Why this entire set of economic activity highlighted by the Conavirus is going no where. i.e. Rich spenders not spending means fewer low wage workers
This is idiotic. i.e. not making commensurate sense, i.e. what we are seeing is that the top level consumers are in spending habits literally killing off jobs in those who are not in their economic cohort. The rich spenders not being engaged means that low wage workers are being tossed out like trash.
It is in the document given below. What it means is that there is no chance of a national investment strategy in place for building up public assets which can be used. The existence of economic activity for almost half of the US economic hiring been frozen into place via a 1-1 relationship with merchantile activity which is a function of the whims of people, and not what people need.
In the earlier days of the American Republic, public work projects, combined with worked out partnership with industrialists lead to the Continent spanning rail roads, as well as 100 years later, the US intercontinental highway system
We could literally not do this today.
It gets worse. Not only can we not do it, the existence of a laboring class of specialists who know how to build stuff up, is imperiled by the complete absence of an industrial policy.
We can thank the Conavirus blow out for showing the end results of purely merchantile focusing upon the survival of the co hort of specialists who know how to build stuff up and use it , in ways which benefit the public.
The Conavirus mayhem has lead to, among other things, a dynamic where there is no chance for build up of public assets, such as transportation. I.e. there has been an overly merchantile bent of investment which benefits the whims of a few rich investors while , as due to their spending being so important, devastating losses of jobs for those in the lower cohort.
Some form of industrial/ economic activity regulation has to be re introduced, and that can be done, but it first of all needs a clear recognition of what the Conavirus has wrought in terms of showing the limitations of the economic model in the USA, today.
https://www.cnn.com/2020/06/17/business/rich-cut-spending-jobs/index.html
Quote
San Francisco (CNN Business)Rich Americans who curtailed their spending during the pandemic ended up costing a lot of low-wage workers their jobs, a trend that could hinder an economic recovery, according to Harvard University research released Wednesday.
The top 25% of the wealthiest US households accounted for two-thirds of the declines in credit card spending from the beginning of January to the end of May, whereas the bottom 25% kept their spending patterns the same, researchers found, noting that the high-income individuals reduced their spending primarily because of health concerns -- not loss of jobs.
"Zooming into specific subcategories, we find that spending on luxury goods that do not require physical contact -- such as landscaping services or home swimming pools -- did not fall, while spending at salons and restaurants plummeted," the report said. "Businesses that offer fewer in person services, such as financial and professional services firms, also experienced much smaller losses."
American spending collapsed by a record 13.6% in April
Harvard researchers' deep-dive into consumer spending data and behaviors was part of a larger effort to provide more comprehensive and real-time economic data. The university previously launched the Opportunity Insights Economic Tracker website in conjunction with Brown University and the Bill & Melinda Gates Foundation.
Analyzing spending by ZIP codes, the researchers found that businesses located in the richest areas experienced a 70% decline in revenues. When those sales fell, employees were laid off and the lowest-income workers were disproportionately affected, researchers found.
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About 70% of low-wage workers in the most affluent ZIP codes in large cities became unemployed as compared to 30% in the lowest-rent ZIP codes, according to the report.
The cities with some of the biggest drops in small business revenue and low-wage worker hours included New Orleans, Louisiana; Washington, D.C.; Honolulu, Hawaii; and Miami, Florida.
The revenue drop was even sharper for businesses -- such as restaurants and hotels -- that rely on physical interaction. It tumbled more than 80% in the most affluent areas such as Manhattan's Upper East Side and Palo Alto, California, according to the report.
Support for low-income individuals -- whether through extended unemployment benefits or other assistance programs -- should be a focal point to head off further economic losses, the researchers wrote.
"Prior experience suggests that relatively few people move to other labor markets to find new jobs after recessions, leading to long-term income losses in hard-hit areas," they wrote.
The researchers found that policy efforts such as the Paycheck Protection Program and the cutting of stimulus checks had nominal effects.
The stimulus checks did boost consumer spending, but they didn't "undo" the losses at the businesses that had the biggest revenue declines, the report said.
Similarly, the PPP loans had minimal effects on job creation in part because a majority of the loans went to professional, scientific and technical services firms, which experienced fewer job losses than other sectors, notably the food services and accommodations industries which accounted for half of the early Covid-19 job losses, according to the report.
The fundamental constraint on spending appears to be health concerns, the researchers said.
"Given this sequence of events, the only path to full economic recovery in the long run is to restore consumer confidence by focusing on health policies that will address the virus itself," the researchers wrote in a summary accompanying the data.
end of quote
FTR
This is idiotic. i.e. not making commensurate sense, i.e. what we are seeing is that the top level consumers are in spending habits literally killing off jobs in those who are not in their economic cohort. The rich spenders not being engaged means that low wage workers are being tossed out like trash.
It is in the document . What it means is that there is no chance of a national investment strategy in place for building up public assets which can be used. The existence of economic activity for almost half of the US economic hiring been frozen into place via a 1-1 relationship with merchantile activity which is a function of the whims of people, and not what people need.
In the earlier days of the American Republic, public work projects, combined with worked out partnership with industrialists lead to the Continent spanning rail roads, as well as 100 years later, the US intercontinental highway system
We could literally not do this today.
It gets worse. Not only can we not do it, the existence of a laboring class of specialists who know how to build stuff up, is imperiled by the complete absence of an industrial policy.
Summary, the writers miss the point. I.e. they claim that restoring health incentives for the entire economy is the way to fix this problem. I state unequivocally that this is a half truth. The real lesson is that so long as top level spending is so important for lower wage work levels, the entire country will not reach full employment. And I mean this quite literally.
Andrew Beckwith, PhD