The Great Lie Of Modern Unions

I have come to know Wendy McElroy writing for some of the same publications, including The Dollar Vigilante. Here she recounts some important labor history and how the combination of,big government and big labor led to failure for both workers and small business.

The original article is here: http://www.thedailybell.com/editorials/34709/Wendy-McElroy-The-Great-Lie-of-Modern-Unions/

The Great Lie of Modern Unions

Published by The Daily Bell - October 31 2013

Few aspects of America's past are as thoroughly misunderstood as the history of the labor movements that thrived in the late 19th and early 20th centuries. The modern union that arose and usurped their place was the antithesis of what it claimed to be. It did not voice workers' rights. It silenced them.

Modern unions were created through an alliance between big government, big business and big labor in order to control the power of the work force. The alliance was not always a comfortable one, to be sure, and it sometimes broke down. Nevertheless, the modern union arose because it was convenient to all parties involved. It also effectively killed what was deemed the larger threat; namely, labor organizations that were not under government control.

Modern unions are rooted in the New Deal legislation of President Franklin D. Roosevelt and they were championed by leaders of industry such as Gerard Swope, then-president of General Electric. The Wagner Act (1935) established the legal "right" of workers to unionize if a majority within a business voted to do so. These unions were handed the legal privilege of certification. That is, the union received government authorization as the sole representative of labor within a certain industry or business with whom the employer was required to negotiate. The monopoly union then prevented other labor groups and individuals from negotiating their own contracts. Workers in the industry could choose not to join the union but they remained bound by its contracts and they had to pay union fees. Thus, the modern union was a forced transfer of authority and rights away from individual workers to a government-created monopoly.



Big business applauded the Wagner Act because it eliminated the need to negotiate contracts with multiple groups or individuals. The monopoly union also acted as an enforcement arm, which ensured that its members complied with contracts. The union prevented the wildcat strikes which were a significant problem; it punished unsanctioned boycotts, work slowdowns and the other labor tactics that had proven so effective in the past. Leaders of big labor were well aware of the benefits they offered to big business. The union leader John L. Lewis, president of the United Mine Workers of America (UMWA) for decades, assured employers with whom he negotiated that a contract with him "is adequate to protect against sit-downs, lie-downs, or any other kind of strike." The power of labor became centralized in such hands.

Prior to the modern union, labor organizations had a marked tendency toward decentralization. Consider the Knights of Labor, a labor federation established in 1869. By 1886, its membership peaked at about 700,000 with local chapters acting with considerable autonomy. The voluntary chapters prospered because they offered services to members; for example, support networks were established to insure members against injury or ill health.

Labor movements flourished in every niche of America. In Michigan, for example, a woman named Sabina (Bina) West Miller rebelled against the inability of working women to secure the life insurance that could keep a family intact in case of an earner's death. By contrast, men often had life insurance through fraternal societies such as the Knights of the Maccabees with which Bina associated.

In the 1890s, she created women's auxiliaries within the Maccabees. In 1916, the Milwaukee Sentinel carried an advertisement for the Women's Benefit Association (WBA), Bina's umbrella organization. The WBA declared itself to be "The Largest, Strongest, and Most Progressive Fraternal Benefit Society for Women in the World. Offers more opportunities to women than any other fraternal insurance society. Non-political and non-sectarian. Established in 55 states and provinces. Organized October 1, 1892." The advertisement reported the membership to consist of 188,008 women.

As a massive and diverse network of labor movements grew in power, the threat to entrenched political interests also swelled. In 1877 and 1894, two massive railroad strikes dramatically illustrated that threat. The Great Railroad Strike lasted 45 days and the Pullman Strike eventually involved about 250,000 workers in 27 states. Troops were needed to break the strikes and to control the violence of some strikers.

But nothing seemed to slow the pace of voluntary labor organizations. Scholar Leslie Siddeley noted that "by 1920 the National Fraternal Congress (NFC), an association of fraternal societies, boasted 200 member societies with 120,000 local affiliated lodges. These 200 societies insured nine million members with over $9,500,000,000 of life insurance in force. The member societies of the NFC were just the tip of the iceberg. For example, we know that in 1918 there were 313 non-NFC fraternal organizations providing insurance to the immigrant poor in Chicago alone. In fact, fraternal insurance was by far the most popular type of insurance among the immigrant poor, as well as among native blacks. Despite their poverty, these groups had levels of insurance equal to, and sometimes greater than, native whites."

By the 20th century, the power of labor movements had also become more blatantly political as exemplified by the Industrial Workers of the World, or Wobblies. Organized in 1905, the socialist Wobblies had strong leaders who enthusiastically embraced strikes. Indeed, and to the dismay of many businessmen, the Wobblies argued against signing labor contracts because the agreements were barriers to wildcat strikes. With a large immigrant membership, the Wobblies also became a potent voice against America's entry into World War I. This dismayed the Department of Justice. In September 1917, 48 IWW meeting halls were raided and 165 leaders were arrested under the new Espionage Act. Of those arrested, 101 of them went on trial; all were convicted and received sentences of up to 20 years.

Government and big business had learned a lesson. An uncontrolled labor movement was politically and economically dangerous. The situation worsened with the Great Depression in which unemployment rose as high as 25 percent. Hundreds of thousands of people roamed America, looking for work. A massive and migrating army of the unemployed is a formula for political revolt. Thus, Roosevelt offered a New Deal in order to create stability. Big business embraced the deal because it also created predictability. Ambitious labor leaders saw the power being proffered their way; they became big labor. It was a career move that some labor leaders had worked toward for years. For example, when Lewis became president of the UMWA, he did away with the union's decentralized structure and crippled the autonomy of local chapters. The modern union completed the centralization of labor under the government's authorization.

The main losers? Small businesses that were forced to deal with big labor. And the individual worker who was stripped of the right to contract in his own name, on his own terms. The very existence of the modern union violates worker's rights.

Labor Board's Kangaroo Court Now In Session

From: http://www.redstate.com/2013/10/29/obamas-kangaroo-court-now-in-session-senate-confirms-another-union-lawyer-as-nlrb-prosecutor/?goback=%2Egde_3012900_member_5801148222588076033#%21

"Ever since July, when Republicans caved in to Harry Reid’s “nuclear option” threat, GOP resistance to Barack Obama’s appointments to agencies like the National Labor Relations Board (as well as others) has been virtually non-existent.

A day after Sen. Lindsey Graham’s empty threat to block appointments until his questions about Benghazi were answered, the Senate voted to confirm controversial union lawyer Richard Griffin as the general counsel of the NLRB.

The position of the NLRB’s general counsel is a powerful one, as the general counsel “is responsible for the investigation and prosecution of unfair labor practice cases and for the general supervision of the NLRB field offices in the processing of cases.”

Back in July, GOP senators were duped into thinking that the then-unconstitutionally appointed Griffin would be gone from the NLRB. However, the very next day, Obama dealt the GOP a blow by cynically re-nominating Griffin for a different role–that of the NLRB’s main prosecutor.

Upon the Senate’s vote to confirm Griffin, union lawyer and current NLRB chairman Mark Pearce (whose law firm represented Griffin’s union) issued a press release stating:

“Today’s Senate vote to confirm Richard F. Griffin, Jr. as General Counsel will ensure the NLRB’s ability to enforce the National Labor Relations Act. The Act guarantees the right of private sector workers to organize and bargain collectively with their employers and to participate in concerted activities to improve their pay and working conditions.

“Having served as a staff attorney and as a member of the Board, Mr. Griffin has a wealth of experience in labor law and a deep understanding of the National Labor Relations Act. On behalf of the NLRB, I welcome him back and know that he will play a vital role in ensuring that we continue to provide excellent service to the American people.

As a result of Tuesday’s confirmation, with the controversial former general counsel of the International Union of Operating Engineers’ now as the NLRB’s prosecutor, employers facing NLRB actions will be both prosecuted and judged by hand-picked union appointees."

Meanwhile In The Real World, Americans Sell Hair, Breast Milk And Eggs To Make Ends Meet

Via Zero Hedge . . .

With a stunning 41% of global wealth in the hands of a mere 0.7% of the world's population, the lower- and middle-class continue to fight amongst themselves for the scraps to maintain a decent standard of living. In the US, with the home-equity ATM now closed (and maybe EBT interrupted), those struggling to make ends meet are turning to the only "asset" they have left that is unencumbered (for now) - their body parts.

As Bloomberg reports, since the beginning of 2011, 'hair,' 'eggs,' or 'kidney' have been among the top four autofill results for the Google search query, 'I want to sell my...;' and "the fact that people even explore it indicates that there are still a lot of people worried about their financial outlook," as hair, breast milk and eggs are doubling as ATMs for more and more cash-strapped Americans.

As one analyst noted, “This is very much unlike every other recovery that we’ve had. It’s going to be a slow-grinding, very frustrating recovery.”

Which should come as no surprise given the massive wealth inequalities...

Personal wealth varies across adults for many reasons.

Some individuals with little wealth may be at early stages in their careers, with little chance or motivation to accumulate assets. Others may have suffered business setbacks or personal misfortunes, or live in parts of the world where opportunities for wealth creation are severely limited.

At the other end of the spectrum, there are individuals who have acquired a large fortune through a combination of talent, hard work or simply being in the right place at the right time.

The wealth pyramid above captures these differences in striking detail. It has a large base of low wealth holders, alongside upper tiers occupied by progressively fewer people.


Via Bloomberg,

Hair, breast milk and eggs are doubling as automated teller machines for some cash-strapped Americans such as April Hare.

...

“I was just trying to find ways to make money, and I remembered Jo from ‘Little Women,’ and she sold her hair,” the 35-year-old from Atlanta said. “I’ve always had lots of hair, but this is the first time I’ve actually had the idea to sell it because I’m in a really tight jam right now.”

The mother of two posted pictures of her 18-inch auburn mane on www.buyandsellhair.com, asking at least $1,000 and receiving responses within hours. Hare, who also considered selling her breast milk, joins others exploring unconventional ways to make ends meet as the four-year-old economic expansion struggles to invigorate the labor market and stimulate incomes.

In all but two quarters since the beginning of 2011, “hair,” “eggs,” or “kidney” have been among the top four autofill results for the Google search query, “I want to sell my...,” ...

While Americans can legally sell hair, breast milk and eggs, the sale and purchase of a kidney in the U.S. is against the law.

...

“If you’ve been unemployed for years, if you’re on food stamps and you’ve had trouble getting by, I can totally see you being very economically desperate,” Colas said. “I don’t think a lot of people sell their kidneys. I do think a lot of people in desperation do that search to say, ‘If worse comes to worst what could I do?’”

...

The average donor is about 27 years old, and 78 percent have a college degree or are pursuing one, Williams said. More than half of donor applications come through an online resource.

The Internet is probably responsible for much of the increased interest in cashing in on body parts, Becker said. Online search engines and exchanges make communications between “buyers and sellers of things like organs or hair much easier,” he said.
Perhaps the last paragraph sums up the US citizenry's perspective better than any other:

“I’ve been growing my hair out for maybe a little over two years, and I just decided now was the time since I lost my job,” MacDonald said. “It doesn’t cost anything to grow your hair out and sell it for money. It’s basically profit with very little work. Anything you can do, I’m sure people are willing to do it.”

Have We Reached "Peak Jobs?"

Charles Hugh Smith, a prescient commentator on American economics, concludes this about the U.S. labor market:

"The U.S. has reached Peak Jobs--at least the sort that can support a household.

There has long been a quasi-magical belief in the U.S. that capitalism's intrinsic dynamic of creative destruction will always create more jobs than it destroys. The evidence is compelling that this belief is no longer reality-based.

Please examine these charts of employment, keeping in mind that only full-time jobs can support households and pay sufficient taxes to fund entitlements paid by payroll taxes (Social Security and Medicare) and pay enough income taxes to support the rest of government.

Full-time jobs: the number of full-time jobs is essentially unchanged from 1999 while the U.S. population has increased 28% . . ."

The article is here:
http://www.oftwominds.com/blogoct13/peak-jobs10-13.html

If the American economy is recovering, why are so many big companies laying off

Courtesy: The Burning Platform
http://www.theburningplatform.com/2013/10/10/if-we-are-in-an-economic-recovery-why-are-major-corporations-firing-thousands/

We already have declining real wages. Small businesses are geting wiped out by taxes, regulations, and Obamacare. These mega-corporations are firing thousands. Retail and restaurant sales are plunging. Consumers are scared straight and are reducing credit card debt. Government spending in states and localities is declining because they are required to balance their budgets. The Boomers are old, with no savings. They can no longer live in a delusionary credit bubble. Sounds like a reason to buy stocks.

Planned ed job cuts in the third quarter rose 25% from a year ago. With September jobs cuts up 19% from last year, it represented the fourth month in a row in which job cuts were higher than the same month last year. Despite the current trend, employers are on pace to cut roughly the same number of jobs that were cut last year.

According to data compiled by Challenger, Gray & Christmas, 10 companies alone have announced close to 75,000 job cuts this year, combined. This represents nearly 20% of all the announced cuts in 2013.

In an interview with 24/7 Wall St., Challenger, Gray, & Christmas CEO John Challenger explained, “For every situation, there’s a different reason for a company to cut jobs.” In some cases, it is a matter of simple corporate restructuring. In other cases, companies facing difficult headwinds are forced to shed jobs. Based on data from Challenger, Gray & Christmas, 24/7 Wall St. reviewed the companies cutting the most jobs.

The companies that are cutting the most jobs this year are, not surprisingly, in industries that are eliminating the most positions overall. The financial services sector is leading the way with 48,874 planned layoffs year to date. American Express, J.P. Morgan and Wells Fargo are all among the top 10 for announced job cuts.

Retail was also in the top five industries, with J.C. Penney and Dish Network’s Blockbuster in the top 10. Aerospace and defense was also among the industries with the most planned layoffs. United Technologies and Boeing were among the companies eliminating the most jobs.

Not all businesses have cut jobs due to poor demand for their products. Challenger also noted that companies announce job cuts when jobs are relocated to another part of the country, or even the world. Metlife moved a large number of jobs from the Northeast to a new base in North Carolina. Additionally, the company also scaled back its variable annuities business, while expanding its presence in emerging markets.

Similarly, United Technologies has been restructuring its operations, both this year and last, in order to cut costs and integrate acquisitions, notably the $16 billion purchase of aircraft component maker Goodrich.

Sometimes, technological change drives job cuts. “In these cases, the business model changes in response to new technology that affects the company or the industry, and a particular company adjusts,” Challenger explained. Cisco has had to contend with the emergence of cloud computing, as cheaper services have undercut the company’s traditionally profitable businesses. Similarly, the travel business of American Express has been impacted by the growth in travel websites.

Some businesses have had to cut jobs as part of their efforts to stay afloat. ”A company just isn’t performing well via its competition, or maybe just revenue is down, and they’re just cutting back,” Challenger explained. J.C. Penney’s sales have declined precipitously in recent years, and it has struggled to keep enough cash on hand to run its business. As a result, the company has had to cut more than 15,000 jobs in 2013. Dish has had to slash jobs at Blockbuster as it continues to close unprofitable stores.

Many of the companies announcing the most job cuts are also among the country’s largest employers. This means, in many cases, the layoffs represent only a small proportion of companies’ total workforces. IBM’s 9,4000 job cuts accounted for just over 2% of the company’s total headcount as of this year.

Only a few of the companies cutting the most jobs have lost money. Only one of these companies, J.C. Penney, posted a net loss, while half increased their net income during their past full fiscal year. Also, shareholders in all but two of the 10 companies, J.C. Penney and IBM, have seen the value of their holdings rise so far in 2013.

Challenger Gray & Christmas provided 24/7 Wall St. with all job cut announcements affecting at least 500 positions this year. 24/7 Wall St. combined all planned cuts by company to identify the companies that are cutting the most jobs this year. We only considered publicly traded, American companies, or divisions of publicly traded companies. Job cuts did not need to be entirely within the United States, however. Some cuts announced in 2013 may not be completed this year. Full-time employee totals were from Yahoo! Finance.

These are the 10 companies cutting the most jobs.

1. JPMorgan Chase & Co. > Job cuts: 19,000 > Number of employees: 254,063 > YTD share price change: +15.7%

JPMorgan Chase is one of the nation’s largest banks. More than half of U.S. households are customers of the bank, according to the company. However, as customers increasingly use self-service technologies, the firm announced plans to trim back its consumer banking staff by 4,000. The company also announced its intentions to lay off 15,000 mortgage workers, many of whom were brought in to process defaulted mortgages during the housing crisis. JPMorgan continues to be one of the most profitable companies in the U.S.

ALSO READ: The Best (and Worst) Countries to Grow Old

2. J.C. Penney Company, Inc. > Job cuts: 15,020 > Number of employees: 116,000 > YTD share price change: -60.6%

J.C. Penney had been coy about the total number of layoffs at the company, which began under former CEO Ron Johnson. The onetime leader admitted in March the company had trimmed as many as 19,000 jobs since his arrival, the majority of which in early 2013 according to Challenger Gray. Barely a few days later, the company confirmed it was eliminating an additional 2,200 jobs. JC Penney has since fired Johnson, and his largest supporter, hedge fund manager Bill Ackman, has quit the company’s board. In recent years, the retailer has been struggling as sales and earnings have declined, and it has continued burning through cash. Recently, Penney had to issue new shares to raise cash, hurting the value of stock owned by existing shareholders.

3. International Business Machines Corp. > Job cuts: 9,400 > Number of employees: 434,246 > YTD share price change: -6.7%

In the first quarter of the year IBM reported a drop in its sales, which was followed by an announcement the company would cut between 6,000 to 8,000 workers worldwide. Yet while cuts took place largely outside the U.S., many American IBM workers were still targets for layoffs. As of August, the company had trimmed more than 3,300 jobs in the U.S. and Canada and furloughed much of its hardware staff. Prior to its recent struggles, the company received criticism for outsourcing jobs to India. Recently, the New York Post reported that IBM now employs more workers in India than in the U.S.

4. Boeing Co. > Job cuts: 5,800 > Number of employees: 174,400 > YTD share price change: +53.2%

Boeing announced in March that it would be cutting over 2,300 machinist positions from its workforce. It followed up that announcement in May, noting it would gradually reduce its Washington-based IT workforce by about 1,500 over three years. These cuts were not all in the form of firings. Some jobs are expected to be lost to attrition and others simply transferred to other states. The company has had many problems in recent years with the development of its newest major commercial plane, the 787 Dreamliner, most notably a faulty battery system. Recently, the company has eliminated another roughly 3,000 jobs related to the production of its C-17 transportation jet, following the cuts to the U.S. military’s budget.

5. American Express Company > Job cuts: 5,400 > Number of employees: 63,500 > YTD share price change: +25.6%

American Express announced at the start of the year that it would cut its workforce by 5,400 employees. Many of these cuts took place in the company’s travel division. Among the major factors driving the company’s restructuring has been the increased reliance of travelers on online travel booking. The company also recently has arranged to sell its publishing division, which includes both general and cardholder-exclusive magazines, to Time Inc.

6. Wells Fargo & Co. > Job cuts: 5,236 > Number of employees: 274,300 > YTD share price change: +17.7%

Wells Fargo announced in August it was laying off 2,300 employees from its mortgage production unit. The major reason for the cuts was the lower demand for mortgage refinancing. This was popular with homebuyers when interest rates were lower, but became far less common once rates began rising. Wells Fargo continued to cut jobs at the end of the summer as mortgage refinancing remained slow. Last year, Wells Fargo processed nearly 400,000 mortgage applications, more than four times the amount of any other U.S. bank.

ALSO READ: The Most Dangerous States in America

7. Cisco Systems, Inc. > Job cuts: 4,500 > Number of employees: 75,049 > YTD share price change: +15.2%

Cisco laid off 500 workers in March as part of a minor restructuring in its data center businesses. However, the company did not stop there. And after reporting a disappointing quarter, Cisco cut 4,000 jobs, bringing the company’s total layoffs to 12,300 jobs in the past two years. The company has been aggressively cutting costs in recent years as its networking products have become increasingly commoditized, according to Bloomberg. Additionally, the markets for Cisco’s core networking offerings — modems, switches, WiFi routers, etc. — may have plateaued, while new advancements in cloud computing have undercut the company’s profitability.

8. MetLife Inc. > Job cuts: 3,150 > Number of employees: 64,000 > YTD share price change: +41.0%

MetLife announced in March that it would cut 650 jobs from its Bloomfield, Connecticut, offices. The cuts are part of its plans to consolidate its operations and open new offices in North Carolina, where it will shift 2,600 jobs. The company additionally cut a third of its advisers, or 2,500 jobs, at the end of May. In regards to these firings, CEO Eric Steigerwalt noted in a presentation to investors that “we’re not financing advisers who frankly were never going to make it in this business.” This was part of the company’s plans to improve its results by cutting off financing to unsuccessful advisers while capping its sales for variable annuities.

9. Blockbuster (Dish Network Corp.) > Job cuts: 3,000 > Number of employees: 35,000 > YTD share price change: +30.1%

In 2010, Blockbuster, then the largest movie-rental company in the world, filed for bankruptcy. At the time it planned to restructure its business to better compete with faster-growing rivals. Dish bought Blockbuster’s assets in 2011 and has been closing failing stores since. At the beginning of this year, the company announced it would be closing 300 U.S. stores, which resulted in 3,000 lost jobs. According to news reports, Dish still sees value in the Blockbuster brand and will continue its attempt to make it profitable.

10. United Technologies, Inc. > Job cuts: 3,000 > Number of employees: 218,000 > YTD share price change: +25.3%

Last year, United Technologies purchased aircraft component maker Goodrich for $16.4 billion and sold several smaller units. The company also took a major restructuring charge that hurt earnings. In its annual report the company disclosed it would cut an additionally 3,000 jobs in 2013. This was on top of the 4,000 cut the year before as part of its restructuring program. Matters could have been worse for many employees, since the company, a major government contractor, had plans to furlough up to 4,000 jobs during the government shutdown. However, employees were able to continue working after the Pentagon removed its own furlough on civilian employees.

Canadian billionaire observes the U.S. . . . worth the read

Ned Goodman, one of the lowest profile but most insightful billionaires in the world, is a Canadian and president and CEO of Dundee Corp., spoke about the perils of quantitative easing at the Toronto Resource Investment Conference on Sept. 12. He made the following remarks, as recorded by The Northern Miner:

Ned Goodman: I have a lot to say and I will give you my biases, no problem there. I believe I’m a sensible man. And as a sensible man I’ve been told by my mother, actually, that even though you don’t know the hour or the place of your demise — you do know, that without a doubt, it’s going to come.

So as a sensible investor, I’m ready for the day that the U.S. Empire crumbles, and that’s a hint as to where I’m going . . . I know that nothing lasts forever and the environment that we’re in could change. But we do not know anything other than nothing lasts forever, and right now it looks like whatever is happening is speeding up, not slowing down. I expect and hope to be here to watch it happen.

The slide that is on [the auditorium screen] is nothing more than to show you that the fixed income market since 1962, which is when I started my career, has had some unbelievable long runs. We’re not talking of short-term things, we’re talking about long-term things. And I’ve watched interest rates from 1962, when I started my career, I’ve watched interest rates go up to 15.8% in the late 1970s; lived through those inflationary days in the late 1970s; and then watched in absolute amazement that bonds outperformed stocks for over 30 years.

So nothing is going to happen to fix what we’ve got right now in a short period of time. Something is going to happen, I don’t know what it is, but when I think about what’s going on amidst the global and Middle East chaos that we have, and the violence around the world, and problematic economics that are in existence, and the financial news that emanates from the U.S., Europe and the U.K. — our world is all screwed up. It’s screwed up in a manner that I don’t think we’ve ever seen before. So the traditional economist has a lot of trouble, and that’s why you see so many different views.

So without any certainty, or reason for optimism or confidence of investors, yet the stock markets of the world appear to be blind to the news of the day. Nevertheless I’ve not been more concerned about the future for overall investment at any time in that entire period that you see there since 1962. While I definitely remain an optimist by nature, there are times when rationality takes over my psyche and questions optimism. I remain positive towards those kinds of investments that will retain inflationary protection like infrastructure, real estate and other hard assets such as gold and commodities.

We are fortunate and unfortunate that we live next door to the richest country in the world, and supposedly the most democratic, as established by its Constitution, but not necessarily by its president. But if you search through economic history books, you’ll never find another instance similar to the U.S. currently. This is all brand-new stuff. With their dollar serving as the world’s reserve currency, while backed solely by paper on which is written “In God We Trust — You Should Too.” I trust in God, but not the paper.

In addition to today’s environment, we have a new country — I’m calling Europe a country — with its own currency, which they promised when they put it out that they would never print any more, but it has the same kind of backing as the U.S. dollar has. Nothing other than the backing of these currencies is that “Don’t worry, if we need any more, we’ll print some more. And therefore you shouldn’t worry, you’ll get your interest because we’ll just print some, and when you need to get your money back we’ll print more.” The British are all confused about it, and maybe that’s why they had to reach out to Mark Carney, and maybe he’s going to help them. But at the same time, the Chinese are collecting U.S. dollars and gold. And what are they doing with it? They are spending it as fast as they can. They have hired or brought into the system prominent businessmen, non-political businessmen, giving them the actual advice that it’s important that they find some place to spend these U.S. dollars — $3.5 trillion.

I was fortunate enough to have a private luncheon meeting with Warren Buffett and a few other people and the question came to Buffett: “What is going to happen when the Chinese want all their money back? And they’re going to ask to have their bonds cashed in?”

And Buffett let out this huge guffaw, drinking his cherry coke, and he said, “It’s never going to happen.” And the questioner asked, “What do you mean?” He said there’s no way that the Chinese, who are very, very smart people, are going to take a piece of paper that says so long as you hold this, we will pay you 3% interest in our dollars, in exchange for a piece of paper that tells them they should trust in God and get nothing. And that’s not what is happening. The Chinese are cashing in their bonds to other countries who are using it as currency.

When he visited the U.S. in 2011, the then-president of China, Hu Jintao, said the current international currency system is a product of the past. The monetary policy of the U.S. has a major impact on global liquidity and capital flows, and therefore the liquidity of U.S. dollars should be kept at reasonable and stable levels. He then commented on the 2008 financial crisis, which is the crisis we are all living with right now. It hasn’t ended. And just like 1929 is a date that everybody remembers, as I remember when I graduated from university and told my mother I was going to become an investment counselor and she said: “Do you know what happened in 1929?” Yes I did, but she lived through it.

So Hu Jintao went on and said that the global institutions had failed to fully reflect the changing status of developing countries and the world economy and finance. He went on to suggest that what China and most of the G20 [want] is a reliable, disciplined and apolitical unit of account for global trade. Let us not forget that he was the leader of the country with the largest holding of global foreign exchange reserves and effectively speaks for China and another 143 members of the International Monetary Fund who have accumulated in excess of $5.5 trillion in U.S. currency, $3 trillion of which is held in U.S. dollars directly.

So as we look forward into the future and see the kinds of things that are going to happen, we wonder about a lot of things. This is the Big Mac versus the CPI chart. You can see that starting in 1985 McDonald’s hamburger used to cost a buck and a half. Today that same McDonald’s hamburger costs $4.35. If we used the phony inflationary numbers that are put out by the U.S., put out by the Federal Reserve and whoever does the calculation, it should be $3.35. Now that is minor compared to what John Williams — Dr. Williams who writes Shadow Stats — says that the current rate of inflation in the U.S. is not 2%, as Mr. Bernanke tells us every day, but it’s more like 8–9%, and maybe even higher when you play around with it. So what you’re getting from the U.S. is a bunch of lies.

This is an undervalue–overvalue [chart] for the S&P 500. You can see the S&P 500 is in fair-value territory. It’s not being undervalued, it’s in fair value. This is the Toronto version of it, likewise in fair value territory, that’s everything. Now look at the Canadian 30-year bond [chart], and it is a little overvalued. Bonds should not be in your portfolio, quite simply. Buffett said it two years ago — they’re dangerous to your wealth. Now here’s the materials [chart], and this is where you lump in all kinds of fertilizers, all kind of metals, and everything — it doesn’t have a big enough chart to get to the undervalue [portion] where it really trades at. It gets better. This is the diversified mining and metals [chart], and it too is in grossly undervalued territory.

Now this is the banks [chart]: Now, some of you probably saw the newspaper article that said “Ned Goodman sold all his banks and is buying gold.” Well now you know why. It was an easy decision. The banks are overvalued, they are a protected species. And they make money under any circumstance, but they are overvalued and they pay dividends, and people are frightened of everything else. So the banks are overvalued and gold is grossly undervalued — grossly undervalued, very undervalued.

And there is my view about the commodities model . . . you can see that big, blue line is headed up for commodities, and it goes back to 1932, and gold is at the top of it. I am comfortable that we are still in the supercycle for commodities, and I’ll tell you why.

Ayn Rand told us that as individuals we have innate mobility, and our highest duty is to flourish by realizing our potential — and we’ve got tremendous potential in this country and the people in this country. She also told us that we’re able to develop and/or join a culture that maybe is outside the norm, and create wealth in profoundly different ways.

So I believe gold is scarce. It is hard to find. It is difficult to extract. And it is valuable. The world needs a new gold standard in order to provide us with a true, positive outlook for the world’s investment climate, which today is in very, very, severe disorder. Its ability to create monetary stability, predictability and investment objectivity would be a boon and a blessing. And this from Jim Grant. We could have a monetary system whose exchange rate would be fixed, and business could be conducted on a global basis without even concern and guessing about what the politicians and policy mavens are going to do with the value of our money.

More than five years have passed since the Great Recession. The so-called Great Recession of 2007 and 2008. And at least three years have passed since what the U.S. has been calling a recovery. And there is no recovery. There’s been a lot of back-patting stuff going on in Washington . . . but it’s all a farce. It’s illusion. It’s all illusions of someone playing with numbers. Von Mises talked about illusions, and I’ll talk about that in a minute.

The market has been stubbornly testing new, nominal, so-called highs for months, and is up over 85% from the bottom. They have made a big change to the Dow. The Dow is a 30-stock index. They’re going to take out three of them . . . and put in new names into the Dow. [The three-lowest priced stocks that were dropped were Bank of America, Hewlett-Packard and Alcoa, and they were replaced with Goldman-Sachs, Visa and Nike.] But what happens to ETFs these days is the automatic necessity for the ETFs to bring their portfolio back to where they say it’s going to be. So they buy all the new ones that have been put in and they sell all of the old ones that have been taken out, and guess what? The Dow is up over 100. And then down a little. And the Dow is going to go up, and I’m sure we’ll hear, “The world is great! The Dow went up! Look, through all this trouble the Dow is going up, we should be happy!”

The market has been stubbornly testing these so-called highs for months, but when you take your eyes off the stock markets and corporate profits for just a second, you find everything is falling apart. Cities are going bankrupt. Pensions are going to disappear from coast to coast as soon as the bills come due, roads are crumbling, bridges are collapsing, the U.S. is living in a police state that has spent nearly $17 trillion of its future wages.

The Americans don’t even have a high-speed rail train. If you go to countries like Korea you have high-speed trains; if you go to China they have high-speed rail trains. The U.S. doesn’t have them. They’re living in 100 years ago. The official unemployment rate is supposedly dropping, while in fact fewer Americans are employed than at any time in the last 30 years. How do they do it? Simple. You get unemployment insurance, you are deemed to be unemployed. As soon as you can’t get a job after a certain period of time, you get taken off the unemployment payments and now you’re counted as “employed.” Still unemployed.

So the unemployment numbers are totally phony, they are not real. If you average the monthly gains for jobs, you get around 179,000 jobs added. But 225,000 is what they really need. So since the recession began in December 2007, there are 5.8 million fewer full-time jobs and 2.8 million more part-time jobs. In other words, anyone who finds full-time work is an exception to the norm. Seventy-six percent of Americans are living paycheque to paycheque. Fifty percent have less than a three-month cushion. Forty-six percent have less than $800 in savings. Twenty-two percent have less than $100 to their name. And 27% have no savings at all. And this is all happening while corporate earnings, of course, are going up.

Why the disconnect? Well, the politicians and the Fed have abandoned their constituents to cater to lobbyists and donors, etc. So, while corporations are doing well, the people aren’t. The share of the economy being paid in wages is small. As it falls lower and lower, it goes to owners and to boardroom salaries and directors. We’re seeing the results of a nation and President Obama’s focus on making corporate health look good at the expense of everything and everyone else.

Now it’s time to give you a bias. One of my biases is that I think President Obama and his position will turn out to be the worst presidency the U.S. has ever had in its whole history. I think his total plan is to get rid of the Republican Party. Now, I have to say, they’re helping him, because if he gets rid of the Republican Party, and if he keeps taking from the rich to give to the poor, and the poor are the ones who vote for you, you will have more votes, so you’re going to keep taking from the rich to give to the poor.

The other thing that happens when you keep taking from the rich to give to the poor is that the rich become poor and they’ll vote for you too. So this is a design. And some will say, well, he can’t become another president, he’s served two terms and the Constitution says you can only serve two terms. But his wife can serve. His wife can run for president in 2016. She’s smarter than he is and a hell of a lot better looking than he is, and she will get not only the black vote but the entire womens’ vote. And the entire democratic vote. So I think that’s his whole plan. Now it’s a bias, I have no proof, it’s just a gut feeling. I hope I’m wrong. But we’re in a recession.

David Stockman wrote a book. He worked with Ronald Reagan and he wrote a book called The Great Deformation, and he said that his view was that we are at the shadow era, the Keynesian endgame of a failing, bankrupt, paralyzed state. The fact that so many voices of the establishment are at pains to shut him down provides me with the view that he might be right.

Will the U.S. dollar collapse? The pressure on the dollar will reflect not only the financial crisis inflicted on us and the U.S. in 2007 and 2008, and further to the president, but also includes the significant weakening of the U.S., a change to the negative on geopolitical status. It is said that God rules in heaven, and that’s part of “trust in him.” Money rules on earth. But even the devil dances for gold.

So temporary prosperity at the cost of long-term prosperity is what the U.S. is going through right now. Federal pension plans are un-funded. The country is running large deficits that don’t do much good for the economy. He spends it somewhere, running monetary policies that improve conditions today, but will worsen future conditions as a result. Social security and Medicare are unsustainable programs created by the grandparents of the country, sustained by the parents of the country, but will kill the young people with their costs. The Obamacare is not going to help the country. Obamacare’s front-end loaded taxes and back-end loaded benefits are not going to do their job. States and municipalities have played with their pension assumptions for years, often in generous benefits they could not afford. Tax policy encourages debt rather than equity, creating industries that over-borrow, and there are many of them. So the country is in a mess. The world is in a mess.

- See more at: http://www.northernminer.com/news/ned-goodman-and-the-botox-economy/1002594276/#sthash.6Opha1iM.dpuf

The Average American Is Dumber Than The Average Human

The article below goes a long way in explaining to our failing ability to compete in the global marketplace. It also speaks to the need for employers to provide continuing education and training to be competitive. The product we are are receiving from our educational system is subpar.

From an anecdotal perspective, I was in U.S. mall recently and overheard not a single conversation of substance. The language was, for the most part, butchered. By way of comparison, not long ago I was in Singapore doing some management training and overheard some young people (all of whom speak both English and Mandarin) in animated conversation. When I listened more closely, I determined they were talking about the solution to a math problem.

The End.

The link is here: http://nypost.com/2013/10/08/us-adults-are-dumber-than-the-average-human/

The text of the article is here:

WASHINGTON — It’s long been known that America’s school kids haven’t measured well compared with international peers. Now, there’s a new twist: Adults don’t either.

In math, reading and problem-solving using technology – all skills considered critical for global competitiveness and economic strength – American adults scored below the international average on a global test, according to results released Tuesday.
Adults in Japan, Canada, Australia, Finland and multiple other countries scored significantly higher than the United States in all three areas on the test. Beyond basic reading and math, respondents were tested on activities such as calculating mileage reimbursement due to a salesman, sorting email and comparing food expiration dates on grocery store tags.
Not only did Americans score poorly compared to many international competitors, the findings reinforced just how large the gap is between the nation’s high- and low-skilled workers and how hard it is to move ahead when your parents haven’t.
In both reading and math, for example, those with college-educated parents did better than those whose parents did not complete high school.
The study, called the Program for the International Assessment of Adult Competencies, found that it was easier on average to overcome this and other barriers to literacy overseas than in the United States.
Researchers tested about 166,000 people ages 16 to 65 in more than 20 countries and subnational regions. The test was developed and released by the Organization for Economic Cooperation and Development, which is made up of mostly industrialized member countries. The Education Department’s Center for Education Statistics participated.
The findings were equally grim for many European countries – Italy and Spain, among the hardest hit by the recession and debt crisis, ranked at the bottom across generations. Unemployment is well over 25 percent in Spain and over 12 percent in Italy. Spain has drastically cut education spending, drawing student street protests.
But in the northern European countries that have fared better, the picture was brighter – and the study credits continuing education. In Finland, Denmark, and the Netherlands, more than 60 percent of adults took part in either job training or continuing education. In Italy, by contrast, the rate was half that.
As the American economy sputters along and many people live paycheck-to-paycheck, economists say a highly-skilled workforce is key to economic recovery. The median hourly wage of workers scoring on the highest level in literacy on the test is more than 60 percent higher than for workers scoring at the lowest level, and those with low literacy skills were more than twice as likely to be unemployed.
“It’s not just the kids who require more and more preparation to get access to the economy, it’s more and more the adults don’t have the skills to stay in it,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce.
Education Secretary Arne Duncan said in a statement the nation needs to find ways to reach more adults to upgrade their skills. Otherwise, he said, “no matter how hard they work, these adults will be stuck, unable to support their families and contribute fully to our country.”
Among the other findings:
-Americans scored toward the bottom in the category of problem solving in a technology rich environment. The top five scores in the areas were from Japan, Finland, Australia, Sweden and Norway, while the US score was on par with England, Estonia, Ireland and Poland. In nearly all countries, at least 10 percent of adults lacked the most basic of computer skills such as using a mouse.
-Japanese and Dutch adults who were ages 25 to 34 and only completed high school easily outperformed Italian or Spanish university graduates of the same age.
-In England, Germany, Italy, Poland, and the United States, social background has a big impact on literacy skills, meaning the children of parents with low levels of education have lower reading skills.
America’s school kids have historically scored low on international assessment tests compared to other countries, which is often blamed on the diversity of the population and the high number of immigrants. Also, achievement tests have long shown that a large chunk of the US student population lacks basic reading and math skills – most pronounced among low-income and minority students.
This test could suggest students leaving high school without certain basic skills aren’t obtaining them later on the job or in an education program.
The United States will have a tough time catching up because money at the state and local level, a major source of education funding, has been slashed in recent years, said Jacob Kirkegaard, an economist with the Peterson Institute for International Economics.
“There is a race between man and machine here. The question here is always: Are you a worker for whom technology makes it possible to do a better job or are you a worker that the technology can replace?” he said. For those without the most basic skills, he said, the answer will be merciless and has the potential to extend into future generations. Learning is highly correlated with parents’ education level.
“If you want to avoid having an underclass – a large group of people who are basically unemployable – this educational system is absolutely key,” Kirkegaard said.
Dolores Perin, professor of psychology and education at Teachers College, Columbia University, said the report provides a “good basis for an argument there should be more resources to support adults with low literacy.”
Adults can learn new skills at any age and there are adult-geared programs around the country, Perin said. But, she said, the challenge is ensuring the programs have quality teaching and that adults regularly attend classes.
“If you find reading and writing hard, you’ve been working hard all day at two jobs, you’ve got a young child, are you actually going to go to class? It’s challenging,” Perin said.
Some economists say that large skills gap in the United States could matter even more in the future. America’s economic competitors like China and India are simply larger than competitors of the past like Japan, Carnevale said. Even while America’s top 10 percent of students can compete globally, Carnevale said, that doesn’t cut it. China and India did not participate in this assessment.
“The skills in the middle are required and we’re not producing them,” Carnevale said.
Respondents were selected as part of a nationally represented sample. The test was primarily taken at home using a computer, but some respondents used a printed test booklet.
Among the other findings:
-Japan, Finland, Canada, Netherlands, Australia, Sweden, Norway, Flanders-Belgium, Czech Republic, Slovak Republic, and Korea all scored significantly higher than the United States in all three areas on the test.
-The average scores in literacy range from 250 in Italy to 296 in Japan. The US average score was 270. (500 was the highest score in all three areas.) Average scores in 12 countries were higher than the average US score.
-The average scores in math range from 246 in Spain to 288 in Japan. The US average score was 253, below 18 other countries.
-The average scores on problem solving in technology-rich environments ranged from 275 in Poland to 294 in Japan. The US average score was 277, below 14 other countries.

Worldwide, only 13% of all employees are "engaged" at work

Below, a recent Gallup survey worldwide on employee engagement. This, perhaps more than any other numeric, defines the problem with work for most people, i.e., "work sucks." The question is how to change that reality in the mind of most employees. We contend it is the lack of credible connections. Read the book, "Why Work Isn't Working Anymore," a good place to begin, available in e-book format at www.crediblyconnect.com

Only 13% of employees worldwide are engaged at work, according to Gallup's new 142-country study on the State of the Global Workplace. In other words, about one in eight workers -- roughly 180 million employees in the countries studied -- are psychologically committed to their jobs and likely to be making positive contributions to their organizations.

The bulk of employees worldwide -- 63% -- are "not engaged," meaning they lack motivation and are less likely to invest discretionary effort in organizational goals or outcomes. And 24% are "actively disengaged," indicating they are unhappy and unproductive at work and liable to spread negativity to coworkers. In rough numbers, this translates into 900 million not engaged and 340 million actively disengaged workers around the globe.

The 13% of engaged employees in the 2011-2012 study has ticked upward from the 11% in Gallup's previous global workplace assessment, conducted in 2009-2010. Furthermore, the proportion who are "actively disengaged" has dipped from 27% to 24%. However, low levels of engagement among global workers continue to hinder gains in economic productivity and life quality in much of the world.

Engaged Workers Most Common in U.S. and Canada, Actively Disengaged in MENA

As in Gallup's previous employee study, engagement levels among employees vary across different global regions and among countries within those regions. At the regional level, Northern America (that is, the U.S. and Canada) have the highest proportion of engaged workers, at 29%, followed by Australia and New Zealand, at 24%.



Not all economically developed regions fare as favorably; across 19 Western European countries, 14% of employees are engaged, while a significantly higher 20% are actively disengaged. However, the highest proportions of actively disengaged workers are found in the Middle East and North Africa (MENA) and sub-Saharan Africa regions, at 35% and 33%, respectively.

The findings also reveal differences among employees with different job types and at different education levels within countries. Recognizing these differences can help managers understand how societal factors could affect workplace characteristics and help them identify specific barriers they must overcome to build more engaged workforces. See the full report for results by job type and education level.

Regardless of region or industry, businesses seeking to adapt to rapidly changing global economic conditions must learn how to maintain high-productivity workplaces and grow their customer bases in widely varying social, cultural, and economic environments. Systems for reliably measuring and improving employee engagement across industries and regions worldwide are vital to that goal.

Bottom Line

People spend a substantial part of their lives working, whether in a high-tech startup in Singapore, a financial institution in Australia, or a garment factory in the Dominican Republic. As a result, the quality of their workplace experience is inevitably reflected in the quality of their lives. Gallup's finding that the vast majority of employees worldwide report an overall negative experience at work -- and just one in eight are fully involved in and enthusiastic about their jobs -- is important when considering why the global recovery remains sluggish, while social unrest abounds in many countries.

Business leaders worldwide must raise the bar on employee engagement. Increasing workplace engagement is vital to achieving sustainable growth for companies, communities, and countries --- and for putting the global economy back on track to a more prosperous and peaceful future.

For complete data sets or custom research from the more than 150 countries Gallup continually surveys, please contact us.

Survey Methods

For the current workplace study, employee engagement results were collected among 73,752 respondents 18 and older in 141 countries via the Gallup World Poll, and 151,335 U.S. respondents using the Gallup Daily tracking survey. Employee engagement questions were asked only of those respondents who indicated they were employed for an employer, either full-time or part-time. Country-level results are weighted by population size to arrive at regional and global aggregates. For results based on the total global sample, one can say with 95% confidence that the margin of sampling error is less than ± 1 percentage point.

Country-level engagement data are reported only among the 94 countries in which at least 300 employed respondents were sampled. The table on page 2 contains those country-level results, along with the margin of sampling error associated with each percentage. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

Gallup measures employee engagement based on workers' responses to its Q12 survey, which consists of 12 actionable workplace elements with proven links to performance outcomes. To identify these elements, Gallup spent years conducting thousands of interviews at every level of various organizations, in most industries, and in several countries. Since Gallup finalized the Q12 question wording in the late 1990s, the survey has been administered to more than 25 million employees in 189 different countries and 69 languages. For a listing of the Q12 survey items and more information on how they relate to business performance outcomes, see the full State of the Global Workplace report.

Pennsylvania may become the next right-to-work State

Right-to-work laws give individual employees in a unionized workplace the right not to join or financially support the union. 24 states, plus Guam, have passed right-to-work laws. Absent a right-to-work law, all employees in a collective bargaining unit must join the union and pay union dues.

Pennsylvania could be next.

The Freedom of Employment Act. This bill, if passed, would prohibit the following conditions of employment:

Membership.--No person shall be required to become or remain a member of a labor organization as a condition of employment or continuation of employment.

Abstention from membership.--No person shall be required to abstain or refrain from membership in a labor organization as a condition of employment or continuation of employment.

Dues, fees and charges.--No person shall be required to pay or refrain from paying any dues, fees or charges of any kind to a labor organization or to a charity or other third party in lieu of the payments to a labor organization as a condition of employment or continuation of employment.
Any violation of the law would be considered a misdemeanor of the third degree, punishable by a fine of not more than $1,000 or up to six months in the hoosegaw, or both. Each day of a continued violation is a separate offense.

Governor Corbett has said that he would sign right-to-work legislation if it crossed his desk.


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