Via Starfcker
I was looking back to see how long I’ve been reading your blog, Jim. I found this place when I linked to a piece called, “Are You Seeing What I’m Seeing“, from Zero Hedge. Almost exactly five years ago. I still think that article is probably one of your all-time best. Back then, observations and information like you have packed in your article were very, very, hard to come by, that was a real eye-opener. But this comment is really good, too, it could hold up today, just like the article.
“I am trying to get my mind around the whole “the 1% are taking everything, the middle-class are getting screwed” thing. To me, people do not understand what capitalism is all about, and do not understand the global forces that are at work..
Capitalism is about competition, and rewarding the smart, the hard-working, the experienced, and the lucky, and a level playing field. The only problem is that today there is not a level playing field – influence is exerted by those with money, and so the playground is tilted. The tilt makes it near impossible for those in the “middle-class” to rise and replace those higher up the rung. Additionally, ridiculous and obscene government regulation makes the tilt even worse – small businessmen simply do not have the resources to keep abreast of all the regs and laws and costs associated with running a business, while megacorps do.
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But even if the playing field was level, the fact is in a global economy, the middle-class is screwed. And nothing is going to change that. The competition for middle-class jobs is fierce – there are literally billions of folks out their willing to do the work currently performed by the US middle-class, but for a lot less money. So middle-class incomes are going to be driven down, and there is no way around that. The middle-class have enjoyed a protected existence – protected as there has largely been no competition for their jobs. When you add in the factors that the Admin so eloquently lays out for us – debt, govt incompetence, free-shit, etc – the situation gets worse.
Here is the deal. I will use me as an example. Let us assume the playing field is level in all ways. Someone new wants to come into the local manufacturing field where I play. He has to therefore play me – and I will be extremely difficult to beat on a level field. I am educated, I am smart, I have 35 years experience in manufacturing covering all functions (including sales and finance), I am cashed-up, and I have happy customers. Can I be beaten? Sure.
But it will take someone extraordinary to do so, or it will take someone able to bring a lower cost structure to bear against me – say someone from China who can overcome the logistical advantages that I still have today. So I am likely going to be the 1%, and the person taking me on is likely to go broke. Capitalism at its finest. I do not have an unfair advantage – I have advantages that I have earned through years of hard-work and via application of my natural abilities. It is totally fair and reasonable that I win, until such time as someone better comes along. Then it is fair that I lose.
The middle-class similarly have to compete – and their main competition is from persons abroad, like it or not. These persons have a cost advantage – all things being equal, and assuming no logistical barriers to entry – that cost advantage will win out. So local employees will come under pressure to lower their prices (that is, their salaries), to the point where an equilibrium is reached. That point has not been reached as of yet – middle class wages will continue to plummet, and unemployment will increase. The middle class has no barrier to entry, and is under the strain of competition.
What do I think is the price point that needs to be met to stop the bleeding? Probably an average wage around $25 -$30k, down from $55k currently. Even that may not be enough of a drop – it depends how long it takes for wages to rise elsewhere. This can be done in one of two ways – actual wage cuts, or defact cuts via Ben B via continuous printing of money and the subsequent devaluation of the dollar. So the dollar must fall by half, or actual wages must fall by half.
The fact is, THERE IS NO SOLUTION. THERE IS NO SOLUTION that will return the status of the middle class. They have to compete and beat their competition. They do not have any natural advantages, save location, and in fact have many disadvantages – pick any one of the seven deadly sins: sloth, greed, gluttony, etc. And the fact is that they cannot beat their competition at the price point they currently have.
It is what it is. That the middle class did well in the past is no predictor that the middle class will do well in the future. The fact is that the days of a middle class as US citizens know it are over. A pyramid will result – there will be no bulge in the middle as has been the case. The bulge in the middle will disappear, and what was known as the middle class will drop to the lower class levels, and the lower class will do it even tougher.
Reality sucks. I am ready for the torrent of thumbs down – but anyone capable of telling me how this is not going to come to pass is welcome to try “
Llpoh, Sept 17 2012
I knew who it was by the third sentence.
Great commentary and absolutely correct. Understand this though- the Middle Class was never something that could continue to sustain itself at it’s size and level utilizing the skill sets and work ethic of the lower classes. For a brief and shining moment there existed such levels of surplus, so much innovation and technological advancement, so few competitors internationally that it ballooned up to a size that was completely and utterly unsustainable over the long haul. Throughout history the middle class was as limited in size as the upper class, the clergy and the aristocracy. It contained only those who were smart enough and capable of risking a great deal to acheive it- the merchant classes, the trappers, the traders, the skilled craftsmen, artisans, inventors, etc. These numbers are always limited.
The middle classes of the 20th century were an aberration, not a norm.
Great comment Llpoh.
HSF – you are exactly correct. I have made that self-same point many times. I generally call it a mirage or somesuch, as it was not a real state and cannot be maintained. I like aberration better.
Perhaps, but I offer up that the middle class was only good during the time when you were successful because the capitalists needed to show that Communism was a bad idea. They gave you your opportunity and level playing field for you to run on but it wasn’t yours. It was theirs. And they took it back when Communism was no longer a threat.
Rob – really? That is what you believe? Alrighty then. Good luck with that.
Hey little poo, I didn’t piss in your punch. I am just pointing out that just as there has been no successful version of communism, there has been no successful version of capitalism. Successful for you no doubt so you conclude that capitalism is best. Others find that it doesn’t work for them so they search for an alternative. Many turn to communism and the capitalists change their game plan to adapt and persuade their rabble that your system is better. If the opposition turns to socialism they fight that threat with assassins and blockades. It’s just a different strategy but it is still the same people trying to maintain their privileged life style. Just as you now seek to justify all that you took. Hope that helps you to sleep at night. Most people like you tend to fall apart at the end of their life. The horrors can never go away; they are simply repressed.
But drinking heavily can help. I’m here for ya buddy.
No successful form of capitalism?
If you are pissed that some have jets while others don’t, big whoop. Capitalism allows the poorest of Western society to enjoy things that even 200 years ago were the province of kings alone. Fresh fruits/meats any time of the year. Endless entertainment, either via television or radio. The freedom to pursue your own hobbies.
Not a success? Yeesh, what bar are you trying to hurdle.
Thank you TPC. You make my point…exactly.
Is that Llpoh writing? I’m impressed. Great read.
I hope you’re not kissing his ass after what he did to you.
Vic simply is acknowledging the artistry I bring to bear whenever I post.
“The middle classes of the 20th century were an aberration, not a norm.”
This is true. Additionally, I think the boomer generation will be the last one to have what we call ‘retirement’ in the modern sense as well (also another historical aberration).
Dollar devaluation is the way of the future. Plummetting wages and purchasing power will follow. The only way to beat the poverty game going forward is to build _generational_ wealth – something that most people do not do anymore and something that governments everywhere are working their damndest at squashing.
Generational wealth = gold and silver. Something that can’t disappear overnight.
I have also seen QE, which benefits the wealthy (especially Mega Corps) and ZIRP which was a gift to Banksters not having to pay interest on savings to Middle Class and poor – a good means for bonus payouts at year end for Banksters.
Kokoda -I think low interest rates were rather more meant as an incentive to the poor and working classes to borrow and spend. They never had a whole lot of savings as a rule.
Yes, for the very noble reason for them to save their balance sheets instead of allowing FREE FUCKING MARKET FUCKING EQUITY CLEARING ACTION. To save their inflated equity. The same reason housing starts are low…to protect their equity.
Star – aw shucks. Thank you. I remember writing that. Not sure I would change a word, except I have 40 years experience.
My business still thrives. I am still involved. And still hard to beat on a level field, for all the reasons mentioned. But slowly, the business will fade away, as I am less involved, and no longer have the desire to push it along. I mentioned I would consider selling up, but buyers are loathe to jump in, especially when a business owes its success to a key manager. I am 10,000 miles away, but still involved daily. But there is simply too much I cannot influence from here – I cannot manage the minutiae, nor the culture, and the minutiae and culture are the lifeblood of a business.
What is slowly eating away the business is that there are fewer and fewer manufacturing experts. The experts are gone, and young managers have taken their place at my customers. What they know of quality, service, logistics, etc., is only what can be found on a spreadsheet. I am of no mind (and no longer young, to boot) to train them, which I used to do. So, those young managers slowly, surely damage both my business and theirs, making decisions about things they do not, and will never, understand. They are the equivalent of the Ivy league bankers so oft decried around here.
The things I mentioned are coming to pass, but more slowly than I anticipated. US wages have stagnated, and foreign wages have increased. The great levelling will continue until an equilibrium is reached.
I am more pessimistic than ever. Notably, that comment did not mention debt and the ever increasing demands, and unsustainability, of the welfare state. There may be insufficient time to reach an equilibrium – there may be a sudden collapse (the old adage applies: how did you go broke? Slowly, then all at once.) owing to those factors. Admin, and others, have taught me much about how debt, and the welfare state, threaten the very existence of the country.
I fear I wrote better back then. Perhaps it was easier to do – I was not trying to tie in so many factors. I focused on my field of expertise. When I write now, I find I cannot tie things up so neatly. There just seem to be so many ends to the string, and I struggle to tie them all.
Thanks again, Star, for that trip down memory lane.
Yet you support the use of non-competes.
You are uniquely unqualified to help or support change to the falling down of America.
“No one can learn what I’ve learned. I’m the smartest person in the world and, if I can manage to do it, I deserve to own the entire world.”
It’s interesting that you would find such an ardent friend in HS. In my estimation, he is the exact opposite of you. His stories are loaded with examples of sharing and teaching. I’m going to guess you have no children.
Wimp – you never miss a chance to show your extreme stupidity.
I spent my life making things. As does HSF. Perhaps in that we see something we understand.
You do not know who I have taught, and who I have aided. Nor do you know what community deeds I have done., nor the tax revenue I have generated, nor the jobs I have created, nor the number of employees that have become modestly wealthy from the opportunities made available to them that they ceased. If those things are of no value, as you seem to say, then I suppose I can at least say I tried to pull my weight.
Re non-compete agreements – they are contracts, business agteements. I do not use them personally, but if anyone signs one, they should stand by that agreement. They freely enter into the agreement. A man’s word is his bond and all that. Guess you disagree. No surprise there.
You never miss a chance to tell everyone how much we should worship you.
Why don’t you stop bitching about the government and banksters? They have authority over you just as you would have authority over your employees.
You stoopid shit. You didn’t make shit. You employed people to make shit. Now you’re telling me you do everything. Yin needs the yang. You invented something?
WIP echoes his savior Obama – ” you did not build that”.
Right. Keep telling yourself that, Comrade.
You hit the nail on the head then, Llpoh. You had it right.
I come here for the big picture, something that would be hard for me to grasp as I am service/repairman and do not get involved with how things operate at a corporate level.
Just saying thanks for all your efforts in helping me to see where things are going, any wisdom I can claim is just from the insight I get here on a daily basis. Many Thanks!
Henry Ford paid his people $5.00 per day, when the average wage was about $1.50 per day. This was done in order to stabilize his workforce, but was also done as Ford believed that his workers should be able to afford his products.
Henry Ford realized that paying people a decent wage would come back to reward him immensely. Of course, the wall street banksters howled in protest, stating that Ford’s high wages would “destroy capitalism” as they knew it…Henry Ford mistrusted banks and knew of their destructive potential. His writings have stated as such.
Henry Ford had a great part in establishing a “middle class” and was instrumental in helping quell the “class warfare” that was evident in other parts of the world.
Our present “race to the bottom” with the implementation of the fraudulent H-1b visa program has made native-born Americans second-class citizens in our own country. The “pointy-headed intellectuals” in our “business schools”, colleges and universities have lost sight of the fact that a well-functioning economy requires a consumer base that is able to afford the consumer products available to them. It helps to have the products produced by the very consumers that eventually purchase them…in today’s business schools, the stockholder is looked upon as the one entity that must be “stroked” at all costs…the balance that is required for an economic system to flourish is ignored…a well-functioning economic system is like a three-legged stool that requires consumer/employees, investors/consumers.employees, and financial backers, also consumers,employees,investors to properly function. Take the employees out of the equation (with the siren song of cheap imports) and you have the mess that we are in today…
Henry Ford’s stated motive in establishing the wage he paid was bullshit. You can’t make money selling your product only to your employees. That’d be like a perpetual motion machine. Ford’s employee pool was a minuscule fraction of his customer pool. So Ford’s true motivation in setting the wage he paid was 1) to get competent and reliable workers – which may not have been as easy as we’d assume 2) having Ford workers driving Ford cars was good advertising and 3) to establish his own reputation as a stand-up guy – another form of relatively cheap advertising. That this hagiography continues until now shows that #3 worked.
Not to mention he helped the Nazis in Germany, so capitalism doesn’t seem to be his first love.
Corporations today have their cake and get to eat it, too. They pay a pittance to foreign born workers to make their products then turn around and sell them here in the US for top dollar. Then, since Americans have been strip-mined of their jobs but still need all these gadgets to keep up appearances, the bankers get rich on credit card debt. Quite the gig they got going on. A level playing field would be if foreign made products could only be sold to those countries who make them (eg. an I-phone would cost $5 in China). If Americans would start living more within their means like people did in the past, things might change. Only a pipe dream, I know.
Realist – seriously, you need to wake up:
1) you do not have to buy foreign made stuff. Just do not do it.
2) jobs have not been strip mined, as you put it. Please refer to the graph posted below that definitively disproves that crap. US manufacturing as a % of GDP remains unchanged. How is that possible if jobs have been strip mined to foreign countries? Answer: it is not. Automation has killed manufacturing.
3) on the one hand you say “they still need all that stuff”and then blame the bankers for the problem. Sorry. The answer is “they DO NOT NEED ALL THAT STUFF”. The can stop buying it at any time.
I understand your frustration. But the US people are the ones responsible for this mess. They have lived and financed their lifestyle off of $20 trillion in govt debt, another $40 trillion or whatever in private debt – or $200,000 PER PERSON. That did not have to happen. It should not have happened. Where would the country be if instead of being blown, that $60 trillion had been invested?
Corporations do what they do – they seek profits. That is their role. If they are denied profits by consumers choosing not to buy, the corporations will do something else. Want corps to manufacture in the US? Only buy American made. Want the NFL players to stop being assholes? Boycott the NFL.
The failure to support and protect the industry and its higher paid employees eradicated the tax base nationwide in the US . The failure to maintain a level playing field and sticking to our Constitutional Republic of Independent States fought forth the economic woes for many and a windfall for very few . This is the cause of the welfare state as politicians from Fed on down scurry about like cats covering up shit ! While they borrow to infinity and pass the debt on to the very people wiped out by actions and inactions . Don’t worry they have a plan to thin us out , YOUR KIDS TOO , it’s called endless war . Somehow there is always funding for that !
Well the middle class can’t compete with Government that’s for sure. As those blue areas on the map become more expensive in large part due to property taxes, the middle class will continue to flee. At least for a little while.
You say,
” I do not have an unfair advantage – I have advantages that I have earned through years of hard-work and via application of my natural abilities. ”
and then you say,
“Additionally, ridiculous and obscene government regulation makes the tilt even worse – small businessmen simply do not have the resources to keep abreast of all the regs and laws and costs associated with running a business, while megacorps do.”
so how is it that you think that you don’t have an unfair advantage?
With big business greed having CONgress in their pockets, the middle class doesn’t have a chance in hell. But even that is an unsustainable situation and will eventually collapse. Man is not a learning animal, boom bust boom bust…. to infinity…
“Man is not a learning animal, boom bust boom bust…. to infinity…”
Here, let me fix that for you-
Mankind is not a learning species, boom bust boom bust…. to infinity…
Men individually are more than capable of recognizing reality and the cycles of life, collectively as a single herd organism, they cannot control their imperative.
Big difference.
That is correct, thank you for seeing my error.
As successful as Llpoh’s been, I think his business is far from a “mega corp” and would be considered “small” by most modern metrics.
The business generally has under 200 employees. That is not mega by any measure.
You must learn to actually read for content. He prefaces the statement in the paragraph before saying:
“Let us assume the playing field is level in all ways.”
And before he clearly stated that the playing field was not level.
This is how one sets up a logical, well-though-out position. Your comment is how one whines.
However, you are correct that this is unsustainable. EVERYTHING in the cosmos is ultimately unsustainable. “The only constant is change” is not just philosphy, it is physics. Deal with it as we all must.
The process of wages approaching international equilibrium continues. Protectionism doesn’t work in the aggregate, but it can work on a relative basis if you do it better than other countries. Trump’s point is that we shouldn’t be free trade purists while other countries employ protectionist tactics. That’s true as far as it goes, but it doesn’t go very far. Mechanization is also going to throw people out of work. There’s going to be an increasing push for a basic income payment from governments. People should at least have to pick up litter. I hate litter. As far as making a living in the US, it seems to me that the best careers will be those that can’t easily be offshored, aren’t likely to be commandeered by the government and are anti-glamorous. Septic line repair and oral surgeon come to mind.
Yes, become a government worker.
In the past, a poor person could go to the woods and pick something, like walnuts or pecans, and sell them to townspeople and make a small amount of money. The next day, they could pick some more and sell more, adding to their next eggs. When the nut season was over, perhaps they could pick wild blueberries, strawberries, anything that grew in the woods, maybe collect fallen wood to sell as firewood, anything they could sell. Eventually, they start a good business and get ahead.
But today, you can’t do that at all. If you want to sell something, you have to have a license, which costs a lot of money, which poor people can’t afford. That’s a small, but prime example of regulations and licensing laws that kills the small guy trying to start out with nothing.
The only way to save the middle class, as we know it:
1. Crush the loopholes and exemptions for the super-corp and ultra-rich…the 0.01% if you will. The mega-billionaires who can literally buy and sell nations if they so wish. Level that playing field for corporations.
2. Crack down on the healthcare industry. I like….I think its Denniger’s plans. Force them to publish prices first and foremost, and use modern laws to smite them.
3. Repeal Obamacare.
The end goal in all of that is to make starting a business more feasible. Lets be realistic, the only true path to being middle class is owning your own livelihood, OR having a highly specialized technical skill. For a lot of people thats not going to be a possibility, they aren’t wired right to run a business, or be a Doctor. If you have less ability you should settle for less result.
Thats fine. We have cheap food. Cheap clothes. Cheap gas. If you aren’t playing “keep up with the Jones'” then it is INCREDIBLY cheap to live in the USA relative to our wages. Being “poor” or “lower class” in America means something different than being poor in India. Or Sudan. Or Brazil.
Honestly, the major budget killers for the lower class are all things the government has been inflating over the years: Rent. Healthcare. Education.
In my hometown a couple can have a nice little debt free existence for ~$15,000 a year. Thats the equivalent of a SINGLE minimum wage job.
The problem is that they’ve sold the “lower” class that they DESERVE…
1. Brand new iGadget.
2. Unlimited data…enough to stream video all day every day on 10 devices.
3. A McMansion.
4. Free college.
5. Free healthcare.
6. Getting to eat out 5 days a week.
7. Yearly family vacations.
8. A Cadillac Escalade.
Psh. Whatever happened to throwing a baseball for fun. Or going fishing. Or reading a book.
People have traded their very real existence for a very fake digital reality, and all its cost is the soul of America.
Where is your hometown, my wife and I are researching retirement locations.
Its near Kansas City, on the Missouri side of the border. Make sure you are north of the river. People are odd further south.
Hey, I resemble that remark.
Yeah you do.
🙂
Great post.
You ought to turn this into an essay-
“If you have less ability you should settle for less result.”
That right there is a gem in the rough.
The middle class as we know it CANNOT be saved. Period.
Anything and everything done through the system at this point is simply a version of can-kicking. The system is playing a losing game of diminishing returns on complexity and energy…there is no bill, policy, statute, writ, amendment or any other device of the system that can sustain the fundamentally unsustainable.
The rest of the comment is outstanding, especially:
“People have traded their very real existence for a very fake digital reality, and all its cost is the soul of America.”
I have said before: Always beware the word “deserve.” It is a tool of politicians (read professional liars) and is the most solipsistic word in all the English language. Everyone always believe that they “deserve” more good, easy things and most of us can convince ourselves that anything bad that happens to others was “deserved” in one way or another.
We all need to adopt William Munneys attitude:
“Deserve’s got nothing to do with it.”
In Western countries, and to a lesser extent in other countries in the East and Africa, there has always been a middle class.
The large size of the middle class was born in the industrial revolution and developed everywhere industry developed.
The post industrial technological age we are now entering is reducing its size, it doesn’t need and can’t support that many people in the middle class any longer.
Times have changed.
I agree with the overall thesis, and really enjoy the discussion of the business relying on details, minutiae and culture, etc……and the need for ownership presence and so forth. But, I think society will break before we see wages go to 1/2 and such. There’s no meat on the bone now, and many don’t have debt, sloth, new car payments, etc. sabotaging their mean……it’s just damn tough out there. And the anger is becoming white hot not. Next is a melt down in my opinion, they/we/you/me just need the event or episode in life.
Wages can be reduced indirectly through stagnation coupled with inflation, and that is the slow boiling of the frog way of doing it.
Uprisings are usually avoided that way.
The way not become white hot with anger and then part of a meltdown yourself is to find a way to live well on that 1/2 an income. First step is go do the math to figure out how much debt you’re in, then subtract that from what you think you’re paid. Its easy to think you’re making the big bucks but actually net near zero due to debt.
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Here’s the problem:
It requires 1 “slug” of work to maintain 1 human for 1 day.
If every human did 1 “slug” of work every day, all would live a happy, contented, useful life.
We are not all doing our “slug” of work.
Robert (QSLV)
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Speak for yourself!
They keep the pit under my outhouse under control. In the garden they can do an amazing amount of work. Not to be under rated.
Robert (QSLV)
Robert:
Why am I being paid “1 slug” per day, working my ass off, while the CEO is getting “10,000 slugs” per day, all the while out on the golf course with his buddies and emailing me to say that I am not working hard enough??
These types of sociopath believe that it is their “specialness” that the world simply could not do without them. They have skills that know one else does.
Trouble is…. when they finally pass, someone else just takes their place.
I rank CEO’s justifying their largesee right up there with Glowbull Warming
Fiatman – I agree that CEOs are largely and wildly overpaid. However, your characterization of how they spend their time is grossly inaccurate. They work, on average, abominable hours. Further, lest we forget, the owners of the businesses pay them what they think they are worth.
He is equating all CEOs with the guy at the head of Goldman Sachs. Most CEOs don’t make $50M a year.
Also, employee pay is not just commensurate with their overall valuation to the company, but also to their exposure.
For example: A 10$ an hour employee has a very small amount of exposure, often no more than $1,000 at a time on their own. A $50k a year employee will probably have exposure of about 50 grand as long as its part of their normal budgeting/expectations.
A $2M CEO is making decisions to the tune of millions…often in excess of 10M at a time. Their game is a matter of inches, 3% savings to someone playing with millions is a big deal compared to the person trusted with $1000.
For years I was a technical person, I consulted internally on projects, products, and regulatory issues. In return I had very low liability relative to my rate of pay, but I was MUCH cheaper across the whole than a contracted scientist.
Now they’ve moved me to management, and put me over teams in several facilities. My pay went up, and is on a commensurate grade. I have put 2 plants in order. I have a third on my docket for next year. If I actual manage to square away all plants with our current workforce management has made it clear they will consider that a miracle…and my pay (and exposure) will go up considerably.
I hear complaints occasionally from people in the plant about my pay. Usually from the newbies. The ones who have been around more than a year know the truth of the matter: we promote and pay based on ability. If you feel like you aren’t getting ahead and are rusting in place [i]its on you[/i]. The rest of us are enjoying nice bonuses, pay raises, and company stock.
“Work just hard enough not to get fired, get paid just enough not to quit”
Unknown
My wife and I fed 80 people on Saturday evening, pig roast with all the fixings. Every last morsel of food that we served was produced on the farm. I heard they gave us a standing O at church the next morning.
People are capable of producing far more than they imagine they can. It’s just that they’ve come to accept that they don’t have to.
Nice.
80 “slugs” in 1 day, kudos to you H.S.. If everyone pulled their freight the movers and shakers would spread an excellent surplus of prosperity on the land.
HSF, most people cannot gut and clean an animal of any kind. Most cannot fix a tractor, mend a barbed wire fence or grow a half acre of corn.
The truth is that if you can’t do it then you must pay someone else to do it for you, or do without. Everybody is a specialist, and wants that yummy specialist pay grade.
Several here bragged on their homes and lifestyles in comments – caught up in the whole KUWTJoneses thing. Gold and silver are fine – but the biggest expense for most people is a mortgage. Pay it off even if its hard to do. Then you just have taxes.
Don’t like corporations and fat CEO’s? Then vote with your wallet and buy from someone local and smaller. Whining never fixed a damn thing – voting with your feet and wallet absolutely works. Look at what is happening with the idiots in the NFL right now, with people voting their wallets.
If your income is falling, then reduce your outgo. It’s the best way to maintain in the face of ill winds. Can’t say you don’t know how to make or fix things on your own with the internet at your fingertips. When I hear that response, my mind immediately goes “lazy or ignorant person” and they are so categorized. Don’t care if that makes some butt hurt either.
Can’t afford new? Then buy used and clean and paint it up like new. Can’t afford an ifone? Then just don’t – get a fone that is cheap, because they all do the same things now.
New cars are $25-60K. Used cars are from 20-50% of that. Both require maintenance, it’s just that YOU have to do it on the used car. I think it nuts to buy new big ticket items, especially when you pay extra for warranties.
My income dropped by from mid 6 figures to low 5 figures in the oil downturn. Weathering it by reducing outgo and incrementally increasing income in any way. Good thing I paid my farmland off. Good thing I am not afraid to read and learn and get dirty too.
The world and those around you owe you nothing. Thinking otherwise leads to some batsh&t crazy expectations in life…
And one eventually reaps what they sow; some crops just take longer to bear fruit…LOL
Greetings,
I am late to this fight as I’m still recovering from a summer trip abroad.
I manufacture as well but my concerns are not so much with keeping a middle class in place but a very serious worry about the lack of manufacturing in the USA. Ya know how some African nations foolishly kicked out their white farmers and then watched their exports go to zero? I mean, well, we’ve been farming for at least 12,000 years so you’d think that just anyone could do it but these nations now face a loss of exports and food insecurity. Why? Well, once they brushed aside their experts, they were left with a bunch of klowns that didn’t know what they were doing.
When young people tell me that possession of a smart phone confers “smartness” upon themselves, I just ask them to go ahead and make me a smart phone. If you can’t make the tool then you are dependent on the person that can.
Good to see that you’re back commenting.
Greetings,
I’m still trying to process what I saw this summer. Italians are trying to come to terms with the fact that they have let in tens of thousands of jihadists into their country and the EU is demanding that they take in and provide for an endless amount more. They feel trapped with most of them wanting to leave the EU and expel the invaders. Crazy stuff.
Hi Nickel. Nice to see you. I am heading to Italy later in the year. Hope it has not gone entirely to shit. But we love Florence so are headed back.
Careful, there are some who believe that “you did not make that” lurking. They would gladly take your stuff and turn it over to those they believe did. Stupidity runs deep.
Wrong. I never said that. You want to take credit for everything that happens in your company. You’re like the SOB who overhears another employee’s good idea and then takes credit for it. And since all employees suck ass and are lazy and you have to pay them why not?
WIP – you ever run a business? Owned one? Hired and took responsibility for employees? Risked all you own to do so?
Of course I take credit. It is mine. I built it. I took all the risk. I put up all the money. I had the talent, skills, and experience to do it. My employees worked and got paid – every week for decades, with nary a missed paycheck. I get the credit, because I have the responsibility. And if it fails, I get the blame.
I built it. Not my employees. Sorry that does not fit your socialist view of the world. But without me, that business would not exist. Nor would the jobs, the tax take, etc. I know you think “All hail, workers of the world unite!”is a workable system. See Venezuela as Exhibit A for how that shit turns out.
Fact is, progress is driven by talented, hard-working individuals. 100 average souls cannot accomplish what one talented person can, no matter how much they try.
Stop arguing. Let’s get a second opinion.
Star – yup. WIP is an Obama clone for sure.
I love the entrepreneur. My father and all his brothers were entrepreneurs. I’m currently incensed with the use of non-competes and dickheaded people who think they can do it all by themselves and view employees (ya know, fellow Americans) as disposable crap. The one thing companies do not want to do is PAY to get the type of employees they want.
Yes, I have had some very small ventures in the past. To this day I cannot believe I quit one of my ventures. This might sound crazy but I had a small deck cleaning operation (busy though). I was constantly being asked to do all kinds of other jobs. Build fences, build decks, paint houses, repave driveways. I was a young strong man, white and damn good looking then. I could have cleaned up money wise. I will not make that same mistake again.
I am right now working on what I believe is going to be my salvation. The fucking shit I have to do to make this all work (my current venture) is vexing me to no end though.
Remember, I asked for your help some time ago. You said fuck off (Ok, I made that up). You had a chance to give back. Instead you went to the Outback.
Don’t make shit up. I am not a socialist/communist or Obamanista. I am an American who doesn’t want to see my country become a third world nation. Although it seems inevitable.
Btw, I’m pretty sure it’s the government that makes hiring “workers” such a difficult proposition. American society is out of balance. You may detest unions but they did do some good.
WIP – why be incensed with “non-competes”? They are not obligatory.
A potential employee comes to me for a job. I offer him a job at X salary, but require he agree to not disclose anything that he learns from me to my competitors for, generally, six months or a year after he leaves my employ, and refrain from working for my competitor for that time period, so as I can ensure my secrets/intellectual capital have some protection.
I do not get the objection. It is a contract fully entered into. You asked above have I invented anything. In fact I have invented untold numbers of things – systems, little bits of industry or operation specific equipment, processes, process controls, quality initiatives, etc. Those inventions are not patent protected – it is not viable to so protect.
The only hope I would have to so protect them would be non-compete clauses. I do not use them personally, but I understand why companies do. It is to ensure the protection of its secrets and its inventions and intellectual capital, and to prevent employees from stealing customers.
I have zero idea why you object. It seems totally reasonable to me that protection would be available to the company to protect those things. And if the potential employee does not like the terms, they can simply get/seek employment elsewhere.
Re being able to do it all myself – of course not. BUT I can find endless people to do the work I need done. They are interchangeable. I am not. They are providers of labor. They sell it, I buy it. I owe them NOTHING except their agreed wages and contractual terms. If I no longer need their labor, then I no longer buy it.
Disposable? I do not know what that means. I am in business to make a profit. And for no other reason. If I do not stop buying labor when I do not need it, I will go broke. It is that simple.
Companies pay what the market demands. hat is the system. They do not want to pay more than that required to get the quality of labor they need. If it gets to expensive in one area, they might well move to another. Competition demands that decision be made.
And so you have never had the pleasure of hiring employees, by the sound of it. I admire that you are trying to start your own venture. Good luck. Truly. It is a noble thing. But difficult. Imagine that difficulty multiplied by the difficulty of having 150 employees, and perhaps a 3/4 million or a million dollar payroll each month you need to meet, plus bennies, payroll taxes, etc., without exception. That gets exciting.
And I refer to you as a socialist when you say things similar to “you did not build that”. I assure you, if you get your venture up and running successfully, you will not appreciate someone telling you it was your employees who built it, not you. I will not be one saying such a thing, as I know better.
Well, I appreciate the well wishes. As far as my non-compete, I’m pretty sure it is simply a scare tactic on my bosses part and I decided I would take a chance when I started this whole thing. It is a calculated risk I am willing to take.
As an aside, have you heard of sandwich shops (no, I am not a sandwich maker. I have a real skill with a real industry difference making plan) requiring non-competes? When even low level desperate people have to sign non-competes, I fail to see how this is not taking advantage of people.
If I succeed, TBP will be the first to know.
Hear, hear, Llpoh.
The loss of good jobs is awful but there are “killer Tsunamis” on the way: the Fiat Dollar’s Crash vs the Gold Redeemable Yuan’s Rise, the Grand Solar Minimum’s Mini-Ice Age with Natural Disasters and famine, man-made Liberal Socialist Disasters & Wars, etc. Bad as it is now, we should be preparing for much worse (ref Matt 24/Luke 21, Rev 6, Modern Prophets etc). The Advantage Goes To Those Who Are Prepared.
The original article predicted the Lowe’s store would close in two years. Did it close?
It did not. It’s still my favorite store. No customers to clog up the aisles. They have 10 registers and I’ve never seen more than 2 open, even on a Saturday. Large corporations can lose money a lot longer than a mom and pop.
Thanks for the update. Bob
Thank you.the future is unknown.
Bob
No, but Sears is on the brink as well as JCPenney and few more.
Notes on ‘The Abberation’:
1) At the end of WW II, America was the only industrial power unscathed by war damage. Productive capacity had been ramped up, and the world was a seller’s market. America was the biggest seller.
2) The dolts and idiots who either believed in and/or used communism to further their political systems removed a tremendous percentage of the world’s population from productive, economically fruitful pursuits — at the same time America was producing on all cylinders.
3) America chose stable markets over an empire, so it financed the rebuilding of most of the non-communist post-WW II world — and got an economic empire of sorts anyway. This reinforced a high level of trade, development and growth, and, coupled with the tremendous growth of the American markets, became the economic engine that fueled the growth of the middle class in America, Europe and Japan.
4) Technological advances extended the aberration after the corrections and upheavals of the 1970s, but the impact was only an echo of the former boom.
We are all familiar with how all this has turned out. It truly was an aberration, with an expiration date (from the American point of view). Many of the American advantages have dissipated or been squandered over time. China, Indonesia, India, etc. finally unleashed their workers and plugged them into the world-wide labor pool. Capitalism won! And extended its winnings on the back of cheap global labor. America’s middle class slowly lost much of the unequal playing field it enjoyed, and from which it had gained so much. It has been a slow grind down to equilibrium, and as some have noted, its not done yet.
Bob – that is a pretty good analysis. I have made many of those same points at various times, and frequently.
Another thing that is oft forgotten is that around 1950, the percent of manufacturing employees was about half of all employees. That number has dropped to around 8% currently, by memory. Little known to most is that manufacturing as a % of GDP has remained unchanged during this period. This chart clearly shows that this is true. And further, it destroys the argument that manufacturing jobs have flowed overseas. The US manufactures as much as it ever did. It just does it without the need for as many employees.
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What this means is that automation has slowly and steadily taken manufacturing jobs, which after WW2 were the backbone of the middle class. Manufacturing jobs paid reasonably well – there was, after all, as you say, almost no competition. The managers of those firms far over-paid their workers in many cases, especially with respect to benefits (pensions, healthcare, etc.) and the GMs, Fords, etc., are still paying a heavy price for having done so. Last time I looked, GM paid more to its ex-employees than it does to its current ones.
The numbers of manufacturing workers as a % of the workforce will continue to fall. Manufacturing will continue to get 2.5% more efficient each and every year. The rule of 70 would thus say in around 30 years the percent will drop from 8% to 4%.
Trump has said he will bring jobs back. But the jobs are gone. Of course, some went overseas. But not 70 million of them. And of those that went overseas, technology will continue to erode the need for employees.
And then you add on the final kicker: No one wants to hire employees. They are painful to deal with. A certain percentage are lazy and dishonest. Many are drug-addled and a danger to themselves and anyone around them. They have a nasty habit of not coming to work. Employers take responsibility for them in many ways when they are hired, and who in their right mind wants to do that? Employers are expected to cover their medical insurance, etc.
Seriously, who would hire a worker if there are any other viable alternatives?
Utterly wrong.
A better analogy: Could the author compete against one or more competitors willing to lose money for 5 years or more in order to drive him out of business?
That’s what happens when leverage, nation states or other forms of subsidy occur.
It is also utterly wrong to believe that somehow the individual can protect themselves each and individually.
National policies don’t come out of thin air. If you aren’t banded together with enough like-minded people, it just means the one that’s the most wealthy gets his way.
The middle class getting screwed is fully a function of politics: the rich have their billions, the poor have their numbers. Most of the middle class is torn between serving their rich bastard masters and kicking it down to the poor so that they’re not the worst off, but the reality is that this is only a temporary position. Middle managers can only survive so long as there are people to middle manage between – and that doesn’t work when the bottom is in a foreign country and the top already considers you, as well as the bottom, as interchangeable parts.