Grab Bag — Christmas Version
Merry Christmas, Happy Hanukkah and Happy New Year to all.
- Some weirdness occurred in Detroit. A Nigerian man claiming to be linked to Al Qaeda tried to set off an incendiary device. It appears the man was subdued by other passengers. The plane had taken off from Amsterdam and landed safely in Detroit. Hopefully we’ll get some more information on this soon. I don’t know how a man gets on a plane with an incendiary device in the year 2009.
- The healthcare industry is upset with the Senate healthcare bill. This can only be good for the American people. I’m liking this bill more and more.
- Paul Krugman has a great column from the 24th — “Indulge me while I tell you a story — a near-future version of Charles Dickens’s “A Christmas Carol.” It begins with sad news: young Timothy Cratchit, aka Tiny Tim, is sick. And his treatment will cost far more than his parents can pay out of pocket. Fortunately, our story is set in 2014, and the Cratchits have health insurance. Not from their employer: Ebenezer Scrooge doesn’t do employee benefits. And just a few years earlier they wouldn’t have been able to buy insurance on their own because Tiny Tim has a pre-existing condition, and, anyway, the premiums would have been out of their reach.” Again, isn’t this the way it’s supposed to be in America?
- Finally, a friend of mine sent me an article by a conservative columnist called Walter Williams. The article is titled Collusion Against Our Youth. Mr. Williams correctly points out that unemployment rate for Black teenagers is approaching 50%. He then mentions that back in 1948, before affirmative action and before a lot of the social programs that conservatives hate were enacted, the unemployment rate for Black teenagers was 9.4%. Now we have less discrimination and five times more the unemployment. He points his critical finger towards minimum wage, mandatory vacation time, Social Security and other societal ills. If we just didn’t have these burdens on business, business would be able to afford to hire more people and unemployment would be low.
Sweet! If you look at 1948 and 2009 in isolation, it is possible to come to that conclusion. Unfortunately, when you factor in everything else, the conclusion is laughable. A recent analysis by the Economic Policy Institute has shown that highly profitable companies have been cutting jobs. Companies like Microsoft earned a net profit of $14.6 billion in 2009 announced the plan to lay off over 5000 employees over the next 18 months. IBM cut just under 10,000 jobs this year in spite of its profits growing over 18% compared to the previous year. Why would these profitable companies drop employees if they’re making money? The answer is simple, Wall Street wants to see increasing revenues every quarter. In order to meet those expectations, some companies are dropping employees to show an increased profit margin. This has nothing to do with whether the company’s making money or not. It has everything to do with the company making more money this quarter than it did last year this quarter. It has everything to do with the quarter to quarter mentality that Wall Street brings to the business cycle. It is clear that unemployment is unacceptably high for everyone in America. We need to address this problem with clearheaded thinking. We need to look at the interaction between Wall Street and Main Street. We need to figure out how to get these international companies to hire Americans again. It has to make business sense. Import tariffs cannot be the only answer. Scrapping the minimum wage, as Walter Williams suggests, would decrease unemployment, yes, but the employees will be working for third world wages which really will not help the situation. We want Americans who are being paid a living wage to be hired. They can then contribute to society. Their kids can go to college. Their kids can then grow up to be president.
Happy holidays to you all!