The Real Insanity Is that People Are Still Spewing this Service Economy Transition Crap in 2012

Now here's a fine example in CNN.com of a Straw Man fallacy written by Dr. Bergstrand: Nostalgia for factory jobs that will never come back

I'm sure that "Jeffrey Bergstrand, professor of finance at the University of Notre Dame" is a very smart man and knows what the hell he's talking about when it comes to things like Finance and Markets and whatnot. But that doesn't give him a free pass to be intellectually sloppy. Quite the opposite. Somebody's gotta drag him by his collar to the mess he made in the Morning News and have his face rubbed into it...."NO! NO Professor Bergtrand! NO! BAD BOY! No informal rhetorical fallacies. NO informal rhetorical fallacies! NO!"

Here's more of what he has to say with a little "begging the question" thrown in for good measure:

If there is a central public sentiment about economics prevailing in America right now, it seems to be this: We want to go back to our manufacturing roots.

The heyday of manufacturing, the block-long plants that produce not just tangible goods, but big, heavy ones like cars, gave us economic stability once; it can do it again.



But as with most nostalgic visions, this one doesn't reflect economic realities.

Get that?

1. He starts off by begging the question that there's likely a central public sentiment about wanting to return to our manufacturing roots...and...

2. That we're all gushy and nostalgic for the days of the "block long plants" or as he later calls it "Low-technology manufacturing" and the "assembly line"...and...

3. That kids these days need to pull up their pants. Wait, sorry. No. My bad. He didn't actually say that.

I don't know the last time Mr. Bergstrand has been in a factory or a machine shop....but all I can say to his initial debunking of his own shallow straw man: DDDDDDDDDDDDDDDDDDDDDDDDDUH! Not a lot of serious people are under the illusion that we've had traditional "Low technology" "assembly line" manufacturing for a long time, or could ever return to it. We're not going back to the days when huge factories founded entire towns around themselves based on some utopian dream of giving white, Christian families homes near a factory where they and their kids will work in prosperity until the end of time.

Nobody believes that.

What we do believe is the small scale machine shops which are seeing upticks in orders. Not mass produced objects like plastic Army Men, but precision highly skilled manufacturing, like, for example titanium hip screws which my uncle makes down in Florida. One. At. A. Time. And the titanium allow? It's mixed up right here in Muskegon at Cannon.

When talking about "economic realities" Dr. Bergstrand, it's important to tread lightly, because many folks in the industrial belt have LIVED the "economic reality" that service sector jobs were supposed to have brought for the past thirty years and let me tell ya....that is also not an "economic reality". You can't have an economy based on selling insurance and ringing up shoe purchases.

We do, in fact, need to make stuff.

That much is painfully, miserably clear.

And we're doing that again. Not in the huge low tech assembly line image our right wing critics think advocates of manufacturing want. But in small scale, skilled machining and production.

And yes...China's rising economy, increase in wages, and loosening fiscal policy has lead to goods becoming more expensive to produce in China, and therefore more profitable to make in the United States again.....but the notion that somebody else could replace what China had been to the US for the past 30 years...now THAT is a FANTASY. Yeah...we've been hearing about this great transition to a service economy for decades now. It's not all that.

the subsequent rapid per capita income growth in China has meant a rise in the relative price of their labor, so the cost differential is being alleviated. This cost differential is being further narrowed by China once again allowing its currency to gain in value compared to the U.S. dollar.

Once that differential diminishes, the rate of manufacturing decline has to slow.
However, this does not signal that "in-sourcing" or "re-shoring" is on the rise in America. Low-technology manufacturing is not anything we will ever get back to permanently. It's just too costly to produce here, and even if China becomes less attractive, there's still Latin America, and much of Asia and Africa.

Okay...let's do just a TINY bit of math here:

Population of China: 1,338,299,500

Population of South America: 572,039,894
Population of Africa: 1,022,234,000
Total Population of Africa and Latin America: 1,594,273,894

So what the Dr. or Economics is trying to tell us is...Yeah! We can TOTALLY move on to cheaper places once China becomes less viable...and all we'll need is to get more than two ENTIRE CONTINENTS and dozens of, often conflicting and frequently technologically backwards, nations to take the place of that one country.

EASY! Except that much of Latin America is already more expensive to produce in than China. For example, workers in Brazil make twice what a worker in China makes, and Mexico makes 1.5 times what a worker in China makes. But forget about that. Details, details....let's just pretend China's land of cheap goods can be easily ported over to, say, Burkana Fasso. What the hell.

The real la-la land insanity is that people who should know better are still spewing this Service Economy Transition crap in 2012.

Forcing Poor Children to Clean our Schools

I admit, one of my favorite jobs ever was working as a custodian for a very large child care center. When something broke, I fixed it. When a child puked masticated crunch berries on the floor, I was the guy who came out the with the magic sawdust-clay mixture to soak it up and take it away.

When the center was short handed in the infant room, I got pulled into the infant room. When they were short handed in the 3 year old room, I got pulled into the three year old room. And when the kids finished their lunch, I was the guy mopping up vast amounts of wet, sticky rice from the floor, sanitizing the tables, chairs and high-chairs, and washing the dishes.

I sanitized doorknobs. I filed down jagged parts of metal that somehow, ever once in a while, stuck out from steel door jams and bathroom stalls. I hauled out dozens of bags of dirty diapers...and yes, I cleaned up an unholy amount of poop from a dozen itty bitty toilets.

Incidentally...these are many of the things Newt Gingrich believes should jobs for poor children in our public school systems. Perhaps you haven't heard Newt Gingrich's suggestion that we shit can the union custodians at our schools and hire poor students to do the work instead.



Cleaning up vomit. Cleaning feces off of toilet seats. Handling cleaning solvents that can eat right through latex gloves. Washing dishes with an industrial dish washer that heats the water over 180 degrees, enough to scald young skin...I can't tell you how many times I burnt myself in that water. OUCH. Plunging toilets plugged with diarrhea and toilet paper, then sanitizing the toilet seat for the Non Poor students.

Newt Gingrish wants our children cleaning blood, mucous, feces, urine, dried snot, vomit from floors and walls and door knobs with chemicles that can eat the skin right off your arm or cause permanent blindness if it splashed into the eyes or loss of smell if some Janitor Kid jammed his finger up his nose...which kids never do, right?

Never.

Because an 8 year old is going to observe strict safety regulations, right?


When tasked with removing the rusting nails from the wooden playground equipment that has been discovered on the playground, that child janitor is of course going to be mindful he doesn't pierce himself....or when an errant ball sends glass and fluorescent mercury filled lightbulbs shattering to the ground, we're absolutely certain that nine year old girl is going to be so extremely careful not to slice herself open, expose herself to mercury, or for lack of attention span leave shattered slivers of glass on the shelves that happen to house the flatware and plastic cups for lunches and snacks. We're sure she'll observe proper safety procedures when removing snapped off electrical prongs from outlets.

We're absolutely sure little Kayden is going to be mindful enough to shovel the sidewalks and keep the entry ways salted to prevent people from slipping, and that he'll be sure to winterize the water systems and change the furnace filters, make sure the soap dispensers, paper towel dispensers, toilet paper rolls, hallway hand sanitizer cartridges, and, of course, cherry scented urinal cakes made from hazardous quaternary ammonium compounds are well stocked.

And surely those very custodian children will be on hand for the monthly to weekly deep cleans that take place late into the nights when most lucky children are at home. Polishing the floors. Dusting the vents. Changing the light bulbs on ladders 20 feet in the air in the massive gymnasium.

But maybe............just MAYBE...... Newt has no idea.

Maybe he doesn't actually know what janitors do. Maybe he imagines there's a routine to the job. Go in, wax on, wax off, mop the floor. Done.

DONE. Clean and sanitary. Every day is exactly the same. In Newt's mind, this master custodian he's talking about will have plenty of time to watch over the children as they clean the grease trap in the kithchen. He'll follow them around as they use the high torque 60 pound floor buffer, which, incidentally, one of my teenage co-workers at the child care drove through a wall at one point. He'll be sure they're not leaving the mopped floors covered in soap, and watching over them to be sure they handle toxic chemicles with proper care at all times.

I can't keep going on talking about this.

Newt is a fucking idiot who clearly hasn't worked a day in his life, and if he has, his decades of corruption have stripped away any working understanding of what it means.

He should be embarrassed for suggesting we make poor children clean our schools. There is SO much wrong with that statement and the most irritating thing is, he doesn't even know WHY.

"I Hear the Store is Saving Money."

GAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAARRRRRRRRRRRRRRRRRRRR!!!

"WAIT...they're paying you minimum wage?"

"I'm up for a raise soon." The young attendant at the Meijer self checkout took my embarrassing, late night grocery store rant in good humor.

"But...WAIT...wait...they're paying you MINIMUM WAGE?"

"A-yup."

I had just spent the past 15 minutes at the massive supermarket, trying to find a cat flea medicine that was actually priced as labeled on the shelf: "But....but....who on earth is benefiting from this new No Price Tag law thing, then?"

"I hear it saves the store money."

"Are they at least hiring more people?"

"No, I think the cut back the hours of the stock guys."

AAAARRGH!

"So....I just spent 15 minutes hunting down cat flea stuff that matched the marked price because of a law that saves the store money and the store isn't hiring more people, you're paid minimum wage to hear some guy rant at the checkout at 10 PM, and I'm STILL seeing my grocery bill go up...."

"Sorry." The young woman shrugged.

"No...no....it's not your fault. I'm sorry. I'm...I'm just ranting. Just being an ass. You know...I'd be a little better with it if I knew the folks here were at least paid more than minimum wage."

"I'm up for a raise soon!" The young woman smiled again.

"I hope it's huge. Okay...well, have a good night. Thanks for helping me get this cat stuff thing figured out."

-----> Michigan was sort of spoiled for the longest time. We had an excellent law that required stores to price each item individually, so that people could quickly and easily compare prices against the scan price at the checkout. The whole point was to give consumers as much information about their purchase as possible.

I never realized how much I USED those price tags until they were gone. Recently our Governor and conservative congress scrapped the consumer protection law, under the guise of "saving stores money" so those savings would get "passed on to the consumer" or "used to hire new workers."

But...so far none of that has happened. All it's done is make people wander around the store trying to find out how much their purchases are supposed to cost. Meanwhile, nobody is getting raises, consumer prices aren't going any lower, and stores slashed hours for stock clerks.

Great.

I was going to buy halloween candy at Meijer a few weeks ago, and went to the candy bin where a big yellow sign read "2 for $5". I reached in, grabbed a bag, went to the checkout...it scanned for $15! GRRR...went back...found another "2 for $5" bin....that bag scanned for $8.

I finally asked a guy chucking candy into the bins "Are those 2 for $5?" He looked at the sign and pulled it off..."no..."

Nobody wins with this law change.

Well.....I take that back. As the young woman said "I hear the store is saving money." Trickle down economics at work.

These are the Jerk Business Owners That Give Business a Bad Name

I'm upset.

I almost injured myself from upset. I was cutting up a green pepper while making some chili and my wife told me something her employee's old boss did that made me SO ANGRY I nearly slammed the knife down right where my other hand was. Damn I'm upset. How on EARTH can people be such assholes and not even flinch, not even have second thoughts.

For the sake of privacy, we'll call the employee "B".

Quick summary: My wife just watched as B's previous employer and staffing agency conspired openly to cheat B out of her last week of pay with a wink and a nod.

PISSED ME OFF.

Okay...and let's just get this out, this woman is AWESOME. Holy shit. She's in her mid 20s, works her ASS off, smart as a whip, nice, respectful, thoughtful, doesn't take shit and picks up slack. AWESOME. If she wasn't living in a city with nearly 12% unemployment and few job prospects she'd be some friggin' director of something or other by now. But being part of "The Lost Generation" in a high unemployment town during the Great Recession...as far as we can tell she's been treated like human filth by most of her employers up 'till now.

My wife considers herself LUCKY to have found B, because B has literally paid for herself and made that business hum like a Frank Sinatra tune, free'd up my wife's time to get more done...

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1. Last week after much agonizing about it, FINALLY...FINALLY...my wife decided to take the leap and offer B full time. She agonized over it because she didn't want to offer full time and not be able to maintain it.

Now I want to make something absolutely clear...my wife is pretty egalitarian in how she pays people. She's not taking home much more than B is at this point. And hiring on a new person full time was a bit of a leap of faith.

But she did it.

Why?

Because B is THAT AWESOME. Everybody likes her. My wife didn't want to lose her to another biz, and jumpin' geebus on a pogo stick, B freakin' deserves it. She DESERVES a better work experience where she's not treated like shit, especially after years of being under the thumb of a verbally abusive employer who wasn't even her employer since she technically worked for a staffing agency.

She worked for that jackass for years, part time for minimum wage through a staffing agency and was expected to take work home, and work late...did I say PART TIME? She was just PAID part time. She worked her butt off for that guy. Begged for full time for years...but nooooooo...


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2. After my wife offered her full time, she put in her two weeks with Mr. Asshole Incorporated and he tried to keep her working there for free, training the new person even after her two weeks were up. And when that didn't work....he called the staffing agency she worked for. The staffing agency he had hired her from.


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3. B's boss told B's staffing agency not to bother paying her for the final week...he wanted the honor of doing that himself.

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4. The staffing agency called B up and told her they wouldn't be paying her. They told her that their client, her boss, would be paying her.

Never. Gonna. Happen.

.................it was just two businesses having an agreement to mutually fuck over some random worker for a pittance. A PITTANCE. Maybe a hundred bucks. An amount that means NOTHING to them. But it means EVERYTHING to the employee. Groceries, gas...

Shit...you know, UltraConservatives should be pissed at these guys, because THESE are the fuckers who give Business Owners a bad name. These are the fuckers who unrepentantly piss on employees and treat them like chattle and give a bad name to entrepreneurs and bosses in general.

Pissed off about regulation? Blame assholes like this who will sleep soundly without any remourse or second thoughts for twisting the knife into the back of a young, industrious worker for nothing. For NOTHING. Just to be a jackwad. Hell...they'll probably sleep BETTER after having ripped one of their workers off.

How the Hell do you DO that?

How the Hell do you cavalierly screw over another human being like that when you have NO NEED to. When there's no gain in it other than sport?

This dude owns several businesses in town and he simply can't help himself from crapping on people, joyfully lording over them the fact that they either work twice the hours under his cruel ways for part time wages, or they're tossed out and another young man or woman, easily taken advantage of, comes along.

Michigan's Jobs Plan: Boot 30,000 Children from Their Homes

To justify kicking nearly 30,000 Michigan children off of a pittance of state assistance on October 1st, Michigan Representative Agema quotes this Bible verse from 2 Theselonians 3:10 :

"let them that will not work, not eat"

I'm not sure how the other State representatives are justifying throwing tens of thousands of Michigan's children out on the street while handing that money over to their favorite businesses as tax cuts in exchange for...apparently...letting the state job situation contract some more.

But I'm sure our Republican legislators clutch their ultraconservative one liners closely to their chests to warm themselves as they snuggle warm into bed safe in their tax payer supplied pensions, salaries, and health care.

The state Legislature on Wednesday passed a 48-month lifetime limit on welfare benefits expected to cast more than 11,000 families off the welfare rolls on Oct. 1 — including more than 29,700 children, according to state officials.
The cumulative time limit will save $77.4 million in the budget year that starts Oct. 1, but Democrats and child advocates said they fear it will cause a humanitarian crisis as social agencies are flooded with families who can't pay for rent, utilities or other essentials.


From The Detroit News

As of October 1st, thousands of Michigan families will be without a means of paying for shelter, clothing, utilities. Here's an image from the Detroit News showing which Michigan regions are hardest hit by this new law.



Yes...maybe they should just go out and get jobs!

Wizardkitten's blog points out that as Michigan's unemployment numbers are once again on the rise, Up to a thousand people applying to 12 positions at a new Aldi store in Holland, Michigan.

12 to 1000! I like those odds. Why, that's a good sporting 1% chance at finding a job each time you apply! And who knows, you MIGHT be that lucky one who wins the grand prize of working part time at minimum wage!

The problem isn't that people don't want to work. The problems is that there is no work, and no money changing hands.

Casting tens of thousands of Michgian's children from state assistance isn't going to change that.

Child Poverty Costs the US 4% of GDP

Here's an interesting tidbit I dug out of Google Scholar today:

Holzer et al. (2007) calculate that child poverty costs theUnited States $500 billion per year, or nearly 4 percent of GDP.

I found the reference in this article called How Poor are the Poor? where a professor attacks a Heritage Foundation report that, really, people below the poverty line in America are living lives of luxury -- something about how the Heritage Foundation used American Housing Survey definitions of poverty, rather than the official poverty line. As it turn out the AHS's definition of poverty is twice as high as the US poverty line.

I admit, though, that I found the reference to child poverty costing the US 4% of GDP a lot more compelling. I mean, we all know the Heritage Foundation is full of crap.

The notion is that in addition to a moral reason to reduce poverty and near-poverty rates in the US. There is also an ECONOMIC reason to do so. And everybody loves that. Or at least they say they do.

As for our actual methodology, we measure the effects of poverty on these outcomes using estimates of the statistical association between childhood poverty (or low family income) and such outcomes as adult earnings, participation in crime, or poor health.1 These impacts do not hold for every single individual growing up in poverty, as some children who grow up poor do not become poor as adults and some who are nonpoor as children become poor as adults.2 But the estimates we use represent the average likelihood of lower earnings, participation in crime or poor health among adults who grew up in poverty.


In the jargon of economists, lost earnings are an opportunity cost—a cost that is incurred because the opportunity to be productive and generate earnings is lost. And since all earnings ultimately derive from economic output, it is reasonable to consider any foregone earnings associated with poverty as reflecting lost output for the U.S. economy.3 This estimate will also reflect the average impact of poverty on the level of GDP in any year, which abstracts from any effects poverty might have on the rate of growth in GDP over time.

I encourage you to read the whole study. It more or less boils down to this: Kids who don't get enough education, food, and health care in earlier life tend not to reach their developmental potential. And an increase of a likelihood of turning to crime removes that person's potential from the economy.

He goes through in mad detail how he arrived at the 4% number.

4%...that's like half a trillion dollar increase in GDP right there, and imagine all the savings to medicaid and welfare over time.

In conclusion...we should probably get people back to work and solve this problem of poor in the US. If not for them...do it for Wall Street, man. Do it for Wall Street.

Physically Watching Our Worlds Crumble

Well, it's finally happened. Ol' besse is giving up the ghost. After emitting noxious fumes into the cabin for a week and sputtering like an animal after a massive stroke, the Ford Escort up and died. Sorta. I was able to nurse it on back home, but slowly and with the hazards on.

To make matters even more pathetic, it died while we were driving between thrift stores in search of a used washing machine because our washing machine also died. Last time it was the coupler, which we fixed. This time it seems to be the washing machine transmission which costs just about as much as a used washing machine just for the part.

On the bright side, we still have the toaster. The toaster is working fine. I just toasted a bagel, so I can vouch for the full functionality of the toaster.

I guess I'm more stressed about the car than the washing machine. The problem with being a single car family is, you don't have a back-up car. And the problem with cars is, they're very expensive. Even the cheap ones.

As I wallow in self pity for a moment, this gives me a good opportunity to segue into the notion of middle class momentum.

When somebody first enters into a lousy economic situation after having had a job for a while, they probably had a car and functional appliances and most were probably in halfway decent working order. Their glasses were probably of the correct prescription and clothes were probably new-ish and their socks and underwear probably had a decent hole to no-hole ratio, favoring No Holes. The living quarters were probably maintained well enough.

And for a while, sans job, folks are able to live, more or less, a standard middle class existence with most of the amenities: Microwave, Car, Television, Lawn Mower, Washer and Drier, maybe even a dish washer and some sort of Air Conditioning.

But as time wears on, and the economic situation doesn't change......these things start to decay. The eyes get worse and the prescription isn't quite exactly right. The washing machine dies. The car troubles are put off for another day...and put off, and put off, and put off. The machines in our lives that we generally associate with a middle class existence fall apart one after another...

...we watch, physically WATCH, the world crumble around us.