Rome is Burning

[phantom power]

We have very low capacity utilization (75%) and very high unemployment (10%).

That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment.

There are machines waiting to be worked and people waiting to work them but they are not getting together. The labor market is failing to clear.

This is a fucking disaster.

Excuse my language, but you have to get that this is a big deal. This is not a big deal like the GOP doesn’t appreciate public goods. Or, Democrats don’t understand incentives. Or some other such second order debate that could reasonably concern us in different times.

This is a failure of our basic institutions of production. The job of the market is to bring together willing buyers with willing sellers in order to produce value. This is not happening and as a result literally trillions of dollars in value are not being produced.

Let me say that again because I think it fails to sink in – literally trillions of dollars in value are not being produced. Not misallocated. Not spent on programs you don’t approve of or distributed in tax cuts you don’t like. Trillions of dollars in value are not produced at all. Gone from the world entirely. Never to be had, by anyone, anywhere, at any time. Pure unadulterated loss.

http://modeledbehavior.com/2010/09/07/rome-is-burning/

[Warpy]

1. The units of production haven't failed. What's failed

is a 42 year experiment in conservative economic dogma that has choked off the demand side of the economic equation by favoring the rich, suppressing wages, and encouraging debt accumulation for many decades to prop up demand. This is just the end game of such policies.

Wealth is concentrated among people who do not spend. Debt is concentrated among the people who would like to spend, but have to devote their shrinking paychecks to servicing that debt.

If nothing is done to reassert demand side economics, the collapse will continue to the point that even the few people who have money will find nowhere left to spend it.

This is a Depression and it's just getting started.

[RaleighNCDUer]

2. And it is all because the OWNERS of those factories get great tax breaks

by shipping the manufacturing overseas, and a lack of protective tariffs keeps foreign products cheaper than home produced items.

What it boils down to, it's cheaper to use Asian slave labor than to pay Americans fair wages to make the shit we want.

Solution?

Penalize slave labor through tariff protections.
Eliminate tax breaks for outsourcing manufacturing.
Focus on production, rather than consumption.
Unionize.

[Vincardog]

4. You might add TAX THE RICH to that list

[RaleighNCDUer]

5. Well, that goes without saying,

which is why I didn't say it.

:hi:

[Vincardog]

6. I don't say it every time I hear the GOP worry about the deficit.

[xchrom]

3. Recommend

[sendero]

7. And even so..

... Obama is talking about more tax cuts and R&D credits for business.

He is an idiot.

[fasttense]

8. Factories are not sitting idle because of lack of workers,

they are sitting idle because of lack of demand. There is no demand for what those factories use to produce, so they closed them and fired all the workers.