement, and NIMBY, one election
truth holds clear: A sitting President running for a second term has never
lost an election when unemployment was low and the economy was good.
On the other hand, he’s never won an election when
unemployment was high or the economy was ravaged by inflation. This means the
unemployment rate can be used as political psychological warfare on the
electorate. If the unemployment rate is pushed down, the consensus is that
there must be jobs and the President can’t be blamed for the failure to
find work. Therefore, to win this election, the current administration has
found ways to make people vanish from the labor force to keep the
unemployment rate lower than it really is. Let me explain how they have done
this.
If the labor
force participation rate had not been reduced 4 percent over the past four
years, the unemployment rate would be more like 11.5 percent today, not the
reported 8.5 percent.
Push those nearing retirement into
filing for Social Security Disability (“SSI” Benefits): Firms
specializing in coaching people on how to be accepted by SSI are now
available to anyone over 50 with debilitating aches and pains from serious medical
conditions such as a bad back, diabetes, failing joints, arthritis, high
blood pressure, failing heart, etc. Plus, anyone over 50 can claim chronic
clinical depression if they’re unemployed and without hope, so
eligibility for SSI is legitimate. Even if you have to apply more than once,
eventually you will get into this program, which has been transformed into a
long-term unemployment program with 8,551,000 recipients. (See Table 2:
www.ssa.gov/policy/docs/quickfacts/stat_snapshot/) I think we can expect
the Obama Administration to turn a blind eye to eligibility and ramp it up in
2012. Do we hear 9.5 million plus on SSI by Election Day?
Get people to start collecting Social
Security early at age 62: As of
November 2011, a staggering 60,671,000 are collecting social security and/or
SSI disability benefits, and the number keeps rising. If you’re
collecting, you’re out of the labor force.
Give out generous government loans and
send people back to school: If you’re a young high
school grad without any job prospects and not especially gung ho about going
to Afghanistan to look for roadside bombs by stepping on them, what can you
do? Well, borrowing from Uncle Sam to go to a four-year college, two-year
community college or trade school, looks pretty darn good. Indeed, a life of
books, late night parties, and cute co-eds, is a pretty nice way to live, and
many adults remember it as the best time in their life! Also, for college
grads with no decent job prospects going to grad school is a pretty simple decision.
Staying in school is a life they already know and love, and, who knows, you
might even learn something! For laid-off Wall Street executives, business
school or law school looks great. Why not learn some skills and come back
when the job market is stronger and the pay is higher.
This back-to-school trend has
surprisingly picked up for those in their 30’s and 40’s –
if you are too young for disability, and still young enough to hope, going
back to school is the new rage. Most importantly, it keeps you out of the
labor force! My favorite tee shirt for the other 99 appropriately says
“I’m not unemployed, I’m in college”. Since America
decided to destroy our factories and move millions of jobs to Asia, good jobs
are so scarce that the labor force has turned into “the labor farce”.
There are four job seekers for every job opening. And, to make matters worse,
over 11 million people can’t move to where the jobs are because
they’re trapped in an underwater house.
Today, 20.5 million people are in
college either full or part-time, but sending them to school isn’t
cheap! Full time college programs for state schools can easily cost $30,000 a
year, and full-time programs at private institutions run well over $50,000 a
year.
It’s also common to see college
grads with $50,000 - $150,000 in debt when they finally enter the labor
force. Student debt today at one trillion dollars is greater than all
consumer debt. A trillion bucks is a lot of spending on economic activity but
with ten percent of student debt in total default, in a few short years it
will be triple what it is today and cost the American taxpayer three to four
hundred billion in bad debt that can never be repaid.
The reason
the debt can’t be repaid is that many students simply do not acquire
skills that allow them to make a material increase in their earnings. Not
everyone is cut out to be a computer engineer or brain surgeon, and the other
skills that remain in demand. The latest statistics show a vast swarm or
newly minted law degrees, and virtually no need for new corporate counsels or
ambulance chasers. Many English majors can’t even write a coherent
article because they only know how to write with their thumbs in cell phone
shorthand. Many of today’s students will simply never earn enough to
support themselves and pay back their student loans. However, they will be
aces at computer games!
At least big student loans help to keep
the cost of college soaring! Why? Because no matter how high the cost of
education goes, kids can borrow the cost from the government. This Federal
largesse helps keep today’s economic spending up while keeping the
salaries of professors almost as high as their inflated egos.
(It should be
noted that many early Americans came from debtor prisons in England or came
over as indentured servants before the American Revolution. After 1776
Australia got settled when England had to find a new place to dump their
prisoners. However, life in the modern world in Australia and New Zealand is
reported to be like Southern California, but with lots of jobs. So, in a few
years, there may be a wave of ex-American students skipping out on crushing
debts by emigrating to warm sunny climes “down under” for a fresh
start.)
Keep inmates in jail. America has
2.3 million people in jail. You may be surprised to learn that while the US
has 5 percent of the world’s population, it has 25 percent of the
world’s prison population! The annual cost to keep one inmate in jail
can easily exceed $30,000 year. Much of the cost is used to pay for the
legions of prison guards, and create valuable jobs like the TSA airport body
searchers. In other words, a police-state economy lowers unemployment as it
creates jobs for the INS, DEA, TSA and Wall Street snitches. In China,
even though they have four times the population of the United States, they
have a million less people incarcerated. There, they shoot criminals or put
them to work rather than pay for them to be locked up.
Needless to say, these labor force
suppression programs cost a bundle but they do put money in people’s
pockets and can generate votes on Election Day. However, for those 60 million
plus on SS or SSI, their life is as good as it will get because in reality
they’re marginalized, and ignored by the economically active. For the
inmates in jail, they tend to learn skills from other criminals on how to be
a better criminal. For those hiding out in school, it will be a while before
they realize they have tons of debt and because federal law prevents them
from going bankrupt on the debt, today’s students will become
tomorrow’s debt slaves many months after the election.
So, at the end of the day, the real joke
is on the American taxpayer who thinks the election is bought by big
political donors giving hundreds of millions of dollars for advertising on
social issues. In reality, though, the PACs, and Super PACs are spending
peanuts compared to the cost of labor force suppression. Who says the Presidency can’t
be bought!
Richard Benson
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