Steven Crowder on the Free Enterprise System

Via Theo Spark:

The Other America: Mountain View Workers Struggle as High Tech Booms

Fascinating piece at New York Times, "In Mountain View, 2 Contrasting Economic Worlds Intersect":

At the Google campus on the outskirts of Mountain View, employees sip lattes under brightly colored umbrellas as others pass on company bicycles, laptops secured in the front baskets. This year the company will add substantially to its work force of more than 5,000 in that Silicon Valley city, and it has just leased nine acres to expand its campus.

But closer to downtown, Carolina Rivera finds herself in a decidedly less attractive environment — the crowded office of the Community Services Agency, where she is looking for a job. She has three children to support and has not found anything since her hours at an organic-food factory were reduced. Those like Mrs. Rivera find life difficult in Mountain View: the competition for work is fierce, housing is expensive and cuts in government services are pending as the city tries to balance its budget.

Mountain View, home to technology kingpins like Google, LinkedIn and Symantec, illustrates the disconnect between the current technology boom and the daily economic realities of many in Silicon Valley. The five biggest tech companies with headquarters in town are valued at more than $200 billion, but Mountain View, with a population of 74,000, faces a $2.6 million budget gap and has an unemployment rate of 7.7 percent.

“We really are seeing two very different economies emerging,” said Emmett Carson, chief executive of the Silicon Valley Community Foundation. “We have the Google campus; they’re expanding, they’re adding employees, they’re doing very well financially. But the nonprofit sector and local government have been stretched to the maximum.”

But these people are supposed to be progressive:

Part of the problem is that corporate campuses, with their own cafeterias, day care centers and other employee perks, are not always very integrated into the surrounding community.

“The industry doesn’t create a lot of demand for services,” said Terry Christensen, a professor at San Jose State University who specializes in Silicon Valley politics. “The Google campus, they pay their taxes, but their workers don’t necessarily use parks, police and other traditional services, so you get a disconnect between the businesses themselves and the people who work in them.”

Just as important, many local residents are simply not in the talent pool for high-tech jobs. The people looking for work at the Community Services Agency have skills in other areas, like housecleaning, gardening and washing dishes, and those jobs are scarce.

Actually, Google acts exactly as it should. It's an extremely successful business that creates a self-sustaining social support system. The trick is to create more Googles, that is, to expand the employment sector to include more companies providing goods and services to an expanding marketplace, which will increase the demand for labor and take the strain off local governments, which don't have the money to care for the sick and unskilled. The rub is that Googe and other progressive tech firms are left-leaning business organizations that operate according to a vision more like Milton Friedman's than Paul Krugman's. It's all in the messaging. New York Times is going off the reservation on this one.

Kevin Williamson's Guide to Socialism

Have you read his book? I've read some longer snippets, but held off going further for now, mainly because I think he's taken a public goods approach and applied it broadly to any economic situation where states supplant markets. Socialism in this sense isn't necessarily Marxism, but that's all I can say until I finish it. You get the gist of it at the clip, in any case:

How Long Will it Take for Jobs to Come Back?

I used to read chapters from Greg Mankiw's introductory economics textbooks in grad school, when I took seminars in international political economy. Mankiw blogs, but he's quite the opposite of Paul Krugman: more conservative and, especially, humble. We can see that in his essay yesterday at the New York Times, "Three Questions for America's Financial Future." On the jobs picture:

Looking ahead, an open issue is whether the recession will leave scars that prevent a return to jobless rates that were considered normal just a few years ago. A striking feature of today’s labor market is the rise of long-term joblessness. The average duration of unemployment is now almost 40 weeks, about twice what it reached in previous recessions. The long-term unemployed may well lose job skills and find their future prospects permanently impaired. But because we are in uncharted waters, it is hard for anyone to be sure.

Actually, one of my favorite writers of all is Victor Davis Hanson. A classicist and military historian, he's also unmatched on political and social commentary on issues ranging from culture to farming to immigration. See his essay from Saturday, "Thoughts on a Surreal Depression":

Here in Fresno County, in the heart of California’s San Joaquin Valley, the official unemployment rate in February to March ranged between 18.1 and 18.8 percent. I suspect it is higher in the poorer southwestern portions, especially near my hometown of Selma, about two miles from my farm.

Since 2000 we have both lost jobs and gained people, and the per capita household income is about 65% of California’s average, the average home price about half the state norm.

In some sense, all the ideas that are born on the Berkeley or Stanford campus, in the CSU and UC education, political science, and sociology departments, and among the bureaus in Sacramento are reified in places like Selma — open borders, therapeutic education curricula, massive government transfers and subsidies, big government, and intrusive regulation. Together that has created the sort of utopia that a Bay Area consultant, politico, or professor dreams of, but would never live near. Again, we in California have become the most and least free of peoples — the law-biding stifled by red tape, the non-law-biding considered exempt from accountability on the basis of simple cost-to-benefit logic. A speeder on the freeway will pay a $300 ticket for going 75mph and justifies the legions of highway patrol officers now on the road; going after an unlicensed peddler or rural dumper is a money-losing proposition for government.

The subtext, however, of most of our manifold challenges here in the other California are twofold: we have had a massive increase in population, largely driven by illegal immigration from Latin America, mostly from Oaxaca province in Mexico, and we have not created a commensurate number of jobs to facilitate the influx.

I often ask business people on the coast why there are not more industries in places like Selma other than agricultural related work that is locale specific. I would sum up their responses as something like the following: Our workforce does not have the educational and linguistic skills to justify, in global terms, the amount of wages and benefits necessary to employ them, hence jobs are mostly in service and government. Software engineering, computers, or Silicon Valley-like industry are out the question. But apparently so are large manufacturing jobs, despite an abundant workforce. As I understand employers, they seem to suggest that steel pipe, electrical wire, or radios would not be better manufactured or fabricated here, and yet still cost two to three times more than a counterpart assembled abroad.

In addition, they believe that the state government would look upon any employer of a large industry not as a partner that would alleviate unemployment and lessen county expenditures, but more or less a sort of target to regulate, advise, lecture, and chastise, both to justify the expanding government regulatory work force and to achieve a fuzzy sort of social justice. There are, of course, large plants and businesses here, but hardly enough to absorb the thousands entering the work force.

The result is about one in five adults is not working in the traditional and formal sense. A morning drive through these valley towns confirms anecdotally what statistics suggest: hundreds, no, thousands, are not employed. Construction is almost nonexistent. Agriculture is recovering, but environmentally driven water cut-offs on the West Side (250,000 acres), increasing mechanization, and past poor prices have combined to reduce by tens of thousands once plentiful farm jobs.

My dad moved to Fresno in the mid-70s and I graduated from Fresno State in 1992. If you ever want to get the feel of what it must have been like during the Great Depression, take some country drives around the Central Valley --- in towns even more remote than Selma --- and you'll be taken back into your own Grapes of Wrath experience. The Democrats make this bad enough, but it's a statist anti-entrepreneurial regulatory stranglehold that's killing employment and the quality of life for large segments of society. I'm noticing it even in parts of the O.C., where unemployment was less than 2 percent in 2000. Hope for the best, I guess, but prepare for the worst.

Melanie Phillips on Michael Coren

Via Blazing Cat Fur:

Markets Respond to Federal Reserve's $600 Billion Economic Recovery Plan

Elections have consequences.



It's not just the Fed that's driving this, "Dow Hits Pre-Crisis Level: Central Bank's Spending Binge Stokes Global Rally; 'Don't Fight the Fed'."

Global financial markets cheered the Federal Reserve's plans to spur the U.S. economy Thursday, driving commodity and bond prices higher and propelling the Dow Jones Industrial Average to levels last seen before Lehman Brothers collapsed two years ago.



Interest rates and the dollar tumbled in response to the Fed's decision Wednesday to buy $600 billion of U.S. Treasury bonds, helping fan fresh rallies in oil, gold and Asian stock markets. Major U.S. companies including Coca-Cola Co. and Dow Chemical Co. raced to take advantage of the low rates, selling at least $12 billion of new debt.



But the Fed's buying binge raised alarms, too: Officials in Brazil and South Korea criticized the move, saying it could spark inflation in their economies.



The Dow industrials leapt 219.71 points, or 2%, to 11434.84, its highest close since Sept. 8, 2008, just before the Lehman bankruptcy filing triggered the most intense phase of the financial crisis.



The blue-chip index is now up 75% from its March 2009 low. But the Dow needs a 24% gain to get back to its all-time high, set in October 2007, a stark illustration of the damage caused by the crisis and the long road the economy still must travel.



The Fed's "quantitative easing" policy, unveiled Wednesday, is designed to bolster the economy by keeping credit easy. The Fed is trying to keep rates on relatively safe Treasurys and cash so puny that investors will be enticed into riskier assets such as stocks, commodities and corporate bonds, helping inflate their prices.

The background, with the political angle, at NYT, "Fed to Spend $600 Billion to Speed Up Recovery":

The Federal Reserve, getting ahead of the battles that will dominate national politics over the next two years, moved Wednesday to jolt the economy into recovery with a bold but risky plan to pump $600 billion into the banking system.



A day earlier, Republicans swept to a majority in the House on an antideficit platform, virtually guaranteeing that they would clash with the Obama administration over the best way to nurture a fragile recovery.



The action was the second time in a year that the Fed had ventured into new territory as it struggles to push down long-term interest rates to encourage borrowing and economic growth. In a statement, the Fed said it was acting because the recovery was “disappointingly slow,” and it left the door open to even more purchases of government securities next year.



The Fed is an independent body, its policy decisions separated from the political pressures of the day. But it acted with a clear understanding that the United States, like many other Western countries, seems to have taken off the table many of the options governments traditionally use to give their economies a kick, particularly deficit spending.



The Republicans regained control of the House for the first time in four years in part by attacking the stimulus plan — begun by the Bush administration and accelerated by President Obama — as a symbol of government spinning out of control, contributing to a dangerously escalating national debt.



This political reality has left Washington increasingly reliant on the Fed to take action, though its chairman, Ben S. Bernanke, has said the Fed cannot fix the problem alone.

Mike Pence is not happy.