Why Is Unemployment high?

Why do we have such high unemployment? If you talk to ten economists, you will get fifteen answers. Let me give you answer sixteen.

Congress has refused to pass an adequate stimulus package and a plan to control our nation’s debt problem. A stimulus package would increase jobs while building and repairing infrastructure to compete better in the future. Passing a plan relating to our federal debt would brighten the outlook for the country and improve confidence. Congress says it wants to reduce debt; however,it refuses to raises taxes on the wealthy. We need both a stimulus and a long-term debt plan.

Congress is at fault regarding both not having either plans and both the congress and President are to blame for not having a plan regarding our deficit. The Republicans are blaming the President for our high unemployment and yet it was their party’s past policies that caused our near depression and their present practices are preventing further stimulus.

We were in a near-depression and we still have not climbed out of it. Depressions take more than a day to create and recovering from one takes a long time. Most families not only had their income drop, but also saw their net worth fall because of the decrease in value of their largest asset, their house. Further, housing values have been slow to recover. The result has been the consumer has lost confidence and has not been in a mood to spend.

We drained our nation’s capital and lost lives by fighting two foreign wars in a manner that provided very little benefit to our nation. As a result we have thousands dead and trillions of dollars wasted.

In addition, much of the consumption in the prior decade was a result of tapping the equity in the family home to use as collateral to have the money to spend. Over the last four years the consumer has been paying down his debts and rightly so. As a result, there is less demand. He is not ready to start borrowing again for consumption. In short, he has lost confidence.

In the last decade too much was consumed relative to income per family. Therefore, do not expect consumption per capita to get back to the “good old days” soon. We will need to rely on exports to increase the demand for goods and services produced in this country.  Increasing exports is a challenge and does not happen quickly.  The world is competitive and increasing exports will take time.

We have too much regulations on small business, we do not defend small business from big business and we need to enforce anti-trust laws against big business where needed. We should not burden Small business with the same rules as big business. Capitalism works fine to the benefit of the nation for small business. Competition requires they give the consumer what he wants. Further, when a small business acts improperly the damage done to the nation at large is minimal because their small sixe.

Capitalism for many industries controlled by oligopolies is broken. Free markets in these industries do not exist. Oligopolies control these industries and need more regulation. Capitalism exists to serve society. Society does not exist to serve capitalism. We should either fix capitalism where it is not working by enforcing anti-trust laws or recognize there are some industries that must be highly regulated. We are comfortable regulating utilities. If capitalism does not work in an industry one alternative is to recognize the problem and treat it as a utility. Capitalism is not working anyway.

2012 Agenda For Politicians

American politics is one of the few jobs where you are allowed to hunt for another job during 98%  of normal working hours and continue to be paid for your present position. WE CANNOT LET THIS HAPPEN THIS TIME!

“Republicans hope Mr. Obama’s pronouncement that a full-year extension of the payroll tax cut was the last “must-do” piece of legislation for the White House will work in their favor, making them look as though they are trying to create jobs while Mr. Obama is busy campaigning.” Boehner Faces a Restive G.O.P. and New White House Attacks, Jennifer Steinhaurer, New York Times, January 14, 2012

In 2012 we have the following items that demand national attention: the presidential and congressional elections, the Afghan war,  Iran building a nuclear weapon, high unemployment, a teetering economy and a national debt with no plan in place to solve it. These are just the items on the top shelf.

Our elected officals are going to try and do the side-step to avoid confronting anything other than their reelection. This is where they make their money and get their power and influence. They would rather wait until after the election when they have raised more money and consolidated their personal power. Both Democrats and Republicans will play the delay game. Each side may bantor some for the cameras and the press; however, in the end they only have their power retention objective in mind.

No one knows how long the world will give us to develop a plan that corrects our deficit problem over time. The consequences are too great to find out; just look at Greece and much of the rest of Europe. We need a plan now. We can begin its implementation later, but give us the plan.

Unemployment cannot wait. There are too many citizens not working and too much work to be done to build and fix infrastructure. Money is cheap and there is an excess supply of labor. What are we waiting for? The election? Families need work now.

It is time for our politicans to go to work rather than spend time and taxpayers money to solidify their next job.

Depressions Do Not Happen In A Day!

Obama is getting blamed for the high unemployment numbers and our current economic downturn when in fact we should be pointing our finger at the Bush administration. The country’s eyes were taken off the economy by the disaster of 911 and it was exasperated further with the unjust war in Iraq.

This is a Bush depression that has its roots in the early part of the last decade.

This depression did not happen in one day. It evolved over time. We presently have an unemployment rate of 8.5%, compared with a rate of 4.2% in October 2008.

Below is a graph showing unemployed from 2000 to the present. In 2007 roughly 8 million people were unemployed. Today the unemployed total 14 million. If we take into account that many of the jobs created from 2000 forward were related to the housing bubble caused by the sub prime mortgage scam, another 2 million jobs were artificially created.

Has Obama made mistakes? Of course he has and much of it was due to a lack of experience. One of his first mistakes was tackling the health insurance issue too early and not getting directly involved in the debate for almost a year. Another was he spent too much time trying to compromise when his opposition had no desire to compromise. This was especially evident with the deficit discussions and the need to raise the debt ceiling.