Celebrating America's first 'declinist' president...
PUBLIC figures and public events are almost always fraudulent in some way, writes Bill Bonner in his Diary of a Rogue Economist.
France's Bastille Day is no exception. It is hailed as a landmark of liberty.
But the storming of the Bastille prison by revolutionaries, a week ago in 1789, led to the liberation of only seven miserable perverts and half-wits.
And it was followed by the mass murder of thousands in The Terror – the bloodiest period of the French Revolution – and the deaths of 5 million more in the Napoleonic Wars.
But today, we turn away from the swindles of politics and back to the old familiar flimflam. We're talking about economics and finance!
The news recently offered a couple of new explanations for why this century has been such a dud.
First, Fed chief Janet Yellen offered this clue, from MarketWatch:
"We've had many decades of declining labor-force participation by prime-age men, and I think this reflects a whole variety of adverse trends related particularly to technological change that's eliminated many middle-income jobs.
"Many individuals with less education are finding it difficult to be placed in jobs that are middle income jobs. And so this perhaps intensified during the recession, but it is a much longer lasting trend. We've seen now unfortunately this is likely tied to the opioid crisis.
"I don't know if it's causal, or it's a symptom, of long-running economic maladies that have effected [sic] these communities."
Then came The Wall Street Journal, pointing a finger:
"Academics from Princeton University, the University of Chicago and the University of Rochester say there's ample evidence that since 2000, men who would otherwise be working are instead being drawn into immersive virtual worlds, giving up paychecks in the process.
"What's more, these men are reporting higher levels of happiness compared with those who work, and they're drawing on the support of mom and dad to stay there.
"The men who essentially drop out don't end up getting by via government support. Instead, they're enabled by family members. The researchers found that nearly 70% of these men who aren't working lived with a close relative in 2015, versus 46% in 2000."
Whether they take drugs or play video games is none of our business. And if their families want to support them...well...bully for them.
We're just trying to connect the dots.
Donald J.Trump, meantime, is America's first "declinist" president.
That is, he's the first to recognize that the country's best days are probably behind it. "Make America great again" was a promise with an admission built into it.
But you can't go back unless you're willing to stop going ahead. To the annoyance of our dear readers, we doubted it was possible. Empires don't turn around. And Mr. Trump showed no sign of understanding what bus he was on or where it went.
Now, six months into the new administration, it is becoming clearer and clearer that we were both right: America is in decline. And President Trump is not going to fix it.
Here's Foreign Policy magazine:
"[A]ccording to a new report from the Pew Research Center, which released results of a 38-nation survey Thursday afternoon. While the majority of those polled still correctly believe the United States is the world's biggest economy, 12 nations – including Canada, Russia, and most of western Europe – believe China has the largest economy in the world.
"Pew detected a dramatic shift; only six nations said Beijing possessed the world's strongest economy when the question was asked between 2014 and 2016. Since then, the number of countries that view the United States as playing second fiddle to China has doubled. And more striking is the change that's taken place in just the past year: Canada, Britain, Germany, Spain, and Italy all went from seeing America as the biggest player to viewing China as the top dog."
Economic growth rates in the US are only half of what they were in the glory years and less than half of China's growth rate...with no sign of picking up.
Not only that, neither Democrats nor Republicans are willing to discuss the real problem nor are bold enough to offer proposals to turn it around.
Because they are both part of the problem, not the solution.
Before the French Revolution, the elite had become corrupt, effete, and ineffectual. They were the beneficiaries of the win-lose deals imposed on the people by the government. Now, it is today's elite who benefit from the win-lose deals; they're not about to give them up.
Why so little growth?
Because too many people and too many resources are shifted to cronies and zombies rather than being invested in the real economy. Some of the zombies are playing video games. Some are doing drugs. Some are doing both.
Perhaps you'll recall our Diary Dictum No. 3: People are neither always bad nor always good, but always subject to influence.
What interests us are the influences that have reduced the labor participation rate for working-age men from 76% in 1990 to only 69% today.
That represents about 6 million men who would otherwise be contributing to growth and output. Instead of adding valuable goods and services, they are consuming them.
Altogether, there are said to be about 102 million working-age people without jobs. Since there are only about 200 million working-age people, that means that more than 1 out of 2 is unemployed.
What's worse, more and more of those who do have jobs work in "low-productivity" fields – such as government, leisure, education, and health.
Friend and former Reagan cabinet member David Stockman has done an excellent job in his Contra Corner newsletter of detailing the shift from "breadwinner" jobs to "bread and circus" jobs in this century.
Since 2000, the number of high-wage jobs in mining, manufacturing, and construction – industries that typically employ men – has gone down by about 15%.
In manufacturing, the number of jobs has fallen back to a level last seen 72 years ago.
Most of the new jobs have been created in service sectors – parking cars, tending bar, cleaning houses – where many are part time and pay an average of only $21,000 a year.
Heck, faced with these alternatives, we might rather play video games in Mom and Dad's basement, too!