Body Parts

How Do We Evaluate US Pasenger Automobile Sales?

On the one hand, automobile sales, along with light truck sales, are up over the past few years. US automakers are financially, at last, feet on the ground, rather than drowning in the flood of red ink, as earlier in the Great Recession. One sees new passenger automobiles, which represent the largest segment of the motor vehicle market, everywhere, and many new luxury cars.

Nonetheless, I have another, competing impression. My impression is that for the majority of American households or automobile owners, buying a new automobile is not in their budgets. As I look around Southern California, from the inland cities to the coastal enclaves of wealth, I see many older cars on the road, with many of those cars showing wear and tear, paint worn off, unrepaired minor collision damage, damaged windows, that sort of thing. These older cars are symptomatic of depressed working class, youthful owners, black and Latino owners, and a strained middle class - all of the private sector. We are an above average household, yet our two cars are each ten years old,  years out of auto payments. We hold onto them, because we don't want yet to tie ourselves to years of payments for new autos.

We need a way to evaluate the state of American automobile ownership, for what it tells us about the state of the national economy. We shouldn't assume that financial recovery for the US and US-based automobile manufacturing industry means that the average American household is doing better than three years ago. For instance, we should look at the average age of the passenger automobile fleet, at the distribution of age of cars on the road, at the age of cars owned by different social-economic classes. I have not done this research, but I think it would likely indicate that average American households are not taking on new automobile debt. This expectation is in line with the reluctance of households to buy new private residences; instead, planning to stay with renting or older, inadequate owned housing. We are not out of the Great Recession yet. 

Why Is Poverty So High and Income Gap So Wide? Look To Government's Role.

As the Great Society got underway, esteemed liberal and Democratic economist and policy advisor, Alice Rivlin, explained, once government policy is established to deal with a problem, such as poverty, it becomes part of the problem. Policy becomes so intertwined with the social phenomenon it addresses that it becomes part of the phenomenon itself. Economics become political economics, forever until policy is ended and withdrawn. So it should be a straight forward matter, when evaluating a social phenomenon like poverty that is intertwined with policy, to ask, at the outset, how has government contributed to the problem.

When we ask that question, we change the paradigm for thinking about poverty. Poverty has been, for a generation, created as much by government efforts to ameloriate poverty as by the social-economic circumstances of poor people.  We know that government policy creates poverty from empirical evidence. When welfare reform was instituted in the mid-1990s, welfare was limited in duration. After being forced off welfare, former welfare holders took jobs. The jobs most of them held paid more than government subsidized poverty and they were better off economically. And surveys showed, they were better off emotionally, in self esteem, and in personal relationships.

The follow-up question we must ask is, how does government policy to soften or end poverty create poverty? Government subsidy to poor people, over a long-enough time, de-motivates them. They build up a pattern of life that is difficult for them to break out of. Demotivation is reinforced by government policies don't reward getting jobs (as by graduated drawn-down of subsidy). Security - even the security  of minimal income - breeds timidity. They don't try to improve their lives by personal striving, they look for improvements by asking for more handouts.

The phenomenon of demotivation helps to explain the income gap between top and bottom. Because of demotivation, governmental subsidy to the poor holds the poor back, preventing them from reducing the income gap with other social classes. The motivations of the well-off classes, on the other hand, are reinforced by their success in obtaining social and economic mobility. Success increases motivation, motivation in turn increases success.

I have not said that governmental aid to poor is never appropriate, only that it has to be limited and brief.

"Drive" Pays Homage to Eastwood

Last night, my wife and I viewed the Nicholas Refn film, Drive, starring Ryan Gosling. We both loved it, enjoying the Los Angeles locales, the driving scenes, and the painterly visual composition and color affectation of many scenes in the first half. She was surprised at the graphic violence in the second half and withdrew from the movie a bit in reaction. I was completely engaged and enjoyed seeing really bad people meet their deserved deaths (this is movie fiction we talking about here, remember). I would label the first half (the dramatic first half) "reverie" and the second half "reality". Though the movie is ostensibly based on a novel, the real inspiration, we both agreed, is Clint Eastwood's film, Pale Rider (1985). In Drive, Gosling plays the Eastwood character, the Preacher, in precisely the same minimalist style, taciturn, few words, few facial expressions, effectively dealing out death as punishment for evil, unable to stay with the woman who believes in him, riding (driving) toward the horizon at the end. The urban setting is visibly a familiar fallen world, where psychopaths scuttle like cockroaches, devouring social garbage in the grips of sin. The symbolism is as clear as the natural wilderness setting of Pale Rider, out of which rides the Preacher to halt evil and avenge past crimes. I thought Gosling's acting was excellent and contributed enormously to the suspense that builds through the movie. The movie is an effective Hollywood film noir interpretation of a classic Western film and its film genre.

Our Approaching Munich Moment

Since the end of the Cold War in the mid-1990s, the US has systematically reduced its military capabilities. The reduction has been based on the assumption that we will not again face a major power showdown as we did in the twentieth century -- US v Japan, US v Germany, US v Soviet  Union. In addition, with the US as the only great military power left, even the requirements of being the world's policeman are diminished. The billy club we swing needn't be huge to mash flies, and, gosh and by golly (per Obama) the UN should take over the role of international policeman anyway. The new power assessment is 9/11:  new conflicts are likely to be asymmetrical, as in the US v non-state terrorists.

But hidden inside this assessment is a fatal intellectual flaw. The policy will be self-fulfilling. It sets up the conditions so that it cannot be disproved. That is, there won't be a big power showdown, because we reduce our military capability so that we couldn't win a big power showdown, so we will avoid big power showdowns, and big power showdowns won't happen. And this flaw will be proved shortly, within a decade. China will assert its military control of the South China sea. It will provoke a crisis, daring the US to intervene. The US, with a diminished Navy and Air Force, will not take the bait. Whatever President is around will have to sue for peace. There will be a big international conference. The President will emerge waving a signed agreement and talk about peace in our time.Taiwan will fall. Or South Korea will fall. Or China will impose trade control over countries to its south.

The South China Sea is not the only flash point. The Middle East is obviously a candidate for a dramatic showdown. It should be clear now, as it has been to some of us all along, that the "Arab Spring" will bring a hard winter of Islamist totalitarian regimes, imposing anti-semitic and anti-Christian policies domestically and aggressively advancing such anti-semitic and anti-Christian foreign policies. Israel will be isolated and attacked. With the effective mobile force of the US Marines reduced, the US will not have the tactical ability to enter the conflict in time to save Israel. The US will sue for peace, against the pleas of remnant Israeli forces, to end fighting begging that the remaining Jews are not killed. The victorious Muslims will agree to allow a few Jews to live submissively in a Muslim Palestine. Most surviving Israeli Jews will be evacuated to the US. Peace will come to the Middle East, as to South Asia, at the cost of millions of lives and of freedom.

The fallacy of our current military policies is that it makes our Munich moment inevitable.

Obama Wags His Dog: Uganda Policeman

Prior to the 2010 Congressional election losses for the Democratic Party, Obama's foreign policy strategy was to replace Pax Americana with a United National Harmonium. That strategy required him to end the US's role as the world policeman, dramatically reduce US military capability so as to make the role of policeman unworkable, build the UN's role in fostering world piece, build Muslim self esteem so presumably Muslims wouldn't attack others out of psychological insecurity, hector and plead world conflicts into disappearing, end the military effort destroy terrorism's bases in Iraq and Afghanistan -- the familiar ideology of the Stalinist sponsored Leftist agenda during the Cold War applied to the post-Cold War era. It hasn't worked of course. Wishful thinking crashes in front of reality.  Obama is left with egg on his face, revealed as generally ineffectual and foolish in foreign policy and international security.

But he has had several minor political successes in foreign policy: the killing of Osama and the adventure in Libya. The Osama killing was good fortune, for which Obama's role was not screwing up something for which he wasn't responsible. Libya was a different matter. Following Clinton's Bosnia script, he succeeded in ridding the world of a murderous vermin using air power and suffering no ground combat casualties (at least as far as we know -- we haven't been informed about secret US advisers to Libya's "rebels" and whether there were casualties among them).

Why did Obama engage in the Libyan adventure? He was reluctant, and let Europe take the lead, but eventually he engaged. Why? Domestic electoral politics. He wanted to show he could be a decisive leader, exercise power, and not walk the US into foreign combat quagmires. That was a neat little boost for Obama. It was a classic exercise in being the world's policeman, even if leading from behind and co-opting other nations to do most of the heavy lifting.  

Now Obama had send "advisors" into Uganda to help that nation rid itself of a violent war lord. It's billed as a humanitarian gesture, but humanitarian for whom? Mostly and importantly for Obama himself. If successful, quickly and without US casualties, the police action would give a little Libyian boost in this presidential election. The scenario is called wagging the dog. The embarrassment from which this adventure rescues Obama is not a possible sexual scandal (not to say that the US press would investigate rumors of his girl friend anyway). It is the complete failure and unpopularity of all of his policies since he was elected. He has no record to run on.

Woof, woof, Mr. President.

Ghouls of the Season To Scare Us Beyond All Reason

 

My neighborhood.

We Are Still In A Recession. What Kind of Job Growth Is Needed For the Economy to Boom?

The "unemployment rate" (now 9.1%) and "jobs hired per month" (most recently only 58,000 [not counting striking workers returning to work]) give a completely false picture of the number of net new jobs that must be added to the economy each month for the economy to boom.

The unemployment rate does not take into consideration:

1. the number of persons employed at part time, who want to be employed at full time,

2. the number of persons under-employed, in the sense that they have jobs and earnings well below their capability, but cannot move up,

3. the number of persons who have left the labor force altogether (as measured by the percentage of the adult population capable of work who do not work), but who re-enter the labor force if job openings increased, and

4. the number of new adults ready to enter the workforce, reflecting population growth and increasing secondary and college graduate rates.

Taking all these factors into consideration, you see that the economy would have to generate net increases in jobs of hundreds of thousands monthly for years to accommodate all these potential workers. Only a booming economy could do that, and only that kind of increase in employment would support a booming economy (increasing payrolls increasing the number of income earners, which increases savings for homes and consumption, which fuel the boom).

Our economy is not growing at all, from this enlarged perspective. It is not even treading water. It is still receding, because the number of potential full time workers continues to increase.  We are still in a recession.

OccupyWallStreet: Follow the Money To Campaign Obama

It is not a coincidence that small groups of young protestors and a sprinkling of union types are protesting Banks/Capitalism/Corporations at the same time that President Obama is ratcheting  his re-election campaign up on the class warfare theme of greedy rich people not paying their fair share of taxes, i.e., social justice. Obama needs some public demonstration of support of this theme, lest it appear only as more of his usual leftist hectoring. So, on cue, we have the protestors. This is all politics of theater, of which the Left has historically been the master. Phony protests by obedient followers of the Doctrine. Would some journalist follow the money, please? Where do these groups get the money to organize, advertise, support themselves while protesting, and pay for the tv and video monitors at OccupyWallStreet central street headquarters? Un, huh, it wasn't from their jobs, because many claim to be unemployed. The money obviously comes indirectly from the Obama campaign or its donor benefactors through some conduit organization. Some journalist might try doing research and finding out which.