[Dismal Operator]

(06-03-2014 06:09 PM)speakeasy Wrote:  

I think America is reverting to the global mean. This type of arrangement where kids stay home until married is standard in most of the world. Some Latino families I know in the US even stay with the parents after marriage and you'll have like 10 people in one house. It's just financial reality. I'm not trying to defend Obama, but I think it's shortsighted to say this is due to Obama policies when it's been a gradual change that's been happening for many decades. Hidden inflation and stagnant wages for decades on end. It's now coming home to roost. A few generations ago an average income family in a place like Los Angeles could purchase the average house. That's now a pipe dream.

Also, the government can't do anything to "create" jobs in the private sector. That's controlled entirely by supply and demand. When there's demand in the economy, it leads to more hiring. Problem is, now more demand can be met by more productive workers aided by technology as well as offshoring. The conservatives will say that lowering taxes will "create" job. That's bullshit. Lower taxes will mean more profit. It won't mean they will then take that surplus and start hiring more people. All government can really do to create jobs is start new infrastructure projects, new wars or new agencies. And then everyone screams "government is tax and spending!"

In other words, America is reverting to a lower standard of living. You are correct in that it is been happening for decades, and that Obama didn't start this. However, he is guilty of doing more of the same. JFKs America was in a position such that it could squander its wealth through poor policy and ruinous economic ideology and not feel too much of a change, but over time the cracks have widened and are more visible.

It's like the boiling frog experiment in which if you stick a frog in a pot of already boiling water it will jump out immediately, but if you stick it in lukewarm water and raise the temperature a few degrees uniformly over a long period of time, the frog doesn't notice the relative change until it's boiled alive. In the 1950s it was possible to have your standard wife, 2 kids, dog, car and picket fence, plus money for savings and even perhaps a housekeeper on the mans salary alone. Today, that requires two incomes plus maxing out two credit cards on top of the student loan debt both spouses probably have, and you don't even get a house. Most likely you've got an apartment. If you want a house, you have to pile on even more debt. Savings, and children?

If the change in living standards from 1950 to 2014 took place over 5 or 10 years, there would have been full scale revolution in 1960. Instead the change took 50-60 years, so it was easier to rationalize away. But the erosion still happens. That's the problem with constant inflation. Keynes:

Quote:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

We talk about all the ills of society today frequently on this board, but for me the economic ills are at the bottom of them all. The biggest one is the quest for inflation at all costs.

Finally, you're right about the only things goverment can do to create jobs. The problem is none of those jobs are desirable. To 'invest' in infrastructure, it has to take money from some part of the economy where it was voluntarily being used and have it involuntarily shifted to other parts of the economy. You don't see the jobs that could have been created if the infrastructure jobs weren't. One of the biggest myths in economics is that WWII ended the Great Depression. Yeah everyone had a job helping the war effort, but food and supplies were rationed on the home front and Americans overseas were getting shot at. It wasn't a great way of life. If the War machine was pumping out home appliances, cars and houses instead of bombs and tanks, the standard of living would have been much better. War is objectively destructive in an economic sense, even though it practically might be the best option. As for new government agencies, those jobs are ultimately jobs that end up making everyone elses' jobs more difficult or more annoying, and perhaps more scarce.