It's the Stupid Economy! and Other Musings

Of course regulation increases unemployment.

Why? Because regulation reduces profitability and reduces business start-ups. Does that mean regulation is bad? Not necessarily. Without regulation we would most all lead shorter, more miserable lives. Go read The Jungle and The Robber Baronsfor a look at what this country was like before regulation.

Every benefit has a trade-off. You gain something and you lose something. That is the way of life.

Is regulation the only factor causing unemployment? Of course not. There are business cycles, boom and bust, feast and famine.

This wave of unemployment has a number of causes. Some of it is because of regulation, some because of bad regulation, some because of social and population trends, some -- most-- because of deep-seated changes in the structure of our economy.

"Deep seated changes." What do I mean by that? Partly the shift away from a manufacturing economy to a service economy, and a decades-old trade imbalance. Too many of our workers service the rest of our workers or have the function of middlemen. When the most profitable, most productive industry is the financial industry, you know there is a problem.

Sure, we could have a regulatory and tax policy that does not drive away manufacturing as much as now. But less regulation means less safety, less security, more hardship on workers, on all of us. And even then, American workers would still not be willing to compete with those abroad who make less than a dollar an hour.

There are those who say they want a laissez-faire hands-off policy toward business. Well, laissez faire means looking for the lowest paid workers. It means providing for them as little as possible. No retirement, no health insurance, minimal safety. Laissez-faire is no remedy.

Basically, our economy is not shifting into a higher mode, but is senescent. What? Did you expect America to keep on leading the world in GNP/GDP and standard of living? You know that is just not possible. It's time for reversion toward the mean -- becoming more like the countries that we look down on.

Can we change? Somewhat, but that means a total overhaul of the economy and our spending and saving habits -- a complete overhaul of values -- and it can't be done quickly if at all.
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Back 20-30 years ago, futurists like Al Toffler were saying, "we are transitioning from a manufacturing economy to a service economy. And that's good. Instead of being a nation of steelworkers we will become a nation of computer programmers. We are evolving into a higher type of economy."

That view was wrong. The service economy meant that there were more fast food workers, not computer programmers. More employed in government, more in law, banking, finance. Basically, instead of creating new products to sell abroad, most of our energies were focused on selling things to each other, at higher and higher prices. Generating commissions and brokerage fees every step of the way.

The Age of Dominance of the Middleman. Of the middle-bureaucrat. An age where the bank VPs and "customer service reps" a/k/a salesmen outnumber tellers.

We are like a school of piranhas, that attack and feed on each other instead of hunting outside supplies of food, or making our own.

The worst piranhas are in the financial sector. If you have any money, they are targeting you.

Remember back in the 1960s, when you'd get phone calls from strangers trying to sell you magazines or whatever? Then the cold calls started to hawk insurance, stock tips, and investments. If they thought you have a few thou to your name, they'd hound you.

You've all heard of Bonnie and Clyde. Pretty Boy Floyd, Dillenger. When we think of crime in the 1920s and 1930s, that is what we think of. Forgotten is the fact that there was an explosion of bunco activity back then, often involving screwy financial schemes and frauds. See J. Frank Norfleet's book on that, for the experiences of a West Texas rancher with slick fast talking con men.

Well, today banks, brokerages and insurance companies have replaced the simpler con men of yesteryear. Now it is insurance and investment schemers who have their hands deep in your pocket, and virtually own most politicians. So often, what they do is legal. Or if it is illegal, it is hard to understand just how, and they own the prosecutors anyway.
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Remember when you'd open the newspaper and there was a McCoy's ad insert? McCoy's would advertise the cost of 2 X 4s in 8' and stud length, half inch drywall, batts of insulation, even screws and nails, for pete's sake! Places like Home Depot would more or less do the same.

McCoy's is gone, from Lubbock at any rate. Along with Payless Cashway, that advertised the same way. And what kind of advertising do you see from the building supply stores like Home Depot and Lowe's? They rarely advertise basic building stuff any more. Now it's the high dollar stuff, like $150 lavatory faucets, high end refrigerators, prebuilt closet shelving. You want screws or nails, you buy them in a box and not by the handful.

See what I am trying to say? We as consumers have gone from building new structures to making what we have more upscale. A totally different consumption habit, totally different values.

Remember the Ivory soap TV commercials? Can you believe it? P & G actually advertised Ivory bath soap, 99 44/100% pure soap, on radio and TV. They used to advertise plain old razor blades on TV. Shaving cream. No more. Now what do they advertise? The expensive high dollar stuff, no more plain soap or shaving cream.

Remember the local bakeries advertising bread? Baldridge's (no holes!), Mrs. Bairds. How often do you see plain old bread advertised? What they advertise are the so-called value-added items, processed foods, boxed and packaged foods. You never see "We have white rice, .45/lb in bulk!"

Consumption has gone upscale. The fish are feeding on ... other fish in the same school.