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Economic theory, which is basically bullshit, is often coached in mathmatical terms to disguise the fact that it is pure bull. However there are some very simple concepts which make very good common sense, and if one looks at that, instead of how to use current data to justify one’s action politically, one comes up with obvious surprising results.
Labor Demand < Labor Supply
That is why so many people are out of work. Now here are the players.
- Workforce Market
- Commodity Market
- Foreign Investments
- Financial Markets
Government is our last option.
So our workforce if we compare the same counting today as was during the Great Depression, is running at 85% capacity. Meaning 15% are unemployed.
Going down the list then,
Corporations are at their best ever. Corporate profit the highest percent of GDP ever.
Financial Markets also are at their best ever. Dow Jones is at record highs.
Commodities are performing well, all indications are of a long term bull market.
Foreign Investment is at an all time high. Never have we had this much outside money.
Real Household Income is declining. We are headed downwards and are currently tied with 1994 as it rose out of the 91 recession, and prior to that, tied with 1984 as we were coming out of the 1982 Recession.
Bottom line with government out our equation, we have the investment side of our economy all doing spectacularly well, and the household side going down.
Proof enough that the free market system, or capitalist system does little for the good of any nation, just as little good it did prior to the legislation that became law after the crash of 1929 when Democrats swept the Federal Government.
Government is the great equalizer. For a fix, government needs to step up and side with We the people (or households), and as a referee would in any sporting event, make the playing field fair.
It can to it in either of two ways. It can impose necessary restrictions upon businesses which increase their demand for labor at the expense of their corporate profits. For example, pass legislation to imprison CEO’s for malfeasance. Only then in order to keep their heads out of hot water, they hire environmentalists, social engineers, accountants, and other highly trained personnel whose prime function is to make sure the company is not doing anything shady.
It can also split the corporations into multiple smaller ones, each now requiring a new president, several new vice presidents, new HR’s, new financial planners, etc and with one fell swoop, increase the demand for labor. This too, comes at the expense of corporate profits, which are currently huge primarily due to economies of scale.
And it can indirectly create demand by raising taxes. When taxes go up on profit- earned, less profit gets earned by design; less “reported” profit, less money handed over in taxes.. Meaning the bulk of that money is now spent being reinvested into the business just so it can’t be taxed. Building projects, higher wages, more R&D gets spent into the economy, This too, comes at the expense of corporate profits on the books.
But that is why higher tax rates are actually the best alternative. Higher tax rates tend to create less taxes, so government still needs to stay small. The revenue collected is lower for the simple reason that if there was absolutely no tax, all the money earned would belong to me. But if more of what I earn goes to you, then I will figure out a legal way to keep more for myself, and report less. So whereas as tax rates go up, total tax revenue comes down; the net effect is that more money goes into our economy thereby creating more demand.
The demand for labor then gradually rises to equal the supply and if it continues on its upward path, yes, yes, so there are more jobs than workers, then competition begins pushing the individual wage rates higher.
Which adds to the increased demand.
Using tax rates works best for now instead of the government interfering with day to day operations of all businesses, it actually creates an environment where each business can operate independently to its own best interest, and as they do, the demand for labor rises even more…..
Anyone who argues for less government input into the economy is in the wrong century and can’t read economic figures that are plain as day. So how does one interpret the cries for less regulations that are hurting corporate profits? Easily. One realizes that sooner or later corporate profits have no choice but to fall, so our household income can increase. Loss of corporate profits is a “good thing”.
One should mention in the same breath, that labor’s percent of wages is deteriorating all across the world. It is a world wide phenomenon. The answer is simply that deference of all governments over the past decade and a quarter, has been given to those in charge of investment.
Policies favoring Investment must now take a back seat to those which put people back to work, which if done, raise the incomes of all of us… Even those of the 1% , though not as much as they have been lately been accustomed. But everyone still benefits.
Raising taxes is where we need to go.
Image Courtesy of Mitt Romney, Debate Number Two.
Nature published the results today. As a man ages past 40 for every year past, his sperm develops two additional mutations per year.
The study’s senior author – a scientist in Iceland – writes: “Conventional wisdom has been to blame the developmental disorders of children on the age of mothers”… but “it is the age of fathers that appears to be the real culprit.”
The latest numbers from the Centers for Disease Control indicate the rate of autism has doubled in the last six years from 1 in 162, to 1 in 88.
The number of men 40 and older who father a child has increased by more than 30 percent since 1980.
For the first time we have hard numbers that explain the data which could answer to the mysterious rise in the rates of autism.
“This study shows that new mutations are frequent enough as men age that fathers aging alone can explain the increase for the risk of autism,” said Dr. Delores Maldespina, a psychiatrist at New York University.
State Senator Tony DeLuca is “Making special interests play by the same rules as our hardworking families.
When you think of Tony DeLuca, the first thing that comes to your mind of course is that you automatically think of someone holding special interests accountable.
Accountability…. It means different things to different people. To Tony DeLuca, it has always meant playing by the same rules as our hard working families…..
For example, Tony has been the open government leader in the Delaware General Assembly. demonstrated by bringing up reform bill after reform bill to be voted upon by the senate. State Senator Tony DeLuca is making our government more transparent and damn it, .. he is also making special interests more accountable.
Because of Tony DeLuca, and only because of Tony DeLuca and his single handed effort with both hands behind his back, the legislative process is open now, for the very first time, to citizens…. Tony DeLuca modernized state government with information available on the Internet; and now, because of Tony DeLuca, all lobbyists are required to let the public know within five days who they represent and who they are lobbying for on each and every bill.
After all, Tony DeLuca…. He’s one of US…..
Tony’s commitment to accountability is clear. Check the facts:
SB 165 Supported by Common Cause.
Delaware should consider itself lucky to have as fine a man in the Delaware State Senate, as it has in Tony DeLuca.
I just couldn’t help but notice he supports almost every Johnson. (Even ones with Swiss spellings… Johansen ….)
Don’t even believe that gasoline prices are set by supply and demand…
They are set by hedge funds. Of course those hedge funds use global events to pump up the price, and if the market suddenly drops, those global hedge funds dump oil as fast as they can, so there is some correlation to events that shake people up……..
But, to control the price of oil, you need to control those who put money into these funds…..
And the fastest way to make them exit, is for them to lose money.
Here is a step by step description of how to drop gasoline prices…
First background facts.
Global demand per day, is 90 million barrels.
The US Strategic Petroleum Reserve is 727 million barrels..
The model for this scenario occurred 5/5/2011.
Brent Crude is selling for 117 a barrel today…..
At ten o’clock sharp, the President announces he is authorizing the sale of 30 million barrels from the strategic Petroleum Reserve to exert downward pressure on the price of oil…. The EC is also releasing 30 million barrels, roughly 60 barrels total.
Those contracts come up for sale at $97 a barrel… The Strategic Reserves can afford to do this, because much of this oil was bought at prices under $60 a barrel.
Those get bought up quickly….
The Price of Brent crude plummets in minutes from $117 to a little over $97…. Suddenly Brent crude is cheaper than lower grade oil, so as money moves to Brent, lower grade prices plummet too…
Instantly all computers analyze the dropping price, and sell their stocks… The price begins to accelerate lower. Each automated sell orders gets generated as oil crashed through price points that traders had programed in advance into their supercomputers.
Price of oil is now $25 below its price minutes before Obama spoke……
Margin calls start piling up… As you receive one, two, three, are following right behind it…. as computers see the price and on command, spit out the request….
The machine trading cuts out the white knuckles, the gasps of air, the flatulence, the human error, the wait-and-see-cause-I-still-don’t-believe-this-is-happening…… Instead, as programmed, automatic, abrupt price drops can quickly prompt these machines to unload a bullish long-position in oil, and build up a bearish short one instead…..
Wall Street traders stop and watch the board… Not knowing who, or what, or where the money is going. Just watching the price go, go, go .. down, down, down,….. All they do know, is every firm’s computer across the globe, is feeding into the frenzy….
In Texas, on oil refinery row, silence ensues as there is nothing which can be done until the market settles for a moment. The floor is covered with torn spreadsheets from the initial drop…..
By 1:00 the smell of blood is all over Wall Street… Phone calls between friends at stockbrokers, hedge funds, oil suppliers all wondering who was going belly up first….
Rumors abound as everyone wonders which major commodities funds are on the losing end of bullish oil bets, and which are getting forced by margin calls from brokers into dumping even more massive positions.
Then came the word… London based Blue-Gold hedge fund was looking for a buyer… (They specialized in bullish bets on the oil market…)
It is now 2:00 just 4 hours after the announcement….
The US and European Petroleum Reserves begin buying up oil contracts amounting up to 30 million barrels each….
By 3:00, others begin buying oil at a bargain price…..
Hedge fund computers begin assessing their losses… Analysts are frantically calling whoever they know to get first reports on the damage.
Retailers begin setting their prices to match the new barrel price over $40 lower than the previous day…. People pulling up to the stations can’t believe their eyes… The gas that was $4.50 when they went to work that morning, was now only $2.88 per gallon….
Across America there was rejoicing…. Whole families are going out to celebrate!
We finally found a president who’d stand up to the fleecers and drainers of the American Way…. In one day, a little under $4 billion was cut from the daily cost of using the globe’s oil ….
Beaten on their own battlefield, they were…….
Now, that’s…. what I call a “good” president…..
(Oil hedge funds never again became a preferred method of speculation. The price of oil never again rose above $2.90)….
There is a rumor being circulated among high circles, that a certain local developer wanted a zoning variance in Newark, that was shot down by that city’s Council….. Apparently it would create havoc for citizens living around it and they protested its development.
He sold the property to the University of Delaware, which turned around immediately and leased it back to him, and because the University is immune to Newark’s zoning under a grandfather clause, he is now able to build his project over the objections of all involved…. with no oversight, mind you.
When the University was questioned as to why they acquiesced to backhandedly helping a private developer bypass legal restrictions, their public answer reportedly was: “because we can.”
Does anyone know of more information? Or is this just a rumor circulated in “high places…”
I think you already know the answer. :)