no third solution

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Bankers Cry Over ‘Restricted’ Bonuses

December 2nd, 2009

Big Bank brings nation’s economy to the breaking point. Big Bank begs, pleads, or threatens the government in to giving it a massive bailout, (of which the citizenry disapproves nearly unanimously). Big Bank proceeds to offer extravagant bonus packages to its employees, which largesse is financed 100% by the taxpayers.

It should come as no surprise that the general public, aghast at being bled dry in order to provide for some C-Suite bankers’ Bentley or Rolls or vacation home on the Riviera, cries “Foul!”

The most appalling thing about the whole situation is the banks’ responses: generally they argue that “If we don’t give huge bonuses, we’ll lose our employees!”

Royal Bank of Scotland Group Plc, recipient of the world’s biggest taxpayer bailout, said the British government’s “very restrictive” control over 2009 bonuses risks driving employees away.

—RBS Says ‘Restrictive’ Bonuses May Prompt Staff Exits

Cry me a river, will you? Your organization performed so poorly that it “needed” emergency life support from the nation’s taxpayers, which it took against their wishes and better judgment. This does not, under any circumstance merit “bonuses”. (In fact, in light of recent performance, I’m not so sure these are the sort of employees you should want to retain in the first place!) Not for anyone. Ever.

But in case you haven’t been paying attention, unemployment is staggering. All industries and sectors of the economy are hurting. The Banks could find a dozen qualified, competent applicants to fill any one of these positions at a fraction of the price of a single $500,000 bonus.

The Banks are worried about attrition? Defection? ROFLCOPTER.

Where are they going to go? Defection means they have options. They don’t.

If the employees threaten to quit, call their bluffs (that’s what it is, after all). I’d tell them, “Get f*cking lost. Don’t let the door hit you in the arse on the way out.”

When Is a Recovery Not a Recovery?

October 3rd, 2009

When it’s a jobless recovery, i.e., that fiction by which the Politicians and Fat-Cats pretend that everything is A-OK, in order to trick the rest of us into following their marching orders off the next goddamn cliff, next year or next decade.

But it’s worse than “jobless”, which suggests job neutrality.  In reality, jobs are disappearing.

Last November it was big news when the FT reported[1] that the world’s economies lost 80,000 jobs. Now, we learn that the American economy shed 263,000 jobs in the month of September[2] alone, sending the national unemployment rate close to 10%. Adding insult to injury, people are remaining unemployed longer than ever: more than 50% of them have recently exhausted their public benefits. What happens to these people?

Even though young college graduates with a few years of work experience have suffered the least (so far), they’ve still been relatively hammered over the past year. Ihe unemployment rate among college graduates 25 years old has nearly doubled since 2008, approaching 5% for 2009[3].

Unemployment rates are increasing

If the aggregate unemployment rate for people 25-34 is 10.1%, and college grads are pacing 4.5%, what’s happening to those without a degree?  Do the math: they’re faring far worse.  These people are supposed to be just starting out, but how will they ever get out of their own way when they start with such a severe handicap? They’ll be 26, 27, 28 years old with no relevant work experience. If and when the economy recovers, there will be a new class of college graduates, competing with the classes of 2006 through 2009, who have been diligently pumping gas and waiting tables at TGIFriday’s for the last five years, patiently waiting for an opportunity to toil for the same people now responsible for their collective misfortune.

Fifteen million people want to work (more precisely, they want to earn), but can’t find employment. I’ve previously written that whenever resources are idle and needs are unsatisfied, there is something fundamentally wrong. But it goes beyond fundamentals when this amount of dis-coordination persists for any measurable amount of time. It is evidence that errors have not been corrected, malinvestments have not been liquidated, resources and labor have not been reallocated towards valuable output, etc.  This amount of disequilibrium can only be effected force, suppression, and exploitation.  People aren’t working because they’re not allowed to work.

Economic crises are part of State capitalism.  Crises, their concomitant mass-unemployments, discoordination and idleness of capital resources, are the means by which the power structure is sustained by the few, subjugating the many to lingering fears of total collapse and destitution.  Without widespread economic crises, the hierarchy flattens and power disperses.  Individuals retain their wealth, they retain control of their lives and livelihood.

Now, individuals need to take the power back.  We’ve been waiting for orders our entire lives, and where has it gotten us?

Don’t ask for permission, don’t wait for orders. Take life into your own hands.  As long as there are needs yet unment (and there are), there are jobs that need to be done.  People need to do these jobs.   We can wait for the jobs to come back, or we can create them ourselves.  Withdraw, as much as possible, from the slave economy.  Pay fewer taxes (or none at all).  Ignore stupid regulations. Take care of your neighbor and your neighbors take care of you.  Grow community.

The only sustainable recovery occurs when people no longer fear “the economy”, when people realize that they, in their individual capacities are “the economy”.

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  1. More than 80,000 jobs cut in just five days. (Permalink from FT.com, may no longer be active)

  2. Jobless Report Is Worse Than Expected; Rate Rises to 9.8%

  3. BLS data: Series LNS14027662 – Seasonal unemployment, 25yrs+, BS or higher education, Series LNS14000000 – Seasonal unemployment (Total) [link] and BLS Table A-13 Employment status of the civilian non-institutional population by age, sex, and race.

Unpaid Internships: Illegal?

September 5th, 2009

I thought the job market was bad when I graduated in 2003. I can’t begin to imagine what this year’s graduates are going through, since they are competing with last year’s graduates, and also with everyone who’s been laid off or otherwise let go in the last 5 or 6 years (some of whom might have a decade or more experience) for the eleven remaining jobs. I can understand that in such circumstances, people might be willing to do some work for free, in order to try and impress the right people.

Enter: government.

Its illegal (9 times in 10).

Mark Cuban argues (and I agree) that the Federal Government has absolutely zero reason to be concerned with the interactions between individuals—voluntary interactions.  However, I understand that only desperation, the product of an un-free market, permits employers to offer, and drives people to choose unpaid jobs or internships in the first place.

Unpaid internships* seem to be most prevalent in those fields where there is the least amount of freedom or competition: government, sports, media. These organizations can get away with asking 20-somethings to grovel at their feet for zero pay, because there is no real competition to keep them honest.  And people accept these gopher-jobs because of the prospect of the economic rents which they might be able to capture in the future.

In a free market people will pay you to create value**, because if they don’t, someone else will, and you’ll go create value for those people, not the misers who want you to work for free.

“Unpaid internships” shouldn’t be illegal, but in a free society, there’s no room for them.


* And it’s not limited to unpaid. Medical residents might earn something like $50k per year, during which they’re expected to work 80 hours a week. That’s about $9 an hour when you factor time-and-a-half for overtime, or about the same as a shift supervisor at McDonald’s. So either doctors-in-residence are about as valuable as a Fry Chief, or doctors (post-residence) are grossly overpaid. I suspect the truth lies somewhere in between the two extremes.

** I do not mean to suggest that there would be no room for apprenticeships or other programs where one party may work for “free” or even pay in order to learn a specific skill or trade, only that internships as most people understand them (errand-boy/girl, gopher, etc.), would disappear.

no third solution

Blogging about liberty, anarchy, economics and politics