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Here's where we will be in 80 more years if the exponential trend continues.
Now let's do the same thing with government employment.
Here's where we will be in 30 more years if the exponential trend continues.
And lastly, let's combine the two.
Here's where we will be in 5 more years if the trend continues.
In other words, in 2016 we could easily have as many people employed in government and financial activities as will be employed in manufacturing, retail trade, and wholesale trade.
Is it any wonder why our economy is struggling?
This post inspired by UK Bubble and by the commentary found here.
Source Data:
St. Louis Fed: All Employees: Financial Activities
St. Louis Fed: All Employees: Government
St. Louis Fed: Employees on Nonfarm Payrolls: Manufacturing
St. Louis Fed: All Employees: Retail Trade
St. Louis Fed: All Employees: Wholesale Trade
21 comments:
Symbiotic Relationships can be a powerful force in nature, and government has grown hand in hand with finance. Problem is when you gut the productive arm of an economy or ship it away, you hollow out the host you have been feeding from.
The Regular Joe who has saved up $60K in total in a 401K for retirement or has lost a job and is on food stamps and/or unemployment can't
support a government pensioner who gets a yearly pension of $200K.
QE2 fun and games distracts from this but does nothing (other than make it worse for the Regular Joe since it leads to dollar weakness and lower purchasing power and is certainly not going to yield real gains in his meager 401K of any substance--but may pay the fees that the sponsor charges).
Anonymous,
"Problem is when you gut the productive arm of an economy or ship it away, you hollow out the host you have been feeding from."
Well said.
I heard on CNBC this morning that the price of gold is falling as the demand for wealth protection falls.
Interesting theory.
One might therefore also argue that the price of real estate is falling as the demand for wealth protection falls.
Wealth protection probably has nothing to do with asset valuation. As we all know, some assets always offer outstanding wealth protection at any price. Real estate and gold are the two most obvious examples.
Sarcasm!
Mark, nice job.
We simply cannot withstand this trend.
If you wanted to add government and retirees (all) against all private sector employment, including farming, and looked at the trend line there you would get a shock.
If you wanted to try to figure total personal income derived from government transfers and government employment, you realize why Krugman is verging on psychosis, and state and local governments are facing bankruptcy.
A big segment of our economy is Greece.
I meant "total personal income derived from government transfers and government payroll vs personal income from all other sources".
This was interesting. And it indicates everything wrong with the American economy.
Back in the 70s, financial services accounted for less than 10% of GDP. Today, they account for more than 40%. That's a problem any way you look at it.
And don't even get me started on government and public employee unions, their salaries and pensions, which are underfunded and unsustainable.
This is all due to decisions made decades ago to export our manufacturing base and import our energy supply. Instead of building for the future, out illustrious leaders went about destroying the past, leaving us in the present with nothing but debt.
As Karl Denninger has pointed out, over the last 50 years there has been zero real GDP growth. Wages have been stagnant for years, but my those credit card bills keep piling up.
That which is unsustainable cannot be sustained. None of this will end well.
MaxedOutMama & GawainsGhost,
The trend is indeed awful and unsustainable.
Factoring in wages would no doubt make it look even worse. Parasite jobs tend to pay well.
As a side note, I am a financial parasite. I retired off of investing and my nest egg sits in government debt. I'm an unemployed person collecting payments from our government. The only thing that really separates me from other unemployed workers is that my payments don't cease after 99 weeks. Sigh.
That which is unsustainable cannot be sustained. None of this will end well.<<
For who? All the CONgresscritters and bankstas seem to be not missing a beat. If things get tight, count on rule changes :).
Maybe we need a Saturday Night Live spoof.
The CONgresscritter Hotel
They check in but they don't check out.
Roach Motel
Roach Motel (insect trap), a device used to catch cockroaches.
A low-priced motel or comparable lodging facility, usually a considerably older property in disrepair, not affiliated with a major chain, and located in a decaying area of town.
Welcome to the new America.
We can always use the unemployed for fuel.
Soylent Green is made of people!
Hey Mark, you'll probably see this on your own if you haven't already, but just to be sure I'm passing it along.
http://globaleconomicanalysis.blogspot.com/2011/01/steve-keen-responds-to-world-economic.html
It's a pretty good take-down of the fallacy of exponential growth, a theme you frequently expound upon.
Like, um, in this post in fact. :-)
We can always use the unemployed for fuel.<<
I hear Uncle Ben isn't gonna even worry about them anymore (if he ever did?). He is busy building his program for targeting inflation and he may announce it tomorrow. With an Ivy league guy in charge of programming the economy, what could possibly go wrong?
Total government spending will allegedly be $6.7T this year.
$20,000 per man, woman, and child.
So the kids making $10/hr at In n Out are just breaking even, really.
Charles Kiting, GawainsGhost, and Anonymous,
"We can always use the unemployed for fuel."
"Soylent Green is made of people!"
Solylent Green Technology!
AllanF,
I'm definitely not a believer in sustainable exponential growth. Indeed!
That said, I don't think an exponential growth in the CPI of 2% per year is unsustainable. If wages grew by that same 2%, government debt grew at that same 2%, consumer debt grew at that same 2%, and we had neither a trade surplus nor a trade deficit then things would look sustainable to me. Too bad we don't have those things.
That said, I would not enjoy balancing my checkbook a million years from now. The growth in the number of digits would be unsustainably frustrating.
What is definitely not sustainable is 2% inflation and 4% return on investments. Something must break someday. Guaranteed.
From the comments of the link to my post above:
Unfortunately, there are only supposed to be about 3x10^79 hydrogen atoms in the observable universe. I could lose a trillion dollars (in today's dollars) per hydrogen atom in my couch and not even know it was missing, lol.
So here I am investing in 30-Year TIPS that pay 2% real returns in theory. If inflation picks up the taxes will eat into those real returns though (quite possibly sending them negative). I don't expect to make out like a bandit.
Troy,
So the kids making $10/hr at In n Out are just breaking even, really.
Here's a job that pays $10 per hour. All the kids are doing it! Sigh.
Wow, and that's $10 in NY no less.
If I lived in NY you can bet I'd not be taking my taxes to any preparer within 5 miles of the Jamaica subway stop, just to be safe. Granted I do them myself, but heck if I lived within 5 miles of the stop I'd move. Just to be safe. :-)
I remember hearing a while back a non-trivial number of H&R Block returns were 1040A's & EZ's. Maybe it's for those.
Then again, I wonder if those get farmed out to Bangalore. With E-file and all, it's probably a huge savings for the company. I suppose "tax preparer" is now on the list of jobs-americans-won't-do, right after "machinist".
AllanF,
"If I lived in NY you can bet I'd not be taking my taxes to any preparer within 5 miles of the Jamaica subway stop, just to be safe. Granted I do them myself, but heck if I lived within 5 miles of the stop I'd move. Just to be safe. :-)"
You gave me the heartiest laugh I've had in a long time! Well played sir. :)
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