The Unraveling of the US Middle Class Is Monetary and Corporate

January 20, 2015

Middle class decline looms over final years of Obama presidency ... Barack Obama enters the final two years of his presidency with a blemish on his legacy that looks impossible to erase: the decline of the middle class he has promised to rescue. – Reuters

Dominant Social Theme: Barack must try harder.

Free-Market Analysis: The West's economic system, we know now, regularly strips people of wealth. Monopoly central banks debase the currency via money printing and large corporations make entrepreneurialism difficult.

If Obama wanted to revive the middle class in the US, he would have to change fundamental parts of the system. But he hasn't, and thus the decline of the US middle class has continued.

Here's more:

The revival of middle-class jobs has been one of Obama's mantras since he took office in 2009 fighting the worst economic crisis in generations ... Obama's administration can take credit for stabilizing the U.S. economy, which is growing again and last year added jobs at the fastest clip since 1999.

But for the middle class the scars of the recession still run deep. Federal Reserve survey data show families in the middle fifth of the income scale now earn less and their net worth is lower than when Obama took office.

In the six years through 2013, over the recession and recovery that have spanned Obama's tenure, jobs have been added at the top and bottom of the wage scale, a Reuters analysis of labor statistics shows. In the middle, the economy has shed positions - whether in traditional trades like machining or electrical work, white-collar jobs in human resources, or technical ones like computer operators.

The trend is in plain sight in Dalton, Georgia, a manufacturing hub 90 miles (145 km)north of Atlanta. Massive factories that made it "the carpet capital of the world," were slammed by the collapse of the housing bubble. During the recession, with machines idle, they began investing heavily in new technology and are now laying plans to restore some lost jobs.

But the new positions are more skewed to the high and low end, and there will be fewer of them per dollar of output than before the recession, said Brian Anderson, president of the Greater Dalton Chamber of Commerce.

"We can produce a whole lot of new carpet with not a lot more people," Anderson said. Companies have spent between $1.5 and $2 billion on retooling and innovation, reducing demand for labor, while higher than average regional unemployment continued to hold down wages, he said.

We can see from the above that reasons for Obama's failure may have to do with structural changes in the US economy. The idea, apparently, is that technology is disenfranchising middle-rank workers, though employment for high-end and low-end workers may expand.

We have a good deal of difficulty believing this, however. As pointed out above, the economic difficulties in the US are structural and have little to do with advancing technology and everything to do with regulatory and monetary measures that are endlessly distortive and dis-incentivize workers and entrepreneurs alike.

The idea of blaming unemployment on advancing technology is an old one and is intended, from what we can tell, to shift the blame from the public sector to the private sector. Given Obama's abysmal jobs record, the meme of technology-as-job-killer is being rolled out once again. This ensures the real culprits are not blamed.

The article therefore provides us with a kind of revisionist history of Obama's efforts to revive the economy. It points out that the Fed's Janet Yellen, "has put money in almost all Americans' pockets with near zero interest rates that have held down mortgage payments, allowed companies to reinvest, and boosted job creation."

In fact, rock-bottom interest rates didn't much benefit the middle class because that class was struggling to survive. Rates matter if someone intends to consume something. But the US middle class in aggregate was far from considering consumer purchases during the Great Recession.

The Fed's Survey of Consumer Finances shows how uneven the distribution of that stimulus has been. Between 2010 and 2013, as recovery took hold and stock markets soared, the average net worth of families in the top 40 percent of income earners grew. For all others average net worth shrank, declining 19 percent for the middle fifth.

This is the expected result if one understands that "pushing on a string" is improbable during asset deflations. People are just trying to hang on. They're not interested in spending, even if they are being enticed with credit.

Over the six years through 2013, the middle fifth's average annual family earnings fell to $47,243 from $53,008 while their average net worth dropped to $170,066 from $236,525.

Obama "had a good start in ending the recession and a good start to recovery and then we were knocked off that trajectory," said Josh Bivens, an economist with the Economic Policy Institute, a left-leaning think tank that advocates higher minimum wages and other policies to boost incomes.

Bivens blamed the end of stimulus programs and a standoff in Congress over the federal debt ceiling that curbed government spending for the loss of initial momentum.

To a degree the administration has also been a captive of broad technological and global trends. Automation and the offshoring of manufacturing and service jobs continue to transform industries and communities such as Dalton.

From our perspective, the above is beside the point. It certainly wasn't a lack of government spending that kept the economy wobbly. Nor was it technological innovation.

The sickness of the West is a monetary one and a corporate one. So long as corporations and central banks have powers enforced by the state itself, there is little chance that the larger marketplace can rebound in a truly healthy way.

In tonight's State of the Union Speech, Obama will call for higher taxes that would fund new programs for working classes. But such programs and tax fiddling does not address the real issue which is one of constant asset-inflation leading to tremendous credit collapses.

Monetary and corporate issues must be addressed first and foremost. Tax and regulatory issues are important, too, but the main issue is the ongoing implosion of prosperity generated by an increasingly destructive business cycle.

Conclusion: 

Obama has not done on a bad job with the economy because of entrenched economic difficulties that are very difficult to root out. He has done a bad job with the economy because he has failed to reveal the truth of its sickness. At least that would have been a start.

via thedailybell

Welcome to the Oligarch Recovery – Majority of Students are in Poverty - First Time in 50 Years

...Majority of Public School Students are in Poverty

State governments to blame for not NULLIFYING the federal government from the peoples' schools.

 

Michael Krieger | Posted Saturday Jan 17, 2015 at 12:20 pm 

 

 
“When they first come in my door in the morning, the first thing I do is an inventory of immediate needs: Did you eat? Are you clean? A big part of my job is making them feel safe,” said Sonya Romero-Smith, a veteran teacher at Lew Wallace Elementary School in Albuquerque. Fourteen of her 18 kindergartners are eligible for free lunches.

She helps them clean up with bathroom wipes and toothbrushes, and she stocks a drawer with clean socks, underwear, pants and shoes.

From the Washington Post article: Majority of U.S. Public School Students are in Poverty
It’s a recovery so lopsided only Timothy Geithner or an oligarch could love it. Since 2008, U.S. economic policy has concentrated on funneling as much money as possible to billionaires, keeping the poor alive and submissive through government programs, and squeezing the middle class to death while at the same time holding out the carrot of hope that things will return to how they were before (they won’t).

The latest evidence of this monumental cultural theft was highlighted yesterday in the Washington Post. Here are a few excerpts:

For the first time in at least 50 years, a majority of U.S. public school students come from low-income families, according to a new analysis of 2013 federal data, a statistic that has profound implications for the nation.

The Southern Education Foundation reports that 51 percent of students in pre-kindergarten through 12th grade in the 2012-2013 school year were eligible for the federal program that provides free and reduced-price lunches. The lunch program is a rough proxy for poverty, but the explosion in the number of needy children in the nation’s public classrooms is a recent phenomenon that has been gaining attention among educators, public officials and researchers.

A “recent phenomenon.” Call me crazy, but that isn’t what you’d expect five years into a so-called economic recovery.

“We’ve all known this was the trend, that we would get to a majority, but it’s here sooner rather than later,” said Michael A. Rebell of the Campaign for Educational Equity at Teachers College at Columbia University, noting that the poverty rate has been increasing even as the economy has improved. “A lot of people at the top are doing much better, but the people at the bottom are not doing better at all. Those are the people who have the most children and send their children to public school.”

Again, this isn’t a economic recovery, it is theft. Until we can admit to ourselves what the idiots and thieves in power have done, nothing will change.

“When they first come in my door in the morning, the first thing I do is an inventory of immediate needs: Did you eat? Are you clean? A big part of my job is making them feel safe,” said Sonya Romero-Smith, a veteran teacher at Lew Wallace Elementary School in Albuquerque. Fourteen of her 18 kindergartners are eligible for free lunches.
She helps them clean up with bathroom wipes and toothbrushes, and she stocks a drawer with clean socks, underwear, pants and shoes.

America: Land of the Thief, Home of the Slave.

For more articles on the Oligarch Recovery see:

• Welcome to the Recovery – McKinsey Survey Shows 40% of Americans Living Paycheck to Paycheck, Up From 31% in 2012
• Welcome to the Recovery Part 2 – Washington D.C.’s Homeless Population Expected to Rise 16% in 2014
• Welcome to the Recovery – U.S. Child Homelessness Hits Record as Poverty in Mass. is Highest Since 1960
• An Open Letter to Sam Zell: Why Your Statements are Delusional and Dangerous
• The Stock Market: Food Stamps for the 1%

In Liberty,
Michael Krieger

Bad Paper: How To Outsmart the Debt Collectors - Indebted or not, good info

by Felix Salmon @felixsalmon

​from fusion.net​

Updated 08/15/2014, 11:03AM

Are you being hounded by debt collectors? You're not alone. Once you go into debt -- even if it's something as benign as paying for something with a credit card, or borrowing to go to college -- then you owe someone else money, and sometimes you're not able to pay back everything you borrowed. And when that happens, the debt starts to get traded: the initial lender will write off the debt, and sell it to a collector. For example, if you borrowed money from a bank, but now the bank has written the loan off, then you no longer owe the bank but a debt collection agency. And the people who work for collection agencies can be very aggressive.

Jake Halpern's great new book, Bad Paper, an adaptation of which is published in The New York Times Magazine, follows a number of these collectors -- many with multiple felony convictions to their name -- around Buffalo, New York, the center of debt collections in the US. According to the Urban Institute, roughly 77 million Americans, or 35% of adults with a credit file, have a report of debt in collections. In some places, that number is significantly higher: In Las Vegas, for instance, it's 50%¹. Of that 35%, most do the wrong thing when approached by debt collection agencies. Their first instinct is to hang up the phone, to run away, to try to ignore the problem, which almost never works. What does work: Taking action like writing a letter to the company in question, instructing its representatives not to contact you. This generally does the trick -- until the collection agency sells your debt to yet another collection agency.

As Halpern's book explains, the unluckiest of debtors end up being taken to court by one of these agencies, in which case they have to show up -- or risk a default judgment being taken out against them, and their creditors given the opportunity to seize their bank accounts, their salaries, and just about anything else they own. 

When a debtor shows up to court, there's a wrong thing and a right thing to do. The wrong thing is for the debtor to settle the case; the right thing is for the debtor to contest it, and ask the creditors to prove that they have title to the debt in question. Almost nobody does this -- but if the debtor does it, he will walk out of that courthouse without owing a penny. The reason? When lenders pass debt onto a collection agency, they don't formally transfer title to the debt. That would be too expensive, given how little they are selling the debt for. So instead they just pass over a simple spreadsheet, with a debtor's name and the amount of money he owes. And that spreadsheet will never stand up in court.

In general, it's a good idea for people to pay their debts. But there's an exception to that rule, and that's when those debts have already been defaulted on. At that point, a person's credit score is completely shot, the people who lent the money have already written it off, and even if the debtor pays the collectors back in full, the original lenders won't see any of the cash. So if a debt collector armed with nothing more than a spreadsheet and a phone number starts pestering you for money, treat him the way you would any other cold-caller looking for your cash: Tell him not to contact you any more -- and then, in the unlikely event that you receive a summons, tell him he has no title to your debt and that you're not going to pay him a penny.

---

¹ The number of Americans with debt in collections is not an easy figure to define, let alone measure: there's no central database of such things. Bad debts never really go away, they just get older and harder to collect on. Which means that while it's pretty easy to get added to the list of Americans with debt in collections, it's very hard to drop off the list. Other statistics, showing 30 million or 35 million Americans with debt in collections, generally look only at debt which has been active in the past 3 months or 12 months. But Americans get pestered every day over debt which is many years old.

The Economics of Tipping - Kenneth A. Zahringer

Mises Daily: Wednesday, November 12, 2014 by Kenneth A. Zahringer
 
My dinner companion sounded indignant. “It’s a shame we have to tip the waitress,” she said. “The restaurant owner ought to pay the staff enough to live on.”

I imagine that is a common attitude among those steeped in our current cultural climate of envy and dislike of economic success — the anti-capitalist mentality, as Mises put it. It’s easy to fall into the trap of thinking that we tip waiters out of sympathy, due to their misfortune of having to work in an industry full of greedy restaurant owners who won’t pay a “living wage.” In fact, tipping is an elegant market solution to a particular set of circumstances, often present in service jobs, that makes determining an appropriate wage extremely problematic. The practice of tipping used to be more common, applying to many more service positions than at present, when it is largely restricted to waitstaff and skycaps. Part of the reason for its partial demise is just the wandering course of economic change, but many jobs that used to be paid primarily by tips came to be covered by minimum wage legislation and simply disappeared.

So why do we tip? At first glance it seems rather odd that a waiter should be paid by two different people — employer and customer — for the same job. But in fact we, as tipping customers, are paying for a very different aspect of the waiter’s job than is the employer. The restaurant owner needs a way to get the customer’s order to the kitchen and the food out to the customer. Most anyone who can walk a straight line and operate a pencil can perform that task. 

But the restaurant owner also wants happy customers, and customers are happy when they have a waiter who can solve problems, handle special requests, and generally make their meal a pleasant experience, and that is a special skill set indeed. Coordinating these two different, and not closely connected, aspects of the job is what tipping is all about.
 
Information Asymmetry

The employer wants happy customers, but he has a twofold information problem. As a practical matter it is difficult for him to observe interactions between waitstaff and customers. In addition, the customers’ expectations regarding the quality of service are impossible to observe. This is further complicated by the fact that staff members are heterogeneous; they are different in terms of skill levels, personalities, and other characteristics that affect the customer’s experience of quality service. Thus the employer doesn’t have the information he needs to arrive at an appropriate wage for each member of his staff. The customer, however, is a participant in these interactions and as such has as complete information as is humanly possible. If the customer pays the server directly for that aspect of the job, the decision of the appropriate pay is made by the person with the most information about job performance.

Incentive Alignment

Employers generally want their employees to give their best, and presumably are willing to pay for that. However, the aforementioned information problem inhibits his ability to do so. Ideally, tips make the server’s compensation directly proportional and immediately responsive to the quality of service provided. This aligns the employee’s incentives with the employer’s; both now want to provide high-quality service to the customer, each for their own benefit.

Risk Sharing

Hiring a new employee entails risk. For the new employee, there is the risk that the job may not turn out as he had hoped. It could turn out to be a dead end with no future, or unsatisfactory in innumerable other ways. The employer, however, has a financial risk. The new employee’s skill set is unknown to the employer to at least some degree, regardless of how thorough the interview process might be. There is even more uncertainty with an inexperienced new hire; there is no history for the employer to work from. The employer has to pay the agreed upon wage, and if the new employee doesn’t perform as hoped he is losing money. If the new employee accepts a lower guaranteed wage and makes part of his compensation contingent on performance — the tip — this relieves risk in two ways. First, the employer is more willing to take a chance on a young, inexperienced worker. If the wage is lower, the minimum performance level needed to make the employee worth the wage is also lower. 

Second, since the employee can increase his earnings directly and immediately by improving his performance the job is not so much of a dead end. The low paying job becomes a valuable stepping stone, allowing the young, inexperienced employee to learn job skills, establish a performance record, and move on to something better. (It should be obvious that minimum wage legislation short-circuits this entire arrangement, making the employer much less willing to hire someone unless he is certain they are worth the higher wage. This is how lower-skilled individuals get shut out of the job market. But that’s the subject of another essay.)

That is the magic of the market. Even mundane habits like leaving a tip for a waiter play an important role in social cooperation and coordination. It is an elegant solution to a knowledge problem, developed spontaneously through the actions of a myriad of market participants. When left alone, people are pretty darn resourceful.

via Mises.org

Licorice Ice Cream from Maine

I only include this post as I grew up at Rummel's Ice Cream. My bedroom was the 2^nd floor facing Silver Street, and brother's next brace of windows facing the front lawn. The house was said to be built in 1826. 

I don't believe I ever knew the author Maureen, but she did a stupendous job!

Bill Rummel

 ~~~~~~~~~~~~~~~~~~~~~~

August 26, 2013 by Maureen

I'm from Maine – a rugged sort of place that requires its citizens to be tough.  You have to be tough to get up and go to work when the temperature is 25 below, snow's five feet deep and the wind is blowing a gale.


Maine is beautiful.  The first time my Aussie husband visited Maine, we'd just come from our home in Victoria in southern Australia where we'd been in drought for about 7 years and he said, "Sure is green!"  Everything in our world was brown and here was this mass of green as far as he could see (he had his head glued to the window of the plane).

The contrast between where I lived and where I was from was striking.  We lived along the Murray River in Australia – one of Australia's biggest river systems and there in Maine we were walking along the banks of the mighty Kennebec River in Winslow.  John said he'd never seen so much water in a river before.  During the worst of the drought we could have walked across the Murray River.


People in Maine talk funny.  They have different words for common things.   Mainers hang aht on their walls, walk down the road apiece, stand in the doah yahd, eat wicked good chowdah, put their buhdados down cellah and describe things in a cute way.  "It was so fricken cold, even the lobstahs were wearin mittns."

The word good has two syllables and the iconic word that suits just about any occasion for a Mainer is "ayuh."

When I was 16 I got a part-time job across the river in Waterville at Rummel's Ice Cream in the summer.  It's been sold to Gifford's now but the building is the same. When I worked there, the Rummel family lived in the house.

I scooped ice cream, made sodas and sundaes and worked the snack bar where we served lobster rolls, hamburgers and deep fried hotdogs.  Those were weird but I loved them.

"I'd like two lobstah rolls ta go," didn't sound odd way back then.  Now it makes me laugh.

Rummel's also had licorice ice cream and it was my all-time favorite.  It was the sort of ice cream that turned your tongue black so you couldn't pretend you hadn't eaten any and if you spilled any on your white uniform – busted!  It didn't wash off very easily.


I didn't care.  I ate it anyway.

My father was a dedicated strawberry ice cream man.  I'd get a cone of licorice ice cream and my dad would roll his eyes and say, "Anyone that would eat that would eat shit off a rusty spoon, Maureen."  He also said 'jumpin judas on a rock' when he got really angry too.

A few weeks ago I was reminiscing about my childhood and told John I wanted to make some licorice ice cream – for old time's sake.

He wrinkled up his nose as if to ask, "Do you HAVE to?"
"Will you make me some vanilla or chocolate?  I don't think I can eat black ice cream and I'm not fond of licorice."

He's incredibly spoiled.  He was the baby of the family and spoiled from the day he was born.  When he was young his sister would dress him before waking him up so his mother wouldn't yell at him for missing breakfast (again).  I must be guilty of spoiling him too because I made vanilla ice cream too.


When I finished the licorice ice cream and it was in the container, I put the container inside a ziplock bag.  

Someone on the interwebs said if you put it in a plastic bag, the ice cream would never get too hard to scoop.  

Nonsense I thought but guess what?  It worked!  It was solid but scoopable.  I always put a piece of baking paper directly on top of the ice cream as that prevents any freezer burn or ice crystals forming on the top but I'd never tried the baggie idea.  Brilliant.

If it's been a long time since  you licked the side of a licorice ice cream cone, why not try this recipe.  John's dad and I loved it.  Black tongues and all.

4.8 from 12 reviews
Licorice Ice Cream



Prep time
15 mins
Cook time
20 mins
Total time
35 mins

One of my favorite things to eat as a kid was licorice ice cream. Now I make it at home.


Author: Maureen Shaw
Recipe type: Dessert
Cuisine: American
Serves: 6
Ingredients

1 cup milk

¾ cup sugar

dash salt

5 egg yolks

1 tsp licorice flavoring or 113 grams (4 oz) black licorice candy

2 cups cream

Instructions

1.    Into a medium saucepan, add the milk, sugar, salt and licorice candy if using and heat to nearly boiling (and the licorice candy is melted).

2.    While milk is heating, whisk egg yolks til frothy.

3.    While whisking briskly, slowly add ⅓ of the hot milk and then add the egg mixture back into the pan of hot milk.

4. Reheat the mixture until the custard coats the back of a wooden spoon - don't overcook or you'll get scrambled eggs.

5.   Remove from heat and add in licorice flavoring.

6.    Chill for several hours or overnight. Add in the cream and freeze in your ice cream maker according to manufacturer's directions.

Source

On Labor Unions : Whom are They Organized Against?

Get book

DECEMBER 01, 1983 by PERCY L. GREAVES JR.

Mr. Greaves, economist, lecturer, and author of numerous articles and books, served with the U. S. House of Representatives Committee on Education and Labor during the preparation and passage of the 1947 revisions of the National Labor Relations Act, popularly known as the Taft-Hartley Act.

Unemployment can be a dreadful condition. The inability to find a needed job is a heart-rending experience for anyone. For those with young children to feed and clothe, it is a terrifying predicament. It gnaws at and destroys the spirit and self-confidence of even the strongest souls. With nerves on edge, family harmony too often flies out the window.

In addition to the deep mental anguish, there are also physical and financial losses. An adult’s health, as well as his spirit, may suffer irreparably. A child’s growth may be permanently stunted. The loss of the family car can reduce both the hope and the possibility of getting another job. The foreclosure of a mortgage on the family home can liquidate the savings of a lifetime. In short, a prolonged period of unemployment can wreck a person’s life.

Then, too, the unemployed are not the only sufferers. With millions of able-bodied persons searching for a source of income or twiddling their thumbs in frustrated idleness, the potential quantity of goods and services available in the market place is greatly reduced. This means higher prices and lower living standards for everyone. Government programs to provide a floor for the unemployed also mean higher taxes and/or still higher prices as a result of the political creation and distribution of unearned dollars. Actually, mass unemployment and its aftermath is probably the greatest single driving force behind our politically sponsored inflation.

So solving the problem of mass unemployment is a major task of our time. Before we can solve it, we must locate the root cause. There was no unemployment at Plymouth or Jamestown. There was no mass unemployment during this country’s first hundred years of existence. What is different today?

Not a Free Market

One major difference is that there is no longer a free market in jobs and wage rates. There are now laws on the statute books that grant certain groups of workers the privilege of demanding and getting higher wages than they could and would earn in a free market. The unemployed are no longer permitted to compete and thus reduce the higher than free market wage rates of the privileged few. So those shut out from the higher paying jobs must compete for work and drive down the wage rates in unorganized occupations. Then, they face the floor decreed by minimum wage laws which often prevent employment at these reduced market wage rates.

Employers cannot long pay workers the legal minimum wage rate if consumers cannot or will not buy the resulting goods and services at prices that cover costs. As a result, rail-lions are now legally prevented from taking either high paying jobs or lowpaying jobs. The free market in jobs and wage rates has been legally destroyed.

It should thus be evident that the remedy for mass unemployment is to repeal the laws which prevent people from competing for the higher paying jobs or taking the lower paying jobs—lower paying, until workers acquire the skill and experience needed to climb the ladder to higher incomes.

Historian Clarence B. Carson has written a small book, Organized Against Whom?, which tells some of the story of how we strayed from the free market path for jobs and wage rates. It is an ugly story vividly describing the coercion and violence employed by many in the labor union movement in their effort to convince the electorate that they are entitled to special privileges and immunities. They have successfully convinced many that labor unions are the protectors of downtrodden poorly paid workers who are supposedly at the mercy of greedy all-powerful employers who rob them of their rightful earnings.

Today, thanks to socialist and labor union propaganda, there is little understanding of the fact that employers are merely middlemen operating in a heavily taxed and very competitive market place. Actually, employers have very little to say about wage rates. Employers are compelled by market forces to pay employees in accordance with the value that consumers place on the production of their marginal employees, the last hired. If employers pay higher wage rates than they get back from consumers, they suffer losses and sooner or later cease to be employers. If employers seek to increase their profits by paying lower than market wage rates, competitors soon bid away their employees. Thus, the free market competition of employers is the salvation of workers looking for higher wages.

The Voluntary Way

In a free society, labor unions, like other organizations, would be voluntary groups trying to advance the interests of their members. They would abide by the laws and seek no special privileges or immunities. Unions that offered employers the most competent and reliable workers, who were willing to work for competitive free market wage rates, would grow and prosper. Labor unions that offered incompetent workers, insisted on featherbedding, or other unnecessary or costly conditions and demanded higher wage rates than competent non-union members would willingly accept would soon fade away. Certainly, in a free society no group should or would resort to violence, coercion or special privileges to obtain what it seeks.

The free market operates according to the Golden Rule. The higher values one contributes to the market place, as valued by consumers, the more one receives in return. Free market operations are always voluntary transactions by which all parties exchange something they have for something on which they place a higher value. Goods and services thus continually move to persons who place a higher value on them. Barring human error or the use of force or fraud, all parties gain from all such transactions. The prevention of the use of force or fraud is a prime function of government.

Dr. Carson tells us how many labor unions now operate, with the help of laws and court decisions, coercing employers to join with them to grant them a monopoly of certain jobs. Such unions are thus able to shut out the competition of competent applicants for those jobs. Then, by demanding still higher wage rates, some unions further reduce production and employment by pricing some of their own members, those with low seniority, out of their high paying jobs. In short, labor unionism, as now practiced, is not only the enemy of employers, investors and consumers, but it is primarily the enemy of competent job seekers who, as a result of union action, must remain underpaid or unemployed.

Unions Gain Monopoly Status

Today, we live in an economy of political privileges with all kinds of lobbies trying to get for their members what they consider their “fair share” of the political largesse. Un questionably, labor unions have been one of the first and strongest of these political pressure groups. As Dr. Carson narrates, they won their first great political victory in 1914, when they persuaded Congress to decree: “That the labor of a human being is not a commodity or article of commerce.” Congress has great powers, but it did not by this legislation alter the fact that labor is one of the factors of production traded in the market place.

With this law on the books, union leaders waged a propaganda campaign demanding that government help them raise wage rates above those of the free market, which they maintain, falsely, are set too low by the whims of all-powerful employers. Their propaganda campaign was accompanied with strikes and violence that disturbed the entire nation and contributed to the mass unemployment of the depression period that started in 1929.

As a result of this propaganda and the show of force, Congress and the courts were persuaded in the 1930s to grant these labor union advocates of self-serving coercion most of the special privileges and immunities they sought. Now, we have the results. Employers as a breed are becoming scarce. So are investors willing to place their savings in new or expanded production facilities. The combined result is that the ranks of the unemployed are now reckoned in the millions. Mass unemployment has even caught up with many of the legally privileged union members. The economic laws of the market cannot long be circumvented without eventually producing undesirable consequences.

As Dr. Carson tells us, our constitutionally chosen government has empowered the labor unions to accomplish all this. He may be a bit harder on the unions than they deserve. There can be no excuse for their resort to violence and coercion. However, they can hardly be blamed for taking advantage of the special privileges and immunities from prosecution that Congress and the courts have conferred on them. In taking advantage of existing laws, they are doing no more than many college kids, lots of old folks and millions of persons in between. Of course, that does not make it right or permanently possible. Neither Congress nor the courts have any power to repeal the laws of economics. They could make us all millionaires, but only by destroying the value of the dollar. A price must be paid for every interference with the inexorable laws of economics. 

It would seem we are fast losing the freedom for which our Founding Fathers pledged their lives, their fortunes and their sacred honor. As Dr. Carson writes: “The thrust of the American Revolution was in the direction of removing special privileges and legal supports from groups and organizations.” For decades now the courts have supported Congressional grants of “special privileges and legal supports” on a wholesale basis. As Carson writes, this has been “a fundamental departure from the principles of good government,” not to mention the principles of sound economics.

Our government has permitted, encouraged and even underwritten the power of labor unions to coerce all other elements of our society to bend to their will. This small book tells much of the story of how this came about. In doing so, it exposes many of the errors in the popular fallacies, the acceptance of which has permitted labor unions to attain their present position of power. This story is one with which every American should be familiar.

The book is not without its faults and contradictions. Some are only the result of an unfortunate choice of words. For example, lawlessness is referred to as the “state of nature.” Or, “An ancient union complaint could certainly be disposed of if governments neither recognized, gave status to, taxed, or otherwise noticed private organizations, except as they might disturb the peace.” That would mean no legal recognition or taxation of corporations or any other private organizations. In effect, it would repeal the First Amendment. For no press or religious organizations would have any status or right to be recognized in court. Or when Carson writes, “Congress is empowered to make laws regulating commerce.” The Constitution carefully limited that power to “interstate commerce,” and that is what it meant until the Supreme Court, in 1937, ignored the key word “interstate” in a 5 to 4 decision which upheld the National Labor Relations Act, popularly known as the Wagner Act.

There are some unfortunate contradictions in the book, as when we read, “Let me confess at the outset that I do not know what labor unions are.” Then the author proceeds in chapter after chapter to tell what they are and what they do. At another point we read, “Violence is not essential to unionism.” That is true, of course, if they operate within the rules and ethics of a free society. However, the thesis of this book is that labor unions are organized against society in general and against other workers in particular. As the author describes so well, they have for years pursued their policies by resorting to violence and coercion. For decades now the government has given its support to their anti- social actions—actions that impede not only full employment and prosperity but also the legitimate activities of many governmental entities.

Criticism might be made of such statements about labor unions as, “They are not economic organizations,” and “Nor is the labor union primarily a political organization.” If economics is the science of human actions to attain selected goals, then attaining union goals by boycotts, strikes and stopping others from working are certainly economic actions. This book presents many incidents illustrating how labor unions have used both economic and political means to attain their present position of power.

Perhaps this reviewer’s greatest disagreement is with the author’s assertion that “Labor unions are religious, or religion-like organizations and, as I say, once this is grasped they come into focus. Their immediate goals are ethical in character; their ultimate goals are religious. Their economic claims are ethical in character.” The latter might be so if they sought their legitimate ends by ethical means. However, there is nothing ethical or religious about the use of coercion, be it legal or illegal.

As for labor unions being religious, many economically ignorant labor union members and Congressmen undoubtedly swallow the propaganda and follow the wishes of the union bosses with a “religious” faith and fervor. We may live “in the age of the divine right of majorities,” as the author rightly states, but the fact that labor unions are “supported by compulsory tithes and taxes” does not make them religious or “established churches.”

Religion pertains to the supernatural—metaphysics. Except for the fact that reason tells us there must have been a Creator, religions deal with matters which cannot be logically proved or disproved. 

Religions are concerned with the irrational aspects of human life. Consequently, honest people, who are both sane and intelligent, can and do differ on religious matters. The aims and actions of labor unions are certainly neither heavenly nor irrational. They are earthy and concrete. Labor unions seek more for their members. There is nothing wrong with that objective if they pursued it by ethical means—by voluntary agreements for the mutual benefit of all parties. However, as Dr. Carson has so vividly pointed out, our present problems have arisen from the use of violence, coercion and special privileges which are neither ethical nor particularly metaphysical.

The mass media, which are largely manned and edited by labor union members, constantly present a one-sided favorable picture of union policies, privileges and activities. The public needs to know more about the antisocial effects of the prerogatives exercised by labor unions. This book strips away much of the veneer that covers the unfortunate deification of labor union activities, activities which, if committed by individuals or other organizations, would be properly labeled as crimes. We need more books which, like this one, expose the root cause of mass unemployment, a major blight not only on economic peace and prosperity but also on the pursuit of human happiness.
 Source FEE
 

Obama's Economic Recovery In Pictures

Submitted by Lance Roberts of STA Wealth Management,

On Thursday, President Obama will give a speech at Northwestern University's Kellogg School of Management on the economy. This issue is critical going into the mid-term elections as virtually every poll shows this is a top concern of voters.

The question of economic recovery is interesting in the context of where that recovery has occurred.  

As I discussed recently in "For 90% Of Americans, There Has Been No Recovery,"while the ongoing interventions by the Federal Reserve have inflated asset prices, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else.

Another problem for the President at Northwestern University is that he will be trying to promote his success on economic recovery to a group of individuals who are currently plagued with a poor slate of economic statistics. The unemployment rate for 18-29 year-olds is nearly 12%. Over 30% are still living with parents more than two years after graduation. Only 43.6% of young adults currently hold a full-time job. 53% are either jobless or underemployed relative to the education.

These stats are going to make promoting an "economic success" story rather difficult. However, let's review Obama's economic scorecard in terms of the things that truly matter to the average American.

Full-Time Jobs

There is only one chart of employment that truly matters: the number of full-time employees relative to the working age population. Full-time employment is what ultimately drives economic growth, pays wages that will support household formation and fuels higher levels of government revenue from taxes.  If the economy were truly beginning to recover, we should be witnessing an increasing number of full-time employees. Unfortunately, that has not been the case as this measure, as shown by the chart below, is only slightly off the lows witnessed during the financial crisis.

Wages & Salaries

Given that nearly 70% of economic growth is driven by personal consumption expenditures, the sluggishness of economic growth since the financial crisis can be directly attributed to a fall in personal incomes. According to a recent Federal Reserve survey, median household before-tax incomes have fallen from near $52,000 annually to roughly $47,000 currently.

The decline in income comes at a time when costs of living have continued to rise. While it is often stated that the "Labor Force Participation Rate" has fallen in recent years due to the a slate of baby-boomers retiring, there are currently more individuals over the age of 65 in the workforce than at any other time in history. For many of those individuals, it is not a question of "wanting" to work, but rather "having" to work.

Financial Security

Another mainstream media theme has been that the surging stock market, driven by the Federal Reserve's monetary interventions, has provided a boost to the overall economy. However, as I have suggested previously, the bulk of the population either does not, or only marginally, participates in the financial markets. The boost from inflated asset prices driven by Federal Reserve interventions has remained concentrated in the upper 10% of the population. The Federal Reserve study breaks the data down in several ways, but the story remains the same. The median value of financial assets for families has fallen sharply since the turn of the century.

Except for those in the top 10 percent of the population.

Opportunity

The U.S. economy was built on opportunity.  However, since 2007, opportunity to "own" a business has plunged to the lowest level since 1989. As discussed, the Bureau Of Labor Statistics adjusts to the employment report upward to account for "new business" start-ups. Since 2009, the "birth/death" adjustment has added 3.5 million jobs to the employment roll. The problem, however, is that the number of families that owned business equity has plummeted during that same period.

Economic Stability

When it comes to the "average" American family, the need for "economic stability" is critical to the support of spending and consumption habits. As shown in a recent WSJ poll, the majority of American's believe that the economy is headed in the wrong direction.

While President may tout "economic success" from various "statistical measures," the structural transformation that has occurred in recent years has likely permanently changed the financial underpinnings of the economy as a whole. With the average American in financially worse condition today than when President Obama took office, it will be difficult to suggest that he has been successful in "fixing" the economy.

Has there been an economic recovery under President Obama? Sure, but it depends on who you ask.

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