Where the Jobs Went

Whiskey & Gunpowder By Henry Daniels
December 8, 2010
Los Angeles, California, U.S.A.

As we head into the Holidays, with no signs that things are ever going to get better, some news was recently released that casts an interesting, and gloomy, light on why there are no jobs.

If there is one common theme I’ve heard from friends who still have jobs over the last two years, it’s that they are working harder than ever and making the same or less than they used to. Personally, I’m self-employed, and while I work 15 to 20 hour days, seven days a week, it hasn’t been in vain; the last two years have been my best ever.

Today, I heard a report on corporate profits and amazingly (or not) the quarter has been the most profitable in corporate history since they started keeping records on such things over 60 years ago.

The math is simple. If a corporation can get by with 50 to 65 percent fewer employees while holding production steady, they will make a lot more money. So what if people have to work two or three times harder than they did a few years ago? If they don’t like it, there are ten people standing in line to take their place.

This means there’s no incentive for corporations to hire. None. At least not until one of three watershed events occur.

The first watershed will be when the workers productivity starts to falter. The truth is that the only way work is getting done on time these days is because the workers are forced to take shortcuts to meet deadlines and quotas. It is already showing up in the quality of products, things are not made as well or last as long as they did just a few years ago. The failure rate is getting alarming on car parts, computer components, and customer service.

The second watershed event will be when the workers decide they are tired of being exploited, and if anyone else wants their job they’re welcome to it. We will see worker slowdowns similar to those popular in Europe. Suddenly, corporate profits will be jeopardized.

The third watershed event will be when corporations no longer have anyone left to sell to. In other words, if the number of unemployed keeps rising, at some point there will no longer be anyone left to buy things until they get employed again. At this point corporate survival will dictate the need to hire people if only to continue selling their products.

Last week, we talked about how one of our first indications of where things are going would be the Black Friday and Cyber Monday’s sales figures. By all accounts, sales this year were basically flat compared to last year. This argues quite forcibly that status quo is where we are stuck for a while.

My guess is we won’t see new jobs for at least a year, maybe two. There will be no trickle down job creation. It’s going to take something more visceral to stimulate job creation.

We’ve become a nation fixated on short-term quotas while we ignore the long-term consequences of such actions. I’ve never held that to be a way to run anything: not your life, not your personal finances, not corporate policy.

Regards,
Henry Daniels

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First, a correction…

Remember this letter from last time?


“I think you guys are becoming the most left-leaning rag on the net. Get a life or get out if you dislike America. These are some of the [most] leftist-leaning articles I have ever read. Are you guys commies or just deep-seeded socialists?”

Seems we got the guy all wrong. He followed up with an email to express his shock at how I used his letter.


“I thought I clearly stated in the subject line that I was referring to Samantha Buker’s anti-Christian article. If I didn’t, then my mistake. I did like your comments after Black’s article.”

There was truly no indication in the email that the comments were directed at Sam, who sits mere feet away from the Whiskey Bar. The editors at The Daily Reckoning snapped her article before I could. So I wasn’t expecting any heat from it.

Anyway, I promised the reader I’d clear up the confusion.

Now, about those taxes…


“I’m as opposed to the high-end tax cuts today as I’ve been for years. In the long run, we simply can’t afford them.”


— Barack Hussein Obama, 2010


“Gimme yo’ damn money, rich boy!”


— Barack Hussein Obama, 2012

Barack is trying to be polite about it right now, but make no mistake: He fully believes that the more money one makes, the more one should be forking over to people in nice suits who have no idea how to make an honest buck…

And he warns that come 2012, somebody is going to be upping their government tithes… or else…

From The Associated Press:


“‘If we don't get my option through the Senate right now and we do nothing, then on Jan. 1 of this 2011, the average family is going to see their taxes go up about $3,000,’ [Obama] warned.

“‘At any given juncture, there are going to be times where my preferred option, what I'm absolutely positive is right, I can't get done,’ the U.S. president said, stabbing his finger for emphasis.

“‘And so then my question is does it make sense for me to tack a little bit this way or tack a little bit that way because I'm keeping my eye on the long term and the long fight.’”

I got your long fight right here, Barack…

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At the Whiskey Bar, we’ve never met a tax cut we didn’t like. In the spirit of tax revolt, we’re offering a discount on this book if you order it by clicking here.

It’s normally $24.95, but if you enter in the discount code TAX2011, then you’ll get $5 off. So be sure to order your copy right now.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

P.S.: As always, after you get the book, be sure to drop me a line about it: gary@whiskeyandgunpowder.com. We’re moving the Bar into the corner of this very nice bookstore, and there will be a lot of reading to do and a lot to discuss.