The mechanics of readjustment

Bay Area, California
The only way Americans can compete economically is with a lower cost of living. No industry will thrive in the United States without a lower cost of living. Health insurance for an average employee and family now costs a corporation about $10,000 a year, sometimes more. Home prices are still way too high here. Education is ridiculously high in the United States.

The working class (which in my opinion is any family making less than $200,000 a year) essentially relies on a lifetime of borrowing - mortgages and student loans and car loans and credit cards and this raises the cost of everything here beyond what it ought to cost. Universities in the United States have grown heavy with greedy administrators who outnumber professors and who collect disgustingly fat salaries. Real estate developers and bankers have infiltrated the Regents of the University of California and most universities nationwide and have pressured for extravagant building programs that pay exorbitant fees, use bank loans and build Las Vegas/shopping mall style facilities from lecture halls to dorms. Vile, corrupt school administrators claim that fancy buildings are necessary to make a school "world class" as if it is some sort of a resort. Young Americans look around as they collect their student loan disbursements in exchange for a signature and say, "Yeah, I guess it's worth it. It's really extravagant and that's great." But they wouldn't say that if they were writing a check for it, and they don't say it when the time comes to pay back their student loans.

Now the Obama administration has released the "tough" student loan guidelines where if more than 65% of a college or university's graduates are delinquent on their loans that the school will be cut off from federally backed loans. 65%? Really? Is that what an American getting a bachelor's degree has to look forward to? 65% of the class being delinquent on student loans is an acceptable level?

So you can hire a worker with a master's degree in computer science out of a good university in Beijing or New Delhi for about $20,000 a year TOTAL. In the US, it costs with payroll taxes $20,000 a year to hire a minimum wage worker who dropped out of high school - it costs $20,000 a year to hire an undocumented worker who ceased school at sixth grade onto payroll at a fast food restaurant. If you want to give that worker health insurance, the cost goes up to about $28,000 to $30,000 per year.

The nation is run by bankers and so every solution is billed as "we need to loan the people more money so that they can afford things." The Fed says, "we have to hold down interest rates and give lots of money to the banks in the hopes that they will lend it to people so that they can afford things."

That is insane. It's the horrific dream of a cabal of bankers. And even those bankers offshore most of their operations. All IT, back office, and a lot of operations has all been offshored. The only thing that remains here are bank tellers who have been transformed into commission-based small time con men trying to sell auto deposit savings accounts to every customer because of the Fed's sweeps rule that allows them to loan out your savings account money overnight in Europe and Asia without telling you about this (as soon as the Fed caves to Wells Fargo's pressure and allows sweeps on checking accounts, all of this ridiculous pressure to open savings accounts will immediately cease).

But the short of it is that unless the cost of living is allowed to adjust here without the Fed trying to inflate it, gradually ALL of the jobs will leave except the ones that simply cannot be offshored - so just like now, software engineers will be paid $10 an hour if they have a master's degree, police, fire and lifeguards will get paid $175,000 to $225,000 per year, auto mechanics will bill out at $125 per hour while lawyers and probably accountants will bill out at maybe $20 per hour (because that work can be offshored eventually too).

People like Friedman and his flat world assume that a capitalist economy will automatically adjust and provide the "right" mix of innovation, prices, investment, savings, etc. That simply can't happen when a cabal of bankers is running the country. There can be no adjustment. Home prices weren't allowed to fall. Commercial rents weren't allowed to fall. If these two cost centers fell, it would reduce the cost to business of producing products and services and it ought to increase employment and the production of goods and services. But it would irritate the bankers because they financed the high prices and the higher the prices are, the more people must borrow.

We're not so free here. We'd do well to mind our own anti-democratic demons before commenting on China's. We're free to paint stupid Hitler moustaches on the President's photo and you don't go to jail for that here. But we're also completely powerless to stop the bankers' theft of our whole nation.

No comments:

Blog Archive