Folks Next Door

One of the things you’ll hear, time and time again, from our friends in the conservative community, is that government needs to treat its affairs more like a household budget. That the federal government, like the average American family, needs to live within its means. Balance its books. Cut back during hard times.

This analogy is almost always wrong. Your average American family, for example, doesn’t keep a standing army. They might have a boat, but they probably don’t have a fleet. Your average American family doesn’t need to build and maintain highways.

But there are areas of overlap. Let’s take the homeowner who is not currently flush with cash. Dad has been “downsized,” but Mom still has her job. The money coming in is maybe just about enough to keep up with the bills.

And then then the sewer line blows up, that part that runs from the house into the main line. The part that Mr. and Mrs. Homeowner are responsible for. The part that runs under the driveway. Fixing it means having someone come in and saw through the concrete, take out the old pipe, put in new pipe, and repave the driveway. It’s going to cost a few thousand dollars, money that Mr. and Mrs. Homeowner don’t have right now. What are they going to do? Fix it themselves? Let the sewage run down the driveway and into the street?

They’re going to borrow some money and get it fixed. There is no other choice. They don’t have the tools or the skills to do the job themselves. They can’t just let it flow into the streets; this is raw sewage.

So maybe that analogy works. The economy is the sewer line, and it blew up. We’re going to have to borrow the money to fix it.

Or maybe you’d prefer the mortgage analogy. Most American families who own homes don’t actually own the homes. The banks own them, and the families living there are renting from the bank, renting until the cost of the home loan, plus interest, is paid off. If we include the cost of the mortgage in our assessment of the average American family’s net worth, we’ll discover that most of them have a negative worth. Most of them, therefore, are practicing deficit spending.

So where is the problem? If it’s good enough for Americans, it should be good good enough for the American government, right?

Five to One

Some days it feels like there are as many people out there anxious to offer advice to the unemployed as there are unemployed. And that advice usually take the form of this:

You have to make yourself stand out from the crowd.

Or maybe this:

You have to try harder than everyone else.

We have an entire political party out there trying to cut unemployment benefits because... wait for it... having some income, rather than none, makes you lazy. Makes you sit around the house. Makes you turn down those job offers because, naturally, sitting around and doing nothing beats having to work for a living.

The takeaway from all this is that if you haven't gotten a job it's all your fault. You haven't gotten a job because you're being too picky. You haven't gotten a job because you haven't done anything to distinguish yourself from all the other (presumably) unworthy job applicants. You haven't gotten a job because you haven't tried hard enough.

Here's the thing: There are five people for every job opening. One job for every five people who want a job. Every time a job gets filled, there are four people who didn't try hard enough. Four people who were too picky. Four people who didn't do enough to distinguish themselves from the crowd.

Is this even possible? Let's do a thought  experiment. It used to be, back in the good old days before the economy tanked, that there was around one job for every person who wanted a job. Somehow, back in the halcyon days of 2006, all the job seekers were motivated individuals, non-picky folk who managed to try hard enough and managed to do enough to distinguish themselves from the pack.

Right. Or maybe, just maybe, there aren't enough jobs out there, that no matter how hard everybody tries, no matter how truly excellent they make their resumes, no matter how awesome they are at the interview, four out of five of them are not going to get that one job that's available. Maybe, just maybe, we should take a fresh look at this with a set of realistic assumptions.

Item: Mexicans are leaving the United States in droves, heading back home because the prospects for employment are better in Mexico.

Maybe we can stop blaming the unemployed for being out of work. Maybe the real culprit here is the politician in Washington, the one who was bought and paid for by some mega-corporation -- they're all making record profits, by the way -- and who is now working on their behalf, not yours.

Back in 1930, the Hoover administration was convinced that the best way to combat what was then a severe recession was to cut back on Federal spending. Most of us know what that severe recession turned into.

But I digress. There are, at the moment, somewhere between 16 and 20 million people who are out of work who would rather be working. Let's take the low end of that estimate; it's the optimistic thing to do. 16 million people looking for a job. No matter how you slice it, 12.8 million of those folks are not going to get the jobs that are out there. Maybe government should be on their side.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Now here's a funny thing about the people who are out of work and why they're out of work. The Crash of 2008 was caused by many things, but almost all of those things were tied to Wall Street, tied to companies whose profits were obscene enough to enable six-figure bonuses for their employees. Companies so big that the Federal Government, under George W. Bush, practically handed them $700 billion dollars through a program called TARP.

A digression: Wall Street is, for all practical purposes, a gigantic gambling parlor. At the most basic level, you buy some miniscule percentage of a company -- a share -- in the hopes that the value of the company will go up, or that at least the company will make enough profit that it will be able to give you some, in the form of a dividend. More often than not, these days, you're simply betting that someone else will think that the company is a good bet and will be willing, at some point, to pay you more for your share than you paid. And, more often than not, the price of shares these days reflects a giant collective bet that people are going to continue to pay more and more for that particular stock.

Conversely, you can bet that the price of a stock will go down.

And then it gets more complicated, at least these days. There are things called "derivatives," which are, essentially, bets on the bets of others. Bets on the bets of people betting on bets, even. This is what happens in an unregulated market. People try to make money any way they can, and they tend to get more creative about the ways in which they make money. For a practical example, pay attention to the "male enhancement" ads that you see on television or on the Internet. No, those things don't work. Yes, the FDA keeps shutting down the companies that market those things. Yes, they keep popping up under a different name, or with a slightly different formulation.

Back to the subject at hand... Those nice folks on Wall Street, the ones who crashed the world economy and caused millions of people to lose their jobs, their life savings? They're doing just fine. Wall Street is having a record year. You see, one of the advantages of working on Wall Street is that the game is set up so you make money off the people making the bets. It doesn't matter if they win their bets or lose their bets -- to a point, anyway. It just matters that they bet, and that you get to collect your fee on each bet.

(Just like a bookie, Wall Street needs to be able to collect on its bets. If there are too many losers who can't pay, Wall Street can't pay off the winners, and then... it's crash time.)

So, to recap: The folks running the gambling parlor are doing just fine. But the folks who lost their jobs, lost their life savings? They're not doing very well at all. As I said at the beginning, for every five of them looking for a job, there is only one job. And the folks who relaxed the rules and let Wall Street run wild? They don't really care. They're more interested in squabbling about who is more conservative, who will let you buy more guns. They're more interested in pointing fingers at unions -- especially public unions -- to distract everyone else from the real problem.

And that problem? Five to one. One in five. No matter how much you spiff up that resume, you're never going to get a job that doesn't exist. And as long as the public falls for the smoke and mirrors that comprise modern political discourse and modern journalism these days, there will be no pressure on Washington to do what's right.