I’m posting a link to this article from a Vietnam newspaper because it’s typical of many such articles I’m seeing in foreign news venues lately, especially as the high price of oil is driving up trade deficits all over the world.

What’s significant about these articles is the alarm with which these trade deficits are viewed by the leaders of the very countries who, for decades, have been mocking the U.S. any time we express concern about our own trade deficit, especially in trade negotiations.  ”A trade deficit is not a problem,” they say.  “We re-invest your dollars back in your economy.”  Clearly, their attitudes are different when the shoe is on the other foot. 

Here’s a couple of excepts from this particular article: 

“Vietnam’s trade deficit, which almost quadrupled in the first four months of the year, has ignited fears about the possibility of a looming economy crisis.

‘The trade gap, which was already wide last year and became worse in the first quarter this year, is threatening our macroeconomic balance,’ said Prime Minister Nguyen Tan Dung in a recent report.”

If they think this is bad, I can’t wait to see how they feel when the U.S. finally comes to its senses and returns to tariffs - hopefully the population density-indexed tariff structure I’ve recommended in Five Short Blasts - to restore a balance of trade.

Pete

I’ve posted a link to this article for two reasons:

1. We need not fear population growth in other countries.  Because the world is overpopulated, further growth will be a source of weakness for these countries, not a source of strength.  (The same holds true for the U.S.  Further population growth will prove a source of weakness, not strength.)
2. The following quote from the article is acknowledgement by someone (if not General Hayden, then the author of the article) that world resources are dwindling.  Does this not cry out for a population management policy aimed at stabilizing or even reducing our population? 

“But Hayden delivered his most pointed comments against China, saying the Asian giant had learned lessons on the sidelines of the two gulf wars and had been investing heavily in military hardware and technology.

That new muscle, Hayden predicted, would be flexed in the struggle for the world’s dwindling resources.”

But, in general, he doesn’t see China as much of a threat.  He is wrong and he is also not considering the economic threat.  Thanks to our own bumbling trade policy, there is no greater threat to the U.S. than the destruction of our economy through continued pursuit of a trade policy that has, for decades now, been proven an utter failure. 

Pete

The President probably has been “clear and candid” about his beliefs about the economy.  The problem is that, largely thanks to advisors, economists and business executives, he’s been badly misguided about what’s really wrong with the economy and what needs to be done to fix it for the common good

“Bush sounded an upbeat tone following a modest uptick of economic news this week.

The economy grew in the first quarter of the year, but only by a meager 0.6%. Yet it was not the contraction that some analysts feared. Employers slashed fewer jobs in April than they had in earlier months. The unemployment rate in April also fell slightly.”

While the economy may have grown by 0.6% as measured by GDP (gross domestic product - a lousy measure of the health of the economy), per capita chained GDP - GDP adjusted for inflation and population growth, actually contracted by 3.0%.  If you use the total rate of inflation (not the “core” which strips out food and energy inflation), the the drop in per capita chained GDP rises to over 4% - a significant recession.  And the unemployment figure is completely worthless.  If every worker worked for one hour during the month and made only $5, that would be considered 0% unemployment.  A much more meaningful figure is weekly jobless claims of 350-400,000, which is an annual rate of 13% of the work force filing for unemployment. 

“‘No temporary setbacks can hold back the most powerful force in our economy — the ingenuity of the American people,’ Bush said. ‘Because of your hard work and dedication, I am confident that we will weather this rough period and emerge stronger than ever.’”

Is the “rough period” he’s referencing the last 30-35 years?  Because that’s how long our economy has been in decline.  I agree with him, the ingenuity of the American people isn’t the problem.  It’s the lack of ingenuity at the top levels of our leadership, and their failure to comprehend the devastation being wrought by failed trade policies that are rapidly bankrupting our country. 

“In Bush’s final year in office, families have been hit from all sides — soaring gas prices, crumbling mortgages, rising grocery bills, struggles to afford college loans.”

But, hey, food and energy aren’t part of the calculation of the “core rate” of inflation, so let’s just ignore them!  Maybe no one will notice.

“The president is counting on a short-term economic boost to help. In a deal he reached with Congress back in February, tax rebate checks of up to $600 for individuals and $1,200 for couples are on their way to more than 130 million households.”

Yeah, that’ll help.  A one-time 1% boost in our median annual income will really make a difference in our three decade decline.  Throw the peasants a few crumbs.  That’ll make ‘em happy. 

“Among his (Bush’s) agenda for lawmakers: make permanent his first-term tax cuts, which are due to expire in 2010; allow drilling for oil in northern Alaska and encourage more oil refining capacity; and modernize the Federal Housing Administration to allow some additional homeowners to refinance from subprime loans into government-backed mortgages.”

More deficit spending, more prolonged dependence on fossil fuels, and no mention of the role of overpopulation in eroding our quality of life and the role of idiotic trade policy that has produced a cumulative $9 trillion trade deficit since 1976. 

Without real leadership soon, this country’s downward spiral will accelerate. 

Pete

I think this article is interesting for two reasons:  (1) The demise of either Ford or Chrysler is one of my 2008 predictions and (2) the reaction from some readers (see the comments) is typical of the misunderstandings about the role of “free” (blind) trade.

But first, a general comment is in order.  Ford’s turnaround plan looks a lot like that of Chrysler and GM: each turn in the turnaround involves making the company smaller and smaller - the very definition of a downward spiral, mirroring the overall U.S. economy. This won’t stop and neither will the overall decline in manufacturing and our economy in general (as we continue to bankrupt ourselves with our enormous trade deficit) until we abandon our screwball “free” trade policy and restore the tariffs (employing the population density indexed tariff structure that I called for in Five Short Blasts) that once made this country the world’s preeminent industrial power and wealthiest nation. 

“Ford Motor Co. will offer buyouts to about 1,300 workers at assembly plants in Chicago and Louisville, as part of the automaker’s plan to adjust capacity with demand for its vehicles, a spokeswoman said Friday.”

Decades ago, there were no such things as “buyouts.”  If a company failed, they simply let everyone go.  It wasn’t that big of a deal because they’d soon land on their feet with an even better, more lucrative job.  But, beginning in the ’80s, as the overall U.S. economy found itself locked in a death spiral, companies began to fear unruly mobs of peasants at their gates with pitchforks and torches.  The solution?  Numb them with “buyouts” that look like big money at the time but which are soon exhausted when their animosity toward the company has been dulled by the passage of time.  The effect is that America’s manufacturing workers trudge off silently into the night, sheep being driven toward what appears to be a greener pasture but is instead a green-painted slaughter house.  And the overall worsening of the supply and demand labor equation drags everyone down a little at a time - almost imperceptibly - like a slow drip from a faucet.

Readers’ reactions?

“The unions have not single handedly hurt the automotive industry.

The CEO’s have! They charge an arm & a leg for a product that has cheap plastic inside & out that breaks a week after you drive it off the lot.

They build gas guzzlers & have no inovative alternatives. The alternatives shown at the car shows will be built in 2010. They should hire the two kids that fiddled with a prius & ended up earning one hundres miles per gallon! TWO TEENAGERS! The Japanese probably have hired them already.”

While I have no love for CEO’s, come on!  They’re making exactly what American consumers have wanted.  Where’s the criticism of Toyota, Nissan, Mercedes and all the others who crank out equally garish monstrosities, for which they charge as much or more than GM, Ford or Chrysler? 

Here’s another:

“Keep cutting little three. This is the reason I will not buy any of their products. They cut jobs and add more foreign content to their cars. And do we see the prices of their cars coming down from that cheap labor?”

So, you’re saying you’d buy their cars if they stopped cutting costs?  And how much have the Japanese, Korean and German cars fallen in price lately?  Price has nothing to do with our trade deficit.  It’s due to granting free access to our market to nations that have nothing to offer in return.

“Union people keep demanding more so the big three cannot compete in price. The unions help keep the poor workers so quality stinks. No wonder they are losing market share, dah. I have not bought a vehicle from the big three since 1987. I refuse to support over priced union demands.” 

Wow, this guy is decades behind the times.  Does he not know that the UAW has been taking wage cuts for many, many years while, at the same time, improving quality to match the best the Japanese have to offer?  It seem he’d rather hand his money over to foreigners than to support a higher demand for labor in the U.S. that would drive up his own income. 

Is it any wonder there isn’t a greater outcry against our trade policies when people are so poorly educated about the problem?  Come on, Americans.  It’s time to stop blaming ourselves, get mad, and demand answers from our leaders.

Pete

The Labor Department this morning announced the loss of another 20,000 jobs in April, which should come as a surprise to no one.  At the same time, in spite of the fact that our population grows by nearly 300,000 per month (thus yielding a growth in the labor force of about 150,000 per month), somehow this loss of jobs translated into a reduction in unemployment from 5.1% to 5.0%, yet one more distortion of the economic facts by the Bush administration.  Look for both numbers - the jobs losses and the unemployment rate - to be revised upward once next month’s data pushes this month’s data out of the headlines.

Here’s some excerpts, followed by my commentary: 

“April’s job reductions followed upwardly revised losses of 81,000 jobs in March and 83,000 in February. Employers also cut 76,000 jobs in January.”

Thus proving my point about the administration’s penchant for issuing phoney numbers and then revising them later, after they’re out of the headlines and won’t have as much effect on the stock market and consumer psyches.  Also, continuing the statistic that I’ve been tracking each month with the release of this data, the tally for the shortfall of jobs (job losses added to growth in the labor force), we have now fallen behind by 859,000 jobs since the beginning of the year.  If the adminstration was honest, this should have raised the unemployment level by 0.6% to a level of 5.3% or 5.4%.  But, apparently, honesty isn’t the best policy when it comes to managing the national economic psyche. 

“‘It looks like the economy is in better shape than we thought,’ said Owen Fitzpatrick, head of the U.S. equity group for Deutsche Bank Private Wealth Management in New York. ‘I think a lot of people were expecting it to be a lot worse.’”

Wrong, Mr. Fitzpatrick.  The economy is not “in better shape than we thought.”  It’s in less worse shape than we thought, and only because the government isn’t being honest with the data.  How can unemployment be running at 5% when weekly filings for unemployment are running at an annual rate of about 13%? 

“Goods-producing businesses cut 110,000 jobs in April, the largest number of job reductions since January 2002, after trimming 88,000 in March.”

Where are the economists now who were telling us that the decline in the dollar was good news for manufacturing and that exports would be rising while imports declined?  Not a peep from them lately.  Undoubtedly, they’re busy concocting a new explanation and yet another list of intangible benefits of free trade (intangible because they don’t exist).  Manufacturing jobs continue to decline because the value of the dollar vs. other currencies never had anything to do with the trade deficit. The trade deficit is caused by the gross disparity in population density and per capita consumption between the U.S. and some of its grossly overpopulated parasitic trade welfare recipients.  The only thing that can be done about this factor is a return to tariffs - a tariff structure on manufactured goods that is indexed to population density.  Anything short of this will keep our country on the path to economic ruin. 

Pete

Should be fun and informative!  Hope you can tune in.

Pete

Here’s an article about the immigration rallies across the U.S. yesterday.  There was a little bit of local news coverage of the rally held in Detroit.  It appeared that there were about 300 people involved.  I saw one American flag and three or four Mexican flags displayed prominently. 

I’d like to comment on some excerpts from the Reuters article:

“Thousands of immigrants marched through cities across the United States on Thursday, but smaller crowds suggested their cause had lost momentum in this election year.”

Perhaps the crowds were smaller because the pool of available participants has shrunk.  Although the issue has thankfully been pushed to the back burner of Congress, it’s still very much alive on the state and local levels, with many, many laws being passed to make it ever more difficult for illegal aliens to function in our society.  Here in Michigan, the law was recently changed to prevent them from obtaining drivers’ licenses, as an example.  Other locales have passed laws to crack down on employers who hire them and on landlords who rent to them. 

“‘This is a very young country built off immigrants. The immigrants of yesterday are citizens today, so immigrants of today should become citizens tomorrow,’ said Jose Rodriguez, who came to the United States from Mexico illegally in 1989 and has since gained permanent residency.”

First of all, this guy is a criminal and should be deported.  Secondly, his logic makes no sense whatsoever.  Just because a nation is built of (not “off”) immigrants, it’s not a rationale for continuing to import more people forever.  It’s like saying that a building made of concrete, once it is finished, should continue to have concrete poured in through the windows just because the building has a history of using concrete.  The guy has no concept of overpopulation (except perhaps the overpopulation in Mexico that he ran from in ‘89).

“‘The police are deporting immigrants because they have broken the law but I think there is a higher law and that is to treat someone in a humane way,’ said Rodriguez, 42.”

Agreed.  All illegal immigrants should be treated humanely during the deportation process.  Did Mr. Rodriguez really come here to champion this “higher law” or did he come here, ignoring our laws, for purely economic reasons?  Then isn’t it really poverty that he considers more inhumane?  If so, then why didn’t he stay at home and champion this “higher law” of humane treatment of the poor in his own country where the need is greater? 

“In Phoenix, no one turned out to march, in contrast to past years when central thoroughfares were packed with protesters.

In Tucson, Arizona, a few hundred pro-immigration supporters walked through the streets carrying placards with messages such as ‘Citizenship Yes! Deportation No!’ That fell short of organizers’ hopes that several thousand would attend.”

I suspect that, not only is the pool of available marchers smaller, but the remainder are laying low out of fear of being identified and deported. 

Activists said the low turnout stemmed from the failure to push a bill through Congress last year that would have given illegal immigrants a chance to legalize their status. An estimated 12 million illegal immigrants, mainly from Mexico, live in the United States.

In one major raid last month, U.S. immigration agents arrested about 400 employees at five Pilgrim’s Pride Corp chicken plants from West Virginia to Texas in connection with immigration-related crimes, including identity theft.

So there’s 11,999,600 to go.  Sounds like the immigration authorities better get busy!

Rampant population growth threatens our economy and quality of life. Immigration, both legal and illegal, are fueling this growth.  I’m not talking just about the obvious problems that we see in the news - growing dependence on foreign oil, carbon emissions, soaring commodity prices, environmental degradation, etc. I’m talking about the effect upon rising unemployment and poverty in America.

Our policies of encouraging high rates of immigration are rooted in the belief of economists that population growth is a good thing, fueling economic growth. Through most of human history, the interests of the common good and business (corporations) were both well-served by continuing population growth. For the common good, we needed more workers to man our factories, producing the goods needed for a high standard of living. This population growth translated into sales volume growth for corporations. Both were happy.

But, once an optimum population density is breached, their interests diverge. It is in the best interest of the common good to stabilize the population, avoiding an erosion of our quality of life through high unemployment and poverty. However, it is still in the interest of corporations to fuel population growth because, even though per capita consumption goes into decline, total consumption still increases. We now find ourselves in the position of having corporations and economists influencing public policy in a direction that is not in the best interest of the common good.

The U.N. ranks the U.S. with eight other countries - India, Pakistan, Nigeria, Democratic Republic of Congo, Bangladesh, Uganda, Ethiopia and China - as accounting for fully half of the world’s population growth by 2050. The U.S. is the only developed country still experiencing third world-like population growth, most of which is due to immigration. It’s absolutely imperative that our population be stabilized, and that’s impossible without dramatically reining in immigration, both legal and illegal.  If we don’t, soon rampant population growth won’t be the only thing we have in common with the third world.

Pete

This article, which appeared in USAToday this morning, is a perfect example of the kind of shallow journalism that prevents any in-depth analysis of the root causes of our problems.  In this case, “journalists” Haya El Nasser and Paul Overburg take simple statistics from the Census Bureau and transform it into the kind of pap that’s designed to please their corporate benefactors, interested in nothing more than promoting never-ending population growth as a means of propping up sales volume and profits while driving down labor costs by further distorting the supply and demand equation for labor. 

The connection between the authors of the article and corporations is clear.  The authors didn’t take the census bureau data and come up with the “labor shortage” connection on their own.  It’s clear from the article that they were fed this baloney by the Brookings Institution, one of those “think tanks” that thinks exactly what it’s paid to think by their corporate benefactors.  It’s appalling to me these propaganda machines (and that’s all any of these “think tanks” are) are held in such high esteem by “journalists.”  But why not?  They make the jobs of lazy journalists easy by simply feeding them articles cloaked in a mantle of veracity and authoritativeness that they scarcely deserve. 

Here’s a sampling of their distortions:

“The number of Americans ages 25 to 44 has dropped 1.5% since 2000, shrinking the pool of young workers in some states despite a 7% increase in the country’s overall population, according to a USA TODAY analysis of Census data to be released today.

The influx of immigrants, which has contributed to more than half of the nation’s growth this decade, has not been enough to offset the aging of the nation’s 79 million baby boomers, which has depleted the ranks of young workers.”

How did immigration and the implication that we need more creep into this article?  It’s because the Brookings Institution is paid to promote high rates of immigration in order maintain our labor force in a state of over-supply.

“The drain on the workforce is most obvious in the Northeast and Midwest, where most of the 20 states that registered declines of 5% or more in the 25-44 age group are located.

‘Older industrial states are facing a double whammy: the loss of the younger, high-fertility workers and a diminished attraction of immigrants,’ says William Frey, demographer at the Brookings Institution.”

“High-fertility?”  Yet another plug for never-ending population growth by the corporate sponsors of the Brookings Institution.  And to suggest that this represents some kind of “drain of the workforce” suggests that employers are being left high and dry, unable to fill jobs.  That’s an outright lie.  Young people are leaving these states because there is no work.  Take my home state of Michigan, for example.  The article reports that the 25-44 population fell by 9.1%, among the highest in the nation.  It’s because unemployment in Michigan is also the highest in the nation at nearly 7.5%.

“That’s the case in Massachusetts, which experienced nearly a 10% drop among 25- to 44-year-olds.

‘We do suffer from outmigration, and outmigration is primarily among younger people,’ says Dana Ansel, the research director at MassINC, a non-partisan think tank in Boston. ‘Losing people in their prime working years is not positive.’”

Why, if there is no work for them? (Note the inclusion of another “think tank” quote.)

“The oldest baby boomers turn 62 this year and the youngest turn 44. The nation’s median age as of July 1 was 36.6, up from 35.3 in 2000.

The gaps in the workforce have been exacerbated by more early retirements, prompting a push to retain older workers. Several states have launched campaigns to lure retirees back to work by offering flexible schedules and work sites.”

Yet another lie.  These workers haven’t chosen to take early retirement.  They’ve been forced into early retirement by down-sizing programs and they’ve left these states to find work.  It’s not that the states who have lost these people need them back to work.  They need them back to prop up their sagging revenue base. 

“The big gains in the 25-44 age group occurred in fast-growing states in the South and Mountain West, where families and young singles can find jobs and affordable housing.”

Finally, a smidgeon of truth.

“‘We’ve got a smaller pool of young workers who will be counted on to support a growing pool of older non-workers,’ says Alan Berube, research director at Brookings and former policy adviser to the Treasury Department.”

I could have predicted that Brookings would be sure to make that point - that we need to sustain high rates of population growth to support the older workers.  Stoke fear among the elderly.  It’s a very effective way of garnering support for illogical positions.  Yes, a shift toward a stable or even declining population will yield some transient issues with funding social programs for the elderly, but since population stability has to be reached at some point, one way or another, further population growth only forestalls the day of reckoning when the problem will have escalated exponentially. 

“Think” tanks.  When did the word “think” become synonymous with “septic?”

Pete

The above link is a Reuters report on the advance reading (the first pass) of Gross Domestic Product (GDP) for the first quarter of 2008.  But GDP is a lousy gauge of how well the economy’s doing because it doesn’t take into account inflation or population growth.  A much better measure is per capita chained GDP - which is GDP adjusted for both inflation and population growth.  As I reported in January, fourh quarter 2007 data for per capita chained GDP already placed us into recession:

http://openwindowpublishingco.com/cgi/wp/?p=60

If you can believe the Commerce Department’s report (which I believe is highly suspect), GDP held at the same rate as the fourth quarter, as did the rate of inflation.  (That is difficult to believe, isn’t it?  Watch for downward revisions in the coming weeks.)  With inflation running at an annual rate of 2.6% (supposedly) and population growth running at 1% per year (thanks to immigration), this 0.6% increase in GDP means that each American’s share of the economy has declined by another 3.0%. 

Folks, this is not a normal business cycle recession.  It’s not a temporary blip caused by the economy accelerating ahead of itself, waiting for other factors to catch up.  This is the culmination of decades of economic policy that consisted of nothing more than creating new rugs under which the filth of our exploding trade deficit could be swept.  The government is running out of yarn for weaving new rugs.  The mortgage meltdown has exposed the mess to the world and relegated America’s credit rating to junk status.  Our foreign creditors have cut us off and left us to face the truth - we’re bankrupt.  We’ve sold off a significant fraction of our national net worth to finance the trade deficit and, with the shrinking dollar eroding what’s left even faster, we’re rapidly approaching the day when there will be nothing left - when foreigners own us lock, stock and barrel.  There’ll be nothing left to finance the trade deficit and, when that day comes, watch out!  The recession will explode into a full-blown depression.  Will it come to that?  Maybe not - at least not right away.  The government and the Fed has their spinning wheels running full tilt in a desperate effort to produce more yarn for another shabby rug. 

Pete 

This is a link to a blog post that I think does a masterful job of illustrating how technological solutions to our environmental problems are absolutely useless if the problem of overpopulation is left unaddressed.  Kudos to blogger Tim Murray.

Pete