And so…the strike-out is complete…
Strike one: real wages are going down…
Strike two: real GDP is going down (US in recession)…
Strike three: Real productivity is going down…
And you’re out!
From Breitbart — ‘U.S. Labor Productivity Suffers Biggest Crash Ever Recorded, Labor Costs Soar Most Since 1982’:
‘The productivity of the business sector fell 2.5 percent compared with a year ago, the largest decline ever recorded in data going back to the first quarter of 1948, the Bureau of Labor Statistics said Tuesday. The decline comes from a 1.5 increase in economic output and a 4.1 percent increase in total hours worked.
‘Productivity declined at a seasonally adjusted annual rate of 4.6 percent in the second quarter. That’s a less rapid decline than the 7.6 percent contraction recorded in the first three months of the year but slightly below economist expectations for a 4.5 percent decline.
‘Unit labor costs jumped 10.8 percent in the second quarter of 2022, reflecting a 5.7-percent increase in hourly compensation and a 4.6-percent decrease in productivity. Economists had forecast labor costs to be up by 9.3 percent. In the first quarter, unit labor costs were up 12.6 percent.’
How do you like that? Mighty Casey, the US, has struck out.
Three strikes, no balls
From the year we were born until now, productivity could be counted on to increase. And productivity, more than any other single measure, tracks our wealth. There are only 24 hours in a day…from the day man first stood on two legs until today, the length of a day hasn’t increased by a single minute. We are wealthy inasmuch as we are able to use those minutes to produce goods and services. The more output — goods and services — per minute, the richer we are.
But now, time goes by, and we have less and less to show for it. In a typical hour, we just can’t produce as many goods and services as we did last year.
How did that happen?
Did masons forget how to mix their mortar? Did machinists forget how to bend their steel? How about accountants, did they forget how to add and subtract?
We doubt it.
More likely, thanks to the Inflation Reduction Act…along with countless other acts of petty insult or grand larceny…the US’s ‘hard working families’ can hardly work at all. They have too many laws, regulations, taxes, and jackass rules to work around. And they have the feds misleading them with phony price signals and stimmy cheques. But of all the Fed’s many crackpot schemes, lowering interest rates to discourage savers was probably the most harmful. Savings allow us to invest in new factories, new machines, and new output. It’s savings, in other words, that makes us more productive…and richer.
As savings went down so did serious capital investment. Instead of spending years building real, profit-making businesses, for example, entrepreneurs wanted to create overnight ‘start-ups’ that they could quickly unload on leveraged speculators. Less money was spent on new plant and equipment…and more on share buybacks, mergers and acquisitions, and other payouts to the rich. Why bother with the risk and hassle of long-term business investment when you can borrow below the rate of consumer price inflation and jack up your stock price…or, like Michael Saylor, buy a crypto that was going to the Moon?
The result was predictable. And now it is here.
And we wonder…
What will they think? After the confusion and ambiguity have lifted, like morning fog by the hot sun of time…
…will our descendants, 30 generations later, see us more clearly? How will they judge us? What will they say about us?
We shudder to think…
Wikipedia: Year 3000
‘Three things generally spelled doom for human societies — government, war, and inflation. And by the 21st century, all three were working against the US and its global empire. Its government had become obese and incompetent. Its war mongers sought conflict. And its economic leaders promoted inflation to keep the money flowing to themselves and their pet projects.
‘General, later president, Dwight Eisenhower had warned Americans about the “unwarranted power” of what he called the “military, industrial complex”. (MIC) in 1961. 40 years later, the MIC was running the country…and ruining it. It wasted trillions of dollars and thousands of lives. But the press asked no questions. And neither party dared oppose it. Then, the MIC so provoked and taunted its rivals — assassinating foreign leaders, seizing money and assets without even pretending “due process of law”, trying to shut them out of the world financial system completely — that Russia, China, India, Iran, Brazil, and many other countries finally joined forces to defend the world from US tyranny.
‘By this time, too, the source of the US’s power — its free economy — had been substantially hobbled. Altogether, presidents Bush, Obama, Trump, and Biden wasted US$24 trillion on wars, deficits, and boondoggles. In addition, the two scourges of economic growth — inflation and central planning — had been unleashed and allowed to run wild. In the 21st century, the world economy still depended on fossil fuel. Yet the US Government was forcing industry to convert to more expensive “alternative” energy. Taxes were raised on the still-productive sectors, while subsidies, handouts, and unrepayable loans were given to the unproductive ones. By 2022, wasteful spending, along with extremely foolish policies from the central bank, brought growth to a halt; the slide into poverty had begun.
‘Corruption, chaos, civil unrest, inflation, poverty, recession, and war — that was the history of the period from 2022 to 2036.
‘Finally, an attack by state-of-the-art Chinese drones, from forward bases in Brazil, in 2037, devastated the US’s military installations, sank its ships, and led the US to beg for peace. In the Treaty of Shanghai, the following year, the US was occupied by Chinese troops. It agreed, also, to disarm what was left of its military and disband its two war-seeking political parties.
‘In this manner was the peace and prosperity of the world restored.’
For The Daily Reckoning Australia