Transcript Powerpoint format with notes

From “The Big Disconnect”
By PAUL KRUGMAN 9/1/06
• … some pundits out there lecturing people about
how great the economy is. ... although G.D.P.
growth has been pretty good for the last few
years, most workers have seen their wages
lag behind inflation and their benefits
deteriorate.
• The disconnect between overall economic
growth and the growing squeeze on many
working Americans ...
• The stagnation of real wages - wages adjusted
for inflation - ... have been declining since the
1970's, ...
Krugman (cont’d)
• Why ...? ... what we see today is the result of a
quarter-century of policies that have
systematically reduced workers' bargaining
power. ...
• The big disconnect, in other words, provides
as good an argument as you could possibly
want for a smart, bold populism. All we need
now are some smart, bold populist
politicians.
A Conservative Responded:
• This is spoken like a true liberal. PAUL
KRUGMAN is clearly a bias toward
unions and government mandated
wages levels and benefits. Everything
needed to establish Socialism and
contrary to the market economy that
has made America the envy of the
world and the place for real
opportunity. ...
Conservative Response (cont’d)
• ... we went into the global economy and
worldwide the number of people that were
willing to get paid less to do the less skilled
jobs increased. Rather than letting go of
those jobs that can be done cheaper overseas
and increasing one's skills to be more
valuable to the new generation of employers,
the unions have tried to hang on. Like a leach
with no real concern for their host, this
behavior has killed many of the (union)
companies by demanding more for their work
than what it was worth on the global
marketplace. ...
Conservative Response (cont’d)
• The sooner that our unions accept their fate,
... the sooner our workers will let go of the
past and prepare themselves for the coming
baby boom driven worker shortage. Employees
must look to improve their value and take
care of themselves, ... Those that will let go
of the past and learn or retrain to provide real
value (talent and skills) to employers will be
rewarded with higher wages because the
supply is less than demand. Really just
economics 101.
• Just some random thoughts :-)
Definitions of populist:
• populist: "an advocate of democratic
principles."
• populist: "an advocate of the rights and
interests of ordinary people, e.g. in politics
or the arts."
• Populism: "the political doctrine that
supports the rights and powers of the
common people in their struggle with the
privileged elite."
• The support of the privileged elite against the
interests of the "common people" has been
the continuing goal of conservatives:
What Conservatives Believe
• If our world indeed is ordered in accordance with a
divine idea, we ought to be cautious in our tinkering
with the structure of society; for though it may be
God's will that we serve as his instruments of
alteration, we need first to satisfy our consciences
on that point. Again, Burke states that a universal
equality among men exists; but it is the equality of
Christianity, moral equality, or, more precisely,
equality in the ultimate judgment of God; equality of
any other sort we are foolish, even impious, to covet.
•
The Conservative Mind from Burke to Eliot
by Russell Kirk, 1953, p. 34
US Employment Level, Actual & Needed
U.S. Employment Level
Jul07
Gap
# of Persons (thousands)
155,000
.
150,000
145,000
Employment needed to keep
up with population growth
4.1M
140,000
135,000
Actual
employment
130,000
employed, seas adj'd
if employed track'd civ pop growth 16+ 4/00 start
125,000
120,000
Jan-95
Jan-97
Jan-99
Jan-01
Year
Jan-03
Jan-05
Jan-07
US Unemployment - Official Measures + Considered "Not in labor
force, want job now" + plus gap not keeping up w/Pop Growth
US Unemployment Rate - Official Measures
& Extra Not in Labor Force, But Want Job Now
& Adding Keep Up w/Pop Gap
16.0
15.0
14.0
Adds unemployed due to
employment not keeping
up with population growth
13.0
12.0
In Jul 07 this
unemployment
represents
(persons):
Adds other "not in labor
force" but "want job now"
20.3M
Unemployment (%)
11.0
16.2M
10.0
9.0
8.0
7.0
U-5 adds other
marginally attached
U-6 adds part-time for
economic reasons
12.8M
&
8.5M
7.5M
7.1M
6.0
5.0
U-4 adds discouraged
4.0
3.0
2.0
1.0
U-3 Seas Adj'd
U-3 official unemployment
U-4 Seas Adj'd
U-5 Seas Adj'd
U-6 Seas Adj'd
Unemployment Rate: U-6 + Extra Not in Lab Force But Want Job Now + 4/00 employment gap
Unemployment Rate: U-6 + Extra Not in Lab Force But Want Job Now
0.0
Jan-95
Jan-97
Jan-99
Jan-01
Year
Jan-03
Jan-05
Jan-07
Had Compensation kept pace with Productivity,
it would have been 68% higher in 2004
Productivity
Compensation
U.S. Trade Balance is
Growing Exponentially
Trade Balance (data as of June 8, 2007)
$100,000
Dollars (millions)
$0
-$100,000
-$200,000
-$300,000
-$400,000
Trade Deficit
-$500,000
-$600,000
-$700,000
-$800,000
1960
1965
1970
1975
1980
1985
Year
1990
1995
2000
2005
Jobs Millions
Colorado +72,700 Jobs
since Dec 00
2.40
2.35
2.30
2.25
2.20
2.15
2.10
2.05
2.00
1.95
1.90
1.85
1.80
Jan-95
Colorado: Total Non Farm Jobs
total nonfarm jobs, seas
adj'd (data revised Jan07)
Jan-97
Jan-99
Jan-01
Year
Jan-03
Jan-05
Jan-07
But Jobs Gap to Keep Up with
Population Growth = 171,260 jobs
Colorado: Non-farm jobs & Jobs Required for Pop Growth
2,550,000
2,500,000
2,450,000
non-farm jobs, seas adj'd
jobs req'd to keep up w/pop
Jobs
2,400,000
2,350,000
2,300,000
2,250,000
2,200,000
2,150,000
2,100,000
Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul00
01
01
02
02
03
03
04
04
05
05
06
06
07
07
Year
Mfg lost: -44,100 Jobs since Jan 01
- 46,600 since Apr 98
Colorado: Manufacturing Jobs
200,000
190,000
Jobs
180,000
170,000
160,000
150,000
manufacturing jobs,
seas adj'd
140,000
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan95
96
97
98
99
00
01
02
03
04
05
06
07
Year
IT lost: - 37,100 Jobs since Jan 01
Colorado: Information Jobs
120,000
110,000
Jobs
100,000
90,000
80,000
70,000
infomation jobs,
seas adj'd
60,000
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan95
96
97
98
99
00
01
02
03
04
05
06
07
Year
Telecom lost:
- 21,500 Jobs since Jan 01 (included in IT)
Colorado: Telecommunications Jobs
50,000
Jobs
45,000
40,000
35,000
30,000
telecommunications jobs,
not seas adj'd
25,000
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan95
96
97
98
99
00
01
02
03
04
05
06
07
Year
ATP +$40B to -$47B in 17 yrs
Trade in Advanced Technology Products
(2007 Value is yearly rate Jul 2006 thru Jun 2007)
40.0
Dollars (billions)
30.0
20.0
Balance
10.0
0.0
-10.0
-20.0
-30.0
-40.0
-50.0
1991
1993
1995
1997
1999
Year
2001
2003
2005
2007
The Trade Debt has led to
Selling Off the U.S.
The Future
•
•
•
•
Trade deficit exponentially increasing
Dollar sell-off … value drops
Hyperinflation
Fed raises interest rates to “fight inflation”
and “protect the dollar.”
• Shut down economy … more Job Loss
• Great Depression
The Structure of Offshoring driving an
exponentially-increasing trade deficit