Yesterday's post proved that the common man and woman obtained zero - nada - no benefit from the massive productivity gains since 1969. Where did that increased productivity come from ? Technology. New technology from computerization permitted everyone to do more work with less labor. Machines replaced people.
Expensive and time consuming studies could prove that, but our collective memory contains plenty of proof. Remember that great musical, "How to Succeed in Business Without Really Trying?" The secretarial pool and the junior executive pool no longer exist. Remember the job of receptionist at the elevator entrance on every floor? Gone. A person used to answer the telephone and take messages. No more - voice mail. Today many lawyers do their own documents and make changes; in the past a skilled legal secretary did them.
On the factory floor, fewer skilled machinists are needed as CNC machinery does their work after the set-up. Technology permits jobs to be performed in India for low wages that used to require highly paid analysts in NYC. X-rays are read in India, instead of by a US based skilled person. Plug-in modules dumb down the job of being a technician, reducing their skill - and pay levels.
You know all this deep in your mind and memory. BUT where is the profits go? Where did the gains in national income go? Who got it? Readers of yesterday's post know the common man and woman got nothing from 40 years of increasing national income.
The cynics are right. The people on top got it all. They took it all. Data prove this. I downloaded the table, "Table 695. Money Income of Families--Percent Distribution by Income" from the Census bureau. Families making $100,000 and over (in constant dollars) increased their share of the total national income from 8.7% in 1969 to 26% in 2008. Everyone else was mostly flat or got a lot less. Remember, the median Ozzie & Harriet family got nothing - almost no income gains for almost years. The group at the top got plenty.
We even see this process continuing today. WSJ: "Lenders See Little Choice: Layoffs - The banking industry, racked by the financial crisis and facing slower revenue growth, is starting to cut costs—increasingly at the expense of jobs."
The leadership at banks failed and is continuing to fail. Does the executive suite get a pay cut? Nope. They lay off lower paid workers, cut their pay, benefits and pension. The customer gets worse service. The bosses get MORE.
All this simple research and thinking proves the 200+ year old implied social contract was broken unilaterally around 1970. The group at the top left the rest of the people eating their dust and leftovers. For all the vaunted bloviations of the revolutionary baby boomers of the 1960s, the leaders of that generation did their best to screw the common man and woman. You can see that easily in people like the Clintons, Barry and the bespectacled Republicans. They all got plenty in favors and book deals. Joe Auto Mechanic got the shaft.
We need a new social compact, a square deal for the common men and women. We need an ideology to bind together the great majority of people in the US in the middle - the center. Let them rule and get a Square Deal. Cast aside the fringe right and left. The fringe right want to let the Vikings continue to raid and loot; the fringe left wants to turn us all into serfs for the government, union bosses and trust fund brats.
Under Free Fraternalism, the middle 60% or so gets complete freedom and a square deal; the top 20% pays part of their fortunes to support the unlucky and unendowed bottom 20%. Those numbers aren't strict lines; they are just rough guidelines. BUT I've proven in other posts that national happiness would increase under this political economic system. And in the past few days you have seen data to substantiate your own memories of 40 years, that national happiness has NOT improved for the great bulk of the people under the existing classic liberal system with its socialist admixture.
The existing system has failed: Time to recognize this and fix the problem.
More to come in future posts.
Word of the Day
"Pellucid" - adjective [$10]
Pellucid means easy to understand.
Sentence: Today's pellucid post should make the nature of the problem facing America obvious. Government and its implied social compact need to be fundamentally changed Free Fraternalism is the solution - a total makeover, not simple tinkering around the edges.
Friday, January 21, 2011
Thursday, January 20, 2011
Square Deal ... Not!
Yesterday I posed the question of whether the classic liberal political economic theory was working as it existed in the US since the 1960s. Did it produce the implied increases in happiness-utility-wealth for the common man and woman? In colloquial speech, was it a Square Deal for them ? Or not? Did the hegemonic class and their governmental bureaucratic allies live up to their express and / or implied promises?
Easily available data exist to test that question. The US Census Bureau keeps and has kept high quality statistical data about the US for decades; they've even extended those data series back to the beginning of the nation and before. This data is and was published in the Statistical Abstracts (published annually since 1878) and the companion volume Historical Statistics of the United States published in 1975 (I have a copy).
I learned about this data series at a course taken as a freshman at Harvard in 1972 from the late Sen. (then Prof.) Daniel Patrick Moynihan. He used his mind in serving the nation, and was a tough professor. You had to do the work and read the material. I did and it sunk in. [To brag a bit, the course was a mixed undergraduate-graduate level course - I did not take (many) gut courses; I wanted my money's worth.] Now, almost 40 years later, I can draw on that learning to write this blog post.
All that data is now available online. With a few clicks , I downloaded a spreadsheet: "Table 698. Median Income of Families by Type of Family in Current and Constant (2008) Dollars". To do a fair longitudinal evaluation, one must keep the sample type as fixed as possible to limit systematic drift. American demographics has changed over time. Let's study the canonical, "Ozzie and Harriet" family - the same as the "Leave It to Beaver" family: a married couple family with the husband working and the wife not in the labor force. Oh, of course she works hard taking care of the household, likely helping out in a family business, or doing many other tasks for no money compensation. Many baby boomers remember that type of family.
Were they treated to a Square Deal?
The numbers. In 1969, a median married couple family with wife not in the labor force made $46,101 in constant 2008 dollars. In 2008, that family made $48,502. The total increase over that huge 38 year span was a mere $2,401, a 5.21% gross increase over 39 years! Per annum, that is a minuscule 0.130% per year. That is NOT a Square Deal.
The numbers also show that for the two decades prior to 1969 (i., e., from 1949 to 1969), the median income for that family grew from $24,173 to $46,101, a gain of $21,928 which was 90.7% increase over the base year of 1949, or growth of 3.28% per annum. That WAS a Square Deal.
Something changed in the 1960s. The political-economic bargain between the common people and their leaders was changed ... unilaterally and possibly secretly and certainly unintended by the common man and woman. The common man and woman certainly did not bargain for that change.
Was there a secret coup? Or some insidious decaying process? Or something else going on?
Your writer will post more on this later.
Word of the Day
"Gravel" - verb usage [$10] a T. S. Eliot word
Gravel means (transitive verb) 1. to lay or strew with gravel; 2. perplex, puzzle, nonplus (from an obsolete sense of 'run (a ship) aground').
Sentence: Stagnant or declining living standards for decades gravel the common man and woman; the reality is and has been so far from the promises of the political leaders. What's going on?
Easily available data exist to test that question. The US Census Bureau keeps and has kept high quality statistical data about the US for decades; they've even extended those data series back to the beginning of the nation and before. This data is and was published in the Statistical Abstracts (published annually since 1878) and the companion volume Historical Statistics of the United States published in 1975 (I have a copy).
I learned about this data series at a course taken as a freshman at Harvard in 1972 from the late Sen. (then Prof.) Daniel Patrick Moynihan. He used his mind in serving the nation, and was a tough professor. You had to do the work and read the material. I did and it sunk in. [To brag a bit, the course was a mixed undergraduate-graduate level course - I did not take (many) gut courses; I wanted my money's worth.] Now, almost 40 years later, I can draw on that learning to write this blog post.
All that data is now available online. With a few clicks , I downloaded a spreadsheet: "Table 698. Median Income of Families by Type of Family in Current and Constant (2008) Dollars". To do a fair longitudinal evaluation, one must keep the sample type as fixed as possible to limit systematic drift. American demographics has changed over time. Let's study the canonical, "Ozzie and Harriet" family - the same as the "Leave It to Beaver" family: a married couple family with the husband working and the wife not in the labor force. Oh, of course she works hard taking care of the household, likely helping out in a family business, or doing many other tasks for no money compensation. Many baby boomers remember that type of family.
Were they treated to a Square Deal?
The numbers. In 1969, a median married couple family with wife not in the labor force made $46,101 in constant 2008 dollars. In 2008, that family made $48,502. The total increase over that huge 38 year span was a mere $2,401, a 5.21% gross increase over 39 years! Per annum, that is a minuscule 0.130% per year. That is NOT a Square Deal.
The numbers also show that for the two decades prior to 1969 (i., e., from 1949 to 1969), the median income for that family grew from $24,173 to $46,101, a gain of $21,928 which was 90.7% increase over the base year of 1949, or growth of 3.28% per annum. That WAS a Square Deal.
Something changed in the 1960s. The political-economic bargain between the common people and their leaders was changed ... unilaterally and possibly secretly and certainly unintended by the common man and woman. The common man and woman certainly did not bargain for that change.
Was there a secret coup? Or some insidious decaying process? Or something else going on?
Your writer will post more on this later.
Word of the Day
"Gravel" - verb usage [$10] a T. S. Eliot word
Gravel means (transitive verb) 1. to lay or strew with gravel; 2. perplex, puzzle, nonplus (from an obsolete sense of 'run (a ship) aground').
Sentence: Stagnant or declining living standards for decades gravel the common man and woman; the reality is and has been so far from the promises of the political leaders. What's going on?
Wednesday, January 19, 2011
Square Deal ?
Did classic liberalism work? By classic liberalism, I mean the type of political economy proposed and explained by Adam Smith and John Stuart Mill. In their theories, maximum economic freedom was supposed to work by an "invisible hand" to increase the wealth of all people, and increase their happiness. Total "utility" (implied to be happiness) was maximized in a system with this freedom; mathematical proofs of this exist and are the basis of much economic theory. I've seen versions of this proof in graduate school level textbooks and B-school classes.
The question is, though, DID it work? And IS it working? Putting theory into practice and testing under dynamic conditions could expose ERRORS and unrecognized assumptions. Astrophysicists in the 1970s found this out; they assumed that all matter and energy could be seen directly or indirectly in some manner or marker from emitted light or other electromagnetic radiation. But clear contradictions existed even then in the rotation curves of galaxies. Decades later, dark matter and dark energy were discovered. The theories were incomplete in the 1970s.
\
Now, the Panic of 2008, the Great Recession and actual events since the 1970s seems to have exposed a flaw - a contradiction - in classic liberalism. Has the utility-happiness-wealth of the common man and woman increased since the 1970s? The "purported" deal - compact - of classic liberalism was that the hegemonic (Ruling) classes working with the political bureaucracy would cause GNP to increase on and on. But to the common man and woman, GNP is a meaningless number. They care about their personal happiness - their ability to make a living and raise their families and live comfortably throughout their lives.
From 1800 until at least the 1960s, it's rather obvious the Deal did work over the long term. By the 1950s and early 1960s in America a family could live, buy a home, send children to college or to a good job in the trades or a plant, and have a reasonable retirement. In 1800 or even 1900 that was a distance dream.
BUT now? And since then? Is there DATA that this "Deal" did not work and is not working, or is it still working? The 40-50 years since 1960-70 is long enough a baseline - that's almost two generations.
This is the question of the century. Has or is classic liberalism reached a range where it fails? Theories can work for awhile, but then breakdown.
My "gut" is that the answer is classic liberalism has been failing for decades, that the lives of the common man and woman has NOT been improving since the late 1960s and 1970s. One has to measure such a concept corrected for age and family composition. From my memories, the level that a family could do and how they could live in 1965 was really far better than now. A common American family must work much harder and longer to achieve the same standard of living.
Is my "gut" instinct correct?
I don't know. I am now researching this matter and will report on the results soon. Demographics, family composition and propensity to work for wages (i. e., women in the workforce) complicate the question, but I'm aware of those factors and will try to take them into account. Meanwhile, could you search your memories about this question with an open mind?
Word of the Day
"Heterodox" - adjective [$10]
Heterodox means (of a person, opinion, etc.) not orthodox.
Sentence: View from the Bunker provides heterodox opinions on investing, government and politics.
The question is, though, DID it work? And IS it working? Putting theory into practice and testing under dynamic conditions could expose ERRORS and unrecognized assumptions. Astrophysicists in the 1970s found this out; they assumed that all matter and energy could be seen directly or indirectly in some manner or marker from emitted light or other electromagnetic radiation. But clear contradictions existed even then in the rotation curves of galaxies. Decades later, dark matter and dark energy were discovered. The theories were incomplete in the 1970s.
\
Now, the Panic of 2008, the Great Recession and actual events since the 1970s seems to have exposed a flaw - a contradiction - in classic liberalism. Has the utility-happiness-wealth of the common man and woman increased since the 1970s? The "purported" deal - compact - of classic liberalism was that the hegemonic (Ruling) classes working with the political bureaucracy would cause GNP to increase on and on. But to the common man and woman, GNP is a meaningless number. They care about their personal happiness - their ability to make a living and raise their families and live comfortably throughout their lives.
From 1800 until at least the 1960s, it's rather obvious the Deal did work over the long term. By the 1950s and early 1960s in America a family could live, buy a home, send children to college or to a good job in the trades or a plant, and have a reasonable retirement. In 1800 or even 1900 that was a distance dream.
BUT now? And since then? Is there DATA that this "Deal" did not work and is not working, or is it still working? The 40-50 years since 1960-70 is long enough a baseline - that's almost two generations.
This is the question of the century. Has or is classic liberalism reached a range where it fails? Theories can work for awhile, but then breakdown.
My "gut" is that the answer is classic liberalism has been failing for decades, that the lives of the common man and woman has NOT been improving since the late 1960s and 1970s. One has to measure such a concept corrected for age and family composition. From my memories, the level that a family could do and how they could live in 1965 was really far better than now. A common American family must work much harder and longer to achieve the same standard of living.
Is my "gut" instinct correct?
I don't know. I am now researching this matter and will report on the results soon. Demographics, family composition and propensity to work for wages (i. e., women in the workforce) complicate the question, but I'm aware of those factors and will try to take them into account. Meanwhile, could you search your memories about this question with an open mind?
Word of the Day
"Heterodox" - adjective [$10]
Heterodox means (of a person, opinion, etc.) not orthodox.
Sentence: View from the Bunker provides heterodox opinions on investing, government and politics.
Tuesday, January 18, 2011
I Have a Dream
Of course that's Martin Luther King's famous speech line. I'm borrowing it today to post my "dream" about where Ms. Market will take us this year. Will she dance on that tables & party, or dump us?
Stocks (S&P 500): high - 1500, low 1200, close 1500.
Bonds: (US 10 year yield): high 4.5%, low 3.3%, close 4.5%
TIPs (the ETF): high 108, low 104, close 104
Gold: high 1500, low 1200, close 1500
Muni bonds: solid A-AA yields rise to 5.5%
From where we are now in these asset classes, the "buy low, sell high" and "sell high, buy low" tactics will pay off well.
Timing: Ms. Market will dance and party a bit, then take a break, then hit the dance floors again.
Hedge funds will have a poor year as the commodity trades will sour, providing little upside and much pain from drops and sideways action. Favorites like AAPL will be sideways. Winnings will be boring stocks like those in the DJIA - big cap blue chips. Big banks will sputter as regulations grind profits away.
Krypto anticipates a fine year and is drooling over those dog biscuits.
Bman will keep riding this bull elephant, but pick fruit off the trees as he passes good trades. The ending waterhole is not yet in sight.
Word of the Day
"Progenerate" - verb [$1000] Obsolete, rare; a T. S. Eliot word
Progenerate means to beget, propagate, procreate.
Sentence: After due exercise of my little grey cells towards the likely path for the various major asset classes for 2011, Bunkerman today progenerated the outcomes that he now believes the near future will bring. Will be a hero or a goat? Time will tell. The future is not determined, but is (mostly) controlled by men riding along the waves of our world in time and space.
Stocks (S&P 500): high - 1500, low 1200, close 1500.
Bonds: (US 10 year yield): high 4.5%, low 3.3%, close 4.5%
TIPs (the ETF): high 108, low 104, close 104
Gold: high 1500, low 1200, close 1500
Muni bonds: solid A-AA yields rise to 5.5%
From where we are now in these asset classes, the "buy low, sell high" and "sell high, buy low" tactics will pay off well.
Timing: Ms. Market will dance and party a bit, then take a break, then hit the dance floors again.
Hedge funds will have a poor year as the commodity trades will sour, providing little upside and much pain from drops and sideways action. Favorites like AAPL will be sideways. Winnings will be boring stocks like those in the DJIA - big cap blue chips. Big banks will sputter as regulations grind profits away.
Krypto anticipates a fine year and is drooling over those dog biscuits.
Bman will keep riding this bull elephant, but pick fruit off the trees as he passes good trades. The ending waterhole is not yet in sight.
Word of the Day
"Progenerate" - verb [$1000] Obsolete, rare; a T. S. Eliot word
Progenerate means to beget, propagate, procreate.
Sentence: After due exercise of my little grey cells towards the likely path for the various major asset classes for 2011, Bunkerman today progenerated the outcomes that he now believes the near future will bring. Will be a hero or a goat? Time will tell. The future is not determined, but is (mostly) controlled by men riding along the waves of our world in time and space.
Friday, January 14, 2011
Reform VII. End Small Business Regulations.
The heavy hand - a ham hand - of government is stifling the entrepreneurial spirit of Americans. That ham hand is at the local level, the State level and the Federal level. Localities use regulations to prevent people from starting small business that might compete with favored groups, or impinge on some connected clique's environment. States use licensing laws and education requirements for "professions" to restrict competition. The Federal government has a huge panoply of regulation ready to land on any business once it grows to 25 or 50 employees. Yup, they tend to restrict hiring more people.
We need to get rid of all this regulation of the common man. We need a new burst of freedom for all of the common men and women.
The tax reforms I proposed are a start; they would get rid of all taxes on employments. The parallel reform we need is a removal off ALL business regulations and licensing (other than life threatening matters) below a very high threshold.
If someone scrapes together enough money to start a business, let him! If someone can get customers to come to him for some service, let him run that business without phony licensing or education requirements. For example, why does the SEC-FINRA regulate financial advisors? Word of mouth or a good private certification such as the CFA would do the job. Let the SEC-FINRA deal with frauds and ponzi-scams.
Why are real estate brokers burdened with silly "continuing education classes"? If they can't do the job, the customers would know it soon. Ditto for people cutting hair or helping the veterinarian treat dogs. Either the customer or the boss knows when the job is being done. Let the customers go to whom they want for services and goods. Let the business owner run his business.
Remember the "UL" label on electric goods? "UL" meant the device was tested by the Underwriters' Laboratories, a private testing service that made sure the device was safely constructed. It was created by the insurance industry.
Make the customers pay attention to the good or service he's getting. The ham hand of government is causing everyone to think the government is supposed to take care of everything and make everything work. It's time that responsibility is put onto the person running the business and the customer to check and make sure the service or good is suitable. They know better, or should know better, than some bureaucrat.
Get rid of almost all government regulations at all levels of government. Then let a thousand flowers bloom - the flowers that a new burst of small business entrepreneurs will bring.
The only regulations needed are for life threatening matters and for the ruling class of the rich and powerful - aka the hegemonic class - to prevent them from enslaving all of us and becoming aristocrats. That's a small group of people and corporations and institutions. Watch them closely; let everyone else be free.
Actions
None. waiting for better rates in the municipal bond market to trickle down to the bonds I'm seeing from Mrs. B's broker.
Word of the Day
"Autotelic" - adjective [$10]; a T. S. Eliot word
Autotelic means having or being a purpose in itself.
Sentence: Government is not autotelic; its purpose is to serve the people and protect them from invaders and oppressors.
We need to get rid of all this regulation of the common man. We need a new burst of freedom for all of the common men and women.
The tax reforms I proposed are a start; they would get rid of all taxes on employments. The parallel reform we need is a removal off ALL business regulations and licensing (other than life threatening matters) below a very high threshold.
If someone scrapes together enough money to start a business, let him! If someone can get customers to come to him for some service, let him run that business without phony licensing or education requirements. For example, why does the SEC-FINRA regulate financial advisors? Word of mouth or a good private certification such as the CFA would do the job. Let the SEC-FINRA deal with frauds and ponzi-scams.
Why are real estate brokers burdened with silly "continuing education classes"? If they can't do the job, the customers would know it soon. Ditto for people cutting hair or helping the veterinarian treat dogs. Either the customer or the boss knows when the job is being done. Let the customers go to whom they want for services and goods. Let the business owner run his business.
Remember the "UL" label on electric goods? "UL" meant the device was tested by the Underwriters' Laboratories, a private testing service that made sure the device was safely constructed. It was created by the insurance industry.
Make the customers pay attention to the good or service he's getting. The ham hand of government is causing everyone to think the government is supposed to take care of everything and make everything work. It's time that responsibility is put onto the person running the business and the customer to check and make sure the service or good is suitable. They know better, or should know better, than some bureaucrat.
Get rid of almost all government regulations at all levels of government. Then let a thousand flowers bloom - the flowers that a new burst of small business entrepreneurs will bring.
The only regulations needed are for life threatening matters and for the ruling class of the rich and powerful - aka the hegemonic class - to prevent them from enslaving all of us and becoming aristocrats. That's a small group of people and corporations and institutions. Watch them closely; let everyone else be free.
Actions
None. waiting for better rates in the municipal bond market to trickle down to the bonds I'm seeing from Mrs. B's broker.
Word of the Day
"Autotelic" - adjective [$10]; a T. S. Eliot word
Autotelic means having or being a purpose in itself.
Sentence: Government is not autotelic; its purpose is to serve the people and protect them from invaders and oppressors.
Thursday, January 13, 2011
Snow Day redux
Sorry for lack of a post, but power went off overnight. It's back on now, but I'm declaring another snow day. Today is the clean-up.
Wednesday, January 12, 2011
Snow Day
About 15" of snow is expected here today. I'm taking a snow day. Next post will be tomorrow.
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