Are we, or have we been, moving into a trend in which capital surpasses labor as the economic engine?
New York Times columnist and Pulitzer Prize-winning economist Paul Krugman thinks so.
From the working person’s viewpoint, the economy is still quite depressed. But economic figures are improving and corporations are making record profits. Many of these companies are holding on to their cash for dear life, fearing the investment and regulatory climate now and to come.
Krugman points out that manufacturing is moving back to the U.S. from overseas. He uses the example of manufacturing computer mother boards. They are made largely by robots, so the cheap, Asian labor is no longer needed. Perhaps that’s why we hear that China’s economy is contracting.
But let’s look at the way things are, from where you sit. Chances are, if you are still working, you have at least some fear that your job is going to go away before you want it to. Perhaps you are saving your pennies, and not spending frivolously, in anticipation of being shown the door at work. The U.S. savings rate needed a shot in the arm, for sure, but how it is getting it is quite disconcerting.
Perhaps you are out of work, and have been for a while. You scratch your head because the job you had, which you had thought, or even had been told, was vital to your company just went away. It’s not as if you had done a lousy job at it and were replaced. Your job just went away, and it’s not coming back.
Meanwhile, you hear about record profits for companies and wonder why they are not putting some of that money back into their operations, i.e. in creating new jobs. Well, they probably don’t have to. Technology has improved to the point at which machines replace people in big numbers. No matter how much money they have, companies will not create jobs they don’t think they need. Some will actually cut jobs they should maintain.
This phenomenon is detrimental to what we know as the middle class. Because those with the capital have political benefactors, they may be creating a political system that lets them get richer at others’ expense. When the successful are protected in this way, the less successful become more vulnerable. As Krugman says, we’re not talking about a gap between the educated work force and the less educated. In this milieu, EVERYONE gets paid less. When the less successful become more vulnerable, they not only get paid less for what they do. They pay more for what they need.
INHERITANCE TAXES CAN HURT
Krugman says that the rich also are fighting to eliminate inheritance taxes. He may find some disagreement here, because inheritance taxes can prevent family businesses from being given to future generations of that family. Sometimes, families have to sell their businesses to cover the tax bill, and there is something wrong with that. On the other hand, there could be large amounts of wealth being easily transferred to people who are already wealthy, without adding to the economic engine.
If this trend of forced idleness continues, it bodes ill. Look at what is happening in other countries, where young, often educated people can’t find work. Such free time among a disgruntled group can lead to all sorts of bad things.
However, in all this, there is good news. There are lots of ways out there to make money, without worrying about having a traditional job. To check out one of the best, visit www.bign.com/pbilodeau. Hear and see the stories of how average people are making above-average incomes, and helping others do the same. It also attacks the notion of paying more for what one needs.
So if you are working, think about your plan B. Savings will certainly help you, but they may not cover all your bills without a paycheck. If you are not working, don’t be discouraged. Check out one of the many opportunities there are, through which average people, regardless of education, are prospering. Sometimes, becoming successful just requires being open to looking at something different.
It has been said that the best way to help the poor is to not be one of them. The best way to fight the capital vs. labor battle that Krugman illustrates is to find ways to generate more real capital. Kurgman calls the capital guys robber barons. If you help people prosper with you, that’s makes you a benefactor.
Peter
Tag Archives: unemployment
OLDER WORKERS STARTING BUSINESSES AT INCREASING RATE
Jody Reeves, 53, dreams of starting a neighborhood seafood shop in Atlanta.
Will she fulfill her dream?
Research shows that the number of Baby Boomers starting businesses is increasing, according to a report by David Markiewicz, a business writer for The Atlanta Journal-Constitution. His report was published Sunday, Dec. 9. 2012.
Mind you, most businesses are still being launched by 20-somethings or 30-somethings. But those in the older set, who decades ago looked forward putting their feet up, collecting a pension and relaxing, are launching businesses by increasing numbers. Markiewicz quotes figures from the Kauffman Foundation, which says the number of people 50 and older launching businesses has increased every year in each of the last 10 years.
Also, Markiewicz reports, the percentage of new entrepreneurs ages 55 to 64 has grown to 20.9 percent as of 2011, from 14.3 percent in 1996.
What’s behind this trend? There is a combination of dreams and realities at work here.
For some, starting a business has been a lifelong dream that had to be postponed for years because they needed a steady income to raise families. Back when the 50-somethings were in their 20s, starting a business was risky. Having a job was not nearly as risky. One tends to be risk-averse when security is there for the taking.
In this economy, however, there are new realities. Having a job is more risky than starting a business. Companies are outsourcing tasks to avoid hiring people. So, instead of doing a task for a company as an employee, the company can hire you as a contractor to accomplish the same thing. No guaranteed salary and benefits to pay. No sick pay. No pension contributions. No disability payments.
Some Baby Boomers have found themselves out of a job, but not ready, able or eligible to retire. They have had to start over at the back end of their careers. They are starting businesses out of necessity, and hoping they can succeed.
THINGS TO CONSIDER WHEN STARTING A BUSINESS
According to Markiewicz’s report, Reeves doesn’t know whether her seafood shop will ever become a reality. “ Some days, it’s like, ‘Oh, yeah, I can do this.’ Other days, I think I might just be better off to go work at Target,” Markiewicz quotes her.
There are a few considerations for anyone of any age when thinking about starting a business. First, do you have what it takes to make it through the launch phase, which could take years, before you see anything resembling a steady profit? Rule of thumb: if you need a paycheck tomorrow, this might not be for you – at least not now.
Secondly, patience and perseverance are essential. If you are the type to try something that may not work initially, then give up on it, starting a business may not be for you.
Thirdly, if you’d love to ditch your boss – if you haven’t already been ditched — but don’t know what you would do instead, visit www.bign.com/pbilodeau. There are lots of ways to make money without having a job. This is one of the best. If you are intrigued, you might think about getting set up BEFORE you have to, so that when you are shown the door, or when you can’t take it anymore, you can walk out with a smile because you’ve prepared for it.
Putting one’s feet up in retirement is a nice thought. But, to paraphrase poet Robert Burns and novelist John Steinbeck, the best laid plans may not come to fruition, through no fault of yours. Speaking “Of Mice and Men,” getting out of the rat race before the rats win is the best thing anyone can do.
Don’t wait until you’ve lost the race. Take a little time now to prepare so that the rats can only THINK that they’ve won. You will know something the rats don’t know.
Peter
CIRCUMSTANCES BEYOND YOUR CONTROL
The Libra horoscope for Dec. 8, 2012, read: “Don’t waste time speculating about how you would perform in other circumstances. Focus instead on the circumstances you’re in now.”
That horoscope was published in The Atlanta Journal-Constitution.
Not everyone takes horoscopes seriously, of course. But this one has a resonating message.
It makes one think about the difference between wishes and dreams.
A wish is something you want, but usually can’t get. A wish is usually something that depends on circumstances to come true.
A dream is something a person can ACHIEVE, regardless of circumstances, if he really wants it.
A dream is usually something a person creates, along with the way he’s going to achieve it.
Circumstances are none of your business. You can’t control most circumstances. Circumstances result from things that happen beyond your sphere of influence. What takes place in your sphere of influence is how you react to the circumstances around you.
For the last three years, the economy has been in the pits. Lots of folks lost jobs. Some still have not gotten new ones. Others have gotten new ones, but at far less than they were earning before they lost their original job.
Jobs are circumstances. They do not belong to the job holder. There is no entitlement to work. Jobs will come and go, through no fault of the job holder. Some will never come back, either to the job holder or anyone else.
Job holders can’t wish for time to go backward. They have to deal with new realities. They have to face the fact that the job that took care of their lives and families is gone. It would be the same as if a hurricane, or other natural disaster, wiped out one’s livelihood, home or entire town. You may have known it was coming, but you never really know how bad it’s going to be until it hits YOU.
CIRCUMSTANCES ARE LIKE THE WEATHER
Most circumstances, like the weather, are beyond your control. When a boxer faces his opponent in the ring, he knows he’s going to get hit. He can do a lot of things to prevent himself from getting hurt, but he can’t prevent everything. And, he certainly can’t prevent his opponent from swinging at him.
We all face certain circumstances. We can’t wallow in the misery, and expect to come out better. We have to DO something to make things better. We have to acknowledge what has happened, but not be paralyzed by it. We must look at the bad, yet see the good – or potential good – of any circumstance.
If you face tough economic circumstances, solutions are all around you. You just have to look for them. Lost your job? There are many ways to make money WITHOUT having a job, and regardless of education or background. To check out one of the best ways, visit www.bign.com/pbilodeau.
If you face tough circumstances, think of all that is good in your life. Let those thoughts dominate your mind. Don’t wish for things to be better. Do what you need to do to make them better. Don’t wish for circumstances to be different. You can’t control them. Establish a dream, write it down, and go about achieving it. If you focus on that, after a while, circumstances won’t matter to you. Circumstances can take away your job, home, possessions and surroundings. They cannot take away your dream.
It’s been said to focus on the things you can control. You can’t control most circumstances. You can control how you respond to them.
Peter
TRIPLETS AD A SIGN OF THE TIMES
Adult triplets all coming home to live with Mom and Dad? Really?
Sounds farfetched, but Procter & Gamble, playing off its Tide detergent ad on the amount of laundry three infant triplets generate, has a relatively new Tide ad with the amount of laundry three ADULT triplets, who’ve moved back home with Mom and Dad, generate.
Though the ad may be effective in advertising detergent, it begs the question: what is the likelihood that ALL THREE adult triplets would be so down and out as to move back home? Better yet, what is the likelihood that Mom and Dad would almost playfully work together to wash their adult kids’ clothes? In fairness to Mom and Dad, they want the kids gone – not because they don’t love them, but they NEED to be on their own.
Parents who’ve raised triplets, and perhaps other kids, look forward to that empty nest when the kids are grown. They want to still see them, but they don’t necessarily want them living back home. If you are a parent, would you welcome your, say, 30-year-old still living with you? If you are the 30-year-old, do you want to be living with Mom and Dad?
In recent years, with the number of job losses etc., parents have been a fallback for younger adults whose lives were suddenly changed. The young person can save on rent, perhaps even food and other living expenses, by hanging home. But as much as parents may not want this arrangement, the young person shouldn’t want it either.
For many, getting out of the house to live on one’s own is a goal as a young person. Parents, meanwhile, undoubtedly look forward to lives they’ve never been able to live while raising children. When the economy is going well, everyone should be happy with their own independence.
BAD ECONOMY MEANS UNINTENDED LOSS OF INDEPENDENCE
The unintended consequence of the economic downturn is the number of people who lose their independence. Mom and Dad could disallow their child or children to move back in, but most parents have never gone through what these young people are going through. They’ve never seen so many young careers threatened by forces their children can’t control.
The good news for children is they have time to recover. Presumably, the triplets in the Tide ad are all single. Matters get really complicated if the adult children have spouses and families themselves. It also gets really complicated for the person who is close to retirement, but not quite there yet. Their unexpected lack of work may sentence them to an extension of their work life, in some fashion.
Add to that the trend of companies refusing to hire those who have been unemployed a while, and you have the makings of a very slow recovery. Meanwhile, those who want to be independent – parents and adult children – can’t be in many cases.
What to do? If you are indeed forced to move back home with Mom and Dad, don’t stick them with your laundry or any other life chore. Live as if you were on your own. Sure, you can eat meals together, but if you don’t eat at the appointed family time, make your own meals.
If you are indeed unemployed, and are looking for an income source, visit www.bign.com/pbilodeau. This is among the better of the many ways out there to earn income, without having a traditional job. If you already have a job, don’t presume it will always be there. Check out other ways to make money – and save money, too.
If you are a parent and have adult kids at home, you, too, can buy into this venture and have your kids work with it. That may hasten their independence, and yours.
Having kids around is great. Many parents whose kids they never see would relish having their children home – for a time. But, after a while, they will want them to go to their own homes. The kids, after a while, should want that, too.
Peter
CLASS OF 2013: FEAR THE DEBT REAPER
It’s early, but Kyle Wingfield, columnist with The Atlanta Journal-Constitution, thinks it’s time to address graduates.
His October 2012 column suggests that graduates – mainly high school graduates – think about their options before going to college.
Wingfield suggests that they not end up like Katie Brotherton, a young Cincinnati woman who is $190,000 in debt from college and graduate school. She’s living in her parents’ basement.
Brotherton is “looking for answers.” As Wingfield points out, it started with her decision to go to college with borrowed money.
You can envision a pattern: a person goes to college, thinking she would get a good job when she got out. She doesn’t. So, she decides to go to graduate school, thinking it might broaden her qualifications and buy her time for the job market to improve. Meanwhile, she’s incurring more debt.
She gets out of graduate school with no good job and lots of debt. She moves back home. She doesn’t want to be living at home, but she has no choice. Her debt and lack of employment leave her unable to afford to live on her own. Her parents sympathize with her plight, but they, too, would rather see her out on her own.
A few decades ago, we were told to go to the best college we could possibly get into. The best schools would open more doors, we were told. The best schools, often, were usually the most expensive. But if those schools opened more doors, you’d be able to pay back your education fairly quickly with a good job.
Many of the “good” jobs that students thought would be there are not. In fact, they may have disappeared permanently.
As Wingfield points out, education inflation is rampant. There could even be an education “bubble” getting bigger by the day. We all know what happened with the housing “bubble.” It’s not that students should not get an education, it’s that some education does not provide a great return on investment, in terms of career opportunities.
Certainly, there is nothing wrong with getting a degree in history, literature or some of the other liberal arts. No education is really wasted. But students have to evaluate whether that education is worth the debt incurred, or, worth the sacrifices your family might make to provide it.
ARTS, HISTORY MAJORS: YOU HAVE OPTIONS
If you love history, the arts or psychology, you can still pursue them. But you can do so at less expensive schools close to home. You may be able to parlay those degrees into a good career, but you have to understand that most people with such backgrounds cannot convert them to real dollars.
All is not lost, however. You can get one of those degrees without using it as an income producer. There are many excellent ways to produce income outside your educational background. To check out one of the best, visit www.bign.com/pbilodeau.
Even if you have a degree in engineering, the sciences, technology, mathematics or other fields in great demand, you might want to have a Plan B if your career plans don’t turn out the way you want them to. There are excellent income streams that can get you out of your parents’ home as an adult.
So, as Wingfield addresses the class of 2013, he suggests that they not lower ambitions, just understand the reality. Not all college degrees are the same. Most college degrees can be obtained from schools that are not cripplingly expensive. Remember that as you get older and proceed in your career, or life, where you went to school becomes less important in terms of whether you get hired. A degree is a degree. You will succeed largely on your experience.
Success comes in many forms. Being a great historian may not produce lots of income, but it may produce great successes. Just realize that you may have to find another way to make a living, or create wealth for yourself.
Educational institutions need to be aware of the “bubble.” It could burst, and they could find themselves with great, expensive programs, and no students that can afford them. Students need to be aware that there are ways to make an income regardless of education. You just have to be willing to check them out.
Peter