
Chomsky - Jobs aren't coming back - lewstherin
http://www.salon.com/2012/05/08/chomsky_jobs_arent_coming_back/singleton/
======
acslater00
I don't know why I keep bothering to point this out, but the notion that
"America no longer makes things" is absolutely, empirically, unassailably
false.

See this: <http://research.stlouisfed.org/fred2/series/OUTMS>

And a prior discussion of the topic.

<http://news.ycombinator.com/item?id=3803022>

Anybody who starts a discussion decrying the death of manufacturing in America
is selling you something, and it's not a manufacturing job.

Sidebar: This quote!

"The workforce and the union offered to buy it, take it over, and run it
themselves. The multinational decided to close it down instead, probably for
reasons of class-consciousness."

Aside from the fact that this story is clearly made-up, the idea that a
profit-seeking corporation would favor "shutting down" an asset rather than
selling it because it fears an uprising of the working class is just about the
stupidest fucking thing I've ever heard.

~~~
mcantelon
>Aside from the fact that this story is clearly made-up, the idea that a
profit-seeking corporation would favor "shutting down" an asset rather than
selling it because it fears an uprising of the working class is just about the
stupidest fucking thing I've ever heard.

Profit-seeking corporations aren't immune to stupidity and pettiness. Another
reason not to sell it is to prevent the emergence of a competitor.

~~~
r00fus
Case in point - Yahoo deciding to shut down del.icio.us - at the very least
the brand name and bookmark list was worth something to someone... why shut it
down?

~~~
AndrewDucker
They didn't. They sold it to Avos.

------
dkrich
I think there is an ongoing obsession in this country to always live in fear
and convince oneself that things are always at their worst and the bottom is
always about to fall out at any moment. Maybe it's human nature. But I just
don't buy this doom and gloom nonsense. Yes the economy is bad, there is no
question about that, but the economy has been bad before. Probably the last
comparable period was the late 70's.

I think more than anything what's changed is our access to information. Before
people never really knew how corrupt companies and politicians can be and they
never had 24/7 access to the opinions of every person in the English-speaking
world to reinforce their pessimism.

The U.S. is losing manufacturing jobs, but that could be remedied by a number
of changes- import tariffs, a reduction or freeze on minimum wage, an
unforeseen economic boost from a new industry (such as auto manufacturing in
the 50's or the internet boom of the 90's).

One place where I wholly disagree with Chomsky is the unimportance of the
deficit. That is a major, major problem. It is true that creating jobs would
help shrink the deficit, but I think there is a lot of rampant spending by the
U.S. government that does absolutely nothing to grow or maintain the economy
or jobs and should be abolished.

~~~
nhaehnle
_One place where I wholly disagree with Chomsky is the unimportance of the
deficit. That is a major, major problem. It is true that creating jobs would
help shrink the deficit, but I think there is a lot of rampant spending by the
U.S. government that does absolutely nothing to grow or maintain the economy
or jobs and should be abolished._

Take a step back and note that you don't actually point out or argue how the
deficit is supposedly a problem.

So there are spending programs by the government that you disagree with. Fair
enough, I'm sure everybody has _some_ government program that they disagree
with. [1] That's what politics is about: disagreement about what the extent of
government should be, and in which areas it should be active.

What that doesn't give you is an argument that the _deficit_ is bad. If you
genuinely think certain government programs are undesirable and should be cut,
then it makes sense to simultaneously cut taxes somewhere so that the deficit
remains the same. Otherwise you would effectively be squeezing the private
sector by reducing the government deficit.

[1] Though it seems weird that you would only support government spending that
grows or maintains the economy or jobs. What about national parks as an
example of a pretty obvious good that has no economic benefit?

~~~
dkrich
Do you really need me to substantiate why it is bad to spend more money than
you make? I guess I took for granted that the fundamental laws of economics
were understood. I guess that was a mistake.

Everybody agrees that running a deficit is harmful. Most disagreement centers
around which, if any, cuts in the budget should be made, and how much those
cuts will hinder a recovery while the economy is still weak. The U.S. dollar
is the worlds' reserve currency, and for that reason alone the U.S. is able to
ignore a deficit for some time. But it is a huge mistake to get used to free
money and not try to get finances in order. Greece made that mistake for many
years and is now paying a huge price (along with the entire European Union).

National Parks are fine. They've been around a long time and that accounts for
a rounding error of the federal budget. The greatest areas of concern are
Social Security and Medicare/Medicaid. Of course the defense budget is up
there too, and I believe defense spending should be cut. The bottom line is
that the Federal Government has grown by leaps and bounds over the past few
decades and its addiction to rampant spending is making the country poor. You
can debate about what should be cut but no increase in taxes is going to pay
for this spending spree we are involved in right now. Greece was forced into
draconian austerity measures when there were no other options on the table. I
sure hope the U.S. learns something from that fiasco before it travels down
the same road.

~~~
nhaehnle
Once you understand sectoral balances [2], you realize that having a deficit
tends to be beneficial. It is not clear how large this deficit has to be (and
there are certainly times when a surplus makes sense, though those are very
rare). It is clear that in the long run average you really need a budget
deficit to have a well-functioning economy.

The reason behind that is actually fairly simple and comes from the sectoral
balances, which state that the balances of all sectors in the economy have to
add up to zero. So if the non-government sector has a surplus, the government
sector must have a deficit, and vice versa.

Private actors like to hold monetary assets, i.e. savings, bonds, and so on.
This means that somebody else must hold corresponding liabilities. Will the
desire to hold liabilities balance the desire to hold assets within the
private sector? This is unlikely at best. If there is no outside source of
monetary assets, then those private actors who are successful at accumulating
assets will force less successful private actors to go into debt until this
debt is no longer sustainable.

The logical way out is for the government sector to provide the required
monetary assets, which is only possible via a government deficit.

Even more so, given that nominal GDP will continue to rise by inflation + real
growth of the economy, there must be a nominal government deficit. Otherwise,
the value of private sector net assets must necessarily decrease over time
relative to GDP, i.e. the private sector is squeezed out of its asset
position. This wealth-squeezing is certainly going to be contractionary. [3]

Under the current institutional arrangement, an ongoing government deficit
means increasing government debt [1]. However, unlike for private actors,
there is no sustainability problem for a monetarily sovereign government (this
is where your comparison with Greece breaks down - Greece is not monetarily
sovereign).

If you are genuinely interested in the topic, you may want to read Bill
Mitchell's Fiscal Sustainability 101 series, starting here:
<http://bilbo.economicoutlook.net/blog/?p=2905>. His writing is not the most
polished, but it's still probably the best analysis on the internet of what
fiscal sustainability even means for a monetarily sovereign government.

[1] Alternative arrangements are possible, but unfortunately, they seem to be
one of the taboos in our contemporary society.

[2] [http://www.slideshare.net/MitchGreen/mmt-basics-you-
cannot-c...](http://www.slideshare.net/MitchGreen/mmt-basics-you-cannot-
consider-the-deficit-in-isolation)

[3] The only way I see to reduce private sector assets without contractionary
effects is to go to those assets directly, i.e. tax the wealthy. That does
make sense for other reasons as well, such as the accumulation of wealth
leading to accumulation of power mentioned in the article. However, taxing the
wealthy is not something you can deduce from economics alone - there is always
a choice.

~~~
dkrich
I'm not sure what your background is, but I get the sense that you don't
really know what you're talking about.

> The reason behind that is actually fairly simple and comes from the sectoral
> balances, which state that the balances of all sectors in the economy have
> to add up to zero. So if the non-government sector has a surplus, the
> government sector must have a deficit, and vice versa.

This is completely false. There have been many instances throughout U.S.
history that the U.S. has run surpluses and the economy has boomed. In fact,
the better private industry is doing, the lower the deficit should be. That's
because more money is being made, and more taxes are collected. If spending
maintains a constant level, then the deficit will shrink. The problem is that
the government never keeps spending constant. The more money they get, the
more they spend. It used to be that deficits were kept in check, though. The
difference between the past and present is that now the deficit is larger than
it has ever been in U.S. history, by a very wide margin.

> Private actors like to hold monetary assets, i.e. savings, bonds, and so on.
> This means that somebody else must hold corresponding liabilities.

Again, wrong. There are assets that equal liabilities, such as bonds or
accounts receivable. But as a class, assets do not equal liabilities. If I own
a factory worth $50 million, then I have equity worth $50 million. Nobody owes
me $50 million for my factory.

> The logical way out is for the government sector to provide the required
> monetary assets, which is only possible via a government deficit.

Ugh. No. IF a government needed to provide monetary assets such as
quantitative easing, there is absolutely no requirement to run a deficit to do
so. The government can spend out of its surplus budget (if it has one). Again,
a deficit means you are spending more than you are taking in. Keep in mind
that most countries can't run deficits in perpetuity. If a country like Brazil
had a deficit the size of the U.S. they would go bankrupt. It is only because
the U.S. dollar is the world's reserve currency that this kind of
irresponsibility is allowed for some time.

> Under the current institutional arrangement, an ongoing government deficit
> means increasing government debt [1]. However, unlike for private actors,
> there is no sustainability problem for a monetarily sovereign government
> (this is where your comparison with Greece breaks down - Greece is not
> monetarily sovereign).

Being monetarily sovereign has nothing to do with it. There are a lot of
sovereign countries, Canada, Japan, Korea, that could not run budget deficits
in perpetuity. Again, the U.S. is a special case. They hold the world's
reserve currency. The moment that changes, then interest rates will spike and
inflation will explode. Nobody will want to hold the dollar, so everybody will
sell it. That will cause the value to plummet. In fact, the fact that Greece
is not monetarily sovereign is precisely why they were able to borrow so much
money in the first place. They borrowed from U.S. banks for years. You know
why U.S. banks lent to them? Because they hold the same currency as Germany,
Italy, and the rest of the EU. If they were still using the Drachma, they
couldn't get a loan to buy a used car.

Do you understand that there is no necessary connection between the U.S.
printing money and GDP? You seem to believe that somehow the federal
government knows how much money to create and this balances perfectly with
private industry. That is wrong. The U.S. government, and only the U.S.
government can freely print its own money to pay its debts. This has led to an
enormous spike in the deficit in the past ten years as politicians have shown
no desire to cut spending. They prefer to kick the can down the road. But
eventually debts have to be paid. If there is not an unforeseen increase in
GDP to pay for the deficit, then it is going to come to a head at some point.

~~~
nhaehnle
First, I am not sure whether you are perhaps confusing the US with the US
government? The current account balance is not the same thing as the budget
balance. There have been very few times in history when the US government has
run a surplus, so you may be confused about that.

 _In fact, the better private industry is doing, the lower the deficit should
be. That's because more money is being made, and more taxes are collected._

That's true, but the causality only runs in one direction. People seem to
believe that if the US government attempts to cut its deficit now, that
private industry will be doing better as a result. That notion is ridiculous.
The causality works only in the other direction.

 _The difference between the past and present is that now the deficit is
larger than it has ever been in U.S. history, by a very wide margin._

So you get big numbers. Big deal. Big numbers alone do not inherently indicate
a problem.

It does make sense to investigate them. However, _if_ there is a problem, then
the big numbers themselves are very unlikely to be the root cause. If you stop
at the high budget deficit and say "we need to reduce that number, no matter
what", you are very likely to make a mistake because your analysis of the
situation is incomplete. And no, hand-waving and pointing at incompetent
politicians is _not_ a complete analysis of the situation.

 _There are assets that equal liabilities, such as bonds or accounts
receivable. But as a class, assets do not equal liabilities. If I own a
factory worth $50 million, then I have equity worth $50 million. Nobody owes
me $50 million for my factory._

This is why I used the adjective "monetary" in _monetary_ assets.

 _IF a government needed to provide monetary assets such as quantitative
easing, there is absolutely no requirement to run a deficit to do so._

You are confusing purely monetary operations with fiscal operations.
Quantitative easing is purely an asset swap, it does not change the net asset
position of the private sector. The only way for the government to provide an
increase in net assets to the private sector is by spending more than it
taxes. That's a simple mathematical fact from accounting.

 _Keep in mind that most countries can't run deficits in perpetuity. If a
country like Brazil had a deficit the size of the U.S. they would go
bankrupt._

A monetarily sovereign government cannot go bankrupt even when it runs a
sustained deficit. It may cause inflation, and it may cause the country to run
excessive net imports, which would cause their currency will drop relative to
other currencies. But that's not bankruptcy.

Japan (which you mentioned later) is actually a good example of all this.
Their government debt is beyond 200% of GDP, without any signs of financial
trouble even at the distant horizon. The exchange rate of the Yen does not
drop. The reason for this is simple: despite the persistent government
deficits, Japan is not a net importing country.

In general, I have the impression that your thinking is a bit muddled. For
example, you write: _The U.S. government, and only the U.S. government can
freely print its own money to pay its debts. ... But eventually debts have to
be paid._

Yes. By printing money. The US government _always_ "pays its debts" by
"printing money". In fact, both US treasuries and US dollar bills are just
different types of debts of the government. They differ in maturity and
coupon. So the US government "pays its debt" by exchanging one type of debt
against another type of debt. Big deal.

If you really thought things through, you would realize that the solvency of
the government is not the issue. If there is an issue, then it lies in the
potential of inflation that is caused by the accumulation of large amounts of
assets in the private sector. If there are large amounts of non-moving
financial assets, then there is the potential of a (non-sustained) burst of
inflation if/when those assets suddenly start moving simultaneously.

But that is not a function of the size of government debt - it's a function of
the size of those assets. If you are truly worried about this issue, then the
correct reaction would be to look for ways to eliminate those assets, and
cutting government budget spending certainly isn't going to help there. You'd
have to tax those assets away, or preempt the inflation by creating inflation
yourself, for example using additional government spending that ends up in the
pockets of people that do not have large accumulation of assets.

You can also just do nothing. Inflation by a sudden movement of existing
private sector assets is a very rare event (think end of the Second World
War), and in any case, it is a one-off event. Some people will be unhappy,
sure, but at the same time, the burst of spending is good for the economy,
will create jobs, etc., so I think the danger tends to be exaggerated by the
people likely to lose the most (the rentier class and those who believe they
are in it).

------
pudakai
Peculiar article - I'd read a couple of sentences and think, "wow, Noam's spot
on here". Then after the next few sentences or major point, I'd think, "what a
moron".

Seems like there is something for everyone to love and hate in this one.
Probably the one thing everyone can agree on is the concentration of wealth
and stratification of society isn't a good thing.

Like a lot of these analyses, it is often hard to sort out cause/effect, I'm
not so sure that this article didn't make some wrong conclusions in this
regard.

I do have to say his contention that OWS is the first push-back against the
concentration & corruption of power in the U.S. is sort of naive. There are
plenty of people and movements that have been railing about this at least
since the early 90's - I'm not going to mention specific ones because I don't
want to seem like I'm touting them.

------
locopati
The first chart comparing productivity and income is pretty telling

[http://www.motherjones.com/politics/2011/06/speedup-
american...](http://www.motherjones.com/politics/2011/06/speedup-americans-
working-harder-charts)

------
serverascode
On one hand, I do feel like things are going fairly well compared
historically, but it also, somehow, at the same time feels like everything is
going wrong, and I'm not going to be able to have a job in my field very long,
(retirement, what?), given outsourcing and companies moving jobs to whatever
country has the cheapest labor this year.

I also feel like we, as a country (Canada), are going to lose a lot of
expertise to outsourcing and multi-national job movement, ie. pay for the
cheaper outsourcing in other ways later.

That said I am trying to do something about it by getting involved in the
local startup community and try to create my own job, but that is quite
difficult.

------
jstalin
"It’s quite different now. For many people in the United States, there’s a
pervasive sense of hopelessness, sometimes despair."

It's because we've been pacified through handouts and the welfare state.
There's no longer a need to think about working hard and getting out of the
unemployment morass we're in. Government will take care of you!

Food stamp spending is at all-time record levels. Millions more people have
gone on "disability" since 2007. The number of people in the work force
continues to decline. Participation rate in the workforce is at multi-decade
lows. The government-created housing bubble has made job mobility much more
difficult, and of course both personal and public debt levels have reached
saturation.

So, why not get unlimited student loans, get food stamps, get yourself
declared to have a disability, and then gorge on all the benefits of being
"poor" like a free cellphone, and reduced cost internet.

We've turned into a nation of dependents!

~~~
tnuc
Given that the US spends over half its budget on "defence" I really don't know
where you are getting your ideas from.

Maybe some numbers and a source?

~~~
tomjen3
Did you even read what you are replying to?

He wasn't talking about the sum of money, just that it had gone up -- and he
wasn't talking about how to finance it, just that it had caused more people to
become dependent on assistance _even as more people are getting a job_.
Meaning that it is not because there is no jobs.

~~~
batista
> _He wasn't talking about the sum of money, just that it had gone up -- and
> he wasn't talking about how to finance it, just that it had caused more
> people to become dependent on assistance_

Yes, we was talking BS.

It makes one feel very superior and active, to believe that poor people,
black, hispanic, etc choose to live on food stamps (as "dependents") ignoring
all those fabulous job opportunities available to them.

That self-worth-boost is one of the main reasons people perpetuate this crap.
Go talk to actual persons living on food stamps to get a real idea of what
it's like and what chances the have to escape it.

