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Monday, March 28, 2016

America Today: The Death of a Middle Class

 Your Hometown, My Hometown  

Even the most liberal economists acknowledge that under  globalization and free trade agreements there will be winners and losers. That's the reality of the "invisible hand" and it makes abundant sense. 

Now guess who has not been a big winner over the past 35 years under this global economic policy initiative? And here are a few articles that support what is readily a self-evident truth to most,  and particularly for the 99% who are  suffering under its consequences. 

Our Hometown...

" they say these jobs are going boys, and they aint coming back"

My Hometown
May, 1983
B. Springsteen 

  The Death of a Middle Class 

Blockbuster Job Growth Still Isn’t Turning Into Big Raises For American Workers

The economy added 242,000 jobs in January while the unemployment rate stayed unchanged at 4.9 percent, according to the latest data from the Bureau of Labor Statistics. Analysts had expected 190,000 jobs to be added.
That maintains the lowest unemployment rate in 2008. The number of jobs added in December of last year was revised up by 9,000, while January was revised up by 21,000. With revisions included, the economy has been adding jobs at a 228,000 average monthly pace, matching the pace of growth in 2015. The labor force participation rate and employment-population ratio both edged up in February, signs that more people are joining the labor force and seeking jobs.

Globalization Destroys American Middle Class

Storm the Bastille

In the last analysis, globalization has only benefitted the rich and led to the quiet destruction of society and the middle class. We need to become more self-reliant. more centred in our culture and effect policies that bring middle class jobs back to North American shores.

If we fail and continue on globalization's  clear path to self destruction, then the possibility of a quiet revolution becomes a greater risk t caused by the freshly minted legions of poor middle-class folks. 

History has an odd habit of repeating itself.

"Let them eat cake' 

Why Globalization Reaches Limits

We have been living in a world of rapid globalization, but this is not a condition that we can expect to continue indefinitely.

Each time imported goods and services start to surge as a percentage of GDP, these imports seem to be cut back, generally in a recession. The rising cost of the imports seems to have an adverse impact on the economy. (The imports I am showing are gross imports, rather than imports net of exports. I am using gross imports, because US exports tend to be of a different nature than US imports. US imports include many labor-intensive products, while exports tend to be goods such as agricultural goods and movie films that do not require much US labor.)


Visualizing Why Manufacturing Jobs Aren't Coming Back

 The market for industrial robot installations has been on a skyward trend since 2009, and it is not expected to slow down any time soon. According to the World Robotics 2015 report, the market for industrial robots was approximated at $32 billion in 2014, and in the coming years it is expected to continue to grow at a compound annual growth rate (CAGR) of at least 15%.

As VisualCapitalist's Jeff Desjardin notes, that means between 2015 and 2018, it’s anticipated that 1.3 million industrial robots will be installed worldwide. This will bring the stock of operational robots up to just over 2.3 million, mostly working in the automotive and electronics sectors.
For how long can the global robot population continue to grow?

What Killed the Middle Class  

Everyone knows the middle class is fading fast. I've covered this issue in depth for years, for example: Honey, I Shrunk the Middle Class: Perhaps 1/3 of Households Qualify (December 28, 2015) and What Does It Take To Be Middle Class? (December 5, 2013)
This raises an obvious question: what killed the middle class? While many commentators try to identify one killer cause (for example, the U.S. going off the gold standard in 1971), the die-off of the middle class is more akin to the die-off in honey bees, which is the result of the interaction of multiple causes (factors that increase the toxic load dumped on bees and other pollinators by modern agriculture).

Longtime collaborator Gordon T. Long and I discuss the decline of the middle class and other key topics in a new 29-minute video How did that work out for you? 


This Theory Explains Why the U.S. Economy Might Never Get Better

Why hasn't America's economy recovered more robustly? Economists have an unsettling answer

In the wake of the 2008 financial crisis, conventional wisdom among economists, business leaders, and policy makers was fairly straightforward: Once the banks were bailed out, the stimulus spent, and businesses had a few years to recover, the U.S. economy would return to its usual healthy growth. Time, in other words, would heal the wounds of the subprime collapse and subsequent turbulence. But if any recovery has turned conventional wisdom on its head, it’s this one.
Inline images 1Over the last eight years, America’s economic prospects have lagged even the most pessimistic early predictions. In 2011, the Federal Reserve predicted that U.S. real GDP would, at worst, grow by 3.5% in 2013 and that the economy would expand between 2.5% and 2.8% annually in the long run. In every year since, the Fed has revised its predictions downward. (The most recent estimate predicts 2.2% annual growth in 2016, and 2% growth in the long run—a rate more than one-third lower than the post-war average.) Even employment, a source of uplifting headlines in recent weeks, is deceptively weak. The unemployment rate—which ignores those who gave up looking for a job—has hit new lows, but the percentage of Americans (between ages 25 and 54) who are actually working is over three points lower than its pre-crisis peak.

 Our  Hometown..
"Now Main Street's whitewashed windows and vacant stores
Seems like there ain't nobody wants to come down here no more

They're closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they ain't coming back to your hometown
Your hometown
Your hometown
Your hometown

Last night me and Kate we laid in bed
Talking about getting out
Packing up our bags maybe heading south
I'm thirty-five we got a boy of our own now
Last night I sat him up behind the wheel and said son take a good look around

This is your hometown"