Two things. While we are busy worrying about protecting frogs and lizards, and the whereabouts of Obama’s absent Mideast policy, I keep hearing the strains of Tennessee Ernie Ford’s ‘Sixteen Tons’ in the background getting louder by the month - “… if the right one don’t a getcha, then the left one will.”
Systemic unemployment and unfunded liabilities. The rampant rise of the first will make it impossible to pay off the second. With the latest data coming in, it looks like both of them will getcha.
The employment data just reported was beyond sad (more here). One could tell that by just watching the administration and their media acolytes' desperate spin on the news from the Commerce Department. Longtime readers will recall that RR has long warned of what is happening in these pre-Singularity years. I even went as far as to stick my neck out some years back predicting that by 2020 the country would have 70 million unemployed (pooh-poohed universally). Turns out I was wrong – that number will be much higher. How high? Well, some economic pundits are putting those already sitting on the employment sidelines at 90M and rising; it all depends on how you tally up America’s workforce. No matter, the fraction of that workforce working or looking for work keeps dropping (see chart), which is the only thing that let’s Team Obama keep crowing about the 7.3% unemployment rate (it would be almost 11% if all the folks in the workforce at the beginning of the recovery were still looking for work).
It’s hard to tell how many jobs the private sector has eked out under Obama since most of them have been part time jobs, and now that he’s redefined the full time work week to be 30 hours, the situation is more complicated. But it does well serve his intentions for the country.
(For those wanting to review some quantitative aspects of how productivity, GDP, and workforce numbers relate, please reread ‘The Real Jobs Problem – Shhh!’.)
Then we come to unfunded liabilities, bankrupt cities, and Chapter 9 – again topics long discussed here before they became a political concern, and now a public concern. Investment maven Bill Mauldin has a recent compendium (‘Unrealistic Expectations’) on the subject from the financial industry's perspective, and it turns out worse than any politician either knows or wants to talk about.
I have lifted the nearby histogram that summarizes the monetary and fiscal devastation that faces us today. For more numerical detail and the broader picture, please read Mauldin’s article. But the bottom line is that without sustained economic growth rates in the 5+% range, there is not a snowball’s chance in hell that these unfunded liabilities will be extracted from taxpayers in the coming years. The nominal amounts will simply be paid off in worthless fiat money. And for today’s politics and the ever sinking level of voter cognition, that’s OK. Who really understands things like discount rates, fiat money, deficit, national debt, GDP, unfunded liability, … ? The gold-plated workable solution for successful politicians is not to talk about it, while promising more taxes on the rich and corporations to make things right and fund their monthly palliatives, aka checks.
And better yet, let’s talk about Syria instead.