economic orthodoxy vs. common sense

Paul Krugman:
Now, it’s bad enough to be jobless for a few weeks; it’s much worse being unemployed for months or years. Yet that’s exactly what will happen to millions of Americans if the average forecast is right — which means that many of the unemployed will lose their savings, their homes and more.

AnnS, from Michigan:
Problem: Too many people and not enough jobs that allow them to pay their ordinary living expenses.

1 out of every 6 people in the labor market are unemployed or underemployed (can only get part-time when they want full-time. And that number does not include all those workers whose hours have been cut by 1 or 2 or 3 days a month or whose wages have been cut.

The bulk of the jobs in the US do not pay enough to cover the cost of housing, utilities, car insurance, car purchase, health insurance, saving for retirement, saving for the kids to go to college .....and all the rest of the things that the talking heads and financial columnists say they should do. The average wage is around $17-18 an hour. The average hours worked are 33. That gives an average income of $30,030. Try using the median priced house at $175,000 on that income. Or paying for a non-group health plan at over $4800 + a deductible for an individual or $12000 + a deductible for a family.

A few weeks ago, on the same day that GM announced it was cutting 20,000 jobs that paid an average of $25-28 an hour plus comprehensive health insurance with a minimal deductible Walmart announced it was planning on hiring 20,000 new employees with its average wage of $9 -10 an hour and health insurance that very few employees can afford on their wages with a $1000+ deductible. That is a LOUSY trade in terms of the income of US households.

An economy based upon selling each other houses, selling each other mortgages and car loans and credit cards, selling each other cheap junk made in China is doomed to fail. The real estate, insurance, finance and retail jobs that have disappeared are NOT coming back since households do not, in fact, have the income to support all that spending and the endless credit if one could fog a mirror is gone and won't return. And the "Knowledge Economy" is a myth and a lie and a false image fed to the US public. There is no way that the US can 'corner the world market' on "knowledge. China and India have 8 1/2 times more people than the US, they have just as many smart people as a percentage of their population as does the US and numerically they have 8 1/2 times the number of smart people as does the US - and worst of all, their smart people will work for 1/10th or less of the amount paid to US workers. Globalization means an equalization in wages and incomes - and the US will get hammered. For incomes to equalize, China and India will go up exponentially and US incomes would have to fall by 75%.

Mechanization and computerization have reduced the need for workers. And now we have the problem of too many people in the US and in the world as compared to the amount of work that needs to be done by a human workers.

Answer: The Administration and the Congress Critters will take the unemployed seriously after there are repeated marches upon Washington which are somewhere between the Bonus Marchers of the spring of 1932 and set to on Bunker Hill. Until then, all the Administration and Congress will do is mouth platitudes and tell the unemployed to go back to community college and get a junk degree in fields where there are no jobs.