Correspondence Between Trumpist and Progressive

Trumpist:

Interestingly, now that the economy is moving beyond the service model economy (which I remember you writing about many years ago as unworkable - just to boil it down into a single word) back to more a more broadly based model (energy, manufacturing, and building with American materials and components), the economy is booming.  There are now more job openings that people to fill them (there's a lot of overtime being worked out there now).  The respective unemployment rates separately for blacks, Hispanics, and high school dropouts are at never before lows (I suspect you could get a job again using your electronics skill sets if you wanted to).  Banks are starting to make loans again.  The working class is excited (Trump won their vote by a 38% margin - that's a helluva spread).  And that was based on promises.  Now the working class has seen the results.  Trump is changing the Republican base.  We are living to see the Republican party as the party of the working class.  And Trump's support among blacks and Hispanics is growing by the day (29% among blacks - which if it carries over the election day will doom the Dems).  

During the campaign and since, he never said a bad word about unions and at meetings at steel and aluminum companies he would always invite the union reps (wearing their USW jackets) up on stage with the workers and execs.   Working guys show up at Trump's massive rallies wearing their hard hats.  It is a thing to behold.

Target, Walmart, Home Depot and Lowes are all seeing the best sales in many years.  The stock market too is going up, but there's value and earnings now to support it (not just banks parking money from the Fed in the stock market).  401Ks are exploding.  There is a nine month wait if you want to buy a big rig truck!!!  

As for a trade war, Trump is using the tariffs to move our trade partners away from their tariffs and barriers against us.  As Trump said during the campaign, the trade war happened a generation ago - and we lost.  Already the EU is coming around to Trump's idea of getting rid of tariffs and barriers.  Mexico and the US have just agreed to a great deal that will increase wages and heavy manufacture in both of our countries.  Canada is still intent on using NAFTA to pass through Chinese parts and steel as well as protecting their others sectors through tariffs and barriers.  They will lose their auto plants which will move back to the US, but they seem happy to trade that for their other protections.  Trump is willing to take that.  Getting car plants back in Michigan, Ohio and Indiana will be huge for the union and working class vote as well as for our economy.

Often missed too is the point that tariffs paid to the treasury pay down the debt.  It's a lot of revenue coming in.  

I know we disagree on politics, but I see all this as way way better than Bush and Obama.  There's a big new walk-away movement (started by a gay hair dresser in New York!) of Dems and libs walking away from the Democrat Party.  These folks are not embracing old style Republican politics but the new Trump populism and disdain for political correctness.  In any event, I don't want a war with you -- I just wanted to share the way I am seeing it on the ground.  With love in my heart.

Progressive:  

Yes, the country has reached what is the lowest rate of unemployment that we have had in decades, however, the devil is in the details.  Let’s take a look.

 A lot of that employment is what they call “involuntary part time” where people take part time work, at the low wages we could expect from part time work, because they can’t get full time work.  Note that part time work does not come with ‘benefits’.  Oh, part time work used to be thought of as for kids and seniors, but now it is dominated by middle aged people… even in the Fast Food Joints – most ‘burger flippers’ now are adults.

 Also, there is a lot of what they call “gig” work and temporary work.  We can think of all those Uber Drivers who are working for nothing.   If they had good jobs then why would they need to do demeaning crap like that?   Again, Gig Work and Temp Work is off and on, the pay is low, and temp and gig workers do not get benefits. 

Then certainly you have heard about all those Small Businesses.  Small Businesses get tax breaks and they do not have to comply with the Benefits Policies that Big Businesses are required to adhere to.  So there are a lot of Small Businesses.  Indeed, some huge corporations make it a business to create and spin off Small Businesses.  Such Small Businesses meet all the legal requirements of being a Small Business, but they are physically in reality ‘offices’ or ‘departments’ (typically located in the same skyscraper) within the shadow Larger Corporation (for instance, I worked for Yulista, a Small Business, where all the Company Officers formerly worked for Calista, and when Yulista went belly up after losing the Contract, they probably went back to working for Calista again until they could again be placed in whatever new Small Business they spin up. Oh, when I worked for Raytheon, the Company threatened that they could ‘spin off’ the Calibration Lab into a Small Business, where we could keep our same jobs but get none of our prior benefits.  Well, since then the Economy in general as made good on that threat.     

Next, we have to wonder about the quality of the Full Time Jobs that do exist.  There is little manufacturing in America, and where there is, most production is being done by automated technologies, and then we can factor in the collapse of the Labor Unions.  Most jobs don’t pay what they used to.  But, yeah, there still are a few good jobs?  They are in Defense Work.  America’s last thriving industry is the Weapons Trade, which is a kind of Welfare, isn’t it?  The Defense Industry is just “Make Work”.   A F-35 Jet does not help anybody or make our infrastructure any better.   If we wanted to Make Work, why not plough the money into Health Care, Public Transportation, Roads, Bridges, and the Schools and Colleges.

Oh, another factor behind low wages and salaries are all of the “Do Not Compete” contracts that people have to sign in order to get a job.  People have to promise never to work for anybody else in the same industry.  Basically this establishes Slavery by Option.  A company can lay off workers with the assurance that the workers must sit and wait next to the telephone to be called back, since they can’t apply for work anywhere else.  Also the DNC contracts makes it difficult to negotiate raises.  The Boss can just say “Where else are you going to go?”     

Also, there is the issue of “discouraged Workers”, that is workers who are no longer seeking jobs.  Apparently the quality of the jobs being offered are not worth their time.  Then there are the early retirements, such as myself, of people who would rather struggle by then get a job where they still had to struggle by but work a miserable job too.

Also, if the American People were really thriving, then retail stores would be thriving, but they are not.  Malls are shutting down.  Restaurants, and Amusement Parks and Movie Theatres are not doing significantly better than they were at the bottom of the Great Recession.  Why is this avenue for discretionary spending so choked off?  People don’t have the extra money that we would expect if they were “doing well”.  Even Walmarts are shutting down in some regions because apparently people do not have money to spend. 

This is reflected in the inflation statistics.  Yes, the inflation statistics are kept artificially low (with formula corrections such as “chicken is the same as steak”, and “a Toyota Corolla is the same as a BMW 3 Series”) but we don’t see the same level of consumption that we saw back in the 1980s or we would be seeing double digit commodity inflation.  But Energy and Gas Prices are going up.  Typically it is Energy Prices that trigger Recessions.  About a decade back I used to argue that America is in a Structural Recession linked to Energy Costs (that the American Economy could only afford to operate when at the bottom of a Recession, and that any significant ‘recovery’ would trigger a fall back to the bottom), an idea that got derailed when Saudi Arabia and others decided to Pump To the Hilt before the International Community got serious about Carbon Emissions and Global Warming.  But after about 6 or 8 years of full out production, the ‘low hanging fruit’ liquid crude in accessible locations is mostly plucked out, and Gas Prices are going up again.  That has always meant a recession before, right?

Also, we can see in the Millennial Generation a kind of a litmus test for the Economy.  They are the best educated Generation ever in the History of America, and this is largely because when they get their Bachelor Degrees they can’t find work, and so they go on to get their Masters Degrees, and when they can’t find work, etc, or they go back for 2^nd degrees.  When they do get jobs, they are jobs like jerking out coffees at Starbucks. 

Student Debt is at crisis proportions because the Work is not out there that can pay for the Schooling.  Oh, in addition to Student Debt, there is also the bubble of Consumer Debt.   In lieu of good wages people are getting by on Plastic.

The inverse of the Consumer and Student Debt Crises, if the very low Savings Rate in America. It should be obvious that if people are struggling with debt in the primes of their working careers that there will be an issue down the road with retirements.  Nobody gets pensions anymore and 401K’s tend to fluctuate wildly with the Market.  Another reason why nobody saves is because, well, with the FED printing all that money at very low rates, the Banks really don’t have to offer much interest on deposit accounts.  Yes, people are talking about Trillions of dollars of both Public and Private Debt, but still a Deposit Account pays less than 2%, and so obviously the FED is paying off the Debt by creating more Debt, that is, printing money.  This is okay only until the World gets glutted with dollar, but we have spoken of this before.  Oh, but, yes, the FED would not need to print so much money if people were willing to save, but printing seems to be the way that Banks make up for the dearth in the Savings Rate.    

 Also, if everything is really going so well, then why is there still so much political dissatisfaction.  We see Populism on both the Right and the Left.  As you mentioned, Traditional Conservatism has been largely discredited (though the Politicians are still in place, and Trump has not set forth a Populous Program but signs what the Conservatives put before him and calls it a “win”), and the Left is going after Corporate Democrats.  Why?  If we were all living the American Dream, then why all the fuss? Where there is smoke there must be fire.

Then we need to appreciate the factor of the Opioid Epidemic where I have the intuition that we are not looking at a lot of “drug overdoses” but really these are suicides.  In a happy economy why are middle aged white people suddenly turning to drugs and dying at their own hands?  

Also, why are so many minority people in America incarcerated for non-violent crimes and crimes that do not involve property theft and fraud and stuff like that.  They are jailed for what amounts to Life Style Crimes.  Is it cynical to suppose that putting them in jail keeps them off the Unemployment Rosters?  Also, when we look at the contraband drug trade (which is now being replaced by the legal drug trade) we can interpret that as a kind of inner city entrepreneurship phenomena, where it is perceived by many that the only way to make a living wage is through establishing a successful Street Corner Franchise. 

Oh, the Military also takes a great many people out of the Labor Force (which artificially shrinks the Rate of Unemployment), and, again, it is largely just a drain on the rest of the economy.  Really, as long as we can fight off Canada and Mexico, then shouldn’t we leave the World to its own Collective Security Arrangements.  Let the U.N. worry about policing the World.  

Oh, then there is Home Ownership.  Yes, houses are being sold, but much of the churning in the Real Estate Markets is from people who are diversifying out of Equities, that is, a lot of houses are being bought up by speculators, and rented out or just being held empty as ‘money holders’, like physical bank accounts (a lot of dollars are coming out of China that just buys up houses.  Apparently the property taxes are not high enough to discourage speculative buying).   So, where the economy is ostensibly doing so well, we have a housing crisis and a lot of homelessness.  Then there are our schools, which are primarily paid for from Property Taxes.  If Schools are not doing well, and they aren’t, then it is because the Property Taxes have dropped off which sort of indicates that houses in these districts have gone vacant.

So, yeah, the Statistics that are issued by the Government look good and a narrative can be created that tells us that we have never had it better, but once you scratch the surface… well, ‘scratch and sniff’.   You know, even if you are right, then that only means that the economy will heat up and it will trigger that “structural recession” I was talking about.  Also there are issues in regards to the economy that are close in the horizon, particularly in regards to the amount of Research and Development money being poured into Artificial Intelligence Robotics and Information Technologies.  This will place most jobs, even Professional and White Collar, at risk. Capitalism will be able to almost fully divorce from Labor.  They are already talking about Driverless Trucks.  It has already started with Information Workers, where the first rudimentary AI Systems are able to find the answers faster better cheaper than full time workers with benefits.  Oh, I just read that one Company came up with a Virtual Negotiator for business contracts and purchases.  The Thing would get on the phone and arrange deals.  Understand, that this thing is Primitive compared to what we will see in just another 18 months (kind of like Moore’s Law, that every 18 months computer speeds double, which eventually saturated and hit its wall, but in a Tech Field like AI it may begin to apply again), but this Virtual Negotiator did as well as Human Negotiators, and nobody on the taped calls indicated that they realized they were talking to a machine (which means that a Primitive AI System was able to pass the “Turing Test”… pass for human).   So, what that means that if you don’t think we are screwed now, then just wait for a few more cycles of 18 mo.   Oh, especially since we are at Full Employment.  If they can’t hire people, they will buy machines to fill the slots, won’t they?  And we know how the price of Technology drops like a rock (smart phones in this decade, laptops in the last, and PCs before that).  Employment in today’s economy is protected by low wages and salaries, but that will erode as the price of AI goes down.  We already have one harbinger of that:  the Factory in China that makes Multipurpose AI Robotics for Assembly Lines recently laid off  16,000 of its workers, replacing them with its own product.  And those were dirt cheap Chinese Workers.  So, it’s already happening.   I can’t imagine that you won’t eventually notice something.