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Thread: The US Recovery

  1. #706
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Doktor View Post
    Yes, what's so hard to figure out?
    So, which gives the more accurate view: a 1% change in the inflation rate, or a one percentage point change?
    Is a change from 3% inflation to 3.03% as significant as a change from 3% to 4%?

    There's a reason why you don't see useful information expressed as a percent change in the percent.

  2. #707
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    Quote Originally Posted by DOR View Post
    , I simply don't know how to find data on dead or retired manufacturing workers.
    Dem party voter rolls has it :P

  3. #708
    Senior Contributor Doktor's Avatar
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    Quote Originally Posted by DOR View Post
    So, which gives the more accurate view: a 1% change in the inflation rate, or a one percentage point change?
    Is a change from 3% inflation to 3.03% as significant as a change from 3% to 4%?

    There's a reason why you don't see useful information expressed as a percent change in the percent.
    It all depends on what you want to show/hide. In the case you presented, you wanted to show that the labor force shrink isn't that much related to China manufacturing. But as the base shrinks, you can't see that much of a drop after few trims. Following same logic/data I will make a case automation doesn't take jobs, too.
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  4. #709
    Senior Contributor Monash's Avatar
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    Quote Originally Posted by Gun Grape View Post
    No need for it. Manufacturing output is at a all time high. Its automaton thats killing jobs, not China and Mexico

    https://fredblog.stlouisfed.org/2016...paign=fredblog

    https://www.forbes.com/sites/timwors.../#41d98dda578d
    Yes but that still doesn't answer the question. Regardless of whether or not the US manufacturing sector is doing well or not, needs 'protection' or not the farm sector still gets a level of tariff protection way above what any rational assessment of it's contribution to the US economy seems to merit. Using the figure quoted for peanuts as an example (138.1 % tariff), as much as I understand that peanut butter and 'jelly' sandwiches might be a staple of the US lunch boxes peanuts themselves hardly qualify as a critical national strategic resource - so why to they merit such an exorbitant level of protection?
    Last edited by Monash; 17 Apr 17, at 06:35.

  5. #710
    Senior Contributor GVChamp's Avatar
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    Quote Originally Posted by Monash View Post
    Yes but that still doesn't answer the question. Regardless of whether or not the US manufacturing sector is doing well or not, needs 'protection' or not the farm sector still gets a level of tariff protection way above what any rational assessment of it's contribution to the US economy seems to merit. Using the figure quoted for peanuts as an example (138.1 % tariff), as much as I understand that peanut butter and 'jelly' sandwiches might be a staple of the US lunch boxes peanuts themselves hardly qualify as a critical national strategic resource - so why to they merit such an exorbitant level of protection?
    Right, and if there is any industry where automation killed jobs, it's farming.
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  6. #711
    Senior Contributor DOR's Avatar
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    The Golden Age that wasn’t

    I’ve been interested in the evolution of the US economy out of manufacturing and into other, higher value-added activities for some time. Americans – particularly politicians – have a strange fixation on manufacturing jobs, probably arising from the myth of the Golden Age. In a nutshell, in the 1950s and 1960s a single worker could support a family, buy a house and probably one or two cars. Jobs were secure, women were subservient and children polite.

    The crux of the myth is that well-paid, secure manufacturing jobs allowed this dream, and that it was widely available throughout society. The well-known problem is that it was only a portion of the labor force that had the opportunity to follow this dream: white men, and it would really, really help if the guy was a Protestant.

    It is true that manufacturing jobs paid above-average wages, but only in 1976-2006. Prior to that, and ever since, such jobs have not paid as well as the average. Construction jobs, meanwhile, paid 20-35% more than manufacturing jobs, on a same-definition basis. More, the other part of the myth, that manufacturing jobs were more secure than other jobs, also doesn’t hold water. Growth in manufacturing employment – which directly reduces the risk of being laid off – was the exception, rather than the rule, throughout the post-War period. (Year-on-year data negates construction's seasonality.)

    I will use an arbitrary (but reasonable) definition to show the unreliability of manufacturing employment growth (i.e., reliable employment with a lower-than-average risk of being laid off). My definition of a less secure employment environment, that is, a higher-than-average risk of layoffs, is this:

    An extended year-on-year contraction -- or growth of less than 1% extending the parameters of such a period -- in job-specific employment.”

    Why include shoulder periods before and after a contraction, when employment grows less than 1%? Because a single data point does not a trend make. Many times, the year-on-year change would bump up into positive territory either just before or just after a string of declines. These are part of the employment cycle, so I’ve included them. If you don’t like it, grind up some numbers of your own.

    The job definition is manufacturing production and non-supervisory workers. People who make things. The comparison is to similarly defined construction workers. In the second part of the table, I’ve added a control for change in total civilian employment, minus these front-line construction and manufacturing workers (the “others”). If manufacturing jobs are “better” than other jobs, their periods of contraction should be fewer, shorter and shallower.

    They aren’t.

    ._._._._.1949-50._._.1952-53._._.1953-55._._.1956-59._._.1960-61
    Poor Growth: Duration (months)
    Mfg._._._._.16._._ _._._._ 11._._ _._._._ 18._._ _._._._ 32._._ _._ _ 19
    Con._._._._.11._._ _._._._._6._._ _._._._ 34._._ _._._._ 21._._ _._ _ 21

    Up to 1961, manufacturing employment remained depressed slightly more frequently than construction (an average of 19.2 months vs. 18.6). Probably not very significant.

    Employment Contraction: Depth (% change YoY)
    Mfg._._._._-7.0._._ _._._-1.7._._._._._-6.1._._ _._._-4.2._._ _._ _-3.2
    Con._._._._-2.3._._ _._._-0.1._._._._._-0.6._._ _._._-5.0._._ _._ _-3.4
    Others._._ +0.8._._ _ _ +1.0._._._ _ _ +0.4 _._ _ _ _ +1.0._._ _._ +2.0

    In this period, manufacturing contracted twice as rapidly as construction (-4.4% vs. -2.3%), whereas all non-manufacturing/construction employment actually rose by an average of 1% p.a.

    Next phase of evolution
    ._._._._.1966-68._._.1969-71._._.1974-76._._.1979-83._._.1985-87

    Duration
    Mfg._._._._.12._._ _._._._ 24._._ _._._._ 23._._ _._._._ 47._._ _._ _ 29
    Con._._._._.16._._ _._._._.11._._ _._._._ 23._._ _._._._ 40._._ _._ _ _0

    Now we see significant variation: 27 months vs. 18. And, construction employment skipped a 29 month long manufacturing slump altogether, in 1985-87. Interestingly, that coincides with the exchange rate readjustments following the Plaza Accord, when one might have expected currency manipulation to give manufacturing a boost. It didn't.

    Depth
    Mfg._._._._-0.8._._._._._-4.1._._._._._-6.2._._ _._._-4.7._._ _._ _-1.3
    Con._._._._-2.5._._._._._-1.8._._._._._-9.6._._ _._._-2.7._._ _._ _+4.3
    Others._._ +3.0._._._ _ +2.1._._._ _ _ +2.1 _._ _ _ _ +1.4._._ _._ +2.6

    Manufacturing fell further, by a percentage point: -3.4% to -2.5%, and construction blew right past the 1985-87 manufacturing slump. Other employment grew 2.2% p.a.

    Phase III
    ._._._._.1989-93._._.1995-97._._.1998-05._._.2006-11

    Duration
    Mfg._._._._.56._._ _._._._ 18._._ _._._._ 90._._ _._._._ 52
    Con._._._._.38._._ _._._._ 0._._ _._._._ 29._._ _._._._ 53

    Further confirmation: 54 months vs. 30, on average, and a big goose egg in 1995-97.

    Depth
    Mfg._._._._-1.3._._._._-0.1._._ _._-3.1._._ _._._-5.0
    Con._._._._-5.5._._._._+4.8._._._._-1.6._._ _._._-7.4
    Others._._ +0.8._._._ +1.4._._ _ _ +1.1 _._ _ _ _ -0.7

    A bit mixed: -1.3% average for manufacturing and -2.4% for construction. But, take out the Great North Atlantic Fiasco and construction jobs fell by only 0.8% in 2006-11. Again, construction skipped the 1995-97 slump, but other jobs were hit by the GNAF.

    The Scoreboard:

    Manufacturing workers experienced 14 extended periods – averaging 32 months, nearly 3 years – of declining employment. The contractions averaged 3.5% p.a.

    Construction workers experienced 12 extended periods (averaging 25 months) of declining employment. The contractions averaged 2.8% p.a. So, it was safer to be a construction worker – on this one measure – than to be in manufacturing.

    For the rest of the economy, there were only four periods of pain. Three of them were prior to 1960; the fourth was 2007-11 (a later start than the 2006-11 period noted above). In the 1950s, “other” employment downturns tended to last 28 months and fall an average of 0.6% p.a.. During the Great North Atlantic Fiasco, it lasted 49 months, but to a depth of just 0.5%.

    For more than 36 years, from 1959 to 1991, non-manufacturing and non-construction employment never fell by more than a tiny amount and for a very brief time. In 1991-92, it bounced around zero for 16 months, but averaged +0.1% over that time. Something similar happened in 2001-02: 12 months of weakness, but +0.2% growth in those “other” jobs.

    So, my conclusions are these:

    1. Manufacturing jobs were not as reliable as construction jobs, and neither of those were nearly as reliable as other jobs in the economy.

    2. Jobs in sectors other than manufacturing and construction grew faster than manufacturing jobs in each of the past six decades, and in the present one.

    3. It makes no sense to strive to return to a Golden Age that wasn’t.

    —DOR
    Last edited by DOR; 20 Apr 17, at 11:05.

  7. #712
    Senior Contributor Doktor's Avatar
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    All that is true, but you can't sell services only.

    I do get it that the US and some of the other Western countries have the comfort to have their manufacturing plants elsewhere. But what happens if half the world turns into Venezuela or Cuba ov 50's and seize those plants?

    The same argument can be made for the agriculture. It makes no sense to subside it while others make it cheaper elsewhere and bring it to your tables. Why you guys do it?
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  8. #713
    Dirty Kiwi Senior Contributor
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    The crux of the myth is that well-paid, secure manufacturing jobs allowed this dream, and that it was widely available throughout society. The well-known problem is that it was only a portion of the labor force that had the opportunity to follow this dream: white men, and it would really, really help if the guy was a Protestant.
    Well no. The crux of the reality is that it had nothing to do with whiteness or protestantism, but that govts. post WWII ran full employment (primarily out of fear of a well trained militia) until the late seventies when inflation became a problem as both employers and unions gamed the system. Rather than fix the system, we get a new one.
    Enter thatcherism, reaganism. rogernomics etc when permanent 5 - 10% unemployment was introduced as policy, along with union breaking. I know you make cases on the US experience (due to audience?) but this really is a global economy.
    In the realm of spirit, seek clarity; in the material world, seek utility

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  9. #714
    Senior Contributor Doktor's Avatar
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    I must have missed the whitness/protestantism part.
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  10. #715
    Dirty Kiwi Senior Contributor
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    Quote Originally Posted by Doktor View Post
    I must have missed the whitness/protestantism part.
    The best bit is the well trained militia. I can't remember what book pointed it out but western governments were terrified of their population post WWII for obvious reasons. Enter thirty years of making damn sure everyone was employed rather than profits maximised.
    In the realm of spirit, seek clarity; in the material world, seek utility

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  11. #716
    Senior Contributor DOR's Avatar
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    Doktor,


    All that is true, but you can't sell services only
    Tell that to Geneva, London, New York or Hong Kong. There’s nothing about an economy that says it can’t interact with other economies for mutual benefit.

    As for nationalization, that is a major threat, but only if there are such concentrations that no substitution is possible. That’s never been the case, anywhere.

    And, as for agriculture, see the above list of cities. What have you got against trade?

    = = = = =

    Parihaka,

    The crux of the reality is that it had nothing to do with whiteness or protestantism
    The myth is that the American Dream was widely available.
    It wasn’t.
    That was just part of the myth.
    If you doubt me, ask a 75 year-old woman, ethnic minority or non-WASP American what it was like to be denied entry into a country club, let alone denied a job or promotion.

    If you think the kind of uncertainty experienced by manufacturing workers post-WWII was the result of full employment government policies, I’d sure hate to see what might happen if the government was actually pursuing a policy of broadly stable economic indicators…which it was.

    After the Nixon Shocks set the economy on an inflationary course, women came into the workforce in large numbers (unrelated), and open discrimination against minorities faded quite a bit (also unrelated to Nixon). That changed the labor-capital balance in favor of capital, and it really helped that it coincided with the height of the baby boom. I was born in 1957, became 18 in 1975 and so I can tell you this from personal – as well as professional – experience.

    By the way, did you notice that unemployment was lower in the 1990s than in the 1980s, and lower in the 2000s than in the 1990s? And, lower in the past two years than at any time since the 1960s? All thanks to services.


    I thoroughly enjoyed the armed militia alt-fact.

  12. #717
    Senior Contributor Doktor's Avatar
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    Quote Originally Posted by DOR View Post
    Doktor,




    Tell that to Geneva, London, New York or Hong Kong. There’s nothing about an economy that says it can’t interact with other economies for mutual benefit.

    As for nationalization, that is a major threat, but only if there are such concentrations that no substitution is possible. That’s never been the case, anywhere.

    And, as for agriculture, see the above list of cities. What have you got against trade?
    Once we all turn into bankers and programmers, we are all gonna eat those bonds : )

    Hey, I am in services, too, but I still need a computer, paper, something to eat, drink and wear. Not to mention something to drive and a place to live in.
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  13. #718
    Senior Contributor GVChamp's Avatar
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    After the Nixon Shocks set the economy on an inflationary course, women came into the workforce in large numbers (unrelated), and open discrimination against minorities faded quite a bit (also unrelated to Nixon). That changed the labor-capital balance in favor of capital, and it really helped that it coincided with the height of the baby boom. I was born in 1957, became 18 in 1975 and so I can tell you this from personal – as well as professional – experience.
    Are you saying that increasing the number of workers is bad for worker bargaining position?

    What's your opinion on immigration again?


    More broadly, I'll agree with you that the Golden Age is wrapped in a lot of nostalgia, but I'll disagree on some broad strokes: the American Dream was and remains broadly accessible, and is more accessible today than it was in prior generations. Even the worst-case scenario are the wages of white men, which haven't increased since the 1970s (depending on how you account for inflation). If it was affordable in the 70s, it's affordable today. Median household incomes have climbed too, since women and minorities have benefited a lot in recent decades. Real Median Household Income has risen something like 30% since 1970.

    https://fred.stlouisfed.org/series/MEFAINUSA672N

    The failure of the American Dream is just the American Dream constantly inflating, just like average home sizes ballooning. There's also certain communities that are not faring quite as well as the prior generation, but that's just life. America is a nation constantly reinventing yourself. You gotta move. You also don't have to move to San Francisco or New York City to make it, you can make a nice life for yourself in Buffalo or Cincinnati.

    Also, no, you don't need to graduate with $200,000 in debt to "make it."
    Last edited by GVChamp; 21 Apr 17, at 15:39.
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  14. #719
    Dirty Kiwi Senior Contributor
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    Quote Originally Posted by DOR View Post
    Doktor,




    Tell that to Geneva, London, New York or Hong Kong. There’s nothing about an economy that says it can’t interact with other economies for mutual benefit.

    As for nationalization, that is a major threat, but only if there are such concentrations that no substitution is possible. That’s never been the case, anywhere.

    And, as for agriculture, see the above list of cities. What have you got against trade?

    = = = = =

    Parihaka,



    The myth is that the American Dream was widely available.
    It wasn’t.
    That was just part of the myth.
    If you doubt me, ask a 75 year-old woman, ethnic minority or non-WASP American what it was like to be denied entry into a country club, let alone denied a job or promotion.

    If you think the kind of uncertainty experienced by manufacturing workers post-WWII was the result of full employment government policies, I’d sure hate to see what might happen if the government was actually pursuing a policy of broadly stable economic indicators…which it was.

    After the Nixon Shocks set the economy on an inflationary course, women came into the workforce in large numbers (unrelated), and open discrimination against minorities faded quite a bit (also unrelated to Nixon). That changed the labor-capital balance in favor of capital, and it really helped that it coincided with the height of the baby boom. I was born in 1957, became 18 in 1975 and so I can tell you this from personal – as well as professional – experience.

    By the way, did you notice that unemployment was lower in the 1990s than in the 1980s, and lower in the 2000s than in the 1990s? And, lower in the past two years than at any time since the 1960s? All thanks to services.
    Blah blah blah, wot I learned in laissez faire 101 in 1976, blah blah. Doest occur to your fervid dreams that the world is a larger place than Berkley, that your experience of growing up was not and is not the centre of the world? That your minorities are not our minorities and that your personal experiences are not the experiences of us all. It is fascinating to watch you deny thirty years of full employment though.
    Quote Originally Posted by DOR View Post
    I thoroughly enjoyed the armed militia alt-fact.
    So the cold war was a myth then? Do tell :-)

    Edit to add: I will allow we are talking around some of the same issues as regards your issues with race inequality in the US though; just from opposite sides.


    America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector. Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”
    A great read in parallel to my comments about the 'banana republic' nature of recent US administrations.
    Last edited by Parihaka; 21 Apr 17, at 22:40.
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  15. #720
    Senior Contributor Monash's Avatar
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    Quote Originally Posted by Parihaka View Post
    Enter thatcherism, reaganism. rogernomics etc when permanent 5 - 10% unemployment was introduced as policy, along with union breaking. I know you make cases on the US experience (due to audience?) but this really is a global economy.
    I maybe wrong but most if not all modern macroeconomic theories define 'full employment' as being < 100% or alternatively that all economies have a natural rate of unemployment which is derived from structural inefficiencies in the economy. Full employment policies were dropped in the middle of last century by the West by those Western nations that espoused them because they were inflationary - and at that time they were. Unemployment rates would and did remain low because technology and all the other factors we now struggle with were a long term issue. So you could live with say 2-3 % natural unemployment - when I say "you" I mean any government of the day.

    The 5-10% range quoted now however reflects not so much Government policy but rather:

    - consistent declines in full-time low skill/low wage jobs due to technology, globalization etc ;
    - ongoing shifts to part time/casual labour in the retail and other sectors;

    Those who are unskilled, poorly educated, single parents etc lose out and the 'natural' rate of unemployment creeps ever upwards, decade after decade. Can't wait to see what universal, industrial scale 3D printing does to metal working and engineering jobs etc or what automated vehicles does to transport workers.

    And I don't think any government anywhere in the West has a clue about how to fix the problem. I suspect governments all over the world are going to start looking at 'full employment' policies of 70 years ago in a whole new light. We are seeing it around the world - governments are getting scared of their people again, and with good reason.
    Last edited by Monash; 22 Apr 17, at 02:03.

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