Today the business section of the NY Times had two interesting
articles. One was entitled: "Wall Street Shaken by US Job
Losses in August" and the other was front page, "Drop in Jobs
is Continuing: 93,000 Lost Last Month."

Excerpt from the first:

.... yesterday the labor department reported that while the
unemployment rate slipped to 6.1% in August, companies cut
payrolls by 93,000. The report was weaker than expected and
delivered mixed signals about the nation's overall economic
health. Wall Street was expecting jobs to increase 20,000
to 25,000, Mr. Hogan [chief market analyst at Jeffries and
Company] said.

"We are concerned about the jobs-creation part of the
economy," Mr. Hogan said.

The second article is highly remiscent of the discussions
that went on here on rcm in the past few months, here I
quote from that article:

... What suprises many economists is that the job-shedding
has continued despite what they describe as an extraordinary
level of economic stimulus. Low interest rates, tax cuts and
rebates, a rise in military spending, mortgage refinancings,
growing corporate profits, even a long-awaited improvement
in business spending on new equipment and software have all
all contributed to the rise in the economic growth rate.

But jobs are disappearing, and employers continue to resist
adding hours for their existing workers. Economists warn that
without payroll expansion and rising income from wages,
sustaining the economic growth will be difficult once the
stimulus weakens.

"If we go into next year without job growth, then the consumer's
willingness to keep spending comes into question, and recovery
is in danger of unwinding," said James W Paulsen, chief
investment strategist for Wells Capital Management.

Seeking an explaination for the job drought, some economists
call attention to the shifting of production overseas,
particulary to China, and to the american economy's rapid
gains in productivity. The productivity gains allow companies
to maintain the same level of production with fewer workers.

Both trends have proceeded at a stepped-up pace in recent months
so the economy, in response, may now have to expand at an
annual rate of 5 percent or more, simply to keep employment
levels stable, said Albert M. Wojnilower, economic consultant
and wall street forecaster. ....

The article also mentioned that about half of the 93 thousand
jobs lost were in the manufacturing areas.

Frankly it sounds to me like the company's dreams of increased
profit by shifting production overseas where labor rates are
very low is already showing signs of failure. My bet is that
the management in firms like that is driven by the pure and
simple desire to temporarily boost profits, so that they
can line their own pockets before the rent comes due. Yep,
plain old greed.

The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle. A lot of this stuff is about perception,
all a person needs to hear is that their friend has just
been laid off, and he thinks, "that could be me. I better
start tightening the belt now before it's too late."

Somebody has to knock these idiots' heads together
and holler in their ears, that NOBODY BUYS ANYTHING
WHEN THEY HAVE NO JOB. This seems simple but they
just ain't 'getting it.'

How much do folks want to be that the next big export
overseas to china is going to be those executives
themselves, when they discover that their efforts have
destroyed their companies - and the US economy as
well. I suspect they will also be making 1/20 of
their present salary or thereabout - IF china is
interested in hiring them. Otherwise it's off to the
rice farm for them.

Jim

==================================================
please reply to:
JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com
==================================================

jim rozen wrote:

... What suprises many economists is that the job-shedding
has continued despite what they describe as an extraordinary
level of economic stimulus. Low interest rates, tax cuts and
rebates, a rise in military spending, mortgage refinancings,
growing corporate profits, even a long-awaited improvement
in business spending on new equipment and software have all
all contributed to the rise in the economic growth rate.

But jobs are disappearing, and employers continue to resist
adding hours for their existing workers. Economists warn that
without payroll expansion and rising income from wages,
sustaining the economic growth will be difficult once the
stimulus weakens.

"If we go into next year without job growth, then the consumer's
willingness to keep spending comes into question, and recovery
is in danger of unwinding," said James W Paulsen, chief
investment strategist for Wells Capital Management.




Someone at the presidential debate quoted Henry Ford as saying, " I pay
my workers
more so they can afford to buy my product."

I've read some about Ford and I recall that when he raised wages, the
money went
into a trust to be paid out after 6 months if the employee was still
there, in good standing.

Fred

On 6 Sep 2003 19:37:25 -0700, jim rozen wrote:
The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle.

You're assuming that *only* the laid off workers bought their
products. That would be a very unusual business indeed. In
almost all cases, a company's workers form a *very* small
subset of its customers.

Look at it this way, out of a potential domestic market of
nearly 300 million consumers, the manufacturers lost
93,000 potential customers. That's 0.031% of the market.
That *very* small drop in the potential market size is more
than compensated by the much lower production costs
of having the product made off shore.

As long as the cost reductions exceed the loss of market
size, the company comes out a winner. Look at the auto
industry. They're having a *record* sales year (in units
sold) despite continuing shrinkage of the number of US
auto workers.

They've had to discount their prices (via rebates and zero
percent financing) to achieve that, but as long as those
discounts are less than their cost savings due to outsourcing,
they're ahead of the game, and consumers have benefited
from lower prices.

Gary

"Gary Coffman" wrote in message
...
On 6 Sep 2003 19:37:25 -0700, jim rozen wrote:
The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle.

You're assuming that *only* the laid off workers bought their
products. That would be a very unusual business indeed. In
almost all cases, a company's workers form a *very* small
subset of its customers.

Look at it this way, out of a potential domestic market of
nearly 300 million consumers, the manufacturers lost
93,000 potential customers. That's 0.031% of the market.
That *very* small drop in the potential market size is more
than compensated by the much lower production costs
of having the product made off shore.

As long as the cost reductions exceed the loss of market
size, the company comes out a winner. Look at the auto
industry. They're having a *record* sales year (in units
sold) despite continuing shrinkage of the number of US
auto workers.

They've had to discount their prices (via rebates and zero
percent financing) to achieve that, but as long as those
discounts are less than their cost savings due to outsourcing,
they're ahead of the game, and consumers have benefited
from lower prices.

Gary

Gary, I think you have been badly infected with Washington Consensus
economics. g

It isn't 93,000 workers. It's now 2.8 million manufacturing workers, because
each company contributes it's own little bit. One person ****ting in the
park is no big deal, but, when half the town starts doing it...

As for the health of the US automobile industry, it's now totally dependent
upon squeezing its supply base like an anaconda wrapped around a monkey. And
Ford and GM together, just two companies in the whole of US manufacturing,
are planning to increase their imports from China from (Ford) $1.1B and (GM)
$2.3B this year, to $10B in 2010 (Ford) and $20B in 2007 (GM), for a total
of a $30B increase in around six years. Even if the economy picks up at a
dramatic rate, there will be a net loss of jobs -- and of purchasing power.

This is no longer an ideological issue. Most of the "conservative" economic
sources, ranging from Bus. Week to the WSJ to The Economist, have agreed on
these points within the last few weeks. The rough consensus is that our
equilibrium unemployment rate probably will have to be raised by one point,
due to trade imbalance and productivity increases combined, and that it will
take GDP growth of over 4% just to stand still in terms of jobs.

So we may have some growth, but it won't go into the pockets of many
consumers. Where that capital accumulation will wind up is problematic as
well. With the US now the most productive country in the world (both in
terms of labor productivity and total factor productivity), those low-wage
countries are looking ever-more attractive as the place to invest. They have
the elbow room to grow faster. We're about tapped out for capital-efficient
growth.

--
Ed Huntress
(remove "3" from email address for email reply)

In article , Ed Huntress
says...

This is no longer an ideological issue. Most of the "conservative" economic
sources, ranging from Bus. Week to the WSJ to The Economist, have agreed on
these points within the last few weeks. The rough consensus is that our
equilibrium unemployment rate probably will have to be raised by one point,
due to trade imbalance and productivity increases combined, and that it will
take GDP growth of over 4% just to stand still in terms of jobs.

The question is, can the gdp grow that much, when the
domestic market is shrinking from loss of wages?

Jim

==================================================
please reply to:
JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com
==================================================

"jim rozen" wrote in message
...
In article , Ed Huntress
says...

This is no longer an ideological issue. Most of the "conservative"
economic
sources, ranging from Bus. Week to the WSJ to The Economist, have agreed
on
these points within the last few weeks. The rough consensus is that our
equilibrium unemployment rate probably will have to be raised by one
point,
due to trade imbalance and productivity increases combined, and that it
will
take GDP growth of over 4% just to stand still in terms of jobs.

The question is, can the gdp grow that much, when the
domestic market is shrinking from loss of wages?

It could. We tend to wish and buy our way out of recessions. We could do it
again.

However, there will be fewer people doing it, although they'll have a lot of
money in their pockets.

--
Ed Huntress
(remove "3" from email address for email reply)

On Sun, 07 Sep 2003 17:21:09 GMT, "Ed Huntress" wrote:
"jim rozen" wrote in message
...
take GDP growth of over 4% just to stand still in terms of jobs.

The question is, can the gdp grow that much, when the
domestic market is shrinking from loss of wages?

It could. We tend to wish and buy our way out of recessions. We could do it
again.

However, there will be fewer people doing it, although they'll have a lot of
money in their pockets.

It is worth noting that the US workforce is shrinking. More people are
retiring than entering the workforce. This caused a net shrinkage of
the workforce of half a million workers during the first half of this year.
It would have been even greater except for the unprecedented number
of illegals entering the US. As the Baby Boomers reach retirement age,
this trend will accelerate.

So we can expect fewer workers to be chasing jobs in the future.
And that means we'll need fewer jobs created to satisfy them.

Gary

In article , Gary Coffman says...

Look at it this way, out of a potential domestic market of
nearly 300 million consumers, the manufacturers lost
93,000 potential customers. That's 0.031% of the market.
That *very* small drop in the potential market size is more
than compensated by the much lower production costs
of having the product made off shore.

Ah, but that's in *one* month. And the suspected
cause of the job loss is only just beginning. What
happens when it keeps up, month after month?

As long as the cost reductions exceed the loss of market
size, the company comes out a winner. Look at the auto
industry. They're having a *record* sales year (in units
sold) despite continuing shrinkage of the number of US
auto workers.

Somehow this seems like a ponzi scheme to me, still.
If this is true, that the job flight overseas isn't a
problem, then how come all those economists are starting
to wring their hands?

There's nobody who wants this to turn around more than
the president. Everyone there is praying for some
daylight in the economic forcasts, but it seems to be
not forthcoming. Could it be they're missing the
obvious?

Jim

==================================================
please reply to:
JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com
==================================================

A complex problem but here are a couple of thoughts to consider. In
the 1800's most of the jobs were farm jobs, but now there are very few
farm jobs. The same thing is happening to manufacturing jobs. It
takes fewer people where ever they are to manufacture things. With
Cad, Cam, etc it takes fewer engineers as well as factory workers.
And I don't think we want to ensure more manufacturing jobs by
decreasing producivity. Anyone for outlawing carbide and insisting on
using HSS?

And as far as relocating jobs. Some years back jobs were leaving the
North and going to the South. With time the advantage has decreased.
Wages in the South are higher now. And Southerners buy more with
their increased wages. The same thing will happen with other
countries. Not quickly, not smoothly. But more jobs in China means
more farm goods exported to China. Farm goods produced by fewer
workers than in the 1800's.

Management can not let their companies become uncompetitive. If they
do all the workers lose their jobs, the stockholders their investments
( and management their high salaries ). Some companies as Nucor are
manufacturing in the States. They have two plants that make
fasteners. But they are extremely automated. Run 24 hours a day and
have something like two guys on the swing and night shifts. Not many
jobs there. Ditto with steel making. They make lots of steel, but
don't employ many people.

Dan


jim rozen wrote in message ...
Today the business section of the NY Times had two interesting
articles. One was entitled: "Wall Street Shaken by US Job
Losses in August" and the other was front page, "Drop in Jobs
is Continuing: 93,000 Lost Last Month."

"Dan Caster" wrote in message
m...

It sounds good, Dan, but the realities are somewhat different. For example:

But more jobs in China means
more farm goods exported to China.

Not likely. It doesn't work that way with China. Their agricultural
productivity is increasing, too -- much faster than ours. They may buy more
but you can be sure that the jobs equation will go the other way, as will
most of the money.


Management can not let their companies become uncompetitive. If they
do all the workers lose their jobs, the stockholders their investments
( and management their high salaries ).

This is a good description of the dilemma. So, do you think that following
these traditional economic imperatives will produce a good overall result,
or is it possible that, given the unique, unprecedented factors in the
equation (1.4 billion people in China; 80-cent wage rates for skilled
workers; 800 million peasants standing in line to get those good,
80-cent-per-hour jobs), it's really a self-delusional, one-way suicide trip?

Some companies as Nucor are
manufacturing in the States. They have two plants that make
fasteners. But they are extremely automated. Run 24 hours a day and
have something like two guys on the swing and night shifts. Not many
jobs there. Ditto with steel making. They make lots of steel, but
don't employ many people.

Maybe we can pay the robots, and teach them to drink beer and buy cars. g


--
Ed Huntress
(remove "3" from email address for email reply)

In article , Dan Caster says...

And as far as relocating jobs. Some years back jobs were leaving the
North and going to the South. With time the advantage has decreased.
Wages in the South are higher now. And Southerners buy more with
their increased wages. The same thing will happen with other
countries. Not quickly, not smoothly. But more jobs in China means
more farm goods exported to China. Farm goods produced by fewer
workers than in the 1800's.

Or, the relocation of jobs from the southern US to Mexico,
to the border regions. Those areas of Mexico are now
rapidly becoming wastelands as the factories are rapidly
departing to China. The wages in Mexico were starting to
inch up also, so off we go in search of the next cheap
place.


Management can not let their companies become uncompetitive. If they
do all the workers lose their jobs, the stockholders their investments
( and management their high salaries ).

I guess this is my point Dan - that the companies view
'being competitive' as being equal to 'firing all the
US employees.' I can just imagine the discussions that
go on in the board rooms - "say look, if we don't do
this and cut our labor costs, then XYZ company (competitor)
*will* shift _its_ production overseas, undercut us by
ten percent in price, get all the business and eat our
lunch. So we HAVE to do it or go under."

There's a certain logic there and honestly I don't know
what I would say if I were in those shoes. I think the
forces driving the job migration are real and relentless.
They're not going away.

But as Ed has said before, there's *nothing* we
can do or make in this country, that the folks in China
can't do or produce - for about 1/20 the labor cost.
Everything is susceptible here. We're not just talking
about manufacture of goods, were talking software,
services, support, all that. Like the song says,

"These jobs are going son, and they won't be back."


Some companies as Nucor are
manufacturing in the States. They have two plants that make
fasteners. But they are extremely automated. Run 24 hours a day and
have something like two guys on the swing and night shifts. Not many
jobs there. Ditto with steel making. They make lots of steel, but
don't employ many people.

Ah, but my question is, who is buying the fasteners and steel?
If those folks are out of work, they won't be spending any
money at all. If those companies are supplying US manufacture
or industry, then I would claim they're on a finite lifeline.
Only a matter of time before their market slowly dwindles out of
existence.

Jim

==================================================
please reply to:
JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com
==================================================

Guys, the plain fact is that, all else being equal, things should be
produced where they can be done so most efficiently. The ultimate
beneficiary is the end consumer. For example, the reason that US cars were
crap in the late '70's and early '80's was an entrenched workforce and lack
of competition. To the extent they're better quality now, it was directly
competition with Japan that made the difference.

Having said that, my concern is that our business with China is the classic
case of a free market selling communists the rope with which we will be
hanged. These people not only use slave labor to beat their economic
competitors, they are physically dangerous to us. When a major Chinese
general says that interference with their desire to absorb Taiwan will be
for them to nuke LA, this should not be dismissed, and we certainly
shouldn't be doing business with them.

On Sun, 07 Sep 2003 22:55:46 GMT,
..... wrote
in Msg. SHO6b.384323$Ho3.58137@sccrnsc03

When a major Chinese
general says that interference with their desire to absorb Taiwan will be
for them to nuke LA, this should not be dismissed,

Learning from the U.S. way of doing business I guess.

--Daniel

--
"With me is nothing wrong! And with you?" (from r.a.m.p)

Although I respect your opinion about "the red menace", there are a few
points to be made.

Most of China is MORE capitalistic than the USA. Although there are
large government subsidies (mostly for larger stuff and largely
indirect) etc, the majority of their economy runs in a similar
"business" mode to the USA. The subsidy issue also comes up in the USA:
A good example is increasing orders for Patriot Missle systems that are
an abject failure. Another example are the huge sums of money given to
the wine making industry to "market" products.

Much of the USA effectively has "slave labor" also. This varies from
the prison workforce (paid pennies on the dollar with large government
subsidies to market products) to the current changes in the overtime
laws (which the Dept of labor admits will cause loss of overtime for a
huge number and those who are no longer "exempt" from overtime are
expected to have wages lowered so there is no net gain...IE working
extra hours for free).

Finally, Are you saying that our threats against russia and china to
keep their hands out of the Iraq issue (not to supply aid to Iraq) and
the threats of "severe retribution" against those couontries if such
were to happen as being any different than the Taiwan Issue?

The pot calls the kettle black

Koz

...... wrote:

snip

Having said that, my concern is that our business with China is the classic
case of a free market selling communists the rope with which we will be
hanged. These people not only use slave labor to beat their economic
competitors, they are physically dangerous to us. When a major Chinese
general says that interference with their desire to absorb Taiwan will be
for them to nuke LA, this should not be dismissed, and we certainly
shouldn't be doing business with them.

Wow! What are you smoking? Most Chinese shi*s outside in the field. If they
have toilets, the sewage doesn't travel very far from the source until it's
deposited on the ground.

Patriot? Name one other missile that has a documented kill rate like this one.
Abject failure? BS.

Slave labor in U.S.? Population in U.S. prisons is around 1+%. Hardly a
significant percentage from a manufacturing standpoint.

Taiwan no different from Iraq? Without reviewing some history, it's a lot
different.

China capitalistic? I certainly hope so. Maybe these poor SOB's will have a
future after all.

Mike Eberlein

Koz wrote:

Although I respect your opinion about "the red menace", there are a few
points to be made.

Most of China is MORE capitalistic than the USA. Although there are
large government subsidies (mostly for larger stuff and largely
indirect) etc, the majority of their economy runs in a similar
"business" mode to the USA. The subsidy issue also comes up in the USA:
A good example is increasing orders for Patriot Missle systems that are
an abject failure. Another example are the huge sums of money given to
the wine making industry to "market" products.

Much of the USA effectively has "slave labor" also. This varies from
the prison workforce (paid pennies on the dollar with large government
subsidies to market products) to the current changes in the overtime
laws (which the Dept of labor admits will cause loss of overtime for a
huge number and those who are no longer "exempt" from overtime are
expected to have wages lowered so there is no net gain...IE working
extra hours for free).

Finally, Are you saying that our threats against russia and china to
keep their hands out of the Iraq issue (not to supply aid to Iraq) and
the threats of "severe retribution" against those couontries if such
were to happen as being any different than the Taiwan Issue?

The pot calls the kettle black

Koz

..... wrote:

snip

Having said that, my concern is that our business with China is the classic
case of a free market selling communists the rope with which we will be
hanged. These people not only use slave labor to beat their economic
competitors, they are physically dangerous to us. When a major Chinese
general says that interference with their desire to absorb Taiwan will be
for them to nuke LA, this should not be dismissed, and we certainly
shouldn't be doing business with them.

"Koz" wrote in message
...
Although I respect your opinion about "the red menace", there are a few
points to be made.

Most of China is MORE capitalistic than the USA.

Your credibility is gone right there.




Although there are
large government subsidies (mostly for larger stuff and largely
indirect) etc, the majority of their economy runs in a similar
"business" mode to the USA.

If you had any credibility left, it's gone now.


The subsidy issue also comes up in the USA:
A good example is increasing orders for Patriot Missle systems that are
an abject failure.

What whacko newspaper have you been reading?



Another example are the huge sums of money given to
the wine making industry to "market" products.

Much of the USA effectively has "slave labor" also.


Not since 1865.


This varies from
the prison workforce (paid pennies on the dollar with large government
subsidies to market products) to the current changes in the overtime
laws (which the Dept of labor admits will cause loss of overtime for a
huge number and those who are no longer "exempt" from overtime are
expected to have wages lowered so there is no net gain...IE working
extra hours for free).

Finally, Are you saying that our threats against russia and china to
keep their hands out of the Iraq issue (not to supply aid to Iraq) and
the threats of "severe retribution" against those couontries if such
were to happen as being any different than the Taiwan Issue?

The pot calls the kettle black

Koz

You my man, are a nut.

JTMcC.

..... wrote:

snip

Having said that, my concern is that our business with China is the
classic
case of a free market selling communists the rope with which we will be
hanged. These people not only use slave labor to beat their economic
competitors, they are physically dangerous to us. When a major Chinese
general says that interference with their desire to absorb Taiwan will be
for them to nuke LA, this should not be dismissed, and we certainly
shouldn't be doing business with them.

"jim rozen" wrote


Somebody has to knock these idiots' heads together
and holler in their ears, that NOBODY BUYS ANYTHING
WHEN THEY HAVE NO JOB. This seems simple but they
just ain't 'getting it.'


Jim.... your post was right on the money. Very well said.

Mark

I just had to add a quick ramble here....

When 5% of the people hold 90% of the wealth in this country, most
business essentially operates to serve the interests of that 5%, not the
other 90%. The result is that the overall goal is to result in "short
term" profitability rather than overall business strength. A good
example of this is the HUGE focus of the governmental policies to try
and and keep stock prices going up. This also puts o focus on CEOs to
artificially inflate those prices through layoffs, cost cutting
measures, etc which cause huge short-term profits at the expense of any
long term company strength. A good example of this is US steel dumping
all their fabricated product divisions in the early 80s. Those
divisions were making profits for the company (small and consistent) but
when the overall stock price was falling, they dumped all fabricated
products and re-worked the accounting system to make it look like cost
savings and bolster the stock price.

One should also take note that "increase in worker productivity" is seen
as a GOOD thing in all the government reports. Yes, slight increases in
productivity are good but for most workers, this figure means they are
working harder and longer for the same money. How many of you can say
that you are paid more and work less than 20 years ago? Can you even
say that you are paid more and work about has hard as 20 years ago?

As long as the government operates in a mode where decisions are made
with such a high focus on "short term profitability", as they currently
do for that 5% who hold the 90% wealth, we will always be weak and
nationally insecure.

Koz (and yes it is a ramble, no it isn't suggestion communism or
government screwing business, just changing the focus to a broader
position of strength rather than a short-term position of maximizing
profits)

jim rozen wrote:

Today the business section of the NY Times had two interesting
articles. One was entitled: "Wall Street Shaken by US Job
Losses in August" and the other was front page, "Drop in Jobs
is Continuing: 93,000 Lost Last Month."

Excerpt from the first:

.... yesterday the labor department reported that while the
unemployment rate slipped to 6.1% in August, companies cut
payrolls by 93,000. The report was weaker than expected and
delivered mixed signals about the nation's overall economic
health. Wall Street was expecting jobs to increase 20,000
to 25,000, Mr. Hogan [chief market analyst at Jeffries and
Company] said.

"We are concerned about the jobs-creation part of the
economy," Mr. Hogan said.

The second article is highly remiscent of the discussions
that went on here on rcm in the past few months, here I
quote from that article:

... What suprises many economists is that the job-shedding
has continued despite what they describe as an extraordinary
level of economic stimulus. Low interest rates, tax cuts and
rebates, a rise in military spending, mortgage refinancings,
growing corporate profits, even a long-awaited improvement
in business spending on new equipment and software have all
all contributed to the rise in the economic growth rate.

But jobs are disappearing, and employers continue to resist
adding hours for their existing workers. Economists warn that
without payroll expansion and rising income from wages,
sustaining the economic growth will be difficult once the
stimulus weakens.

"If we go into next year without job growth, then the consumer's
willingness to keep spending comes into question, and recovery
is in danger of unwinding," said James W Paulsen, chief
investment strategist for Wells Capital Management.

Seeking an explaination for the job drought, some economists
call attention to the shifting of production overseas,
particulary to China, and to the american economy's rapid
gains in productivity. The productivity gains allow companies
to maintain the same level of production with fewer workers.

Both trends have proceeded at a stepped-up pace in recent months
so the economy, in response, may now have to expand at an
annual rate of 5 percent or more, simply to keep employment
levels stable, said Albert M. Wojnilower, economic consultant
and wall street forecaster. ....

The article also mentioned that about half of the 93 thousand
jobs lost were in the manufacturing areas.

Frankly it sounds to me like the company's dreams of increased
profit by shifting production overseas where labor rates are
very low is already showing signs of failure. My bet is that
the management in firms like that is driven by the pure and
simple desire to temporarily boost profits, so that they
can line their own pockets before the rent comes due. Yep,
plain old greed.

The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle. A lot of this stuff is about perception,
all a person needs to hear is that their friend has just
been laid off, and he thinks, "that could be me. I better
start tightening the belt now before it's too late."

Somebody has to knock these idiots' heads together
and holler in their ears, that NOBODY BUYS ANYTHING
WHEN THEY HAVE NO JOB. This seems simple but they
just ain't 'getting it.'

How much do folks want to be that the next big export
overseas to china is going to be those executives
themselves, when they discover that their efforts have
destroyed their companies - and the US economy as
well. I suspect they will also be making 1/20 of
their present salary or thereabout - IF china is
interested in hiring them. Otherwise it's off to the
rice farm for them.

Jim

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"Koz" wrote in message
...
I just had to add a quick ramble here....

When 5% of the people hold 90% of the wealth in this country, most
business essentially operates to serve the interests of that 5%, not the
other 90%.

I disagree, business operates to satisfy the stockholder, and today, in the
U.S., that is every working stiff with a 401K or mutual fund investment,
plus a lot of small busnessmen who have their pension plan invested at least
partially in stocks and bonds. The 1960's idea that only the idle rich care
about stock prices is long gone, the man on the street is just as likely to
check his investments as the tycoon.

The result is that the overall goal is to result in "short
term" profitability rather than overall business strength.

I disagree again, you assume that a small cadre of ultra rich are running
the country to suite their fancy. The facts are that those running business
today answer to almost the entire spectrum of American society, look at the
Enron executives either doing time or about to do time, in prison. This
should reafirm your flagging belief in the free market system as practiced
in America.

A good
example of this is the HUGE focus of the governmental policies to try
and and keep stock prices going up. This also puts o focus on CEOs to
artificially inflate those prices through layoffs, cost cutting
measures, etc which cause huge short-term profits at the expense of any
long term company strength. A good example of this is US steel dumping
all their fabricated product divisions in the early 80s.

Your example of what is wrong with corperate America come from the 1980"s!
Are you kidding! A lot of things are done wrong in every decade, that is the
human element, but to try to buttress your arguement with examples from 20
years ago is simply irrelevant.

Those
divisions were making profits for the company (small and consistent) but
when the overall stock price was falling, they dumped all fabricated
products and re-worked the accounting system to make it look like cost
savings and bolster the stock price.

That was their perogative, if it was the wrong decision, they would be
punished by the market, again 20 year old examples are obsolete when talking
about the big business climate of 2003, soon to be 2004.


One should also take note that "increase in worker productivity" is seen
as a GOOD thing in all the government reports. Yes, slight increases in
productivity are good but for most workers, this figure means they are
working harder and longer for the same money. How many of you can say
that you are paid more and work less than 20 years ago?

I most definitly can, 20 years ago I was making a fraction of what I make
today.

Can you even
say that you are paid more and work about has hard as 20 years ago?

Of course I can.


As long as the government operates in a mode where decisions are made
with such a high focus on "short term profitability", as they currently
do for that 5% who hold the 90% wealth, we will always be weak and
nationally insecure.

I am, and I believe WE are, neither. Keep your weakness and insecurity to
your self, I am, and those I befriend and associate with, are NOT weak, and
NOT insecure. I feel sorry for anyone that, living in the most freedom
loving country in the world, the country with the greatest amount of
opportunity ever available on the face of the earth, that finds their
predicament so depressing, you my man would have been eaten alive in the
middle ages, you would have never survived on the plains in the 1880's, and
you probably only survive (to whine) due to government assistance in the
year 2003.

JTMcC.



Koz (and yes it is a ramble, no it isn't suggestion communism or
government screwing business, just changing the focus to a broader
position of strength rather than a short-term position of maximizing
profits)

jim rozen wrote:

Today the business section of the NY Times had two interesting
articles. One was entitled: "Wall Street Shaken by US Job
Losses in August" and the other was front page, "Drop in Jobs
is Continuing: 93,000 Lost Last Month."

Excerpt from the first:

.... yesterday the labor department reported that while the
unemployment rate slipped to 6.1% in August, companies cut
payrolls by 93,000. The report was weaker than expected and
delivered mixed signals about the nation's overall economic
health. Wall Street was expecting jobs to increase 20,000
to 25,000, Mr. Hogan [chief market analyst at Jeffries and
Company] said.

"We are concerned about the jobs-creation part of the
economy," Mr. Hogan said.

The second article is highly remiscent of the discussions
that went on here on rcm in the past few months, here I
quote from that article:

... What suprises many economists is that the job-shedding
has continued despite what they describe as an extraordinary
level of economic stimulus. Low interest rates, tax cuts and
rebates, a rise in military spending, mortgage refinancings,
growing corporate profits, even a long-awaited improvement
in business spending on new equipment and software have all
all contributed to the rise in the economic growth rate.

But jobs are disappearing, and employers continue to resist
adding hours for their existing workers. Economists warn that
without payroll expansion and rising income from wages,
sustaining the economic growth will be difficult once the
stimulus weakens.

"If we go into next year without job growth, then the consumer's
willingness to keep spending comes into question, and recovery
is in danger of unwinding," said James W Paulsen, chief
investment strategist for Wells Capital Management.

Seeking an explaination for the job drought, some economists
call attention to the shifting of production overseas,
particulary to China, and to the american economy's rapid
gains in productivity. The productivity gains allow companies
to maintain the same level of production with fewer workers.

Both trends have proceeded at a stepped-up pace in recent months
so the economy, in response, may now have to expand at an
annual rate of 5 percent or more, simply to keep employment
levels stable, said Albert M. Wojnilower, economic consultant
and wall street forecaster. ....

The article also mentioned that about half of the 93 thousand
jobs lost were in the manufacturing areas.

Frankly it sounds to me like the company's dreams of increased
profit by shifting production overseas where labor rates are
very low is already showing signs of failure. My bet is that
the management in firms like that is driven by the pure and
simple desire to temporarily boost profits, so that they
can line their own pockets before the rent comes due. Yep,
plain old greed.

The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle. A lot of this stuff is about perception,
all a person needs to hear is that their friend has just
been laid off, and he thinks, "that could be me. I better
start tightening the belt now before it's too late."

Somebody has to knock these idiots' heads together
and holler in their ears, that NOBODY BUYS ANYTHING
WHEN THEY HAVE NO JOB. This seems simple but they
just ain't 'getting it.'

How much do folks want to be that the next big export
overseas to china is going to be those executives
themselves, when they discover that their efforts have
destroyed their companies - and the US economy as
well. I suspect they will also be making 1/20 of
their present salary or thereabout - IF china is
interested in hiring them. Otherwise it's off to the
rice farm for them.

Jim

================================================= =
please reply to:
JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com
================================================= =

In article , John T. McCracken says...

When 5% of the people hold 90% of the wealth in this country, most
business essentially operates to serve the interests of that 5%, not the
other 90%.

I disagree, business operates to satisfy the stockholder, and today, in the
U.S., that is every working stiff with a 401K or mutual fund investment,
plus a lot of small busnessmen who have their pension plan invested at least
partially in stocks and bonds. The 1960's idea that only the idle rich care
about stock prices is long gone, the man on the street is just as likely to
check his investments as the tycoon.

Here he may be talking about regulatory issues as well,
John. It is *certainly* true that large corporations that
contribute mightily to politicians' campaign funds *do*
get preferential treatment when the laws get written.

One simple example that I've trotted out time and time
again is the law that used to require businesses who
pay employees by check to allow those paychecks to be
cashed without fee, within a certain distance of the
workplace, or the wages would have to be paid in cash.

The banking industry got alhold of that and crushed it,
so now if a worker wants to actually cash his check, he
has to pay a fee, one that ranges between one and ten
dollars, typically.

Sure every joe has a bit in the stock market now (except
me I guess) but if you are really trying to convince anyone
here that just because somebody owns $10K in some mutual
fund, that this puts them on an even footing with, say,
Exxon-Mobil or Halliburton, I think this is not going to
work.

Jim

==================================================
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==================================================

Lot's of good stuff snipped...

jim rozen wrote in message ...
Today the business section of the NY Times had two interesting...

For a very compelling and similar view check out this link... all on
one line

http://www.marke****ch.com/news/story.asp?guid=%7B21B5AD0D%2DC132%2D435F%2D8EF3%2D EB0F2D5630D9%7D&siteid=mktw