The End of Work as We Know It
Are you still working? Still have a job? Getting paid? (I’m asking for a friend.)
I bring up this normally delicate subject because, unless you’ve been holed up in Antarctica, you surely know that millions of Americans are in financial extremis just now.
It’s easy to say something like, “Yes, and people need to get back to work.”
Then again, you know that even the idea of work is transforming.
What are unemployed and underemployed people supposed to do?
The factories of old are gone. You can’t just walk down to the mill, pass through the striking workers and Pinkerton guards and get a job as a scab, swinging a shovel. It’s not 1892 anymore.
Meanwhile, in the current era and in most sectors of the U.S. economy, wages have been stagnant or declined for 30 years.1
One piece of contemporary, snotty advice has become sort of a macabre joke: “Learn to code.”2
Is there an answer? Well, people write books on this issue…
But for now, let’s hit some key points and look at where events are taking us.
Many times here at the Whiskey bar, I’ve discussed the wreck of the U.S. economy.
“A real economy makes real things,” I keep saying.
Under the sway of our idiotic and execrable class of national-level “thought leaders,” the U.S. has spent several decades hollowing out vast swaths of its traditional industrial economy.
The country was hit with a massive pandemic last year, only to learn that we hardly manufacture any of our own pharmaceuticals and that much of our drug supply and medical equipment comes from China.
On a larger scale, it’s the culmination of 30 years of strategic failure.
Closer to the present time, many of the nation’s employment and income problems arose over the past year due to widespread business shutdowns dictated by panicked federal, state and local governments.
Restaurants, hotels, movie theaters, airlines and many more… Doors were shut, or open intermittently on the best of days.
The numbers of business closures and job losses are huge. From what I can gather, over the past 10 months something like 300,000 small businesses across the country have closed their doors;3 about 100,000 of them were restaurants.4
Much of this economic carnage — business and employment — was front-loaded last winter and spring. That was when the COVID lockdowns hit like a giant asteroid.
Let’s do some easy math. Spread things out over 10 months of 2020, March to December.
An average of 30,000 businesses closed per month. That’s about 1,000 per day (about 40 per hour), meaning one business was lost every 90 seconds.
All this for almost an entire year. And it’s not yet over. There’s more to come, right?
We have serious implications ahead… And what does it mean to you?
If you’re working, you are fortunate. Be grateful.
Because right now, tens of millions of people are unemployed or underemployed.
Let’s use unemployment comp initial claims in 2020 as a barometer.
Here’s a recent, one-year chart from the Department of Labor. It shows weekly initial claims. The curve shows how the numbers skyrocketed by a factor of seven or eight last winter and early spring.
Unemployment compensation weekly initial claims, U.S. Department of Labor.5
If we weren’t discussing unemployment, I’d think this was a cross-section of the slope of Mount Denali (aka McKinley), in Alaska.
Meanwhile, you’ve likely seen news accounts about miles-long car lines at food banks.6
And you’ve probably also seen stories of millions more under the gun and on the verge of being evicted for nonpayment of mortgages or rent.7
On occasion, I hear people say that this economic mess was caused by the COVID virus.
No, not at all. COVID is but a molecule. It’s a nasty little beast, to be sure. And I sure don’t want to get sick with it (knock on wood).
But the worst thing you can say about COVID is just that; it’s a molecule that makes people sick.
Right now, the COVID survival rate is in the range of 99.7%. (Although again, be careful. Avoid the bug!)
And as 2021 unfolds, there’s even a variety of vaccines against COVID. Feel free to take the needle.
But here’s the point on that angle. COVID did not close down the economy.
To crush the economy, you can thank our illustrious government; primarily state governors, but also local and federal officials. (Looking at you, Dr. Fauci.)
In many areas, elected officials placed their grubby paws hard on the throttles of the economy and snuffed the life out of many a business while impoverishing workers.
Act in haste, repent at leisure, right?
Because last spring, with tens of millions lined up to apply for unemployment comp, Congress hastily passed a $3.3 trillion spending bill.
The Niagara of spending put $1,200 checks into many people’s pockets, along with forgivable loans to employers to keep employees on the payroll. That was a few hundred billion.
With the other couple of trillion dollars, Congress also bailed out all manner of banks, businesses, Wall Street cronies and more.
And now in the early days of 2021, there’s a move on to do it again… More big bucks.
It’s hard not to be sympathetic to the idea of helping people out during tough times. I said as much in a recent article.
But at the same time, I discussed how the country is broke. I analogized what’s happening to burning the furniture to stay warm in the winter.
Sure, you’ll be warm for a while. But come spring you’ll still be broke and won’t have any furniture.
That is, by spending all that money — by the Fed creating all that money out of the ether — we’re making the country poorer, not wealthier.
In December, when I wrote about burning the chairs and tables, the ante was for the Treasury to send out checks for $600 per individual, depending on household income and other factors.
But over the past couple of weeks, the number has risen much higher. In fact, we’re up to $2,000 per person, courtesy of President Trump and many members of Congress.
Of course, the whole thing is a political football. In an odd quirk of fate — Trump and all his Trump-hating Democrat opponents are on the same page.
Finally, though, there’s something they agree on!
But many Republicans oppose the $2,000. Senate Majority Leader (for now) Mitch McConnell (R-TN) foremost among them.
It’s something about the quaint Republican notion of fiscal responsibility Huh? Never heard of it…
President Elect Joe Biden favors the large number, too.
“If you send Jon and the reverend to Washington, those $2,000 checks will go out the door,” said Biden at a recent, pre-election rally for Democrat Senate candidates in Atlanta.
Biden was referring to Jon Ossoff and the Reverend Raphael Warnock, both of whom won the recent runoff contest in Georgia.
The $2,000 checks Biden mentioned are part of a proposed spending package to put money in the pockets of those tens of millions of households across the land in the wake of the economic unwind of 2020.
Over 200 million Americans may be eligible for the payout. Do some arm-waving math here: $2,000 times 200 million, and we’re looking at over $400 billion in play.
That’s a big number, even by the astronomical standards of federal spending. By way of comparison, it’s over half of the defense budget.
Meanwhile, there’s not sufficient tax revenue in the U.S. Treasury to cover this kind of massive new spending. It’ll all come from the Fed. There’s no way to issue bonds into the capital markets for that kind of cash.
Let’s explain this another way. All new spending on so-called “COVID relief” will be notional dollars conjured up on the books of the Federal Reserve. Nothing to back them up.
It’s inflationary, to say the least.
And it’s the beginning of something else…
Remember those rhetorical questions at the top of this article, about what are people supposed to do if they can’t find a spot in the shrunken economy? If they can’t learn to code?
We now beginning a hard push towards what’s called a universal basic income (UBI).
If you have a job and income, great. Keep working. Pay taxes.
If not, just sign up for UBI. The checks will start coming. Some defined amount every month, per person, per household. Direct deposit.
Just kick back and relax, all courtesy of your magnanimous and caring federal government.
Among other things, this is why incoming President Elect Biden wants Janet Yellen at the Treasury Department.
Yellen will be the bag lady for UBI.
Congress will authorize the idea, then Congress will set it up as an entitlement on budgetary autopilot. And the Fed will simply spin out the funds like clockwork.
Can it work? I doubt it, not over the long run.
Then again, as Lord Keynes said, “In the long run, we’re all dead.”
I’d add that in the long run (maybe sooner than that) the dollar is dead too.
Which brings us back to gold… the subject of another article.
On that note, I rest my case.
That’s all for now… Thank you for subscribing and reading.
Managing Editor, Whiskey & Gunpowder
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7 Eviction Crisis Looms as Millions Rely on Federal Moratorium Expiring This Month, ABC News