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Archive for the ‘Employment’ Category

So says John Stossel:

I guess Obama doesn’t know that the Transcontinental Railroad was a Solyndra-like Big Government scandal. The railroad didn’t make economic sense at the time, so the government subsidized construction and gave the companies huge quantities of the best land on the continent.

As we should expect, without market discipline — profit and loss — contractors ripped off the taxpayers. After all, if you get paid by the amount of track you lay, you’ll lay more track than necessary.

Credit Mobilier, the first rail construction company, made enormous profits by overcharging for its work. To keep the subsidies flowing, it made big contributions to congressmen.

Where have we heard that recently?

The transcontinental railroad lost tons of money. The government never covered its costs, and most rail lines that used the tracks went bankrupt or continued to be subsidized by taxpayers.

The Union Pacific and Northern Pacific — all those rail lines we learned about in history class — milked the taxpayer and then went broke.

One line worked. The Great Northern never went bankrupt. It was the railroad that got no subsidies.

Read the whole thing.

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Joel Kotkin analyzes the shocking Republican victory in New York’s ninth congressional district using the context of Mayor Bloomberg’s view of New York City as a “luxury product”.

For a decade, the Bloomberg paradigm has held the city together: Wall Street riches fund an expanding bureaucracy that promotes social liberalism and nanny-state green politics. Indeed, Wall Street’s fortune — guaranteed by federal bailouts and monetary policy under both Presidents George W. Bush and Barack Obama — has been the key to the mayor’s largely self-funded political success. Under Bloomberg, Wall Street’s profits allowed city expenditures to grow 40% faster than the rate of inflation. Bloomberg was also able to buy political peace by bestowing raises two to three times the rate of inflation on the city’s unionized workers.

Now this calculus is falling apart. Layoffs are mounting on Wall Street, while bonuses — the red meat that fuels everything from high-end condos to expensive boutiques and restaurants — are expected to drop 30% from last year.

Then there’s this:

But something is stirring in the boroughs.  The district’s voters not only embarrassed their civic betters by voting Republican, but they also demonstrated that New York’s middle class, politically quiescent under Bloomberg, may need to be taken seriously again.

This gives hope for what Bronstein calls “the real New York” — a place that is neither particularly glamorous nor severely bifurcated between the rich and those who service their needs. With a more diversified economy and family orientation, this unexpected rebellion could represent the first step toward restoring New York’s roots as a city not of luxury but of aspiration.

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That seems to be the driver in world markets since Thursday trading began in Asia.  This morning it hit the US with no investment escaping save Treasurys.

Walter Russell Mead weighs in:

  • Chinese stocks fell almost 5 percent and key real estate company stocks were down by double digit percentages as fears grow that the long-delayed bursting of the China property bubble is here;
  • the European bank crisis is deepening, with the IMF sticking to its guns about the massive capital losses faced by the continent’s banks and BNP Paribas apparently trolling the Middle East in search of a big capital injection
  • the Federal Reserve’s new worries about the economy made a deeper impression on investors than its plans to support growth
  • some US banks are starting to look shaky again.

There are many more reasons for concern.  The continuing inability of Europe to cope with the euro troubles, the political impasse over economic policy in the United States, and the deer-in-the-headlights immobility of Japan do not inspire confidence.  The emerging economies — China, India, Turkey and Brazil — face increased difficulties of their own and will not pull the global economy out of the dumps.  That large corporations are sitting on cash hoards or buying back stock rather than making new investments is bad news; that consumers are cutting down debt and doing what they can to increase their savings is good news for the long term, but bad news now.  And it seems clear that two years of frantic efforts in Washington have failed to breathe new life into the nation’s housing market.

Plus this:

I still hope the old house can weather one more storm, but it is clear that we can no longer take that for granted.  The ground under the foundations is washing away; the wind threatens to rip off the roof, and cracks are appearing in load bearing walls. Sooner rather than later we are going to have redesign and rebuild.

Financial market crashes come and go; the world may spin back into recession or the economy may wobble for a bit and then stabilize.  But we’ve had a glimpse into the abyss; in Europe, in Asia and in the Americas some of our most fundamental institutions and social policies are going to have to change.

Sobering, indeed.

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“Unions may protect wages, but they also slow job growth.”

So says Shikha Dalmia:

Grand Valley State University economist Hari Singh found that if Michigan had been a right-to-work state, the auto industry would have seen a 25 percent gain in jobs since 1965. Instead, it lost 56.6 percent just between 2002 and 2009, shrinking its work force by 165,777. In a functioning market, high unemployment would lead to lower wages. But in Michigan’s auto industry, Singh found, wages actually rose 18.1 percent during that time.

Unions congratulate themselves for protecting workers’ wages, but they have imposed a heavy price on everyone else. Not a single foreign automaker has ever taken advantage of Michigan’s legions of out-of-work but highly trained employees, preferring to train novices in right-to-work states.

Plus this:

Since jobs can’t come to Michigan, Michigan residents followed the jobs. Michigan lost 11.7 percent of its 25-34 age group between 1993 and 2003 — while right-to-work states gained 3.8 percent. Indeed, the 2009 Census revealed that Michigan had experienced the third-highest emigration in the country. Otherwise, Michigan’s unemployment situation would be even grimmer.

But the hidden costs of labor unions have become impossible to ignore, partly because Michigan’s collapsing real estate market has made it hard for homeowners to sell and relocate. There is a new desperation to do something to jumpstart job growth, which is why unions are in the cross hairs.

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From the L.A. Times:

In a bid to speed up negotiations that have dragged on for more than eight months, union officials representing supermarket workers in Southern California took a step closer Thursday night to going on strike.

Officials from the United Food and Commercial Workers gave 72 hours notice to cancel their labor contract extension with the region’s three leading grocery chains, a mandatory step before a walkout. Once the contract is no longer in effect, grocery workers can strike at any time.

The contract covered an estimated 62,000 checkers, baggers, meat cutters and other grocery workers across the region, including those employed by Ralphs, which is owned by Kroger Co. of Cincinnati; Vons and Pavilions, owned by Safeway Inc. of Pleasanton, Calif.; and Albertsons, which is owned by SuperValu Inc. of Eden Prairie, Minn.

Greg Conger, president of UFCW Local 324 in Orange County, said union officials felt they had no choice but to take this step. “It’s time to bring these negotiations to an end,” Conger said. “The talks have been going at a glacial pace. “If the employers don’t snap out of it, and give our members a proposal that we can live with, the only option we have left is a strike.”

The sticking point?  Healthcare.

Under the latest offer from the employers, grocery workers would pay $9 a week for individual coverage and $23 a week for a family, company and union officials said.

Wow.  $36 per month for an employee’s share of healthcare.  I wish.  Juxtapose that with this headline:

Unemployment Worsens in California

The unemployment picture in California – the largest state by population – worsened in August, as the jobless rate ticked up to 12.1 percent.

Only neighboring Nevada – at 13.4 percent — has a higher unemployment rate in the nation. (On the whole, the jobless rate for the country is at 9.1 percent).

California’s Employment Development Department (EDD) said employers in the state slashed payrolls by 8,400 during the month. The government in particular is shedding positions at an alarming rate – local and state government agencies cut 3,600 positions in August.

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From Larry Kudlow:

New York City mayor Mike Bloomberg, in a radio interview on Friday, warned that high unemployment could lead to widespread rioting. That’s right. He actually said that. At a time when European cities have suffered massively from hooliganism, and at a time when U.S. towns like Philadelphia and Kansas City have suffered huge human and commercial tolls from so-called flash riots.

For Bloomberg to come out with this statement is irresponsible and incendiary. But you know what? He’s got a personal agenda. This is a desperate talking point to sell Obama’s jobs plan, which Bloomberg favors as a solution to high unemployment and zero growth.

There’s a whole history here of liberals threatening riots if they don’t get their way. WABC radio host Mark Simone reminded me that back in 1994, Matilda Cuomo warned there would be race riots in New York if her husband Mario weren’t reelected governor in his race against George Pataki.

So now the liberal Mike Bloomberg is trying to go to bat for his pal Obama. And he’s doing so in a very clumsy and inappropriate way.

In fact, Bloomberg is pitching for the whole Obama jobs package — the $450 billion stimulus plan and the $470 billion tax hike. The package is totally unpopular. A recent Bloomberg poll (how ironic) showed that voters disapprove of more Obama stimulus by 51 to 40 percent, and that 56 percent of independents oppose it. Other polls show that more than 60 percent of Americans disapprove of Obama’s handling of the economy.

Then there’s this:

Some political insiders I spoke to believe Bloomberg desperately wants Obama to win a second term. They say the New York City mayor wants to be Obama’s new treasury secretary. Therefore, Bloomberg is hammering Republicans today and absolving Obama from taking any blame or ownership of the current economic mess, which has placed the nation on the front end of yet another recession.

Read the whole thing.

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So says Thomas Sowell:

There was a stock market crash in October 1929 and unemployment shot up to 9% — for one month. Then unemployment started drifting back down until it was 6.3% in June 1930, when the first major federal intervention took place. That was the Smoot-Hawley tariff bill, which more than a thousand economists across the country pleaded with Congress and President Hoover not to enact.

But then, as now, politicians decided they had to “do something.” Within 6 months, unemployment hit double digits. Then, as now, when “doing something” made things worse, many felt the answer was to do something more.

Both President Hoover and President Roosevelt did more—and more, and more. Unemployment remained in double digits for the entire remainder of the decade. Indeed, unemployment topped 20% and remained there for 35 months, stretching from the Hoover administration into the Roosevelt administration.

What about the track record of doing nothing?

For more than the first century and a half of this nation, that was essentially what the federal government did — nothing. None of the downturns in all that time ever lasted as long as the Great Depression. An economic downturn in 1920-21 sent unemployment up to 12%. President Warren Harding did nothing, except for cutting government spending. The economy quickly rebounded on its own.

In 1987, when the stock market declined more in one day than it had in any day in 1929, Ronald Reagan did nothing. There were outcries and outrage in the media. But Reagan still did nothing. That downturn not only rebounded, it was followed by 20 years of economic growth, marked by low inflation and low unemployment.

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