Tyler Durden guest posted at Naked Capitalism yesterday. Most of the post is beyond my economic paygrade, though Dakinikat might be able to provide us with the Cliff Notes later. But I did find his overall observation very astute:
With articles like this coming out of Time magazine, it is inevitable that in the immediate future, the United States will be split into two partisan camps. However, this will not be the traditional schism of republicans vs. democrats, contrary to Mr. Barney Frank’s attempt to start ideological partisan warfare. The real split will be of naive, easily-manipulated, small-time mom and pop investors, who only care about looking at their daily yahoo finance screens and 401(k) statements, seeing more black than red, and only focusing on what happened in the immediate past, and the forward looking taxpayers, who see the upcoming budget deficit fiasco, the social security ponzi scheme, the Medicare/Medicaid debacle, the ridiculous underfunding in public and corporate pension funds, the rising city and state taxes, the shuttering factories, the rising unemployment, the plummeting American production base, the “seasonally” upward-adjusted economic data coupled with consistently downward revised prior economic releases, the increasing savings rate and the multi trillion discrepancy in consumer purchasing power. The taxpayers are becoming angrier and angrier at the net present value destruction of future opportunities of being a U.S. citizen, while investors cheer every piece of information (whether or not supported by facts) that provides a push to their current net worth, ignorant of what this may mean for the future. There will come a point where this schism reaches a boiling point, in the meantime, the paradox is that so many of the taxpayers are also investors, who are caught in a tug of war with themselves on what the proper response to the crisis should be: happy as a result of bear market rallies, or sad when they put the facts into perspective.
I’ve felt this coming for about 15 years now, ever since I ran for the school board because I was alarmed with the curriculum standards. I’m sorry to break it to you guys not in the science area but our curriculum in the US doesn’t even come close to the standards in many countries in Asia. Even our best high schools are pathetic. I work with a lot of international scientists who find our math and science curriculums such a joke that they send their kids to Saturday schools just to bring them up to speed. There is a lot of anger and disbelief at how educators intentionally hold our children back in our schools. The sad part is that many of our nation’s teachers are not qualified to teach these subjects at a world class level and they know it. And when I saw this problem emerging 15 years ago, I tried in vain to get curriculum supervisors in my own school district to see the future. Think of it this way: if you have a country with 2 billion people and even if only 1/10th of 1% of that 2 billion was graduating with degrees in the hard sciences, it would be many, many more scientists than the US graduates. But it’s even worse than that because NOW, if you are a chemistry major in a US university, your chances of being hired to do chemistry anywhere in this country is becoming vanishingly small. All those jobs are now going to India and China.
We have spent the last 25 years disassembling ourselves technologically. We did this at our employer’s encouragement. Of course, it doesn’t help that most high tech jobs are non-union or that unions have very little power these days anyway. When it happened to the unions, we were smug that it wouldn’t happen to those of us who had educations. Those poor steel working shmucks and caterpillar workers were just vanishing dinosaurs. But WE would be around forever because we were smart. We would in invest our 401Ks and watch the money pile up.
Then came the mergers when research came grinding to a halt for years at a time. Then came the layoffs that boosted our 401K portfolios and made us cheer. Then came the endless outsourcing and contractors and contract negotiations that came with oursourcing and contractors. We spend almost as much of our day hunting down people to do the work we used to do as actually doing the work. We now have people who were trained to do one thing taking on the upstream work because no one else will be hired to do it.
And the investors whine that no new drugs are being produced and they threaten to take even more work overseas. And the layoffs will continue until there is no one left except a few project managers who will work part of their year in Hyderabad, fighting the traffic to oversee the work of the Indian PhD’s who will do low level chemistry grunt work for pennies on the dollar.
A year ago, the bulletin board of the kitchenette on my floor was festooned with anti-tax screeds clipped from the Wall Street Journal. Now, I’m just as likely to find letters to the editor about how when they lay us researchers off, it would be folly to think we have other opportunities in the Great American Industrial Landscape. We have none. When we are let go, that will be it. There will be no bootstraps to pull ourselves up. All the capital will have fled elsewhere.
We have eaten our seed corn.