Liberal-funded New Economic Foundation made the case for a 21-hour work week late last week in a published report. That was issued the same day Forbes and Local Market Monitor, a research firm, released a report trying to show America was on the verge of a brilliant recovery in the housing and jobs market. That was also the same day the Greek bailout appeared to disintegrate throwing the future of the euro and the solvency of many major and central banks into question.
All stories are factual meaning all of the data contained within would be valid–if they were in isolation.
Start with the Greek problem first. Instead of a 50% reduction in face value of the bonds it has issued as was the agreement last fall, Greece is now asking for at least a 70% devaluation plus is only willing to pay 4% interest on any existing or future bond. The problem this causes was summed up succinctly by Gary Jenkins, director of Swordfish Research, “When you are dealing with a sovereign, you don’t have a lot of tricks up your sleeve. If they chose not to pay you there’s not an awful lot you can do about it.”
Both sides, Greece against the lending European Union and the IMF, are digging trenches in this world-watched battle which threatens to topple up to half the world’s economy and ultimately undermines the attempts to bolster socialist, welfare states in developed countries. Jenkins is right, what happens to the value of all the trillions in bonds issued by the United States, Japan, China, England, France and India, among others if Greece or any other country folds?
Against this uncertain backdrop is the NEF report urging Americans to take a look at the cut-rate work week that is standard practice in Europe–a shortened 21-hour work week. What NEF dismisses is the effect half pay will have on an already reeling American economy. NEF, a Keynesian outfit, extols the virtue as a ”challenge to social norms, a resetting of the industrial clock ticking in America’s head.”
NEF sees the 21-hour week as integral to “redistribute paid work, offer the hope of a more equal society while giving us the time for all the things we value but rarely have the time to do such as care for our family, travel or continue our education as opposed to consumerism.” What it fails to address properly is how Americans, already burdened with a mountain of private debt, will be able to afford things without maintaining its income. It also did not address how the government would be able to continue its unchecked spending spree on much smaller revenue because the graduated income tax is based on people paying more when they make more. Cut the earnings in half and the tax revenues will drop by 75% in return through many falling into lower brackets.
Which brings up the last important report in Forbes. LMM, a North Carolina-based firm, helped Forbes compile a list on the 100 most populous cities in America. They addressed the changes in home valuations for both a three-year and one-year period, the unemployment rate, population changes and new-home construction for all of these areas.
Not surprisingly they interpreted the data to show America was on the verge of exploding out of its economic snail into a jet plane. But there are some details that cannot be explained. Take San Jose, CA, as an example. San Jose had a 2% valuation decrease in the past year and a 10% decline in the past three. Its population grew at 5%, its job growth at 3.3% and its unemployment is at 9.2%. Housing starts were up 97%! The report does not tell where all the demand will come from.
Forbes’ list claimed to have one thing in common–a strong jobs market for the listed cities was essential. Would anyone before 2008 have classified a 9.2% unemployment rate in San Jose as “strong”?
How does Forbes expect that rate to be diminished since the population is growing faster than the jobs picture in San Jose? And only if the housing starts over the past three years were below one-tenth of a percent of the population growth could there possibly be that much demand for housing now. Finally, if indeed the NEF gets its way and trims the income to 52.5% of what is current levels, who’s going to be able to pay for those houses without some major support from public housing handouts or severe cost-cutting by the developers?
Not surprisingly, Forbes discovered that where oil and gas development is in vogue, there is a much higher upside to the economic growth and home valuations. Houston and other major Texas cities had superb home valuations compared to non-energy area real estate. Forbes also claimed bottoms for many of the real estate markets noting “drops of one, two or three percent are a pittance compared with the double-digit drops common in recent years.”
But Forbes’ report isn’t issued in a vaccum. There’s that euro crisis out there, still diligently stalking the financial sector. There’s sovereign debt by the bucketfuls dragging at the world’s economy. There’s municipal debt and state debt and personal debt most of it over-leveraged by as much as 75%. And if the Progressives have their way we will all be suffering from the effects of a half-day’s work and half earnings.
John Maynard Keynes predicted by the 21st century everyone would be working only 15-21 hours a week. He thought we would be focusing on “how to use freedom from pressing economic cares” by whistling our way into more rewarding endeavors of doing what we like, not what we have to. He figured we could save the world, or at least make our personal lives more enjoyable, by working less.
Seldom has anyone been paid for doing what they like. Sometimes a person finds employment in an area they love, but mostly a wage is offered for doing something because that is the only way to get the job done and they don’t pay unless the job is done to to the employer’s standards and people abide the standards because their backs are against the wall financially. You can’t spend what you haven’t earned (unless you are government) and you can’t share what isn’t earned. Moreover, you can’t eat, heat homes, ride or drive or sleep on what isn’t earned by someone.
Jobs aren’t keeping pace with population growth, the liberals want to trim the amount earned to “create” more job oppotunities and the aovereign states are beginning to crack apart. Those things are not compatible. Yet major media sources continue to treat them as disparate items not as part of the whole, painting a false picture of the economic landscape.
And wasn’t the media who claimed the economic landscape would determine our own election this year?
Michael McCune spent 16 years as a government tax auditor and then operated a consulting/accounting business for 14 years. For 11 years he wrote a biweekly opinion column for the local paper (1981-1992).