The Great Recession

[Michael]

Apparently that's what this thing is being called. :erm:

Anyway, I see lots of media talking heads and politicians trying to sound upbeat lately - with the stock market rallying and US jobless figures coming in slightly better than expected (meaning not quite as bad as predicted).

In order to shoot down this balloon of optimism, suffice it to say that the "stress tests" that the US Treasury department applied to the US banks that envisioned a 'worse-case scenario' involving 8.9% unemployment in 2009 (and the attendent risks that poses to mortgage, credit cards and loan default rates).

Well, US unemployment rate just hit 9.4%. That's considerably worse than the 'worse-case' scenario projected upon the banks.

Source (http://www.nytimes.com/2009/06/06/business/economy/06jobs.html?_r=1&hp)

I can't help but see the US economy stumbling along at or below zero growth for some time to come. This summer is going to be ugly with a new round of commerical real estate developers going bankrupt (and the banks that financed them coming under additional pressure).

And US mortgage foreclosure rates continue to climb...

[Americano]

I don't see any potential industry strengths to turn this thing around. Regarding unemployment, those who exhaust their benefits (including the federal extensions) will be dropping off the rolls mostly still unemployed to reduce that number for public consumption, which will be heralded as a 'positive step forward' with no real meaning.

[The Drunk Guy]

I don't see any potential industry strengths to turn this thing around. Regarding unemployment, those who exhaust their benefits (including the federal extensions) will be dropping off the rolls mostly still unemployed to reduce that number for public consumption, which will be heralded as a 'positive step forward' with no real meaning.
That's very true. Most of those who exhausted their benefits prior to the recession were waiting around to receive disability benefits and were considered a "non-factor." I think that the majority exhausting their benefits now will be a major factor on the face of America for the next few years.

Two years ago, this shit would have scared the hell out of me. I was bouncing from job to job with no real goal in mind and I could very easily have ended up jobless without possibility for benefits. Now that I have a "career position," I find it all abstract. This has been the first month I've really struggled during the recession and that's only because we're moving and had the equivalent of three months rent to pay at once.

I also find it weird because I see jobs opening up all the time and people spending money just like normal. Traffic shows that people are still vacationing and vehicles are just as expensive as ever (if no moreso). The only think I have really noticed is that residential construction has taken a pretty big hit despite commercial construction carrying on as normal.

Perhaps it's just the calm before the storm. Maybe it just see it this way because I live in rural Kentucky. Is it all going to come crashing down in a year or two?

[Michael]

Btw, I've been reading some articles about published "unemployment" numbers.

Seems as if the US formula is designed to understate unemployment far more than most other systems (mostly due to the millions of people US has locked up in jails being used to skew the figures).

As a result of this, US unemployment rate is understood to be understating US unemployment by about 1.8% (meaning the present US rate is closer to 11.2% at this time). This correction to US unemployment figures essentially wipes out the entire margin by which US unemployment figures are thought to be consistently better than European averages over the last twenty years. They are not.

[Americano]

Btw, I've been reading some articles about published "unemployment" numbers.

Seems as if the US formula is designed to understate unemployment far more than most other systems (mostly due to the millions of people US has locked up in jails being used to skew the figures).

As a result of this, US unemployment rate is understood to be understating US unemployment by about 1.8% (meaning the present US rate is closer to 11.2% at this time). This correction to US unemployment figures essentially wipes out the entire margin by which US unemployment figures are thought to be consistently better than European averages over the last twenty years. They are not.

Here's a decent article on US unemployment calculations:

http://www.cariboo.bc.ca/carryon/dcharbon/forum/usa.htm

You'll like the military (1.5M) and parolee (8M) distortions.

[Michael]

Here's a decent article on US unemployment calculations:

http://www.cariboo.bc.ca/carryon/dcharbon/forum/usa.htm

You'll like the military (1.5M) and parolee (8M) distortions.

Yes, that the US unemployment rate is traditionally lower than everyone else's is a statistical lie.

Kinda like that 'free market' in private healthcare with all the government rules, regulations and tax-subsidies designed to make it profitable.

Or the amazing 'free market' American homeowner with his tax-subsidized mortgage.

Or the 'free market' in government subsidized student loans.

Now there's nothing wrong with tax-subsidizing mortgages or private healthcare insurance (or student loans). But claiming that these tax-subsidized enterprises are models of free market efficiency is just blatant propaganda (i.e. "lies").

[Michael]

One of the key indicators that the US recession is still in the 'getting worse' phase and still a long way from 'bottoming' let alone 'recovering', is the fact that most of the important trends are still pointing downward.

US housing prices and the foreclosure rates for example. Both are still getting worse.

Housing specialists said the number of foreclosures would probably keep rising as more people lose jobs or are forced to trade full-time work for part time. Nearly six million jobs have been lost since the recession began a year and a half ago, and many economists expect unemployment to rise to 10 percent by next year, from 8.9 percent now.

More defaults by the unemployed could shunt more houses onto a saturated market, economists said, sending prices lower.

“We’re still caught in this vicious cycle,” said Patrick Newport, an economist at IHS Global Insight. “These numbers were horrible, and they’re going to get worse. This problem’s going to be with us for a while.”

The wave of employment-driven foreclosures could pose new challenges for the Obama administration as it tries to stabilize falling housing values.

Source-NYTimes (http://www.nytimes.com/2009/05/29/business/economy/29home.html?_r=2&hp)

Keep in mind that this article is about a week old and US unemployment (official manipulated rate) has been bumped up to 9.4% since the article was written.

I think it is going to be a long and ugly summer for economic news.

[Americano]

The step from economic recession to depression.

As I understand it two quarters of 10% economic contraction defines an economic depression. Given that government statisticians have little flexibility beyond their political masters desires for cooked numbers, would the public even know if economic conditions have deteriorated to that level? Isn't it just a matter of nudging all PCs sold from say a two-year value span to a three-year value for GDP purposes and so on?

[Leprechaun]

Btw, I've been reading some articles about published "unemployment" numbers.

Seems as if the US formula is designed to understate unemployment far more than most other systems (mostly due to the millions of people US has locked up in jails being used to skew the figures).

As a result of this, US unemployment rate is understood to be understating US unemployment by about 1.8% (meaning the present US rate is closer to 11.2% at this time). This correction to US unemployment figures essentially wipes out the entire margin by which US unemployment figures are thought to be consistently better than European averages over the last twenty years. They are not.
Michael can I get some links to these articles?

[Michael]

Michael can I get some links to these articles?
The one posted above by Americano describes the process by which US unemployment figures are significantly understated by excluding the military, prisoners and parolees as if they do not exist.

Given that the US has (proportionately) more military and more prisoners and more parolees than any other western nation, you can well imagine the size of the impact on the statistic. I believe this induces a 1.8% understatement.

As for other articles, that was a general statement. I probably read a dozen articles a day. I honestly don't keep track of them unless there is something significant there.

Btw, these distortions are in addition to the usual distortions of ignoring those who have given up looking for work and those who are working part-time because they can't find full time employment - but this is a red herring because all western countries manipulate their unemployment statistics this way. It is the prisoners, soldiers and parolees that the unique American distortion.

In other words, if you are going to use this to argue with Europeans about unemployment figures, you will have to address the fact that the Europeans also understate their unemployment figures using similar techniques (though they don't exclude prisoners, soldiers and parolees).

[Americano]

You might find this interesting, the German position on military status of employment:

"Other manipulations
The AKE annual benchmark data refer to a specific month or week (generally in April). The "OECD-1 method" estimation procedure is used to infer period averages (quarterly in this case). By this method, annualised data from the two secondary sources are fixed at the AKE levels by calculating scaling factors. Higher frequency factors are then interpolated using the secondary data sources. These are applied to the AKE data to achieve quarterly estimates of employment and unemployment. National data from the microcensus and the Federal Ministry of Defense are used to calculate quarterly figures on the number of military personnel which are subtracted from total employment to arrive at total civilian employment."

One thing democracies have become very proficient in is statistical manipulation for political purposes. No successful private entity business plans other than banking without fair market value rules, Ponzi Schemes and other frauds could allow estimated or cooked statistics as a base criterion.

http://stats.oecd.org/mei/default.asp?lang=e&subject=18&country=DEU

[Michael]

To translate that German bureaucratize, that means that the Germans don't count their military as being "employed" for the purpose of calculating the unemployment figure.

The US unemployment statistics do count US military as "employed" (which makes the US unemployment figure appear lower than it actually is).

It would be interesting to find some confirmation on how everyone else treats parolees since the US unemployment figures just pretend they don't exist (and they constitute about 3% of US working population) - they are just erased out of the calculation.

[Leprechaun]

While I understand counting those in the armed forces (full-time) as employed and while I can understand excluding those in prison (as they are not actively seeking work which is a necassary characteristic of someone unemployed. Rather thay are economically inactive) I can't for the life of me understand why parolees are excluded.

[Michael]

While I understand counting those in the armed forces (full-time) as employed and while I can understand excluding those in prison (as they are not actively seeking work which is a necassary characteristic of someone unemployed. Rather thay are economically inactive) I can't for the life of me understand why parolees are excluded.

I should think it is obvious that the 'goal' is to fudge the unemployment statistic to make it look better than it really is in order to help delude Americans into thinking that their economic system is better than anyone elses. This is highly beneficial to the Washington political and media elite class.

[Americano]

While I understand counting those in the armed forces (full-time) as employed and while I can understand excluding those in prison (as they are not actively seeking work which is a necassary characteristic of someone unemployed. Rather thay are economically inactive) I can't for the life of me understand why parolees are excluded.

Military are not employed in a position of economic contribution other than flow-through from public funds, distorting total workforce count and subsequently understating unemployment percentages. Not actively seeking work, which also includes non-prisoners, is another labor department dodge to reduce publicized unemployment, as is counting part-time workers at the same statistical level as full-time employed.To we bean counters, cooked numbers that don't satisfy anything but political whims.

[Leprechaun]

I should think it is obvious that the 'goal' is to fudge the unemployment statistic to make it look better than it really is in order to help delude Americans into thinking that their economic system is better than anyone elses. This is highly beneficial to the Washington political and media elite class.
Indeed, much of the right (well what we consider right-wing) here often mentions America's consistantly low unemployment rate as an argument for a more right-wing economic approach however this suggests that they are wrong. They are gaining in Ireland (although it remains to be seen in the economic turmoil at the moment, they may have taken a huge hit but nobody really knows. I would be interested in information about the trend of real unemployment in America vs. Europe over the last few decades. What interests me most here however is that while this 'low' unemployment rate is supposed to herald extremo-captialism it can only be calculated by including soldiers who are employed in......the public sector!! (ish) and that is before we investigate the spin-off jobs etc.

[Michael]

Indeed, much of the right (well what we consider right-wing) here often mentions America's consistantly low unemployment rate as an argument for a more right-wing economic approach however this suggests that they are wrong. They are gaining in Ireland (although it remains to be seen in the economic turmoil at the moment, they may have taken a huge hit but nobody really knows. I would be interested in information about the trend of real unemployment in America vs. Europe over the last few decades. What interests me most here however is that while this 'low' unemployment rate is supposed to herald extremo-captialism it can only be calculated by including soldiers who are employed in......the public sector!! (ish) and that is before we investigate the spin-off jobs etc.
Basically the 'rightwing' in every western country likes to cite the 'low' US unemployment figures as justification for introducting more rightwing policies to that country.

It should be no surprise to anyone that this 'data' is fake.

It also should be obvious that all the countries that did take US economic advice over the last fifteen years are the countries that have the most seriously fucked up economic problems now (UK, Iceland, Ireland, Poland, Latvia, Estonia and Poland to name the most notable).

[Americano]

Basically the 'rightwing' in every western country likes to cite the 'low' US unemployment figures as justification for introducting more rightwing policies to that country.

It should be no surprise to anyone that this 'data' is fake.

It also should be obvious that all the countries that did take US economic advice over the last fifteen years are the countries that have the most seriously fucked up economic problems now (UK, Iceland, Ireland, Poland, Latvia, Estonia and Poland to name the most notable).

I'd venture a guess that under 5% of Americans even know how US unemployment is calculated? Or the micro-census method of telephone calls to a select group of people actively seeking or not seeking work being extrapolated to, questionable numbers?

[Greendruid]

After the "dragon-tank" piece was this gem from the Onion:

Guests react to insta-poll (http://www.theonion.com/content/video/new_live_poll_allows_pundits_to)

This is so frightening close to the truth out there right now that it made me laugh and cry almost simultaneously. The optimist in me kept laughing.

[Lily]

I'd venture a guess that under 5% of Americans even know how US unemployment is calculated? Or the micro-census method of telephone calls to a select group of people actively seeking or not seeking work being extrapolated to, questionable numbers?

*raises hand* I honestly have no clue how the unemployment numbers are calculated. The only thing I know about unemployment is that it is a lagging indicator of economic recovery, and I could be wrong about that one.

Care to enlighten a economics-challenged American? ;)

[Lily]

After the "dragon-tank" piece was this gem from the Onion:

Guests react to insta-poll (http://www.theonion.com/content/video/new_live_poll_allows_pundits_to)

This is so frightening close to the truth out there right now that it made me laugh and cry almost simultaneously. The optimist in me kept laughing.

That is freakin' hilarious! :rofl:

I only wish CNN, FOX and MSN would employ such real time feedback. It would be doubly cool if the down ticks were hooked up to an ejection mechanism for each pundits' seat. Go below a set level and whoosh! you're outta here! :D

[Americano]

*raises hand* I honestly have no clue how the unemployment numbers are calculated. The only thing I know about unemployment is that it is a lagging indicator of economic recovery, and I could be wrong about that one.

Care to enlighten a economics-challenged American? ;)

Here's a good general start without becoming mired in the methodology. If it opens a door there are other sites that get down to the basics.

http://www.cariboo.bc.ca/carryon/dcharbon/forum/usa.htm

[Michael]

Things are just getting weird around here...

Toronto housing market is apparently 'red hot' with sales gains of 26% over last month, and the average house price up to $396,000 - showing a 1% volume gain and 6% price gain over the last 12 months.

Apparently the whole commercial real estate sector managed a 1% gain as well.

This data is just Toronto only, but still this is a bit weird for a recession - especially given that Ontario's economy is heavily dependent on the auto industry. Luckily modern Japanese/Korean car plants heavily outnumber the older massive 'Big3' autoplants...

Either way, it really is hard to even notice a recession around here.

[Lily]

Here's a good general start without becoming mired in the methodology. If it opens a door there are other sites that get down to the basics.

http://www.cariboo.bc.ca/carryon/dcharbon/forum/usa.htm

Okay. So, basically what this article is saying is that the numbers aren't realistic in that they don't reflect the true picture of unemployment. For example, I went from fulltime to pool last year and so wasn't counted in the unemployment figures. I get that. In my profession, that happens a lot. We take breaks. I went back to work full time this April. However, the numbers and percentages we do see are consistent, correct? I mean, the government doesn't choose to include me in April and not include me last May, right?

[Michael]

Okay. So, basically what this article is saying is that the numbers aren't realistic in that they don't reflect the true picture of unemployment. For example, I went from fulltime to pool last year and so wasn't counted in the unemployment figures. I get that. In my profession, that happens a lot. We take breaks. However, the numbers and percentages we do see are consistent, correct? I mean, the government doesn't choose to include me in July and not include me in August.

To the best of anyone's knowledge, the numbers given are true numbers. The issue is the 'definition' they use is designed to make the unemployment number look artificially lower than it really is.

Right now the "official" US unemployment figure is around 10%. If it was calculated the same way as other western nations, that figure would likely be 11% or 12%.

None of this should matter at all except the US government (and American rightwingers) like to brag about the comparatively low US unemployment figure (which is always 1 or 2 points below everyone else's) is a testament to the superior quality of the US economy and political system.

Of course the same argument is often used to justify US political choices too.

Public policy based on lies is never good in the long run.

It is important to note that every nation uses the same tricks to understate their unemployment figures. The US government does the same tricks PLUS some added ones that no one else uses - like the prison and military populations which are both comparatively very large in the US and NEVER counted by anyone - except the US.

Btw, I just stumbled onto another case where US government plays statistical games - the US Census officially counts prison populations as "residents" in the rural districts where the prison is located. They count as census population for electoral districts (but of course, they can't vote). These prisons are mostly located in low-populated rural locations. This skews the vote representation and favors rural district conservatives since some 5% of their constituents are legally proscribed from voting (surprise, surprise!). Federal money apportioned according to the census figures has the affect of oversubsidizing these rural districts and comparatively underfunding the urban districts.

[Lily]

The U.S. jobless rate came out this morning and it went down for the first time in more than a year. The official rate stands at 9.4%, down from 9.5% from the previous month. Although 247,000 people still lost jobs in July, that was fewer than the June total of 443,000 jobs lost.

Source (http://money.cnn.com/2009/08/07/news/economy/jobs_july/index.htm?postversion=2009080708)

[Michael]

The U.S. jobless rate came out this morning and it went down for the first time in more than a year. The official rate stands at 9.4%, down from 9.5% from the previous month. Although 247,000 people still lost jobs in July, that was fewer than the June total of 443,000 jobs lost.

Source (http://money.cnn.com/2009/08/07/news/economy/jobs_july/index.htm?postversion=2009080708)

Yes, that trend is likely real. The game is that the "official" 9.4% really should be stated as 10.4% which is no real difference, but doesn't make the US look any better than anyone else. The artificially low figure of 9.4% is lower than everyone else's unemployment figure and that's the reason the US figure is jiggered that way.

This is a statistical deception that is part of the reason Americans are so convinced that their economy is better and more efficient than anyone else's economy. This is a lie but it has a very powerful political effect.

[Lily]

Yes, that trend is likely real. The game is that the "official" 9.4% really should be stated as 10.4% which is no real difference, but doesn't make the US look any better than anyone else. The artificially low figure of 9.4% is lower than everyone else's unemployment figure and that's the reason the US figure is jiggered that way.

This is a statistical deception that is part of the reason Americans are so convinced that their economy is better and more efficient than anyone else's economy. This is a lie but it has a very powerful political effect.

Isn't everything perception these days? Hey! Employment numbers are better! The economy is better! Whoo hooo! Let's go buy that new big screen, Doris!

[Michael]

Isn't everything perception these days? Hey! Employment numbers are better! The economy is better! Whoo hooo! Let's go buy that new big screen, Doris!

If that was the only effect of such lies, I wouldn't care. What you describe is common to all western governments. They all have an interest in understating their bad economic news.

The key issue though is how these statistical lies are used to create/justify US exceptionalism and that US exceptionalism is used to justify/support the invasion of small countries whenever US elites choose to do so.

That's the real problem with such statistical lies.

Statistics "prove" that the US is the "best" nation on earth. Therefore, how can the "best nation on earth" be anything but good for places like Iraq? The American population tends to believe in this.

[Lily]

If that was the only effect of such lies, I wouldn't care. What you describe is common to all western governments. They all have an interest in understating their bad economic news.

The key issue though is how these statistical lies are used to create/justify US exceptionalism and that US exceptionalism is used to justify/support the invasion of small countries whenever US elites choose to do so.

That's the real problem with such statistical lies.

Statistics "prove" that the US is the "best" nation on earth. Therefore, how can the "best nation on earth" be anything but good for places like Iraq? The American population tends to believe in this.


Statistics and in the case of the Bush administration and Iraq, outright lies.

Nationalism has been a hallmark of the United States since its inception. We are a young country with a sense of creating something great literally from the ground up. We are a prideful nation, there is no getting around that. We don't have a long history of conquests and victories, of destruction and rebuilding. The reaction of our nation to being violated was this: Let's go kick some ass. That's the mentality, right or wrong. Perhaps it will take an invading army or two, or a national collapse for that to change. Who knows?

[Americano]

Statistics and in the case of the Bush administration and Iraq, outright lies.

Nationalism has been a hallmark of the United States since its inception. We are a young country with a sense of creating something great literally from the ground up. We are a prideful nation, there is no getting around that. We don't have a long history of conquests and victories, of destruction and rebuilding. The reaction of our nation to being violated was this: Let's go kick some ass. That's the mentality, right or wrong. Perhaps it will take an invading army or two, or a national collapse for that to change. Who knows?

By most measures the US is a declining empire. While still able to maintain global respect by military hegemony, the economic numbers haven't been working for quite some time. That leaves collapse, which the government is willing to cushion for as long as our currency allows. As long as the general public continues to believe .02% statistical improvements announced by the government and media will eventually make everything all right, they'll fall in line.

Nationalism supporting faulty government can only be stretched as far as the cushion allows. The US has nothing to fall back on but debt. US debt service is currently the third largest government expense, right behind DoD (with a budget highly distorted by allocating DoD expenses to other budgets) and Social services. All debt at next to nothing interest expense. For a depressing mental exercise, imagine USD losing so much more value the US has to fund its debt at say 8%.

[Lily]

You don't have to convince me America is in decline. I specificallly remember when we turned from a creditor nation to a debtor nation. "Uh oh," I said to myself, "this can't be good." Fareed Zakaria makes a pretty good case in his book, The Post American World. Most Americans truly believe large scale manufacturing is coming back. It isn't. We are beyond that stage in the evolution of our economy. When we're financing our dept at 8%, the USD will no longer be the world currency of trade. These "astro turf" town hall shoutfests will be very real.

[Michael]

Regarding the 'decline' of American power, here's a good article on what might be one of the major reasons (or symptoms).

Small Business Sector Comparison (http://www.cepr.net/documents/publications/small-business-2009-08.pdf)

Here's a couple of examples:

The United States has the second lowest share of self-employed workers (7.2 percent) – only Luxembourg has a lower share (6.1 percent).

The United States has among the lowest shares of employment in small businesses in manufacturing. Only 11.1 percent of the U.S. manufacturing workforce is in enterprises with fewer than 20 employees.
...
(Raising the cutoff for a small business to fewer than 500 employees does not significantly alter the relative position of the United States.)

U.S. small businesses have a much lower share of employment than the comparison economies do in the two high-tech fields for which the OECD publishes data: computer related services and research and development.

There you have it. It has long been a general rule of thumb that small businesses tend to provide the majority of growth in good quality jobs. US has less of those types of businesses than any other western country. That says everything about future US economic development (more McJobs with McMonster Corporations).

[Americano]

Regarding the 'decline' of American power, here's a good article on what might be one of the major reasons (or symptoms).

Small Business Sector Comparison (http://www.cepr.net/documents/publications/small-business-2009-08.pdf)

Here's a couple of examples:







There you have it. It has long been a general rule of thumb that small businesses tend to provide the majority of growth in good quality jobs. US has less of those types of businesses than any other western country. That says everything about future US economic development (more McJobs with McMonster Corporations).

That's right, force those remaining small businesses hiring illegal immigrants to pay big penalties and source their products offshore so we can import them with a declining currency. Sometimes it seems we can't get any dumber but we never fail to get even dumber.

[Michael]

That's right, force those remaining small businesses hiring illegal immigrants to pay big penalties and source their products offshore so we can import them with a declining currency. Sometimes it seems we can't get any dumber but we never fail to get even dumber.

The irony is that US politicians talk non-stop about how much they support "small business" while they spend all their efforts giving preferential treatment to massive multi-nationals. Typical politicians - say one thing while doing another.

I would say that the US private healthcare system is one of the main reasons for this since small companies can't usually afford this benefit, but without this benefit, they can't attract high-quality employees who all run off to work for the big multinationals to get their health insurance provided.

So long as the US retains the model of 'employer provided healthcare', small business in the USA is going to be the 'runt of the litter'. And that's not good for US economic development since real growth in wealth and prosperity for the greatest many tends to come from the widely diverse small business sector, not the multinationals (which tend to suck up lots of tax breaks and loopholes).

Btw, this data is consistent with the data that shows that the USA is the least egalitarian country in the western world, and has the weakest entrepreneurial culture in the western world.

I really think that "employer-provided-healthcare" model in the USA is to blame for this unintended consequence.

[Americano]

The irony is that US politicians talk non-stop about how much they support "small business" while they spend all their efforts giving preferential treatment to massive multi-nationals. Typical politicians - say one thing while doing another.

I've always had a good laugh when politicians create tax breaks for 'small businesses' in the form of accelerated depreciation and other special treatment of fixed assets. As if small businesses are going to go out and acquire new, expensive assets by incurring debt with a negative effect on cash flow. It's always for the big guys.

I would say that the US private healthcare system is one of the main reasons for this since small companies can't usually afford this benefit, but without this benefit, they can't attract high-quality employees who all run off to work for the big multinationals to get their health insurance provided.

So long as the US retains the model of 'employer provided healthcare', small business in the USA is going to be the 'runt of the litter'. And that's not good for US economic development since real growth in wealth and prosperity for the greatest many tends to come from the widely diverse small business sector, not the multinationals (which tend to suck up lots of tax breaks and loopholes).

Btw, this data is consistent with the data that shows that the USA is the least egalitarian country in the western world, and has the weakest entrepreneurial culture in the western world.

I really think that "employer-provided-healthcare" model in the USA is to blame for this unintended consequence.

[Greendruid]

The irony is that US politicians talk non-stop about how much they support "small business" while they spend all their efforts giving preferential treatment to massive multi-nationals. Typical politicians - say one thing while doing another.

I would say that the US private healthcare system is one of the main reasons for this since small companies can't usually afford this benefit, but without this benefit, they can't attract high-quality employees who all run off to work for the big multinationals to get their health insurance provided.

So long as the US retains the model of 'employer provided healthcare', small business in the USA is going to be the 'runt of the litter'. And that's not good for US economic development since real growth in wealth and prosperity for the greatest many tends to come from the widely diverse small business sector, not the multinationals (which tend to suck up lots of tax breaks and loopholes).

Btw, this data is consistent with the data that shows that the USA is the least egalitarian country in the western world, and has the weakest entrepreneurial culture in the western world.

I really think that "employer-provided-healthcare" model in the USA is to blame for this unintended consequence.

You could bolster your argument if you have the figure of small businesses in Canada. Since our business culture is quite similar, surely the difference in health insurance vs. socialised medicine will play out as you say?

[Michael]

A small ray of sunshine this morning...

GM bringing back 1,350 workers
Increased demand for fuel efficient cars is leading General Motors to reinstate workers and increase shifts and overtime in order to build 60,000 additional cars.

NEW YORK (CNNMoney.com) -- General Motors is upping production and calling 1,350 of its U.S. and Canadian auto workers back to work due to increased demand for its vehicles.

The company said Tuesday it is raising production by about 60,000 vehicles in the third and fourth quarters, in response to the increased sales that accompanied the government's Cash for Clunkers program.

The increased production will come from added shifts and overtime, GM said. In addition, the company will keep select plants open during weeks that they had previously been forecast to be shut down.

Source (http://money.cnn.com/2009/08/18/news/companies/gm_jobs/index.htm?cnn=yes)

Let's hope this uptick is real and not ephemeral. :)

[wphelan]

A small ray of sunshine this morning...



Source (http://money.cnn.com/2009/08/18/news/companies/gm_jobs/index.htm?cnn=yes)

Let's hope this uptick is real and not ephemeral. :)

I guess we can hope, and there's nothing wrong with that, but nothing I can see has changed that would lead me to believe this is real news. I'm sure there is an up-tick in short-term demand as a result of the CARS program. People that already were already going to buy cars are doing so right now instead of waiting. I'm willing to bet money there will be steep drop in auto sales by the end of the year, however. And, unfortunately for those affected, there will be layoffs that follow.

Actually, if we didn't see this happening now after three billion dollars had just been injected into the auto industry, that would be news.