Interview with United Technologies CEO

CNBC published a transcript of Jim Cramer’s interview with Greg Hayes, the CEO of United Technologies, the parent of Carrier. It is enlightening on many levels.

First, it is an introduction to what life will be like under a thoroughly incompetent President. Hayes is an actual business leader, not a low-rent grifter or TV star. As he describes his interactions with the President and his plans for the company you get a sense of just how easy it will be for any half-competent businessman or diplomat to outclass the leader of the free world.

Hayes is no genius. He’s not a standout super-CEO. He’s just a solid performer who worked his way up through the ranks of business management to a leadership position. In other words, he is far more qualified than our President to do anything outside the entertainment or marketing industries. And as you read carefully through the interview you discover that it will be pretty easy for an average American CEO to take our next President to the cleaners.

Because he’s not an idiot, Hayes set the frame for this interview session by conducting it front of a giant aircraft engine the company builds in the US. This doesn’t happen in low-income, low-value facilities like the Carrier plant in Indiana. This work is done by skilled professionals in a highly automated facility in high-income, high-tax, high-regulation Connecticut. This work is not heading to Mexico. The bulk of the money UT invests in that product goes into engineering, not assembly. Those engineering jobs are based in the US, but not in places like Indiana.

Think about this engine. We’ve spent about $10 billion developing the technology around these engines. It starts with the gear. And we have a star gear system which allowed us to do something we’ve never been able to do before, which is to spin the fan in the front at a third of the speed of the turbo machinery in back.

Billions of dollars invested with billions more to come. The vast majority of it in the US. Much of that investment (and salaries for professionals) fueled by savings in the manufacturing process, leading to competitive advantages made possible through trade agreements.

Hayes is happy to take some free money from the State of Indiana to delay the disappearance of low-skilled jobs in Indiana. But what’s the future for United Technologies and those low-skilled jobs?

You’ve got a workforce here [in Connecticut] highly skilled– highly, highly skilled; highly trained. I think the average employee here on the shop floor has got about 26 years of experience. Right? Very difficult to do. But these are the kind of jobs that we can do in America because they require high skill and high value add. The assembly lines in Indiana– I mean, great people. Great, great people. But the skillset to do those jobs very different than what it takes to assemble a jet engine.

Yea, “great people” in Indiana. Real salt of the earth. And no amount of government subsidy is going to keep them earning $20+/hr for work that can be done for $5/hr for the next few years in Mexico. Meanwhile, the company invests a few million dollars to automate those jobs out of existence altogether. That’s right, we’re only a few years away from seeing those workers in Mexico replaced as well.

We’re gonna make up $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because we’ll make the capital investments there. But what that ultimately means is there will be fewer jobs.

And that’s how it works. Move the jobs offshore for a while in order to facilitate the retooling of plants in the US. It is actually very difficult, if not impossible, to automate manufacturing processes while there are still human workers operating on the line. It’s cheaper to just shut down, operate offshore for a while, then bring the manufacturing processes back under an automated scheme. The investment comes back. The jobs don’t. What does Trumpian intervention accomplish in this cycle? Wasting taxpayer money to buy a few votes, while those voters get poorer.

Instead, we could let this process play out and witness how it makes Americans wealthier. How it creates fantastic new jobs that did not exist before. Again, from Hayes:

Look, we invented this engine here in Connecticut, right, just up the road in East Hartford where we have 6,000 engineers. There’s another 1,100 engineers– you can’t see them in the plant. And there’s 1,400 mechanics that work on these lines every day.

Take a close look at those numbers. The Carrier plant is currently using more than 2000 manufacturing workers to build air conditioners. Soon it will be down to just 700 (not the 1000 that were promised). Give it another year or two, once the President is distracted, and it will probably drop to 0.

This new manufacturing facility in Connecticut has almost 10,000 employees, but only 1400 of them are on the factory floor. Just as a quick reference, median household income in Connecticut is over $65K, compared to 48K in Indiana. The deal Mike Pence and his idiot President-elect just engineered helps explain that gap.

What should be done to help workers adapt to this new world? United Technologies, like thousands of other companies, is already doing it.

45,000 people have been through our employee scholar program. 38,000 degrees. We’ve spent $1.2 billion over the last 20 years educating our workers. We’ve got 7,000 people currently enrolled in this program. And the whole idea improve your own marketability. Improve your own skills. Because the skills that you have today are not the skills that are gonna get you through tomorrow.

Corporations are not waiting for government to catch up. They are doing what they can to upskill current workers. They are taking on the costs of education to make a higher skill workforce available for future growth. If the Carrier affair is any indication, we aren’t going to get answers or progress from the upcoming Administration. Education investments from corporations are not going to filter down to workers like the employees at the Carrier plant. Saving their economic future will depend on smart, insightful political leadership embracing some bold changes – like a universal basic income. For the next few years expect these workers to be used as the backdrop for lots of photo ops while their jobs slowly and quietly fly away.

138 Comments

  1. Pingback: Pentagon to Boost Manufacturing Engineering Education - Los Angeles High Tech News

  2. Here is exactly what we can expect from the GOPe. Let Trump distract; let the people he appointed to destroy the safety net do their work behind the scenes in full complicity with the GOP. Don’t count on it being public – Paul Ryan has a plan for that – it’s called: keep the legislative change process under wraps while gutting the programs.

    Brian Buetler of this New Republic piece is doing outstanding reporting. I highly recommend you “follow” his writing. He also podcasts at: Primary Concerns.

    “it is eerily possible to imagine Republicans pulling off the most regressive social reforms in modern history under a cloak of darkness. And the scariest thing of all for supporters of these programs is that nobody knows for sure how to reverse the dynamic, so that the third rail goes live again….”

    “Past GOP attacks on entitlement programs have been fairly frontal. Trump and his agenda-setters on Capitol Hill are going to do their best to keep this one off of the front pages. In the end, Bush’s Social Security privatization never got a vote in Congress. In the face of intense public and Democratic Party objections, Republicans shelved it and then tried to pretend it never happened.”

    “On a daily basis, Trump has proven able to divert media attention away from the plutocratic government he is assembling and on to a variety of shiny objects. He has not tweeted about Obamacare or turning Medicare over to private insurers, but he did appoint one of the most fiercely dedicated foes of both programs to run the Department of Health and Human Services.”

    “In 2005, when Democrats wanted the GOP’s plan to privatize Social Security to drive news coverage, Bush played into their hands. In a way, he did so consistent with the best liberal traditions of public debate.In all likelihood, Trump isn’t going to do any of this.” (Obama used the public forum as well for debate of the ACA.)

    “House Speaker Paul Ryan has been priming Republicans in Congress to streamline Obamacare repeal and Medicare privatization for years. Unifying control of government so Congress can set the agenda, and the president can sit back and sign bills, has been the party’s long-game for years. The difference is that instead of keeping drama at bay, the GOP president will be creating routine distractions from the hard work of crafting unpopular legislation.”

    ” Many dedicated, hardworking reporters will work insane hours covering the GOP’s decision-making and legislative maneuvers, but much of that hard work will end up below the fold, where much of the public won’t see it. This will insulate the party from blowback while the process is underway, which is precisely when blowback is most needed.”

    And, this, DS, is why we can’t wait until 2020.

    https://newrepublic.com/article/139245/trumps-distractions-will-provide-republican-cover-rip-apart-safety-net

    1. Profile photo of DS DS

      Mary,

      I’ll respectfully disagree with Mr. Buetler’s assessment of the situation. In Trump, the GoP has a tiger by the tail. They have no idea (and neither do we) precisely where he stands, where he’ll give way, or how he’ll react in the face of legislative opposition.

      The GoP is not as unified at this point as I would have expected. There’s no consensus on repeal/replace in the Senate at the moment; you’ve got Graham proposing legislation to help Dreamers; you’ve got McCain and Flake standing up for the filibuster. It’s not clear to me that Republicans are in a position to achieve 50 votes on many of Trump’s signature issues, let alone 60.

      Trump, rather than being the result of some kind of strategic genius on the part of Grover Norquist, is the result of grave miscalculations on the part of…well, pretty much all of us. He may be a fool, but to treat him as some sort of marionette at the beck and call of a GoP Congress is a significant leap. Even if he were, the divisions within the party make his effective use subject to question.

      In short, I’m not going to get riled up over a particular reading of the tea leaves. We can all see what Congress is working on and when. When I see something that concerns me, I will write my representatives. Until then, I will maintain a watchful wariness.

      1. Everyone has to be comfortable with their own style. By the time something concrete is put “out there”, it is usually too late to proactively organize. We might be able to individually react, such as you seem most comfortable doing, but numbers matter for the big things. I don’t disagree with you that there is dissension within the GOP, but my years of watching this party has convinced me that when it gets right down to what is most important to the party, they fall in line. In fact, I hope you are correct and I am wrong, but we’ll see, won’t we?

        As always, it’s good to have intelligent discussion. Thanks for engaging.

  3. Outside of the world that doesn’t involve Dear Leader and his Twitter feed, others are moving ahead with the concept of a Universal Basic Income.

    The legislature in the Prince Edward’s Island province of our dear neighbors to the north unanimously passed a motion to develop a pilot project for a UBI. While the details are yet to be hashed out, one suggestion would give citizens $1,320 a month, replacing the currently existing Ontario Works (welfare) program and the Ontario Disability Support System.

    http://www.huffingtonpost.ca/2016/12/07/basic-income-pei_n_13496370.html

    Just for the record, both liberals AND conservatives came together to agree on the idea, noting that it would both reduce government bureaucracy and expand benefits to all. Amazing how that works when people deal in actual facts towards mutual benefit, ain’t it?

    http://www.huffingtonpost.ca/2016/12/07/basic-income-pei_n_13496370.html

    Also in the world of UBI news, Elon Musk himself has openly said that we’re likely headed towards it.

    https://futurism.com/elon-musk-theres-a-pretty-good-chance-well-end-up-with-universal-basic-income/

    1. An alternative to Universal Basic Income is a federal job guarantee. I believe it has some distinct advantages over UBI. http://www.nytimes.com/roomfordebate/2016/07/11/are-we-ready-for-the-next-recession/a-guaranteed-federal-jobs-program-is-needed , http://www.nytimes.com/roomfordebate/2016/07/11/are-we-ready-for-the-next-recession/keep-unemployment-from-mushrooming-with-preventative-policies

      Both policies address the very important need for food and shelter, and both stimulate demand in the economy. Both would reduce bureaucracy for welfare and unemployment benefits. But a job guarantee provides many additional benefits, including something I consider paramount – dignity.

      There are other things JG would provide that UBI doesn’t. Training: how to get to work on time, how to interact in a workplace situation, how to follow instructions, how to give instructions, how to solve problems. Personal satisfaction: I believe people want to be useful and to have their efforts valued. I believe they want to have accomplishments to point to. A leg up for private sector employment: They’d have a resume and hopefully recommendations. Employers hate to hire people who aren’t currently working. Even less bureaucracy: JG’s pay and benefits would immediately become a floor for private pay and benefits, eliminating the need for minimum wage and benefits legislation and administration. And of course we’d get the benefit of their labor, as we did and continue to do 80 years after jobs programs like the CCC and WPA. If we’re going to pay people, we may as well get something back.

      There are two big objections to JG, one shared with UBI and one unique. The one shared is cost: where does the money come from. I personally believe JG would be a much smaller program than most people think, since people employed in a JG would spend the money they earn, and private sector would be forced to increase employment to service the increased spending. Other than that, cost issues are the same, and I believe manageable.

      The other big objection is that it will increase bureaucratic waste. Perhaps so, but the human endeavor that has no bureaucratic waste has not yet been invented. And the increased productivity would still be a net benefit.

      1. I tend to prefer a JG to a UBI, myself. I do believe that properly structured it could benefit the nation in numerous ways. It does lead to development of discipline and the work ethic. The CCC and WPA had numerous infrastructure and societal benefits. Not the least of which was the preservation of dignity and the work ethic.

        Also, not a small but often overlooked aspect was that particularly for the CCC, since the US Army often provided the organizational structure, the NCOs and junior officers, gained a lot of experience that was a significant enabler towards the rapid expansion of the military immediately prior to and after the US entry into WWII.

        On the negative side, there was a lot of opposition by organized labor and the private sector, supposedly because these jobs were taken away from the private sector and “the socialization of America”. The Republicans were of course totally opposed. As a result the programs were discontinued in 1942 and early 1943, when full employment was reached. They were actually intended to be temporary programs.

      2. FDR is recorded as one of America’s “greatest” Presidents for good reason. He devised a series of programs that embued “dignity” with economic security. A question for the proponents of the JG – would this program retain SS?

      3. A good question, Mary. I would expect that it would and would support including Social Security, Medicare, worker’s compensation, etc., but of course that would depend on the enabling legislation. Again the entire polarization of politics in America would come into play. Since the modern “Repugnican” party wants to eliminate Social Security and other safety net programs, they would not want that. But they would also be opposed to a JG program anyway.

      4. The dollar being up means that people are selling other currencies in order to buy dollars. I don’t really have a good theory as to why. Maybe people expect exports to the US to fall if tariffs are imposed, causing some unemployment overseas. They might be trying to buy dollars as a safe haven against coming hard times.

      5. I understand and agree with the basic concept behind a JG, but it falls behind a UBI in a number of critical areas:

        – It retains the old definition of “work” in our society, whereas a UBI fundamentally overhauls it, implying dignity and pride in efforts in all areas, whether it’s a mother taking care of her children at home, a student learning a foreign language or whatever else.

        We’re at a critical point in our history where the old idea of a “job” is being slowly but surely eliminated and we want to be at the forefront of that argument and why it’s good for everyone. A UBI is critical for that revolution. That said, if we want to pursue a similar, if not smaller scale version of the JG as a supplement for people who, for whatever reason, still want to work and find that they’re having difficulty elsewhere, then that’s a discussion worth having.

        – No matter how thorough you are, looking to “guarantee” people a job will inevitably see people falling through the cracks. That was true for Roosevelt’s PWA in the ’30s and it would be true today. A UBI is an absolute guarantee of a minimum income for absolutely everybody that’s of the appropriate age, no exceptions.

        – One of, if not the single greatest focus of a UBI is its fostering of the individual in what they want to do, not just what they have to do. Offering people the guarantee of a job sounds great, and certainly to some extent it is, few to no people actually dream of being involved in public works.

        Long-term, a UBI’s goal is to allow people the opportunity to pursue and realize their dreams. Trade that in for a JG and you’ll suffer their time that they could otherwise be using to maker those dreams a reality. We’re entering a new world where young people will have to be studying and refining their skills as never before, at least until their mid-twenties to their early thirties. They need all the free time they can get.

      6. Those are good points, Ryan. Makes total sense. It’s obvious that population control is going to have to be a major component of these ideas….think we’ll get any movement from conservatives in that regard? One would think that expanded contraception would be a slam dunk – addresses abortion rates, medical insurance costs, welfare numbers – yet the hard right religious wing opposes access to affordable, effective birth control. So – what to do?

        On this point, women HAVE to rise up and demand their rights to make choices regarding pregnancy, yet the group that is least empowered and most impacted – poor, single women – have the least influence.

  4. I am a laid back kinda guy, I have a Zen like outlook, live and let live, a turn the other cheek kind of attitude. I am not confrontational. I don’t want to rock the boat. Always strike a low profile. But the next person that says that voting doesn’t matter, that all politicians are alike, I’m going to punch in the fucking mouth.

    1. If I could edit that comment, I would change punching in the mouth to “give them a piece of my mind”.

      That comment was after the news of some of his appointees. News concerning the Orange One is causing excessive alcohol consumption in this household. And rash commenting after said consumption.

      1. I chose the unarmedandunafraid tag to make a statement with every comment, sort of like a signature line in email that would hopefully let people know that there are some who live their lives without guns. But it was long so I decided to shorten it, at least here. Save some pixels and 1’s and 0’s.

        As I type this I realize I am afraid, much more than when I started reading and commenting on this blog. Strangely, I’m not afraid of home invaders or zombie hordes, or whatever. I’m afraid of those with the mindset that guns are needed to solve the problems of the future. And the enablers that were recently empowered by our political process.

  5. This is the argument the Demon need to start making. Not the “He’s RACIST! and FASCIST! and SEXIST! ”

    He may be those things, but it comes off as alarmist, and frankly, most ppl tune it out.

    Make the argument that he’s incompetent, a sucker, a loser. THATS what’s going to stick, because it’s absolutely correct. He’s out of hi is league.

    1. Profile photo of EJ EJ

      But people have been saying that, too. People have been pointing out that he’s led his business to as many bankruptcies as Newt Gingrich has had failed marriages. People have pointed out that if he had just put all his inheritance in an index tracker fund, he would have more money than he does after years of business.

      People tune that out too.

      The problem is not that we haven’t found the silver bullet argument against Trump, or that we’re too hung up on racism, misogyny and fascism. The problem is that Trump is immune to silver bullet arguments. His supporters literally do not care. He could rape a dog in the street and it wouldn’t hurt him.

      1. The emperor has no clothes and no one cares……….

        If the market continues to rally, based upon optimism for reduced regulations and corporate tax reform, Trump will be seen as a financial wizard….the dollar is rising and all is good for investors – who are, of course, the “makers” and thus the power brokers.

        We learned last night that the ultra close vote recount in MI has been stopped. Stein is appealing but time is running out….what could the GOP be afraid of?

        https://www.theguardian.com/us-news/2016/dec/07/us-election-recount-halted-michigan-jill-stein?

        I say stay on him hard – be united – and start selling the Democratic platform.

      2. Trump’s supporters are a lost cause until and unless they choose to acknowledge these realities. That could happen for some of them when they get burned by protectionism/ trickle-down economics/ safety net shredding, but their capacity for self delusion is high. The sad fact is that these people could have been outvoted.

      3. In listening to Rachel Maddow tonight, she cited a PPP Study that revealed that of Republicans who supported Trump, 59% do not think he should release his tax returns! All other categories of voters – pro-Clinton, Pro-Stein/Johnson, were overwhelmingly in favor of Trump disclosing his tax returns….yet the majority of his Republican supporters do not!

        Now, since no one has seen his tax returns, how will we know if there are conflicts of interest beyond his more visible real estate ventures?

      4. Profile photo of DS DS

        The thing about all of the lines of argument being talked about in this thread is that they’re all ultimately personal in nature. They come down to “he’s dishonest, he’s a racist, he’s temperamental, etc.” We’re at a point in our politics where tribalism and the apocalyptic rhetoric engaged in by our politicians have effectively neutered this style of attack. Hitting Trump on character just raises his profile and sets his base harder against the rest of the world.

        The only avenue of attack left, as far as I can see, is on policy. “Doing x is going to hit your pocketbook in way y.’ I don’t want to normalize Trump. I don’t approve of virtually any aspect of the man. Unfortunately, though, I’m convinced that the only way to beat the man is to let him fail, and to soberly point out the consequences of his policy positions. When 2020 comes around, the only way to beat the man is ‘Trump advocated x. We implemented x. This is how x hurt you.”

      5. We can’t wait, DS. There’s too much at risk; however, I do agree with your logic which is why (in my prior rant) I advocated the personal approach. When people you interact with are affected adversely, help them understand the linkage. That way, when 2018 (not 2020!) comes around and we have mid-terms, maybe, just maybe, we can get more of these non-voting or otherwise voters to make better informed votes….and, I know, this election wasn’t about facts or Trump wouldn’t have been elected. Sure – there is that, but Ladd is correct that the effort begins NOW.

        Here’s an example of psychological swift-boating of the truth in the most recent Forbes opinion on Dr. Price’s “Empowering Patient’s First” plan. Be sure to scroll down to sign in via google or FB when all the “ad blocker” warnings come up . I’ll post the link and my response. I have vowed to use my time as I can which for me is responding to opinions that have wide circulation. I’m putting myself out there and hope to generate more honest discussion or refutation. Beyond that, I plan to pursue personal efforts and monetary support of organizations that can do things I can’t.

        http://www.forbes.com/sites/theapothecary/2016/12/09/tom-prices-empowering-patients-bill-does-impose-guaranteed-issue-but-dont-jump-for-joy/#487fdc21bd16

        My reply:
        “The gaping hole in your defense of Empowering Patients First is your statement of condition: “don’t be so poor that you can’t afford the premiums (even after the modest tax credits) so that you don’t fall into the trap of perpetual pre-existence.”

        Like, that’s a choice for “most” people? Most people who have health issues that are chronic or serious understand the need for health insurance. Whether they can afford to purchase it or not is a different matter. Working people who have to rely on ER treatment spend hours waiting for services which are crisis-management at best. Many “poor” people are working more than one job and they still can’t cobble together enough money to pay for health insurance and still put food on the table, house their families, and clothe them. What is it about conservatives that you don’t get this? Education? Talk to recently graduated college students and older degreed adults who have lost employment due to outsourcing and other non-controllable factors.

        There are a range of reasons that people don’t have health insurance but to premise your support for Price’s Empowering Patient’s Bill upon “don’t be ‘so’ poor” is just about the most elite argument I have read yet in the defense of repeal of the ACA. “

      6. Profile photo of DS DS

        Mary,

        Perhaps I’m reading incorrectly, but it strikes me that the phrase you cite was probably meant to be taken in a sarcastic/ironic sense. I think he’s using a bit of light humor to point out one of the flaws of the bill, while defending a fairly narrow point from his previous article.

        I understand the call for action now, but it’s early days, and I still don’t have a strong sense of what Trump intends. Whether or not his ‘plans’ can be stopped depends a great deal on things that are largely beyond our control.

      7. Profile photo of DS DS

        Mary,

        I say that because I’m refraining from opposing people, rather than policy. Do Trump’s cabinet choices concern me? Absolutely. Has anybody put forward concrete plans that can be picked apart? Not really. I’ll have something to say about Tom Price’s proposal if that’s what the administration ultimately advocates.

        It’s sometimes said that ‘personnel is policy,’ but that’s less true when it comes to the political leaders of government bureaucracies. These agencies are capable of a degree of self defense. Right now, that’s a good thing. I intend to speak up when proposed policy poses actual problems. Until then, I’ll wait and see.

      8. DS, you were correct in your interpretation of sarcasm from Seth Chandler’s statement about “not being ‘so’ poor”. He replied to my comment and here it is in total:

        “I think most readers will recognize that the article does not offer unqualified support for the Price bill but attempts to resolve the important factual issue of whether it provides for guaranteed issue. They might also have detected at least some possibility of irony in my “moral” that, under Empowering Patients, people had best not be poor.”

        Admittedly, I missed the irony. Mr. Chandler’s piece illustrates that “guaranteed issue” for all people under Rep. Price’s plan is not assured. Continuous coverage will leave out millions of people and they matter. I hope he writes more on the subject and I’ll remember to note his use of irony when assessing intent.

    1. Sometimes I think that the fundamental problem is that about half of the voters don’t believe in the political process as a way of solving political problems They subscribe to a political party that undermines the political process, which, in a vicious circle, makes the political process ineffective.

      1. Yep, instead what we hear is how inept Obama was at reaching across the aisle, wasn’t a “tough enough” negotiator, was horrible in foreign affairs management; appointed a terrible cabinet, was always focused on “those” people and the environment…

        Clearly, Obama was not politically astute but he was/is a hard working, decent and moral man. Compare

    1. To answer my own question, per BLS (this is from Truthful Politics – a link is below) the job creation figures since Reagan are:
      Reagan: 13.6 million
      Bush 41: 1.1 million
      Clinton: 19.7 million
      Bush 43: (-388 thousand)
      Obama (current figure): 8.6 million

      WHICH PARTY CREATES THE MOST JOBS????

      The link to the Truth Politics article is:
      http://www.truthfulpolitics.com/http:/truthfulpolitics.com/comments/u-s-job-creation-by-president-political-party/

      1. It’s interesting to look at job creation figures in relation to deficits, since deficits are the old-fashioned way to stimulate the economy and employment (note: I am NOT saying there’s anything wrong with that)

        Reagan: 4%
        Bush I: 4%
        Clinton: 1%
        Bush II: 2.5%
        Obama: 5-6%

        These are eyeball estimates from a St. Louis Fed chart of deficit as a percent of GDP. By this measure (and I’m still trying to decide if it’s a good measure) Reagan and Clinton look like stars, the Bushes were duds.

        Here’s some things that I ought to correct for but don’t know how: effects of automation, distribution of spending vs. tax cuts in the deficit, and where the tax cuts went.

      2. I’d like to see more descriptive information regarding the figures you indicate. The figure for Obama of 5-6% implies that Obama’s yearly deficits have been very high. In actuality the deficit under Obama has declined dramatically as the economy recovered. Initially the deficit each year was extraordinarily high, but that was because receipts had declined considerably due to the Great Recession and there was a very large stimulus. But in the later years there has been a considerable decline in the deficit. The deficit hawks could and have had a field day with these figures by taking them out of context.

        As you say there are some things that need to be corrected for. I feel that we should differentiate between deficits due to tax cuts and where they went as opposed to deficits due to spending and the type of spending. Also the level of deficits should be taken in context. When the economy is doing well, the level of deficit should be low, whereas when the economy is not doing well, the level should be higher. At least that is what I learned from good old Keynesian economics.

        Let us not forget that the the US economy was on the verge of a tail spin into another Great Depression when Obama took office. If one uses Krugman’s definition of depression – an extended period when normal economic measures do not function – we were actually in a depression. One other characteristic of the Great Depression did not occur and that was major deflation, but we were nearing that.

      3. TM, as you point out the nature of fiscal expenditures matters a lot. Tax cuts for people who won’t spend don’t do much of anything. On the other hand, some expenditures return really good dividends. I think I read once that the Interstate Highway system has returned nearly 25% annually since it was built 50+ years ago

      4. Yes, Mr. Ike was an innovator and he was conservative, to boot. We had budgets that were essentially balanced. We were spending a high percentage of our GDP (much higher than now) on Defense (height of the Cold War). He ended the Korean War and subsequently managed to keep us out of shooting wars.

        But the top income tax rates were around 90%. Social security was not a big program and Medicare did not exist. Also as been mentioned the “White Social Safety Net” was being created during that period. On the other hand, life for the disadvantaged, African-Americans and other minorities was not very good. If one was not a heterosexual white, their sexual orientation had be kept in the closet. There was heavy discrimination. There was an attempt to universally deport Mexican migrant workers. That failed utterly.

        For some life was very good, but for others it was not so good. One of the focal points of the late Silent and early Boomer rebellion of the late sixties and early seventies was to open up American society. That effort is still ongoing. As Chris has pointed out many of Trump’s voters want to return to that period. For my part, I believe we need to continue to open up American society, improve and expand the social safety net to all members of society. That may involve a UBI, single-payer health care and significant investments in education and infrastructure. Getting control of the financial engineering is also required. We must also take care of our environment and implement a program to adapt to ameliorate and control the human caused global climate change.

        I personally think very highly of Eisenhower. He was a good leader, was willing to implement changes when required, but was not a revolutionary. In other words he was a true conservative. He was a good fit for the times and being a true conservative is not bad. America needed a period of stability after the wrenching changes of the 30’s and 40’s. America is a different place now, however. Different leadership is now required.

        So yes, Ike was an innovator, by today’s conservative rhetoric. But he also realized that we all had to be team players. That is totally opposite to the “Makers and Takers” or “Ayn Randian” belief set of the modern conservative wing of the Republican party.

  6. With Republicans pledging to repeal Obamacare as soon as they’re able and without a replacement in place, chaos was inevitable, but the scope of it is beginning to come into stark focus.

    http://www.thehill.com/policy/healthcare/309101-hospitals-gear-up-for-major-offensive-against-obamacare-repeal

    According to a new report sponsored by the hospital industry, cuts with respect to Medicaid and Medicare would be absolutely devastating. If left to pure repeal without any sustained funding streams for them, hospitals could suffer losses in as much as half a TRILLION dollars. That’s a recipe for unmitigated disaster.

    Of course that’s not even taking into account the chaos that’ll erupt as providers flee the exchanges in droves, which is another migraine in and of itself.

    1. I’ve noted this before, but when hospitals treat uninsured people, that cost is split between the institution, the ACA, and local taxpayers. In TX, there is a line item on the county tax list that states “hospital district”….anyone who thinks they’re not paying for indigent patient care are not paying attention to this little section. Check it out.

  7. Concurrent to the Trump comments about taxpayers being over-charged by Boeing on the presidential 757, (does he realize that he is NOT YET POTUS!!! ), comes this expose by the WaPo that a study commissioned by the Pentagon, released in Jan’15, that was buried. Seems the Pentagon was worried Congress would cut their budget if the details of the report were made public. Which Congress actually voted for a larger budget than the Pentagon or the President asked for….wonder if this report would have made a difference?

    $125Billion in savings is identified….that might make a dent in the entitlement programs Republicans are so eager to cut…while criticizing HHS for fraud and waste, maybe they should look to the budget they drool all over for funding instead…

    It will be interesting (again) to see what follow up will chase this report of the waste in the Pentagon’s budget…….and see if any changes or adjustments are made by those conservatives who are ready and willing to cut everything that helps ordinary Americans.

    https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html?utm_term=.b4d1c09d3559&wpisrc=nl_most&wpmm=1

    Now, remember, that Congress –
    +
    `

      1. Profile photo of DS DS

        In defense of the DoD guys on this one, there are some serious caveats to this proposal. First, that 125 billion is over five years, which is a substantially smaller amount than WaPo makes it out to be. Secondly, a lot of the “efficiencies” identified are non-specific, mealy mouthed bullshit that you hear from these kinds of consultants all the time. Lastly, and probably most importantly, these guys are assuming that the Pentagon can simply eliminate jobs at will. Even if they want to do it through attrition, they risk the ire of Congress. Everybody in Congress wants to save money…until you want to save it in their district.

        Does DoD waste an epic amount of money? You bet. Do these guys have the answer? Probably not.

      2. I don’t care if some of the report was mealy-mouthed, it should have seen the light of day! I am so tired of all the criticism of Medicare, SS, and Medicaid that serve millions upon millions of people with vacuous charges. I agree charges need to be specific, but more emphatically, I am tired of the double standard, the convenient with holding of information, and protection of one bureau at the expense of another deemed “expendable”.

      3. With all respect, DS, that’s BS. If you order a study then stick it under the mattress where the sun don’t shine, you can bet there won’t be serious contemplation of its recommendations. The fact that the study covered five years makes it even more compelling in its significance. It wasn’t a fly by night organization. As for the fact that lots of people would have to be retired….isn’t that what business does when overhead gets too large? Isn’t that the constant criticism of the GOP about the “bloated” federal work force? They certainly don’t seem uncomfortable about paring it down in size.

        Fact is – if this report had been released publicly, it could have been part of the debate in the presidential campaign and it surely would have offered a head start on budget preparation for 2017.

        No, I’m not going to give anyone involved with hiding this study an out. Deal with it. If there are areas that need explanation, do so. If there are areas that need further research, do so. What I don’t condone and neither should any American, is a five year study that identifies savings of $125 billion dollars that is hidden.

      4. Profile photo of DS DS

        Sorry, I didn’t mean to imply that burying the report was okay. If it’s any consolation, what was probably going to be a relatively obscure bit of budgetary arcana is now going to get national attention. These guys done goofed…

      5. DS, you may feel that $125 Billion is insignificant, but it only is if it is disregarded. IOW, if the report is taken seriously as a template for cost efficiency, savings would occur. With so many safety net programs on the chopping block ostensibly due to cost over runs and inefficiencies, saving something in every cost center would be helpful for budgets that are stretched to the max in other areas of growth and need.

        Why do you feel the report is arcane? You said you agreed that Defense was likely to have many cost issues, so why would you not be supportive of trimming where the DOD indicates there is waste? Closing duplicative or non-essential bases has been punted for years…It’s time to get serious about what services are priorities in our nation and that includes the DOD.

      6. Profile photo of DS DS

        Mary,

        I’m sorry if I haven’t been clear; you and I probably agree more than we disagree. Let me lay out a few points.

        My point regarding the study is not that $25 billion per year is insignificant, or that it should be ignored. What I meant was that, by trying obscure the study (if they did. That point is disputed), they’ve made it a much bigger deal than it otherwise would have been. Had this been brought to the attention of the Armed Services Committee, it probably would have been quietly discussed, and then dismissed. Now Congress, feeling offended, is likely to look into the matter in a much more significant way.

        Why would the report have been dismissed? Because it contains limited substance. Their slide presentation is full of the sort of jargony nonsense and wild assumptions that these consultants always bring up. Essentially, these guys just assume things can be done more efficiently, say ‘make it so,’ and then walk out the door and collect a paycheck.

        The classic meme with regard to the military (and government in general) is that they spend $100 for a hammer, or $500 for a toilet seat. You can find plenty of examples of this in military budgets. Sometimes its classic fraud, waste, and abuse, but more often than not, it reflects the need for specialized functionality that’s not required on the civilian market. Same goes for personnel costs. Could they be more efficient? I have no doubt. Can they be $25 billion more per year efficient? That’s unknowable without a deep understanding of the processes in which they are engaged, and that’s not what this study did.

        There is absolutely big money to be saved at the Pentagon. The JSF program, for instance, is an absolute whale. Unfortunately, the future of American air superiority now hangs on it, and we can’t really cancel it now, but lessons from that program can and should save the Pentagon huge dollars in the future. Concurrency in procurement needs to be eliminated, achievable goals need to be set, and program requirements need to be well defined at the outset and not changed. These are reasonably specific measures; improving ‘efficiency’ by 4-8% per year is not.

        Base closing is actually the perfect example of the sort of erroneous conclusions reports like this one can reach. The suits that generated it would look at all those duplicative bases and say ‘Look at all the money we can save! Just close them.’ DoD would say ‘We agree! Have for years!’ Then Congress comes along and says, ‘Wait, how many jobs is that gonna cost my district? Yeah, not happening.’

      7. DS, Please correct the projected savings reported by WaPo to $125 billion, not $25 Billion as you stated. You sound knowledgeable about DOD budgets. You also convey an attitude of casual dismissal of legitimacy of government commissioned studies. Maybe you have good reason for that, but I don’t share your view that reports like this are de facto arcane or taxpayer gigs. It was commissioned by the DOD, conducted over 5 years, and performed by people whose charge – identification of waste and efficiency potential in government – is undeniably legitimate and worthy of public dissemination and debate. If the report lacked substance (which my reading of the WaPo article did not affirm) then this should have been called out.

        As for base closures – it is inexcusable that these decisions are impeded by the politics of jobs/local revenue/votes. With members of Congress talking about making huge changes to the social safety net which affects all Americans, you bet I want them to do their jobs and look hard at cost savings wherever they are justified.

        I see this issue as part of a much larger picture – one of national priorities and revenue allocation. Too often, political justification for substantive change is predicated by savaging other valuable programs rather than the merits of need and purpose. The public’s portion of the US budget is getting increasingly smaller as a result of reduced revenue to the treasury from taxes and other revenue-generating operations. The default solution by Republicans is always to cut programs that benefit the poor, ill, elderly, disabled.

        Unless you have personal documentation that the purpose and treatment of this five year study was never intended to be seriously considered, we will disagree. My view is that it should have been accorded the gravity and openness the findings indicated. We have far too much bullshit in our political process as it is. With Congress poised to make sweeping changes in government services and programs, the revelation of this report not being made public deserves all the criticism it is receiving.

      8. Maybe so, Creigh. But why does that not matter to Congress? To a Congress that budgets even more $$ than requested by DOD? Without doubt, I do not trust this Congress to do anything on the merits of need.

        The fiscal hypocrisy is rampant.

        All commissioned studies should be public.

      9. Profile photo of DS DS

        Mary,

        Unfortunately, I am not incorrect about the projected savings. The total is $125 billion over five years, or $25 billion per year. From the WaPo article:

        “The report, issued in January 2015, identified “a clear path” for the Defense Department to save $125 billion over five years.”

        That’s not insignificant, but it is not 20% either. This study is government commissioned, as you say, but it was conducted by Mckinsey Consultants. Their primary business is private sector consulting. That doesn’t automatically mean that they’re wrong, but take a look at some of their slides over at Mother Jones:

        http://www.motherjones.com/kevin-drum/2016/12/does-pentagon-really-waste-125-billion-pencil-pushers

        The author takes a dim view of these recommendations, and so do I. Why? Because they’re the sort of non-specific recommendations that you can pick up in a PMP certification book. They’re operating on the magical assumption that the DoD can match private sector efficiency gains in operations without considering the nature of those operations. That’s a recipe for failure and waste. DoD is spending significant amount on overhead, but we don’t have a good basis for comparison to determine if that’s a rational amount.

        Look, the study is not totally without value. If nothing else, they’ve categorized and quantified spending on the institutional military. That’s a step forward. In the meantime, however, there are very real, obvious steps that could be implemented in procurement and in the operational military that would result in savings that don’t disappear when the curtain gets pulled back.

        For instance, someone I know was involved with a training operation in which private aircraft were contracted to provide transport an reconnaissance. Meanwhile, nearby Air Force assets that could have served the same purpose while meeting their training requirements sat on the ground. Potentially seven figures the military didn’t need to spend in a single operation. Why did it happen? Pretty much because the officer running the exercise just didn’t consider reaching out to another branch.

      10. Profile photo of DS DS

        Also, it’s worth noting that this study was not conducted over five years. It was produced in three months. From the WaPo article:

        In an Oct. 15, 2014, memo, Work ordered the board to move quickly, giving it three months to produce “specific and actionable recommendations.”

        That’s not a lot of time, and probably why the recommendations are not particularly impressive.

      11. I stand corrected on the five year time frame for the study – the $125 billin in savings were projected over five years. FWIW, the contract budgeted for the study was $2.9 million. The whole effort is bogus if the report recommendations don’t flow to decision-makers…who, may not have done anything with it either, but why spend $2.9 million for a study that no one sees or acts upon?

        Here’s the proposal, courtesy of google.

        “http://dbb.defense.gov/Portals/35/Documents/Meetings/2015/2015-01/CBP%20Task%20Group%20Out-brief%20Slides_FINAL.pdf

      12. Profile photo of DS DS

        I think there’s an understandable urge to want to make the Pentagon more efficient, but I think there’s also a bogus fascination at the political level with applying the practices of corporate America to get there. The comparison to UPS is telling:

        “Almost half of the Pentagon’s back-office personnel — 457,000 full-time employees — were assigned to logistics or supply-chain jobs. That alone exceeded the size of United Parcel Service’s global workforce.”

        That may be true, but I doubt that UPS is capable of putting a 5000 man brigade combat team anywhere on the planet ins 72 hours or less, and then sustaining and expanding that presence. Maybe they are, but they haven’t demonstrated the capability. That doesn’t mean that the job can’t be done more efficiently, but I would bet against being able to maintain that capability at a personnel level comparable to that of UPS.

        Again, I don’t think the study is worthless. It may seem like a low bar, but the Pentagon now has at least a basic characterization of its back office spending. That may not seem like much for $2.9 million, but it is real progress.

      13. DS, if such a vast portion of the DOD budget is allocated to administrative and service personnel (not military engagement), why hasn’t there been more push by Congress to privatize this aspect of the Defense operation? I’m talking about elimination of civil service jobs in favor of outright privatization such as is being recommended in other areas of government?

        I understand the false equivalency of comparing government operation to that of the private sector, but it hasn’t seemed to bother those pushing for privatization of prisons, mail delivery, etc when there is either profit to be made or an uncomfortable engagement to be conducted. Covert “black” operations conducted through private military contractors have not received enough scrutiny. I recently watched the documentary film “The Whistleblower” (private paramilitary organizations involved in UN peace operations). The atrocities they committed while representing our country and the United Nations were horrifying…It was very well done but very difficult to watch. Commentary at the end of the movie stated that the US contractors involved are still employed by the US. Here’s a link.

        http://foreignpolicy.com/2011/06/29/the-whistleblower-the-movie-the-u-n-would-prefer-you-didnt-see/

      14. Profile photo of DS DS

        Mary,

        I suspect that people have a natural aversion to military privatization because the impact of that is something we can all grasp fairly easily, even in abstract. People are naturally suspicious of that, even if we’re only talking about back office operations. Combine that with the fact that officers want to have a neck to put hands around when their LES comes up a few hundred dollars short at the end of the month, and I think there are powerful political forces arrayed against privatization. Even still, a little more than 26% of the workforce covered by this report consists of private contractors.

        Other government services don’t have those kinds of constituencies. Prisons, for instance, embody a service that doesn’t affect most of the US population in an appreciably concrete way. The people most affected by prison policy are those that few of us care to defend; thus, if we can save a few bucks, and they’re the only ones who suffer from the cut corners, people are willing to look the other way. That’s both morally problematic and shortsighted, but it’s one of the weaknesses of democratic politics.

        As far as PMC attrocities go, I don’t disagree that it’s a problem. There’s not really a good legal framework for their use in combat zones, and their abuses occur in environments that make prosecution difficult. Unfortunately, in cases such as the one you reference, the kind of work they’re engaged in represents capabilities that aren’t maintained within the military, making them sadly necessary. Clearly better oversight and legal frameworks are necessary, but I struggle to see how their use might be avoided.

        With respect to ‘black operations,’ my suspicion is that these are rarer than we might think. It’s difficult to come up with a solid use case for a PMC in a black operation, outside of certain situations where they might provide a degree of deniability.

      15. Good thoughts, DS, but if you have time, view the movie. It’s a hard watch but clearly there is not just a lack of accountability, there is wholesale complicity in trafficking. The movie made the point that these same contractors are still employed by the U.S. and the U.N. even knowing these atrocities happened and are undoubtedly still happening. Surely there has to be some framework for holding peacekeepers accountable for commission of crimes.

        I flatly do not believe in privatization of prisons.

  8. I think the takeaway is this: If your job is putting one thing on top or another thing, and putting a bolt through them, you are screwed. There is no amount of government intervention, subsidy, policies, or treaties, that will save your job. Nor should there be. The value of such labor, on a per-hour basis, has dwindled to a point where it is no longer feasible to pay for it in the US. This is the economic reality. This is also just the beginning – but we’ve had these sorts of beginnings before. Anyone been to Pittsburgh lately? It’s absolutely beautiful. Perhaps Detroit will be again as well. We have to ride this one out, sports fans – there’s no other option.

    1. I know that automation will eventually cross into all fields of labor, and I recognize that the focus is on industrial labor, but I would like to speak up for human services who serve our children, the elderly and disabled. To me, this is a different situation even though I fully recognize there are care aspects where automation can be highly useful. Once you’ve ever been exposed to or directly involved in a situation like this, you may be at a disadvantage from making a judgement about care needs.

      I utilize several pieces of equipment for my husband’s care and literally could not do the job without them. The equipment compliments the men and ladies who assist me in his care though they lack advanced educations. They are indispensable in the value of their help, kindness and the skills they render. We will always have a need for services on a personal level even recognizing that automation and technology can be a tremendous assist.

      Education of children and nursing and other services/job skills will undoubtedly incorporate technology but they are most valuable for the empathy and wisdom they offer to those they help.

      1. And why did putting one thing on top of another and bolting pay a decent wage while taking care of the elderly doesn’t? Because a generation of workers organized and raised holy hell. No reason why that can’t be done again.

      2. “Workers organizing” has a temporary effect. Right up to the point where there are alternatives. Do you really believe the demise of say, the Port of New York, was brought on by containerized freight, or the Longshoreman’s Union? Does it matter?

        Home healthcare is not easily automated. In general, it is not a “high skill” profession. It also has a special distinction in that it is generally paid for by third parties. Organize home healthcare workers, and just see what happens.

      3. Like every personal service, there are different levels of skills. I can assure you, the people who work for us are highly skilled although they may lack college degrees. Those who work as independent contractors usually command $18/hr (skilled) or more….with alzheimers care being at the top of the pay scale. You are correct, however, for those who possess “regular” caregiver skills dealing with people who are simply old, feeble, or mildly disabled, organization would be expensive for the families who need them.

        I hope you never have to experience the need for caregivers but if you do, you will quickly appreciate the difference between “regular” skills and highly skilled persons.

      4. I was referring to labor history in the 1930s and 1940s: union strikes mostly when there was literally blood in the streets at times. Today we have the “Fight for $15”, fortunately nobody shot yet, but the powers that be don’t just decide one day to treat people fairly.

        I take a very conservative view of rights. The only rights you have are ones you are willing to fight for, or that someone else is willing to fight for on your behalf. Anything else is a privilege granted to you by your betters, who will take the privilege away from you if they feel like it, and sooner or later they will feel like it.

    2. Fifty – Thank you for mentioning my adopted home town. Many positives about the former steel city. I didn’t live here during the demise of major manufacturing but I assume there were things that could have been done to ease the transition.

      Speaking of bringing back coal and steel as Orange One has, I doubt many want it back here where robotics, healthcare and other high tech jobs are prevalent.

      1. My pleasure, unarmed. I first was there in the 70s giving a paper. It’s a different place today, and a shining example of what economic transitions can bring. Contrary to the hand-wringing and gloom-and-doom of the antiglobalists, even economic dislocation can have a bright side. In fact, at least here in the US, it usually does. Good on ya!

      2. Mary,
        Pittsburgh was a one trick pony until the collapse of the steel industry in the 70s and 80s. I think three things have contributed to its resurgence:

        1) Eds and meds. Our universities and hospitals, often in collaboration with each other, or doing some world-class things.

        2) We didn’t have any money in the 80s and 90s, so much of the ugly, poorly planned “revitalization” that happened in other cities passed us by. By the time we had money to do anything, emphasis was put on sustainability, making the most of our beautiful outdoors, and an overall aesthetic that is much prettier than late 20th century stuff.

        3) After the collapse of the steel industry, literally half the population of Pittsburgh left and the numbers have still not recovered. That’s actually a good thing because everything is insanely cheap here. That means all of our graduates can afford to stay in the city, and we are attracting ever more people from expensive places like Brooklyn.

  9. Profile photo of EJ EJ

    In the old East Germany it worked similarly: since automation threatened jobs, the government paid companies not to automate. The result was a society which operated, quite literally, at a museum level of technology.

    When my friends ask me why I continue to believe in capitalism, this is what I tell them.

    1. I believe in capitalism but I am not blinded by its failures or weaknesses. When the benefits of capitalism accrue to so few, it becomes an opportunity by privilege or sheer luck. That may be a fault of government and only tangentially of capitalism, but it is a real consequence and it is definitely not trickling down.

  10. This is the dilemma that we should be focus on. More, better stuff being made and more services provided with fewer but much more skilled people doing the work. What do the people do that do not have the ability to adapt to this developing reality? They are not going away and will not be content to die quietly in some corner.

    This problem and how it is resolved will determine if capitalism survives. Capitalism is going to need an in field modification . Trump is a smoking mirrors and dog and pony show expert. But even Bubba will find out eventually he was and is all B.S. .I just hope our system is not too heavily screwed up in this process. I read somewhere that the betting market is 9 to 5 that he gets impeached. This may eventually be Pence’s problem.

      1. A good friend – recently deceased – worked for McDonald-Douglas which later was absorbed into Boeing. He lamented the merger and how it impacted an incredibly highly qualified group of people. He finished his career with Boeing doing work for NASA, and was proud of what he contributed but he always felt M-D was the premier company.

  11. This blog is right on the money.

    The future of US manufacturing is in sophisticated systems, such as the United Technologies Aircraft Engine uses as an example here. In such systems, the high technology workforce consisting of engineers, programmers, technicians and other technology professionals typically outnumber the number of workers on the factory floor. Even the workers on the factory floor are highly skilled workers. For most of those jobs a minimum of two years of post high school education plus in many cases an apprenticeship (OJT) is required.

    Germany has adopted a pattern in their educational systems where the Companies in cooperation with various governmental agencies and educational institutions. provide an extensive apprenticeship program. Graduates earn credentials. However, those credentials are not necessarily translatable into a comparable degree such as is provided by the typical educational institution. German manufacturing and systems development is highly respected throughout the world and is highly regarded as being of very high quality. That is the template that appears to being followed by United Technologies in Connecticut.

    Boeing is finding much the same to be true in their facilities. They are spending billions of dollars to automate their wing production. They have tried outsourcing but ran into many problems. Even outsourcing within the US has sometimes been problematical. Much of the Boeing workforce is highly skilled and even many of the factory floor workers have post-secondary education.

    In the case of Carrier, I suspect that the plant of Mexico will consist largely of assembly using workers that are not highly skilled. Many of the high value and high technology components will be manufactured elsewhere.

    To save these low skilled jobs is going to require some more enlightened leadership of which the incoming administration appears incapable. Unfortunately, many of the people in the US do not think beyond the photo ops.

  12. How does one promise to keep businesses from outsourcing jobs that are costing them money and detracting from the bottom line of the company? They can’t. It will repeat in the coal industry, appliance industry, etc until these jobs are simply gone. My frustration with this is that the people who are working at these jobs soon to be outsourced have seen this coming for years, yet apparently, too few took advantage of opportunities to re-train or obtain more education. There is a responsibility for each person to stay relevant to the marketplace. Government and business can help, but when the handwriting is on the wall – do something to change your situation! Obviously, older workers will have the greatest challenge and most legitimate complaint, but many of those who are clamoring about job losses, pay reduction are going to have a tough time because these jobs aren’t coming back and they know it.

    I’m sure this sounds selfish but it’s a fact of life. This group is perfect for a safety net but I wonder if it should be shorter term rather than the UBI approach that basically thwarts desire and acceptance of personal responsibility? (This is heresy coming from a Democrat but so be it.)

    I watched this interview on CNBC and had the same reaction as Chris. What will be interesting (I seem to be saying that a lot lately) is how Trump will correlate his promises to working people without being at odds with the business….It seems he has boxed himself in which won’t be the last time and for which I have zero pity for his situation. I’m sure he will try to find a way to spin his way out of this but it may not be as easy. He’s already getting some push-back from members of Congress, as well he should.

    1. Mary, your first paragraph regarding training for displaced workers and particularly older workers is right on the money.

      I have found that to be very true for myself. My BSEE degree was in 1974 (42 years ago). I am in the fairly static industry of consulting, but even that has changed dramatically. I have made a conscientious effort to keep current, but I really do not have the skill set required at this time. I find that I have to have the support of younger engineers and technicians to produce the drawings, and some of the other documentation required. I can write the procurement documents for industrial control systems, but I certainly cannot write the code for the computer systems, required.

      Fortunately, I had a sufficient rewarding career so that I was able to save adequate money and do have the ability to continue to do special projects from time-to-time, as I am doing right now.

      One of the problems has been that relations between the business sector, labor and government have typically been adversarial and have not developed the educational systems to supply the highly trained workforce required for today’s sophisticated manufacturing. That is going to take some far more enlightened leadership.

      1. You don’t have to be wealthy to save. You just save on a smaller scale.

        Easier said than done, and people’s personal circumstances don’t always allow it.

        It’s just something everyone should consider and not rule out as unthinkable.

      2. You don’t have to be wealthy to save. You just save on a smaller scale.

        Easier said than done, and people’s personal circumstances don’t always allow it.

        It’s just something everyone should consider and not rule out as unthinkable.”

        /r/personalfinance: https://www.reddit.com/r/personalfinance/

        Get Rich Slowly: http://www.getrichslowly.org/blog/

        Mr. Money Mustache: http://www.mrmoneymustache.com/

        Bogleheads: https://www.bogleheads.org/

        As much as Americans complain about ‘the economy’, the people it affects aren’t the ones whose voices we often hear and the people whose voices we often hear could more often fix their own problems with disciplined approaches to personal finance.

      3. Aaron, I’m a late arrival to the savings game myself, and I’m amazed at how easy it is to put away a dollar a day instead of bleeding a dollar a day, and how it adds up over time, both the saving and the bleeding. And yes, I have wasted a lot of time when I could have been saving.

      4. The most my mom ever earned was about $16,000 per year yet she always made a point to save, she owned her own home, never lived paycheck to paycheck, and lived a comfortable life consisting of travel, attending concerts, dressing well, and eating at good restaurants.

    2. Not all old people have fail to stay up to date and employable. A few months after I retired my wife who pushed me to retire received a phone call for me about a job managing a Water Treatment system. She told them I was retired and do not call again. She worked for two years to finally get me to retire and would brook no interference. I found out about it a few days later when a letter came to me about it. Skill people are scarce and even being in my sixties I am still in demand. I still take on training to keep my skills current and meet license requirements. Life is unpredictable and if I had to or wanted to go back into the workforce I want to stay in my field and make decent money. And btw my previous employer paid for most training or schooling any employee wanted. You just had to make acceptable grades and finish the course. Smart employers generally follow the lead of United Technologies and encourage their workforce to gain education and training.

      1. You had a great combination of smart parents, a quality education, and strong personal desire to succeed in your field. Those who lack the innate intelligence and the sense of responsibility to prepare themselves to their maximum abilities, are doomed to jobs that will pass away. My hope is that they at least have the recognition and responsibility to encourage their children to get educated in fields that offer more secure employment.

      2. Mime, I think it’s all too easy to take things for granted and assume circumstances will remain the same in one’s lifetime, especially if one’s parents and grandparents worked in the same industry for years and years without interruption.

        I don’t think it’s necessarily due to a lack of intelligence or responsibility. Actually, what it may be is fear, fear of branching out and trying new things.

        What’s sad is when people accept no responsibility and blame immigrants and foreigners for their plight.

      3. This may be true for some, but children of auto workers have had plenty of notice. Children of coal miners, the same. I’m not speaking of those who were gainfully employed, suddenly stripped of their job as their employer outsourced their work. I’m speaking of people who have seen industrial jobs withering and had/have a responsibility to prepare themselves – if they can – and certainly their children – that this is a jobs area that is dying. As my brother in law (attorney and long time land man) told me: I wouldn’t encourage young people to go into petroleum engineering, I would encourage them to go into different fields that hold more promise of employment.

        I understand fear of failure but when the outcome is so clearly dismal, what choice does one have? Again, aged people are in a tough spot, the rest need to re–train and re-educate or educate (if they aren’t).

    3. Profile photo of DS DS

      I totally get the frustration with folks who have not taken opportunities to improve their education/skills, but I do feel like that frustration presupposes the existence of those opportunities. Low value manufacturing and commodities businesses have virtually no incentive to further educate their employees, and the government has done little to step up.

      I decided a year ago or so that it was time for a career change. I’m extremely fortunate in that my employer values education for its own sake, allows me to flex my schedule so I can attend classes, and is located in such a way as to make that feasible. They pay for a share of my tuition. I’m also relatively young and single, and can afford to dedicate the lion’s share of my personal time to study and training.

      My current set of circumstances have aligned perfectly to allow me to pursue what I want to do. Had even one of these “luxuries” not been available, I doubt very much that I could. Living on student loans can quickly add up to financial ruin, particularly if you have a family. As far as I can tell, that’s one of the few options open for job retraining these days. I think that’s going to have to change before we get too critical of those who haven’t pursued the sort of self-improvement that would make them more marketable.

      1. I don’t disagree that business and government don’t have a role in helping people find new opportunities for work that will align with their intellect, interest, and the market. There hasn’t been enough of that save through military service, to their credit. And, the military is a branch of government, so they get credit for that.

        Opportunity is a thorny problem, yet millions of Americans have chosen a man who they feel will “fix” their situation – guess the new prez will be jetting off hither and yon every time he hears of a business that is going to offshore jobs…..I make the observation that people need to be more self-aware and market-aware not in criticism but in observation of the fact that no one else is going to do this for them! Certainly not the Republican Party. And, ultimately, not Donald Trump.

        We’re not just talking men’s jobs here, we’re talking about many single moms. America needs to have a conversation about what is most important to and for its people. That hasn’t happened; instead, the people are told what they should expect. That’s not nearly good enough.

        Kudos to you for your self-awareness and preparation. You are doing exactly the right thing. As for the expense of college/technical schools, certifications – that is a huge, looming trillion dollar problem that the Republican Party has flatly refused to address. Maybe it’s time they do or be held accountable by their base for their failure to do so by the individuals and families who are struggling with college debt.

      2. Profile photo of DS DS

        “We’re not just talking men’s jobs here, we’re talking about many single moms.”

        This is actually part of my point, though it was not artfully made. For me, getting to where I need to be in an educational sense is enormously expensive in terms of time. There’s just no way I can see myself working a 40, contributing to childcare, and maintaining any sort of academic success. Policy-wise, there have to measures to compensate for this if we want to move people into higher value careers.

        As for holding Republicans accountable, well, I don’t think it’s enough. Part of the reason Hillary lost this election is because she failed to articulate a message on these issues. People heard Trump talk about bringing jobs back through protectionism and border control; when they listened to Clinton for an alternative, they heard “That guy’s an asshole.” That’s all well and good, and even true, but it’s not a platform.

        Somebody has to put forth an honest message for folks who are losing their jobs/communities. Corey Booker put it best when he said “You can’t legislate against the microchip.” If Democrats as a party can’t grasp that and put forward policies that could conceivably deal with the effects of globalization, disillusioned people in the segment of America that lost Clinton the election won’t turn to Democrats; they’ll turn to more extreme alternatives. They may even turn to alternatives to politics.

      3. Agreed that Hillary’s focus was wrong. She had a platform but she thought (as many did) that a man as despicable as Trump could be an effective focus and win the election for her. He didn’t and she didn’t.

        As for Democrats – I maintain that this party is doing the work for working people but they are pitiful at communicating what they are doing. Republicans aren’t doing crap for working people yet they are successfully spinning that they are the party that is….If Dems can’t get this problem solved, they will continue to lose. There needs to be new and different leadership within the Dem Party and until it happens, nothing else will.

        The smartest thing you and other young men (and women) can do is stay single, prepare yourself for a market relevant job, and then deal with the whole family thing…in that order. That’s also part of the problem of many working people – they get the order backwards then wonder why they are “trapped”.

    4. Mary – When you say “this group is perfect for a safety net but I wonder if it should be shorter term rather than the UBI approach that basically thwarts desire and acceptance of personal responsibility?” Are we sure that it does? I always look at the Scandinavian countries that have a more generous safety net yet a higher work participation rate. It may be affected by the way their system is implemented, I don’t know.

      Maybe we could test it here? One state? One county? Maybe run an long term test, look at high school graduation rates, college entry and completion?

      If it really does remove motivation in a majority of the population, we should know. There may be tweaks that would mitigate this. Maybe like a higher UBI depending on your work history when you retire?

      1. I am all for a test, Unarmed. What I am referring to as a short term assist are the unemployment benefits that have been steadily eroded by Republican action. Of course there have been abuses of these benefits but so many more people were helped. In the absence of any interest or intent by this Republican Party for securing our social safety net, I am hot hopeful that they would see a UBI as anything but another worthless tax on their profits. It’s sort of like all the garbage we hear about lowering U.S. corporate tax rates – sure, do it, but also strip the loopholes and tax benefits that effectively bring their rates down to very globally competitive rates….Do you really think these businesses will be willing to forego one to achieve the other? Do you think the GOP has the political courage to require them to the quid pro quo? I don’t.

  13. “Saving their economic future will depend on smart, insightful political leadership embracing some bold changes – like a universal basic income.”

    Can’t say that I see much in the way of smart, insightful, or bold from either party right now. We’ll probably need a very rough ecomonic patch before anyone dares to try something like that.

      1. As I’ve stated numerous times in this blog, I am very concerned that a major crisis is coming. The stage seems to have been set, and with this election the players are coming on stage.

        American history is replete with examples showing that Americans refuse to tackle problems until there is a crisis. Then the problems finally get resolved.

      2. So what’s the likely catastrophe? Major recession or a worse economic collapse? A very obvious big increase in people dying because of a hamfisted attempt at repealing and “replacing” the ACA? Civil unrest because the DOJ reverses any attempts to reform policing? Too many deplorables decide that they have license to act like Nazis and minority citizens fight back?

      3. >] “So what’s the likely catastrophe? Major recession or a worse economic collapse? A very obvious big increase in people dying because of a hamfisted attempt at repealing and “replacing” the ACA? Civil unrest because the DOJ reverses any attempts to reform policing? Too many deplorables decide that they have license to act like Nazis and minority citizens fight back?

        All of the above? Seriously, take your pick, but let’s go through a few at the top of the list just for clarity:

        – Repealing the ACA without an immediate replacement is almost assuredly going to cause unmitigated chaos in the health industry. Going by Republicans’ repeal attempt in ’15 as a guideline, Medicaid and Medicare will both take a huge hit, the financial and practical affects to hospitals will be enormous and widespread and providers will flee the exchanges in droves, driving up rates enormously while an ensuing death spiral threatens to engulf the entire system.

        Practically speaking, I have a hard time believing Republicans would invite that kind of political suicide without at least something to try and mitigate the effects, but unfortunately all the solutions required (risk corridors, bailouts to the providers and insurance industry, etc.) are all things that were present in the original version of the ACA, which Republicans, naturally, have all said they despise. Worse still, they would have to be enacted almost immediately in order to stave off the worst-case scenario.

        Put it this way. This is where the hospital industry’s sway gets put to the test.

        – Obviously, any hope of meaningful policing reform is dead in the near term, but the larger consequences of Trump’s election are likely to abound from a number of areas that we aren’t going to be able to fully grasp until they happen:

        1.) Neo-Confederates and Nazis are emboldened right now and will be even more so once Trump is actually sworn in. He can’t control them. He’s their tool and a convenient rallying cry, but nothing more. In much the same way as terrorist groups like ISIL will likely press Trump to see just how weak and easily overcome he is, radical and extremist fringe groups will press their advantage too. We probably won’t have to wait too long to see what that means for real people.

        2.) How do activist groups like Black Lives Matter respond? Here, we could actually see meaningful progress IF viable alternatives rise to the occasion to offer real, substantive solutions and a path forward to what ails them. Honestly, we’re not likely to get that out of the Democratic Party as, at least as things stand, they’re more likely to use them as cheap political cover to fight Trump. Then again, depending on what happens within Democratic politics over the coming year, who knows?

        My greatest concern is what happens if they’re effectively left to the lions and they feel like they’re fighting on all sides. That could sow the seeds for a lot of future bad blood that would have far reaching consequences that I cringe to think about.

        3.) Are we about to enter an age where the police are going to have to pick sides? This is serious shit. We’re hearing actual reports of actual police officers openly questioning whether or not they can continue in a nonpartisan fashion and whether they may have to voice open defiance or even dissent. Whether or not this happens and the extent that it does are complete unknowns at this point. Keep your eyes open.

        – Trump’s openly defiant stand towards China will not go without consequences. Whatever you think of the Chinese, they take their honor and national standing very seriously. Trump’s effectively telling them “screw you” is a toxic mix that’s likely to backfire spectacularly.

        Not only does China own over a trillion dollars of US debt (including several hundred million by way of Trump himself), but Trump’s trade standings could put Beijing in an eager position to push forward their own trade agreements and attempt to isolate the US economically, hopefully weakening the dollar and using that as a springboard to help strengthen the Yuan, which frankly has been at an all-time record low for several years now.

        Worst-case scenario, Trump goes into a full-on trade war with China.

        – And, of course, there’s always the possibility that the US enters into a recession and thanks to a spectacularly gridlocked Congress and incompetent president, little to no serious help comes from Washington as we’re left to flail about trying to make due by ourselves, in which case both our economic and national standing deteriorates even further. This, naturally, exacerbates all of the potential scenarios listed above and makes them even worse.

      4. Your doomsday scenario is all too possible. I disagree with your statement that Dems use the BLM movement for political fodder. I see the problems for Black people both within our justice system and in terms of equality getting much much worse under the Republicans. Think L.A. riots of the 60s? Who could blame them?

      5. “2.) How do activist groups like Black Lives Matter respond? Here, we could actually see meaningful progress IF viable alternatives rise to the occasion to offer real, substantive solutions and a path forward to what ails them. Honestly, we’re not likely to get that out of the Democratic Party as, at least as things stand, they’re more likely to use them as cheap political cover to fight Trump. Then again, depending on what happens within Democratic politics over the coming year, who knows?”

        The best hope there is at the city level. If places like Dallas want to run their police forces in ways that are sensitive to minority community concerns, a Trump DOJ can’t stop that. But then you have badly run departments like Ferguson, Miami Gardens, Chicago, etc. where the DOJ DOES need to step in, and they won’t. That’s a powder keg. We just may repeat the late 60s.

        ALso, WTF with that hung jury in that murder trial for the cop who shot Walter Scott? 1 juror gummed up the works there. I really want a tour inside this person’s head. Exactly what about a case where the evidence clearly showed a fleeing man shot in the back AND evidence planting (the taser) gave you “reasonable” doubt? The one bit of good news is that the DA will try it again. Hopefully the federal case also proceeds. If they can’t close on this one, why should any non-White person trust the system?

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