Happy Labor Day, Disposable Widgets

This week, my wife and I were debating which major our middle son should pursue at University - now in his first year. Of course, neither one of us considered Information Technology, my field for 25 years. Why would we when it's been 15 years of relentless outsourcing and non-stop concern as to whether or not I will have a job a year from now. Then tonight I read this bullshit article stating that "the skills gap is real" i.e that there is a dearth of well-trained technical employees in the U.S. Let's see, back in the late 1990s, we were told that the IT boom was going to last decades. It turned out that months are now the new decade. All of the entry level and now advanced jobs that would have been in the U.S. are now in India. But don't expect any PhD academic, country club frat boy, or any other self-absorbed tool to get it. They get to find out the hard way. 

Having witnessed the 30+ year ascendancy of the morally void Ayn Rand Angel Heart Society, we are now witnessing in real time, its vicious unwinding. The demise of Dumbfuckistan...

The hallmark of globalization is commoditization and homogenization.  All resources and factors of production become nameless, faceless widgets.  It's a fire and forget business model.   Sell it and forget it.  All "externalities" borne by broader society.  Economists call all side effects of a product "externalities" such as pollution or health effects etc.  In a sustainable economy, businesses are held accountable for their externalities, so that the cost of the product includes all direct and indirect costs, including pollution, labour turnover etc.  Clearly, that's not the case in the unsustainable disposable economy we live in, especially as it relates to labour.  Once the salesman class disposes of people, it has no further need for them.  They are the ultimate externality, to be borne by society at large.  And just as one would expect in a world awash with cheap labour, once these labour widgets are disposed of, they fall ever further behind the learning curve as the relentless pace of technology makes their skills obsolete.  Each new generation of worker leapfrogged by the next, in an ever attenuating career span.   

One of the largest economic delusions of our time that gave political cover to the fire and forget labour model is the false dichotomy economists created between employees and consumers.  In textbook economic terms, economists magically decided that the welfare of employees is totally independent from the welfare of consumers.  When Mitt Romney's Bain Capital "right sizes" one of their investments, by leveraging it up with debt, we are told consumers at large benefit.  Clearly that firm's employees pay the cost, but the textbooks tell us that society retrains them and finds them new gainful employment.  Fire and forget.  Of course, the latter part about retraining and recovering from loss of employment never quite works out that way, so fire and forget over and over again and soon the body count starts to add up.  The 27% of state 'dependents' become Romney's 47% on the way to the 67%, while the game show hosts running the country, look the other way.  And given that the obvious is never obvious to the Idiocracy, suffice to say that if you don't have a job, you are no longer a consumer it doesn't matter how much cheap junk is available at Walmart.

There is another unfortunately overlooked aspect to the fire and forget business model that is also just now coming home to roost.  Unfortunately, the broader economy is a closed loop system in which one company's costs is another company's revenue.  So, what we are witnessing in real time is an army of MBA con men trying to cut costs to prosperity while in aggregate they destroy their own economy.  What works great for one company is a catastrophe when they all attempt the same strategy at the same time.  Apparently they haven't made that connection yet either.

And I am not even going to go into the whole decimation of the small business sector to give rise to the big box mass warehouse retailers.  Most of that damage occurred years ago, and those small businesses and the entrepreneurs who invested their life savings in them, are long gone by now.  Suffice to say, when we walk into a Big Box outlet and see a glassy eyed minimum wage robot with a 1000 yard stare and zero upward career prospects, we are all reminded that there is a price to be paid for everything.

Choose the Illusion: The first non-recovery since WWII
Per capita real GDP adjusted for the Federal deficit
(A doubling of Federal debt since 2007)

On average, between 2000 and 2012, 17 factories per day closed in the U.S.
Where did all the (borrowed) money go?
Answer: Corporate Profits: A 12% annualized gain since Y2K (375% compound growth)

Another mostly overlooked aspect of this shit show is the attack on public sector workers and unions. These were people who were working hard all along, minding their own business. They never had much in the way of career upside, no dot com stock options, no fat end of year bonus, no trading pieces of paper back and forth for millions of dollars. Now however, we are told that they are the problem.  Mostly because their pensions are no longer affordable.  Why is that?  These pension programs were created decades ago by actuaries who are expert in the field of pension accounting. Unfortunately, those actuaries assumed that the U.S. economy would continue to generate a decent rate of return and therefore they built contribution models based on a historically achievable interest rate, say 5%, based on 200 years of prior history. Well, unfortunately, after the past decade's boom bust cycles on Wall Street, we find interest rates at 0% and hence pension programs that would have worked fine at 5% interest, no longer work. So for those denialists, who tell us that the costs of the 2008 Wall Street bailout are already accounted for and Wall Street "paid back" the bailout money, guess again.  The ongoing costs of Wall Street's gambling will be the gift that keeps on giving, starting with these 0% interest rates that are now bankrupting pensioners across the country.  And of course, yield hungry pension managers are taking way too much risk right now, thinking only about return on capital, when they should be focused on return of capital.

Ultimate Greed Destroyed Ponzi Kapitalism (And Everything Else)

Lastly, we are of course constantly reminded of the ongoing political warfare with its attendant disconnect from all reality.  The Romney Class vents their greed-filled rage at all of the indolents piling up on the foodstamp rolls, seeing absolutely no connection between their own actions in treating people as disposable widgets.  Of course this is all more wishful thinking by the amnesiac Harry Angel-like Romney class that is desperate to absolve themselves of all responsibility for this overwhelming disaster.  

The elevator is waiting.