On Not Working

Spotted a curious headline the other day in the Washington Post, one that seems to rest on an absurdity: “Stronger economic data make stocks fall”. About that…

On the face of it, within the assumption regularly implied towards the populace that the stock market is correlated to the condition of business & thus the condition of the economy as encountered by the average person, this is a statement that makes no sense. A stronger economy should mean better stock prices, which should mean more money for companies to plow back into business, which should mean employment and eventual wage growth. Instead, information that new claims for unemployment benefits went down prompted retrenchment measures on Wall Street. Why? The article mentions two things about this recent period rather instructive about Capitalism As We Know It:

1) The idea of the Federal Reserve easing off of bond purchases — in other words, creating more money for the government to spend than usual since what they jack from us isn’t even near covering the spread — frightens investors. After all, it’s not like we’re buying much these days. That surplus capital needs an outlet! At the moment, that outlet is the state.

2) When it comes to sources of profit, actually selling more goods & services isn’t quite as important lately as cost-squeezing, which mainly consists now of tramping the dirt down over the dead concept of wage growth. Look at where what jobs that did come up were largely located, via the Wall Street Journal:

More than half the job gains were in the restaurant and retail sectors, both of which pay well under $20 an hour on average.

“These jobs count as jobs in the jobs reports, but there’s very little attention paid to the kind of jobs these are,” said Arne Kalleberg, a sociology professor at the University of North Carolina and the author of the book “Good Jobs, Bad Jobs.” “They tend to be low-wage jobs, they tend to be in retail and personal-service-type sectors, many of them are part time.”

Cost cutting at one end, bad jobs being most of what is available at the other end. Actually, let me backtrack a moment on that slight unemployment rate drop: you know that the government doesn’t count people who were looking for work but gave up to the unemployed ranks, right?

The full picture this shows is more horrific to look at than most media will let on. Large chunks of the labor force idle when they don’t want to be, another section barely hanging on at Wal-Mart and similar (no doubt with food stamps & Medicaid treated as part of their compensation package…). The Fed stepping on the gas to no visible avail, all under an Ouroboros situation in the executive suites — “we’re making all this money from cutting corners & squeezing labor, if the Fed shifts we’ll be forced to cut corners & squeeze labor!” — and an untenable long run outcome if they keep it up. Bernanke & co can’t just buy everything

You want to know what would break this cycle? Well, I hear that average people tend to spend more when they actually have money. Y’know, cash. Ducats. Scrilla, scratch, cheese. That is why I trust the low wage workers currently striking across the country far more than any of the various suit & tie types claiming authority over us, because they recognize. If it were up to me, every grad student of economics would have to as part of their final credit try to live for a period of time on the budget & schedule of the average working poor person.

About b-psycho

Left-libertarian blogger & occasional musician.
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3 Responses to On Not Working

  1. Todd S. says:

    If it were up to me, every grad student in economics would be flogged and immediately sent for re-education in something more useful, like 18th century Russian poetry.

  2. Todd S. says:

    Forgot to finish what I started before hitting the “Post” button.

    I’m always a bit amazed of people’s perceptions of wages. People talk to me about jobs, and I tell them it’d be tough for me to make it on much less than $15/hour given my current bills and financial obligations, and they scoff as if I’m looking for a pot of gold. Then they’ll complain about barely scratching by on their starting teacher salary, which is $35k/year now around here. When I explain to them that even with full-time, year-round employment (which teaching isn’t) that’d be about $17.50/hour, they refuse to believe it. Pretty simple math, but we’ve somehow been led to view hourly rates as translating into much higher annual totals than they actually do. I can’t really explain how or why people see it that way, but I experience it all the time.

  3. B Psycho says:

    LMFAO… it’d definitely make ’em more interesting drunks.

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