Posts Tagged ‘economy


Million of Jobs Lost Due to Free Trade with China

Millions of Jobs Are Still Missing. Don’t Blame Immigration or Food Stamps

by Andrew Van Dam in The Washington Post February 22,2018

Millions of Jobs Are Still Missing, Don’t Blame Immigration or Food Stamps

Prisoners wait for breakfast at California Men’s Colony prison in San Luis Obispo, Calif., in 2013. Rising incarceration rates are one of a handful of factors that help to account for the United States’ missing jobs. (Andrew Burton/Getty Images)

Where did all the jobs go? Well, we’re finally starting to find some satisfactory answers to the granddaddy of all economic questions.

The share of Americans with jobs dropped 4.5 percentage points from 1999 to 2016 — amounting to about 11.4 million fewer workers in 2016.

At least half of that decline probably was due to an aging population. Explaining the remainder has been the inspiration for much of the economic research published after the Great Recession.

Economists and politicians have pointed at immigration, China, video games, robots, opioids, universities, working spouses — everything up to and including the academic equivalent of shrugging their shoulders and muttering, “Kids these days.”

Until recently, there was no good system to untangle it all.

University of Maryland economists Katharine Abraham and Melissa Kearney built one. After reviewing the most robust research available and doing some rough-but-rigorous math to estimate how much job loss each phenomenon can explain, the duo discovered something surprising: pretty much all the missing jobs are accounted for.

Just as important, they pinpointed the culprits. In a draft paper released by the National Bureau for Economic Research this week, Abraham and Kearney find that trade with China and the rise of robots are to blame for millions of the missing jobs.

Other popular scapegoats, such as immigration, food stamps and Obamacare, did not even move the needle.

During this time, there were other changes in the labor force (particularly an increase in educated workers) that pushed the employment rate upward. As a result, their research needed to account for more than just the 4.5-percentage-point drop and offset those gains.

Factors that mattered

Competition from Chinese imports

The era of vanishing jobs happened alongside one of the most unusual, disruptive eras in modern economic history — China’s accession to the World Trade Organization in 2001 and its subsequent rise to the top of the global export market.

There’s a deep body of research into the manufacturing jobs that were lost to competition from cheap Chinese imports, as well as those that vanished from related industries. On the basis of that research, Abraham and Kearney estimate that this competition cost the economy about 2.65 million jobs over the period.


Automation also seems to have cost more jobs than it created. Guided by research showing that each robot takes the jobs of about 5.6 workers and that 250,475 robots had been added since 1999, the duo estimated that robots cost the economy another 1.4 million workers.

Minimum wage increases

Abraham and Kearney used previous research into how teens and adults respond to rising wages to produce a high-end estimate of the impact of minimum wages over this period. Other recent research has found either a small effect or no effect. In the end, they combined those figures to find that about 0.49 million workers were lost.

That number does not account for the benefits that the broader labor force derived from higher wages, Kearney said.

Social Security Disability Insurance

The number of people receiving Social Security Disability Insurance nearly doubled from 1999 to 2016, from 4.9 million to 8.8 million. The population has aged, but that is still 1.64 million more people than there should have been, had rates remained steady for each age group, the researchers found.

Abraham and Kearney estimated that the labor force shrank by about 0.36 million as an increasing number of workers drew disability benefits.

Veterans benefits

The economists estimated that roughly 0.15 million people were not working because of the expansion of a disability insurance program run by the Department of Veterans Affairs. Between 2000 and 2013, the share of veterans receiving such benefits rose from 9 percent to 18 percent.

Mass incarceration

There were about 6.5 million former prisoners in the United States between the ages of 18 and 64 in 2014, according to the best available data. Assume that 60 percent of them served time as a result of policies implemented since the 1990s, account for their ages, time served, and pre-prison earnings, and you get a conservative estimate of 0.32 million lost jobs.

What did not reduce employment


Most research indicates that immigration does not reduce native employment rates. And even if it did, it is unlikely that it would reduce overall (native and foreign-born) employment. Immigrants’ employment rates are higher than those of native-born residents.

Food stamps (Supplemental Nutrition Assistance Program)

SNAP benefits average about $4.11 per person per day. Able-bodied adults are generally cut off from benefits unless they are working. Furthermore, the program itself did not change enough over the period in question to alter people’s behavior. It grew, but that was because of fallout from the Great Recession, not because of permanent policy changes that made nutrition assistance more accessible.

The Affordable Care Act

Obamacare went into effect in 2014 and has not had a noticeable impact on jobs to date. It is safe to assume it was not a decisive factor in the 1999-2016 period.

Working spouses who allow men to stay home

While this is a popular theory, the share of men who are not in the labor force but had a working spouse actually fell slightly between 1999 and 2015, according to a 2016 report by the White House Council of Economic Advisers.

The unknowns

Along with an aging population, the first six factors (competition from China and automation in particular) account for the majority of the jobs lost during the recession. But the U.S. labor market is colossal and complicated, and other explanations are out there, pushing and pulling the estimates in either direction.

It might be harder to change jobs now

Americans are not moving as often as they once did. It seems reasonable to assume, on the basis of recent research, that employment rates would be higher if people were more willing or able to relocate for work. But there is not yet enough evidence to state this conclusively.

Likewise, it is possible that the skills possessed by the available workers are becoming increasingly unrelated to the skills required by the available jobs. But this “skills mismatch” has not yet been proved over the long term.

Finally, there has been speculation that the rapid rise — from 5 percent in the late 1950s to about 30 percent today — in the share of workers in jobs that require a local or state government license has limited folks’ ability to switch careers and respond to labor-market requirements. We do not yet know enough to put a number on it.

Video games, opioids and changing youth culture

U.S. youth employment rates fell rapidly over the period. Economists have grabbed headlines recently by blaming the precipitous drop in young males in the workforce on a variety of factors including video game playing and prescription painkiller abuse.

But there is not yet enough evidence to prove that either phenomenon is a cause of low youth employment or a result of it. According to Kearney,  both issues could, at their root, be the result of shifting views of what is acceptable for a young man to be doing with his life.

“For whatever reason, these men seem more willing to stay home, live with their parents, live off their girlfriends,” Kearney said.

The paper’s most striking finding is not, however, speculation on idle American youths. It is that many of the topics that dominate political discourse about the labor market — such as immigration, food stamps and Obamacare — are unlikely to bring back lost jobs.

Instead, policymakers should be focusing on the forces that took those jobs in the first place: import competition, automation, incarceration and disability insurance.

“There’s not much we can do about the fact that our population is aging,” Kearney said. “But it’s pretty imperative that we figure out why younger individuals aren’t working at the rates they used to and do something to change that.”

The headline of this story has been updated.

Correction: A drop in the employment-to-population ratio of 4.5 percentage points would have been equivalent to about 11.4 million workers in 2016. An earlier version of this post put that number at 6.8 million.


Editorial Comments

It is good to get actual research numbers instead of just theories about the U.S. economy as seen in Abraham and Kearney’s article: Explaining the Decline in the U.S. Employment-to-Population Ratio: A Review of the Evidence.

This viewpoint is so much different than the Free Trade mania that is pushed by “Big Media”


Poll Support For Manufacturing Made in USA Goods Jumps But Don’t Credit Trump

Morning Consult: Poll Support For Manufacturing Made in USA goods jumps but don’t credit trump.

Consumer Preferences

Increased Support For Buying ‘Made in America’ Goods, but Don’t Credit Trump

The President’s boosterism of domestic manufacturing only goes so far, experts say

President Donald Trump signs an executive order to try to bring jobs back to American workers and revamp the H-1B visa guest worker program during a visit to the headquarters of tool manufacturer Snap-On on April 18. (Scott Olson/Getty Images)
  • Experts say that the discrepancy illustrates just how price-sensitive American shoppers are.

U.S. consumers are willing to pay more for “Made in America” goods, according to a recent nationwide survey. But there’s a financial limit to how much they’ll support a key 2016 campaign theme by President Donald Trump.

Sixty-seven percent of adults in the United States would be willing to pay more for products if they knew doing so would support American manufacturing, according to a Morning Consult poll conducted Oct. 26-30. The survey of 2,201 U.S. adults has a margin of error of 2 percentage points.

When asked about specific price points for a hypothetical product, however, consumer attitudes diverged — particularly along political lines.

Respondents were given the choice between a $50 coat made overseas and a $50 coat made in the United States, and 84 percent said they would opt for the domestic garment. As the price of the American-made coat rose to $60 and then $75, the percentage of respondents who said they would purchase it slipped to 70 percent and 52 percent, respectively.

Put another way: Support for purchasing a “Made in America” product dropped 38 percent when its price jumped 50 percent.

Experts said the discrepancy reveals just how price-sensitive American shoppers are, and they downplayed the effect of recent politicization of American manufacturing and consumption, such as Trump’s Buy American and Hire American executive order from April.

“We can put a dollar figure on anything,” said Anthony Dukes, an associate professor at the University of Southern California’s Marshall School of Business who specializes in pricing strategy, in an interview this month. “Marketers do this all the time. They put a value on a brand; they put a value on an attribute of a product; and they even put a dollar value on ‘Made in the USA.’”

Answers to this question have shifted since last year, when 47 percent of respondents said they would purchase the more expensive domestic coat; 52 percent this year said they would.

Dukes credited that uptick more to a consumer movement of buying locally, as opposed to the political atmosphere, though he said overall “patriotic obligation” is one reason why consumers may say they purchase domestic goods.

Sixty-five percent of Republicans said they would purchase the pricier coat, compared with 46 percent of Democrats, according to the October poll.

Ron Friedman, a partner at the public accounting and advisory firm Marcum LLP, agreed that the Trump administration’s economic nationalist rhetoric isn’t influencing consumers, and that shoppers always go for the less expensive item — wherever it’s made.

“The issue is price, not ‘Made in America,’” Friedman said in an interview this month.

“If a consumer had the opportunity to buy ‘Made in America’ versus, realistically, ‘Made in China,’ and the prices are exactly the same, they would buy ‘Made in America,’” Friedman said. “But the reality is the prices are not the same. The prices are just cheaper coming in from China.”

Although cost influences choice here, the tribalism of domestic consumption shouldn’t be overlooked.

Republicans making less than $50,000 a year were more likely than Democrats earning the same amount to say they would purchase the more expensive American good, by a similar margin: 67 percent versus 48 percent, respectively.

Americans making more than $100,000 a year are where support for the pricier domestic coat slips. Fifty-four percent of wealthy Republicans and 37 percent of Democrats with similar incomes were less likely than adults with smaller incomes to say they’d purchase the more expensive American-made item.

Measuring the number of products made in America can be challenging, especially when federal agencies use different definitions when overseeing such goods.

Fifty-three percent of “final demand for manufactured goods” or “personal consumption, business investment and government purchases” were made in the United States, according to the Commerce Department’s Economics and Statistics Administration. That means that about half the products Americans purchased were domestically produced.

That number varies by industry. Twenty-eight percent of the computer and electronic products and 48 percent of automobiles that Americans purchased in 2015 were domestically made, while 79 percent of food, beverage, and tobacco products consumed in the United States were American-made, according to the ESA.

When consumers finally get to the check-out line, Dukes said their sentiment for “Made in America” products may not always turn into action.

“It’s easy to say one thing, and then actually pull your wallet out — it’s different,” he said.


The Oaf of Office – More USA Jobs or Less?

This is written specifically for Inauguration Day. With Donald Trump being sworn in as the 45th President, the question is whether his administration will be good for the American worker and the Made in USA movement which ultimately means more jobs for Americans.

What Can We Expect for Made in USA jobs under the Trump Administration?

Will the Trump administration increase Made in USA jobs or will the Trump administration continue the Republican doctrine and do the opposite: to decrease good paying jobs in the USA? To predict these two outcomes, we have to know what Trump believes by what he has said (which is sometimes difficult as sometimes he is on both sides of the same issue). We know that he agrees with the ultra-right of the Republican Party on all issues except possibly two: first, the GOP has always been wary of Communism and Russia. Interestingly enough, Trump has expressed the exact opposite of this wariness. Second, the GOP are in full support of Free Trade, exporting US jobs and maximizing profits for the company’s CEOs. While Trump had previously offshored jobs and has his Trump clothing line (and his family’s products) made outside of the U.S, suddenly, in mid-campaign, Trump said that he is against Free Trade treaties.

Policies of the Republicans and Therefore, Trump and its effect on the USA.

So let us quickly look at some of the policies of the Republicans (and therefore, Trump) and see how it would effect US jobs. These include minimum wage, income taxes, Immigration, Free Trade, Energy, Mergers, Economic Growth, Free Press.

Wages and the Minimum Wage

For the past 100 years, the traditional view of Republicans towards business has always been on the side of owners of businesses.  This has not changed. Republicans have always been against all issues that would make the bosses pay more: minimum wage, vacations, 40 hour work week, overtime pay, social security, unions, pensions, employee health care, disability, child labor, worker’s compensation,  and workplace laws that outlaw discrimination or harassment. These issues were fine when the United States was an overwhelmingly run by small businesses. But, since 1980, the USA has become the Mega company capital of the world and many of these giant companies are multi-nationally owned. In fact, large corporations (since 2007) employ more Americans than small businesses (small business being defined as less than 500 employees). The US is so top-heavy (big corporations dominate) that just 6 companies made 50% of all profit in the US in 2015 (according to USA Today) and 28 companies made 50% of the profit to the S & P. So, sometimes it seems ludicrous that the Republicans go to great lengths to protect the mega-Rich, who already have their own lobbyists, but very little for small business owners. So, what about the workers? Workers compensation has been stagnant especially when compared to corporate profits and CEO pay. Workers wages are just starting to go up over the past two years, but many workers depend on the Federal Minimum Wage to make a living. The Minimum Wage has been unchanged since 2007 (as passed by a Democratic Congress), it is still $7.25 per hour (Louisiana and Tennessee do not follow the federal minimum wage). It has been shown by many economists that the minimum wage has not kept up with inflation. And at the present time, an employee working a forty hour week at minimum wage would still put one at the poverty level. Critics (mainly Republicans) have charged that the raising of the minimum wage kills jobs. This has never been proven, in fact, there evidence to the contrary (Business Insider) and (US News).

History of US Federal Minimum wage to Nominal Dollars

History of US Federal Minimum wage to Nominal Dollars

What is the opinion of Trump? He wants to repeal the minimum wage. But, of course, he has flip-flopped on this issue multiple times (see Washington Post Flip-flops on minimum wage). But if Trump follows standard Republican orthodoxy, and many expect that he will, Trump will try to repeal the minimum wage. What does this mean for American workers? The prospects don’t look good. It is assured that the Federal Minimum Wage will not be raised. However, some Democratic states have, on their own, voted to increase their own state minimum wage. These states have shown the greatest economic growth. Growth in these states will be great, because they are innovative, and despite the efforts of the Trump administration.

Income Taxes

Trump has promised to change the tax code. It has always been hard to pin down Trump, especially when what he says does not match what he says on paper. But the written Trump Plan is a basic Republican plan, First, it gets rid of the Inheritance Estate Tax which would help only the top 1%. Second, it decreases the corporate tax rate from 35% to 15%. Third,  it would decrease the rate of the top income makers from 37% to 33%. The group of $91,150 – $110,000 per year  would also get a small tax break from 28% to 25%. There is no change from $37,500 – $91,150. In fact, most may be paying more. (You can see more on the Trump Tax Plan/NPR analysis). The final verdict: This is classic trickledown economics, giving more money to the top 1%. It didn’t work with Reagan did it, it won’t work now. When you give more money to the rich ,they do not spend it (there is no trickledown), they invest it. Additionally with substantially less income coming to the government, the cost to the government is $62 Trillion per year (greatly increasing the deficit). Final Cost to the worker: more taxes paid by the middle class, less money from the corporations, less money from the top 1%, less money for the government to finance infrastructure. In fact, this is the exact same policy that caused the middle class to disappear in the first place.



Historically, there have always been groups that have hated immigrants: at first, it was directed at the Irish, and then the Germans, then the Chinese and Japanese and then later, the Hispanics. The Republicans haven’t always been about deporting immigrants. For Republicans, this is a relatively new phenomenon. I mean there were always a sub-group of Republicans – the KKK, the John Birch society, the segregationists, and other White Supremistist groups (they had been Democrats until the Civil Rights Acts of 1965, then they became Republicans) whose voices have always been minimal until recently. Now they are quite vocal. The cause of this movement? It happened after President Reagan repealed the Fairness Doctrine in journalism and Media. This is when Right Wing Media went into action. It encouraged prejudiced people who were previously silent to speak out publicly. And this is where Trump has made his connection. Trump loved to inflame this crowd with hatred towards immigrants: He said he would build a wall. And then he said Mexico would pay for it. Of course, it was talk, just saying outrageous things to get people to listen.


The Wall Between the US and Mexico

So, how serious is the possibility of building the wall between the US and Mexico? Even Trump supporters didn’t take this idea seriously, but they loved the hateful rhetoric anyways. Let us look at the 119 mile wall between Mexico and the United States. The Washington Post said that building just the wall would cost $25 Billion (not million- and it doesn’t consider surveillance). But, we know the actual costs are always more than estimated by three to four times. So, that would make it approximately $100 Billion. And Mexico is sure not going to pay for it. So, guess who is going to pay for a wall that won’t keep immigrants out? You are, the American tax payer. Estimated cost per person $308.

trump-wall                                                                                                    The Trump Wall

Republicans know that immigrants are a vital source of labor for certain business especially the farming community. In fact, the Senate had passed a Comprehensive Immigration bill in 2013 (that is right – both Democrats and Republicans worked together). However, some Republican Tea Party members scuttled the bill in the House and now, we are in the same state as before. Final decision: I can’t see Trump getting enough Republican votes to build the wall. Some Republicans are thinking about the future of their party. They know they can’t stay in power as the all-white Party about increasing their chances of getting Hispanics to vote for them. The Republican can’t stay the all-white Party, not without a lot of tricks anyways (like the ones they are already employing – gerrymandering, voter suppression), so they will need to lure some Hispanic voters. Theoretically, what if Trump built the wall , and deports all the ones he said he would (11 million), many industries would be hit hard: agriculture, construction, Home Health, Hotels, Motels, restaurants, landscaping, wine growers, etc. Some anti-immigrants say that this will “free up jobs for Americans.” My experience, Americans don’t take those jobs. When the Great Recession hit in 2009, how many Americans did you see working on the farm or Home Health? Practically none. Americans would rather collect unemployment than do the heavy manual labor that the immigrants do.

Free Trade

Free Trade is a Republican creation, taking root under the Reagan administration. It undermines what our Founding Fathers had started which was, in order to protect fledgling U.S. businesses, the government would levy tariffs on products coming from other countries. The first Free Trade Agreement passed was the North American Free Trade Agreement (NAFTA) which was an agreement between the US, Canada and Mexico. The next Free Trade agreement was a whopper. It was the World Trade Organization (WTO) which brought in tons of more countries, including China. And guess what happened, just as previous President contender, Ross Perot predicted, this created “a giant sucking sound” of American jobs to other countries. By eliminating import tariffs, it made imports much cheaper, American products suffered, businesses closed, and, then, American business owners joined the foreign competition by closing down American factories and sending the jobs to China, Mexico, Vietnam, India, Bangladesh, etc. (where labor is cheap and regulations minimal). Multiple industries in the USA have been hurt, severely injured and many are on life-support. A lot of good paying manufacturing jobs had been eliminated in the United States, which has created a giant vacuum in the US economy – that vacuum is from the loss of the middle class.

Trump had always been a Free Trader, in fact, he has offshored his Trump clothing to places like China and Mexico. He was never against Free Trade until, during his campaign, he had read a survey where people felt it was important that jobs be kept in the USA. During the campaign to whip up this anti-trade talk, Trump had made insinuations that he would raise the tariffs on China.

Buick Envision made in China

Buick Envision made in China

It is interesting that Trump has targeted companies auto companies that have planned to off-shore to Mexico, but does he say anything about China bringing cars into the USA? No. How about the Buick, Chinese – made, Envision? Nope, not a word. Then, there is the new all-electric car, Atieva which just changed its name to Lucid, to make it look like it is American, which is totally financed by Chinese businesses, will Trump comment on this? Nope. Trump will only comment once there is enough publicity to make it worth commenting on it. It is not like he really cares whether it is US made or not.

Will Trump raise tariffs on Imports from China?

So, the question is whether Trump will levy tariffs of 35 or 45% like he threatened. My prediction is No. Trump has too many ties to China (from Time Magazine). He has plans to build 20 Hotels in China over the next 10-15 years and not to mention that the Bank of China is his biggest tenant in Trump Towers. If Trump really infuriates the Chinese government, the Chinese could impound his company that makes Trump clothing and they could jail all of his employees and managers as spies, because totalitarian governments are like that. This is called conflict of interest. Federal policy is being influenced on how it effects hid business personally. Another potential conflict of Interest: The Obama administration has filed a suit against Fiat-Chrysler . Fiat is hoping that can make a deal with the Trump administration. Fiat might be thinking instead of being sued or paying a fine, maybe we could just make a contribution to some Trump business?

So How Will Trump Save American Jobs?

If  import tariffs on Chinese products are not raised, then, how will Trump save American jobs? My prediction is he won’t. What he will do, is what he has been doing since being elected? He will tweet and threaten a company who have had thoughts about building factories in Mexico. (See Ford and Toyota – Washingon Post). Also, see Fiat-Chrysler. In all cases, Trump took credit where no credit was due. He did not change the course of their company. Think about it, do you think corporations make millions of dollars in investment just because of a tweet? This is not a charity auction. (“I bid 30 milllion dolllars to bring jobs back to the USA!”) These corporation have been formulating these plans for years. (In reality, Trump should be thanking Obama for all these actions, but Obama is not one to be a credit hog.) Will he truly go after NAFTA which would hurt his most loyal constituents, the Farmers? Maybe, but Trump has no loyalty and no interest in agriculture.

Will there be serious reforms towards Free Trade? I truly doubt it. Trump will give the outward appearance that he cares. In the meantime, American companies will continue to off-shore, and companies that come back (re-shore of jobs), instead of being little noticed (like the present time), it will be crowed about by Trump who will take all the credit where none was due. One good thing to come out of this is that traditional Republicans like Paul Ryan are looking to decrease taxes on American products that are to be exported, they haven’t gone so far as to say that they will increase tariffs on foreign imports or getting rid of tax exemptions for moving expenses for companies as they move their company from the USA to another country. At least, the Republicans are entertaining some Democratic ideas, but don’t let them hear that.

Other Issues That May effect the Economy

Health Care

Health Care can strongly influence consumer’s pocket book. At the present, Trump and the Republicans are ready to repeal The Affordable Care Act (ACA). If the Republicans do replace the Affordable Care Act with a comprehensive Health Plan that covers everyone, providing good health care at less cost, this would be one of the greatest breakthroughs in the history of American government. But will the GOP take that giant and brave step. Not a chance.

The Evaluation of the Affordable Care Act (ACA)

The ACA did many great things, it insured an additional 20 million Americans, the highest percentage of insured Americans ever in the history of the nation. It controlled expenses, brought down the price of healthcare, paid for preventive health and eliminated exclusion based on pre-existing conditions. But, the ACA wasn’t close to a perfect system. One of the main problems with the ACA was that is was based on the obsolete notion that companies wanted to give their employees health insurance. Today, companies bend over backwards to make sure employees are not full-time and, therefore, does not have to pay benefits). In fact, companies like Macys keeps track to the minute any employee that comes close to qualifying for benefits, and makes sure that it does not happen. My belief was that the ACA was a band-aid to the health care system, to decrease its expenses – to delay the eventual bankruptcy of the nation from health care for several more years.


The Cost of Repealing The Affordable Care Act

There are a couple of problems with the idea of repealing the ACA. One is the Republicans have no replacement policy. Even though Trump says they have a plan and it is close and Everyone will be covered, better care, less cost. This is definitely a case of over-promise and under-deliver. (Especially if Medicare for everybody is off the table.) The other problem with the Affordable Care Act is that it is a Republican idea from the Heritage Foundation. The only “real” thing that the Republicans don’t like about the ACA is that President Barack Obama takes all the credit for it and therefore, for political expediency, it had to be demonized. The idea behind the ACA was to add more competition between the insurance companies (health insurance exchanges) and, therefore, decreases costs. The only wrinkle from the GOP brain trust, thus far, is that the insurance companies can compete across state lines. Wow, what a change. (Oh yeah, Health Savings Accounts which are available in the ACA, great idea). The problem with the ACA and the GOP wrinkle is that insurance companies can drop out of the competition at any time (because many times there are “agreements” between oligopolies) which raises the price of insurance premiums. The fact is the Republicans want to repeal only the name of Obamacare and leave the rest of the system untouched. They don’t want to go back to the extremely expensive  and dysfunctional old system. But that is the only way. So, what the GOP did under the dark of night was to hide the fact that repealing the ACA will cost the nation trillions of dollars, the GOP wrote a resolution that repealed a mandate that The Congressional Budget Office keep track of how much repealing the Affordable Care Act would cost. In the same article, it highlighted:The result of repeal is estimate that $140 billion of federal funding would be cut to states by 2019, resulting in the loss of 3 million jobs by 2021, loss of $1.5 trillion in gross state products and a $2.6 trillion reduction in business output. State and local tax revenues will fall by $48 billion. Obviously, the repeal of the ACA will be very costly, and it is very probable that the average American will be paying a lot more for Health Care. And expect a lot more Americans to declare bankruptcy due to medical expenses. The AP reported than premiums will increase by 25%, that 18 million more people will be uninsured one year after enactment and 32 million more uninsured by 2026. Look at it another way, the Trumpcare model will be so expensive and exclude so many people that it would rapidly drive the nation and individuals into bankruptcy, that the electorate would be willing to give the model of Medicare-for-all model a very serious look many years sooner. (But, the Republicans are very serious of getting rid of Medicare by privatizing it based on a model like Obamacare).



Trump has nominated Rex Tillerson, CEO of Exxon, as Secretary of State. What does this mean? Well, detente with Russia, of course. But, with regards to oil, we should expect to see more widespread drilling everywhere including the Oceans, the Arctic and National Parks. Expect more pipeline projects across the United States. And, you will definitely be spending a lot more for gasoline. The price of gasoline is not actually based on supply and demand (as people traditionally think) but rather on speculation (see my blog entry: Wall Street and the price of Oil). The price of oil hit a low in January 20, 2016 at $27 a barrel. Now, with the election of oil friendly politicians, the price of oil has increased to close to $54 per barrel (this is definitely not due to increased demand or decreased supply). It is estimated that in 2017 the cost of oil per barrel will be in the $60s, however, I believe this is severely underestimated and that speculators will push this up much higher. Remember it wasn’t all that long ago when a barrel of oil was $114 (in June, 2014). So, expect to pay a lot more at the pump.



Trump and the GOP believe in the government staying out of the way when it comes to businesses. We know from history that the natural outcome of unfettered capitalism is monopolies. But since this was outlawed by Theodore Roosevelt, the natural end point is oligopolies (a few companies that own everything). By collusion (oligopolies say instead “a gentleman’s agreement), a few companies can drive prices up without actually competing. For 2017, one can expect many new giant mergers to pass without fight from the Federal government. AT&T with Time-Warner will merger as will Monsanto and Bayer. Even Fortune Magazine has made this prediction with their headline A Trump Presidency Could Unleash a Pharma Merger Boom. So, maybe Pfizer and Allergan could try a try another merger (it was thwarted by the Obama administration). The effect for consumers: Pay More for Less Choice.


Economic Growth

One thing that people forget is that the United States is at near maximal employment, the US economy is very strong (all economist believe this, maybe not political pundits). The economic growth has been steady at 2% per year. Yet, enough people (not a majority) still wanted a change. Here is what Goldman-Sachs predicts for 2017:

Donald Trump promised economic growth of 5-6%. No other economist is coming close to predicting this. It is another case of over-promising and under-delivering. In fact, some are thinking that Trump may slow the economy and Citi group thinks that it is a 50% probability that Trump will not even finish out his term. The next year – there will be growth and it will be all due to the Obama administration. Plus, there is no evidence of weakness in the economy, unlike years previous to The Great Recession. However, after that, it will be Trump’s baby. Sometimes, growth and recession have nothing to do with the President and there are swings that naturally occur or sometimes things occur can effect the economy (9/11). I predict based on the cycles of the economy, that we are due for a “slowing” as we have never seen this many consecutive years of positive growth ever. Certainly, President’s do make a difference. Sometimes it takes several years to really see the effect – but is plain when you evaluate Reagan’s legacy both on the United States and on California, (back when he was governor). The United States and California have never recovered. There is distrust in government, the government tax base is shrinking, infrastructure has almost collapsed. Are there any great infrastructure projects in the USA anymore? (Just compare the USA to China’s incredible growth, we look like Ancient Rome).


Trump’s policies are like Reagan’s. It is Voodoo economics. Bad for everybody except for the 1%. There will be more large corporation mergers, Health Care will become much more expensive, the middle class will have to pay more in income taxes, the Federal deficit will explode, oil prices will increase, the rich get richer and no real change in jobs coming back to the USA. The only potential bright lights for the economy are: Republicans working on adjusting their Free Trade policies and a “big” infrastructure project. The infrastructure project could be done right, but I severely have my doubts with this group of Republicans. As Trump takes the oath of office, he becomes the oaf in office. This inauguration is like scene from a parallel universe, like what if Hitler didn’t attack Russia, or what if we didn’t discover Penicillin. The American public have not grasped that we are living in a great time, but have decided that we needed a “change”. People for some reason can’t grasp the concept that change can be for the worse, sometimes much worse. So, for the people who to vote for a temper-“mental” man without one day of public service, “You reap what you sow”. If the economy goes south, you go bankrupt, you lose your health insurance, well you brought it upon yourself. 70 million Americans voted against your choice. As far as bringing jobs back into the USA, Trump will bring none, not even his Trump clothing line from China.


Free Press

This last issue does not have to do with economic issues, but there has been a disturbing trend. With the rise of right-wing news groups, Breitbart, Fox News, Alex Jones, it is getting difficult for Republicans to know what is real news and what is fake news. Trump only reads the most extreme right wing news, so he does not know what is real news versus fake news. And if Trump is confronted by the real truth, he belittles the Press. Trump is kicking the Press out of the White House to limit access. He didn’t allow the regular Press to ask questions during his so-called “Press Conference”.He has threatened to sue the Press or jail them like other dictators. In the meantime, they have hired KellyAnne Conway as the Reich Minister of Propaganda (ala Joseph Goebbels). I believe that if he can intimidate the Press, then he can intimidate any Americans who disagree with him. My idea is that all networks should fact-check in real time – which means while a political participant or President speaks, at the same time, in close captioning – it says whether the person is lying. It would be easy because almost all of these TV shows are tape-delayed.

free-pressWe need to support the Free Press and they should be free from the intimidation of a dictatorial President. And we need to stay strong against the Trump and his trolls who threaten violence and vitriol on all who disagree with Don the Con.



Chinese billionaire revives closed Ohio GM plant, creates 3,000 jobs

Food for thought. So guess who is going to bring the middle class back in the United States? It could be the Chinese. The Chinese taketh and giveth back.

Chinese businessman Cho Tak Wong turned a shuttered GM plant into an auto glass factory for his global empire

Source: Chinese billionaire revives closed Ohio GM plant, creates 3,000 jobs – CBS News

MORANIE, Ohio — The factory floor is bustling again at a manufacturing plant in Moraine, Ohio.


Mr. Cho

CBS News

A billionaire has indeed brought jobs back to this part of the Rust Belt, but not the one who promised to on the campaign trail.

His name is Cho Tak Wong; He goes by Mr. Cho.

The Chinese businessman says he expects to create 3,000 jobs in the former General Motors plant, which shut its doors in 2008, costing the area 1,000 jobs.

Mr. Cho turned it into a state-of-the-art auto glass factory, part of his global Fuyao Glass empire, which produces 23 percent of the world’s car windows.

“When I walked into it two years ago it was dark, dirty, it had been uninhabited for quite a few years,” said Jim Reid, a supervisor at the plant.


Mr. Cho, right, touring the factory

CBS News

Reid voted for Donald Trump for president, who made the Chinese a target during his campaign.


Jim Reid

CBS News

Correspondent Jim Axelrod asked Reid what he made of a Chinese businessman being the one to bring so many jobs back to Ohio.

“I’ll be honest. I struggled with it a bit when I made the decision,” he said. “Just because of what I’ve been led to believe through my life.”

But Mr. Cho seemed untroubled by Trump’s criticism.

“That was just campaign language. Now that Trump is the president-elect, things will be different,” he said.

“Mr. Cho, are you making America great again?” Axelrod asked.

“Yes!” he replied.

Axelrod asked Reid what his message would be to Trump about Chinese businessmen in the U.S.

“Just give them a try,” Reid said.

Ten percent of the jobs at the plant are held by Chinese employees. As for wages, the Fuyao jobs start in the $12 to $15-an-hour range. The old GM jobs at the same factory paid $30 an hour, but Mr. Cho said he is looking to raise the pay scale considerably.


Why Made in USA 2016

I have be doing this Made in America movement since 2011. I thought it was time to re-examine whether in 2016 is “Made in America” reasonable to follow. Obviously, the big corporations and their paid politicians think this “Made in America” movement is silly. I mean what else can be better than cheap imports? We measure our economy by how the US spends its income, so, obviously with corporate profits bulging (which is all that matters to the big corporations) and people buying cheap useless stuff – all would appear to be rosy.

In some respects they are correct, after The Great Recession, there has been: 70 months of net job growth, an addition of 14 million private sector jobs, 1-2% GDP growth and people filing for unemployment benefits was the l0west in 42 years (1973 – even lower than the incredible Clinton years), The US has added more jobs than it lost in the Great Recession, unemployment rate is 4.9%, things, indeed, do appear rosy.

private sector growth

But all is not as rosy as it appears, it is because the American public knows there is something fundamentally wrong. And we will examine this.

The Major Reasons why People Buy American

There are three main reasons why people buy American: 1) America produces great quality products; 2) Buying American is good for the American economy and stops outsourcing of American jobs; and 3) ethical concerns such as child labor, slave labor or human trafficked workers, unsafe products, unsafe food, countries that blithely pollute the environment.

#1 Americans want great quality products

Most people want quality products, of course, there are people who insist on the cheapest, but then that is what The Dollar Stores are for. Even tourists from China often want quality American made products. Good luck in finding them.

What are Quality Products?

Quality products means that products do what they are supposed to do reliably and consistently (and fashionably). Who wants a Christmas toy that breaks down the first time you use it? Who wants to have to replace a piece of apparel because it looks awful after a couple of washes? Clothing should look good year after year and not just thrown in the dump after wearing it once. Not all objects should be disposable. With quality products, one will actually save money over time.

Why Are American Products Considered Higher Quality?

In general, American products have more oversight, more inspections and higher expectations, the results are higher quality products. American workers are adults (as compared to many countries where child labor is the norm) and are considered to be decently paid (as compared to their foreign counterparts). American pride is part of what makes quality higher. No company likes to be on the news for making inferior products, and some feel that making a quality product will establish customer loyalty.

#2 Buying American is Good for the American Economy

As we mentioned earlier, the American public feels that there is something fundamentally wrong with the current American economy. The traditional American economy meant good paying jobs, making American made products and service jobs that sold these American products. Products were a little more expensive, but they were quality and the jobs paid so well, that only one person working a full-time job not only had benefits but made enough to buy a house and support a wife and three children. This was still present in the 1960s and 1970s.

The Beginning of the End

Extreme Capitalism

The beginning of the end started in 1980. The US economy was so strong that economists thought they could do anything, in fact, what they tried was down right radical. First, they made businesses completely independent of government. Never mind that the Federal, State and City governments had created an incredible infrastructure for these businesses run easily and efficiently. By making the government stand back – businesses were able to to practice extreme capitalism: 1)monopolies, 2) huge chains,and 3) volume discounters which decimated millions of small businesses, making laborers out of people who used to run small businesses. Just look at today’s landscapes, millions of strip malls which could be in any city in the U.S. (there are no countries in the world that have copied this.)

More extreme Capitalism

Further Extreme Capitalism: Greed became the norm. Profits and stock prices became all that matter. Growth and employee loyalty became obsolete. Benefits were cut. Full-time became rare. All companies severely trimmed their (American) work force and made their remaining employees work harder and cheaper even when they were making incredible profits.

Globalization and Free Trade

Globalization and Free Trade were the forces that further destroyed the US economy. Globalization made it easy to communicate and transfer products easily from one end of the world to the other. Free Trade (NAFTA, World Trade Organization) eliminated taxes on products coming into the U.S., together with the elimination of quotas, allowed tons of foreign cheap products to undersell American products. So, big companies closed down American plants, with the help of tax breaks to help move their companies, made China the # 8 in the world’s economy in 1999, into the number one economy in 2015.

GDP 1999

Even California had a bigger GDP than China in 1999.

The Process where American jobs were shipped to other countries is called off-shoring.

The Result of Extreme Capitalism

Thirty five years of this extreme capitalism has made the American people very angry. (See Angry  Esquire survey). The American middle class is getting smaller. The wealth gap between the rich and the middle class and poor has not been this big since 1927. For every new dollar in profit in the past 5 years, 97% went to the top 1% in income. Middle class wages are stagnant. The ability to climb the ladder by going to college is hindered by rapidly escalating college tuition. And even the ones that go to college, the pay is less.(See NY Times: Year 2015 in charts).

For the ones not going to college, good paying jobs are as rare as white rhinocerosis, American manufacturing (traditionally good paying jobs) has lost eight million jobs since 2000. Also, more people have dropped out of the work force at any time since 1977. (See NY Times: Year 2015 in charts). For each paying job, the number of applicants has multiplied, no longer are you competing against people in your community but also against candidates from other states and countries, thanks to globalization. And the future shows that many current jobs are potentially off-shorable (moved to other countries) or technologized (replaced by machines) -like cars they drive themselves or drones that deliver packages. Doesn’t the United States already have the worst service ever – just go to any Home Depot or Wal-Mart a find a person to help you.

Another victim of extreme capitalism has been the rural community. In the rural community, jobs were provided traditionally by farming, however, farming jobs had been displaced by technology and giant machines (only 1% of people now call themselves farmers). What took its place was manufacturing with its cheaper labor, but then the Free Trade Agreements caused off-shoring of the manufacturing jobs to foreign nations, leaving many rural towns as manufacturing ghost towns. And manufacturing is not coming back. There has not been much optimism for the future of rural communities.

An Unexpected Result From Extreme Capitalism

Once Big corporations and Big Banks became extremely wealthy, the ability to change things soon became severely compromised as corporate interests have put such a stranglehold on government that corporations are now considered people, with religious rights and are able to put in unlimited amounts of money to buy elections. Special corporate interests have been able to undercut extremely popular laws to the point that we no longer know where our meat comes from: The Official End to Country of Origin Labels on Meat.

Anger Due to Extreme Capitalism Economic Policies

The current economic condition has caused anger for millenials who see a harder time to get to the American Dream, for Democrats who have been against all of these policies of extreme capitalism and, more recently, a subsegment of the Republican Party. The Republican Party has been the Party of Large Corporations and Big Banks since 1910, they wrote all the laws of extreme capitalism. However, the Republican economic policies have hurt all of their constituents that aren’t part of the 1%. So, in response, the angry subsegment support a blow-hard, born-millionaire (like Mitt Romney) who promises more tax breaks for the rich. Go figure. If everybody stood back and looked a what extreme capitalism has done to our great country, the only Republicans left would be the 1%. But they control all the media, they control our high ranking officials, so they have been doing OK.

How Does The Buy American Movement Help the American Economy

By buying American – you are keeping other Americans employed, it may be a neighbor, in may be yourself. The Made in American movement believes that there should be more American manufacturing and not less. For every new American manufacturing job created, another 3.5 new American jobs are also created. For every dollar paid for a Made in America product, another $3 dollars goes into the economy. Compared to every dollar spent on a foreign made product, $0.40 goes into the economy. If every American spent a measly $3.33 per year on Made in USA products, it would create 10,000 new American jobs, and if it were $64 per year, another 200,000 American jobs would be created.

By buying American, we decrease our dependence on imports, we decrease our trade deficit which is now $384 Billion for 2015 with China which has cost the US  5 million manufacturing jobs since 2001 just due to the trade deficit (according to the Economic Policy Initiative).

#3  Ethical Concerns

We all know that many third world countries have very little or no supervision, and even the people who look into corruption are corrupt themselves (Evidence of Corruption in Chinese Anti-corruption Industries). In most of these cheaper labor countries – the workers can be slave laborers (Thai Shrimp Laborers tied to Slave Labor) or child laborers which is legal in all of these countries. It has been illegal in the USA since 1938. (Actually it was first passed under Woodrow Wilson in 1916, then The Supreme Court overturned the law, and it took Franklin Delano Roosevelt to finally get the measure passed [despite adamant GOP opposition]).

The International Labor Organization estimates that 211 million children between the ages of 5 and 14 are engaged in forced child labor, the majority involving exposures to hazardous conditions. Child labor is the direct result not only of poverty, but also our demand for low-cost goods. It is our responsibility as consumers to be educated and take necessary steps toward preventing the support of child labor through our purchases.

We know that food and products from these slave labor countries can be unsafe due to little supervision or because they use harmful chemicals that are prohibited in the US.

We, also, know that these slave-labor countries, cities and manufacturing plants do not care about the environment and pollute the air, the ground and the water indiscriminately. And by buying these imported cheap and disposable products made in tremendous bulk that we are stripping our away our natural resources and filling up our landfills. Remember there is only one earth. A great film that touches on much of these ethical concerns is “The True Cost” (you can rent it for $3.99).

By Buying American, you are sending your vote to ethical standards, clean earth, and sustainability. You are standing up for the American economy and you are getting quality products in return.

Yes, I think it is still worth the fight. Buy American, stop offshoring American jobs.



The Betrayal of the American Dream

‘American Dream,’ Betrayed By Bad Economic Policy : NPR. In a book by Donald L. Bartlett and James B. Steele, “The Betrayal of the American Dream”, the authors criticize a government obsessed with free trade and indifferent towards companies that outsource jobs. “Everyone loves Apple. Apple makes nothing in this country anymore,” Bartlett tells NPR’s Steve Inskeep as an example. “But then, look over here on the other side and you have Intel, and their plants are massive, and they are good-paying jobs. They continue to invest in this country. And what we need in this country now are more Intels and fewer Apples.”

Germany also has a good economic record. When the global financial meltdown happened, Germany adopted a policy that subsidized companies in order to help them keep employees on the rolls. “It’s one of the reasons the German unemployment rate is much lower than in this country,” he says. And the German jobs have decent wages and benefits.

Bartlett and Steele believe that the American government needs to support American companies to preserve jobs and to combat government subsidized jobs from China (which gives China an unfair advantage). “We need to respond, and we never have done that in any kind of systemic way. Every other country out there knows that, and as a result of that, they continue to thumb their nose at our attempts to open those markets.”

For more information, click on the above link.

May 2018
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