Have We Hit The Top?

[Dinar]

I do not know what will happen to inflation, macro, etc... I do know that

a) there are millions of people in corporate America, and even more in the public sector who sit around all day and either do nothing, or actively hinder output.  So if either the government or large companies or universities start firing deadwood, productivity will soar.  At Harvard for instance number of administrators & other bureaucrats has doubled on a per student/professor basis in the past several decades I believe.  

b) The welfare state is becoming bigger and bigger and destroying any incentive to work for unskilled and low skilled labor.  If it ever gets cut back, watch millions re-enter the labor force, with huge upside to GDP, and downside to inflation.   In NYC today, it is more profitable to develop homeless shelters in Manhattan on UWS (home of $4000 per sq foot condos) than to turn an existing building into luxury housing.   

[cubsfan]

31 minutes ago, Dinar said:

I do not know what will happen to inflation, macro, etc... I do know that

a) there are millions of people in corporate America, and even more in the public sector who sit around all day and either do nothing, or actively hinder output.  So if either the government or large companies or universities start firing deadwood, productivity will soar.  At Harvard for instance number of administrators & other bureaucrats has doubled on a per student/professor basis in the past several decades I believe.  

b) The welfare state is becoming bigger and bigger and destroying any incentive to work for unskilled and low skilled labor.  If it ever gets cut back, watch millions re-enter the labor force, with huge upside to GDP, and downside to inflation.   In NYC today, it is more profitable to develop homeless shelters in Manhattan on UWS (home of $4000 per sq foot condos) than to turn an existing building into luxury housing.   

That's a fascinating viewpoint that makes a lot of sense. The amount of "helpers" and non-productive "watchers" is pretty astounding.  You can certainly see it in our institutions.

 

I wonder if you can really say that about public companies? Maybe the large tech companies will wise up...?

[Luke]

44 minutes ago, Dinar said:

 

a) there are millions of people in corporate America, and even more in the public sector who sit around all day and either do nothing, or actively hinder output.  So if either the government or large companies or universities start firing deadwood, productivity will soar.  At Harvard for instance number of administrators & other bureaucrats has doubled on a per student/professor basis in the past several decades I believe.  

44 minutes ago, Dinar said:

b) The welfare state is becoming bigger and bigger and destroying any incentive to work for unskilled and low skilled labor.  If it ever gets cut back, watch millions re-enter the labor force, with huge upside to GDP, and downside to inflation.   In NYC today, it is more profitable to develop homeless shelters in Manhattan on UWS (home of $4000 per sq foot condos) than to turn an existing building into luxury housing.   

Which high quality jobs will give "huge upside" to GDP for the some 6m unemployed in the US? 

Edited January 11 by Luca

[Luke]

Problem is that much of the value creation has been outsourced out of the US, the US is only a custodian to that creation. Thats why you have either shitty service jobs or all of these bullshit jobs as David Graeber put it well: 

 

In the year 1930, John Maynard Keynes predicted that, by century's end, technology would have advanced sufficiently that countries like Great Britain or the United States would have achieved a 15-hour work week. There's every reason to believe he was right. In technological terms, we are quite capable of this. And yet it didn't happen. Instead, technology has been marshaled, if anything, to figure out ways to make us all work more. In order to achieve this, jobs have had to be created that are, effectively, pointless. Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul. Yet virtually no one talks about it.

 

So what are these new jobs, precisely? A recent report comparing employment in the US between 1910 and 2000 gives us a clear picture (and I note, one pretty much exactly echoed in the UK). Over the course of the last century, the number of workers employed as domestic servants, in industry, and in the farm sector has collapsed dramatically. At the same time, ‘professional, managerial, clerical, sales, and service workers’ tripled, growing ‘from one-quarter to three-quarters of total employment.’ In other words, productive jobs have, just as predicted, been largely automated away (even if you count industrial workers globally, including the toiling masses in India and China, such workers are still not nearly so large a percentage of the world population as they used to be.)

 

But rather than allowing a massive reduction of working hours to free the world's population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning of not even so much of the ‘service’ sector as of the administrative sector, up to and including the creation of whole new industries like financial services or telemarketing, or the unprecedented expansion of sectors like corporate law, academic and health administration, human resources, and public relations. And these numbers do not even reflect on all those people whose job is to provide administrative, technical, or security support for these industries, or for that matter the whole host of ancillary industries (dog-washers, all-night pizza delivery) that only exist because everyone else is spending so much of their time working in all the other ones.

 

These are what I propose to call ‘bullshit jobs’.

 

While corporations may engage in ruthless downsizing, the layoffs and speed-ups invariably fall on that class of people who are actually making, moving, fixing and maintaining things; through some strange alchemy no one can quite explain, the number of salaried paper-pushers ultimately seems to expand, and more and more employees find themselves, not unlike Soviet workers actually, working 40 or even 50 hour weeks on paper, but effectively working 15 hours just as Keynes predicted, since the rest of their time is spent organizing or attending motivational seminars, updating their facebook profiles or downloading TV box-sets.

 

[Dinar]

@Luca, when you make statements that the US has only shitty service jobs, the only thing you show is your ignorance.  Do you know that there is a massive shortage of plumbers, electricians, carpenters & other construction workers in the US?  Massive shortage of doctors, nurses, et all?  (In NYC today, there is a four month wait to see a dermatologist for instance.)  Do you know how much these people, including skilled tradesmen make?

 

Why is working a service job shitty?  Just because you do not like it does not mean it is shitty.  I do not know what you do for a living, but I am sure I can find plenty of people who will not like what you do.  Does this mean that your job is shitty?  You remind me of good old Karl...

Edited January 11 by Dinar

[ValueArb]

46 minutes ago, Luca said:

Problem is that much of the value creation has been outsourced out of the US, the US is only a custodian to that creation. Thats why you have either shitty service jobs or all of these bullshit jobs as David Graeber put it well: 

 

In the year 1930, John Maynard Keynes predicted that, by century's end, technology would have advanced sufficiently that countries like Great Britain or the United States would have achieved a 15-hour work week. There's every reason to believe he was right. In technological terms, we are quite capable of this. And yet it didn't happen. Instead, technology has been marshaled, if anything, to figure out ways to make us all work more. In order to achieve this, jobs have had to be created that are, effectively, pointless. Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul. Yet virtually no one talks about it.

 

So what are these new jobs, precisely? A recent report comparing employment in the US between 1910 and 2000 gives us a clear picture (and I note, one pretty much exactly echoed in the UK). Over the course of the last century, the number of workers employed as domestic servants, in industry, and in the farm sector has collapsed dramatically. At the same time, ‘professional, managerial, clerical, sales, and service workers’ tripled, growing ‘from one-quarter to three-quarters of total employment.’ In other words, productive jobs have, just as predicted, been largely automated away (even if you count industrial workers globally, including the toiling masses in India and China, such workers are still not nearly so large a percentage of the world population as they used to be.)

 

But rather than allowing a massive reduction of working hours to free the world's population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning of not even so much of the ‘service’ sector as of the administrative sector, up to and including the creation of whole new industries like financial services or telemarketing, or the unprecedented expansion of sectors like corporate law, academic and health administration, human resources, and public relations. And these numbers do not even reflect on all those people whose job is to provide administrative, technical, or security support for these industries, or for that matter the whole host of ancillary industries (dog-washers, all-night pizza delivery) that only exist because everyone else is spending so much of their time working in all the other ones.

 

These are what I propose to call ‘bullshit jobs’.

 

While corporations may engage in ruthless downsizing, the layoffs and speed-ups invariably fall on that class of people who are actually making, moving, fixing and maintaining things; through some strange alchemy no one can quite explain, the number of salaried paper-pushers ultimately seems to expand, and more and more employees find themselves, not unlike Soviet workers actually, working 40 or even 50 hour weeks on paper, but effectively working 15 hours just as Keynes predicted, since the rest of their time is spent organizing or attending motivational seminars, updating their facebook profiles or downloading TV box-sets.

 

 

And yet in real dollars median income in the US has grown by 50% in the last 40 years. Sure it's not growing as fast as it did before then, but it isn't shrinking yet (unless 2019-2023 is the new long term trend).

 

And a big reason our incomes have increased is outsourcing. Instead of assembling iPhones here in grueling manual labor jobs we outsourced them to China where they pay substantially more, are easier and far safer than the rural farming jobs many of the workers were drawn from. And the savings mean Apple can sell more iPhones and hire more engineers, designers and managers here, and the market is bigger for software developers taking advantage of it. That's what is driving our higher wages.

 

Of course a lot of our work hours are wasted, that's been true since the dawn of time. But still our capital reinvestment steadily produces more and better tools to enable us to produce far more output for the same amount of work. 150 years ago David Graeber would be ranting that McCormicks invention of the mechanical reaper was making it too easy for farmers to harvest their fields, eliminating labor jobs and it was turning the younger generation into a nation of shop-keepers and craftsman who could no longer feed themselves. 

 

This nation started by being 90% farmers! Oh, how can it survive without nearly everyone working in the dirt 12 hours a day 6 days a week just to feed their family and make a small surplus to sell at market to the Europeans! What in blithers is an "App Developer" and how can they feed anyone? Their $4,000 laptop can't plow any field, so why are they making $200,000 a year?

Edited January 11 by ValueArb

[Luke]

3 minutes ago, ValueArb said:

This nation started by being 90% farmers! Oh, how can it survive without nearly everyone working in the dirt 12 hours a day 6 days a week just to feed their family and make a small surplus to sell at market to the Europeans! What in blithers is an "App Developer" and how can they feed anyone? Their $4,000 laptop can't plow any field, so why are they making $200,000 a year?

That "App Developer" is surely the average employee in the US! 

[Gregmal]

A lot of this is also skewed and fragmented regionally. Its a classic center of the world syndrome we see in places like NYC and LA...but productivity is plenty healthy in many places. I cant even name all the real world examples of this because there are so many, but it really is a regional thing. The reasons range from incentives, to work ethic, to legislative stuff...but its real. I saw guys putting up roofs and constructing a Walmart on Thanksgiving Day in FL...in NY you need to spend 3-5 years asking some scumbag politician permission and bribing union people just to get your building permit. I went to Short Hills the other week to get my wife a birthday gift at Cartier...something Ive done plenty times before...store was now closed and "appointment only" because animals in hoodies and goofy looking sneakers keep stealing with no repercussion. Ultimately jobs and productivity is a function of the business environment...and on top of it being very much a blue collar bull market for employment right now, its also area dependent. But too many people get sucked into the big city narrative stuff and thats gonna lead one astray. 

[ValueArb]

23 minutes ago, Luca said:

That "App Developer" is surely the average employee in the US! 

 

I just quit an app developer job where base pay was $170k in the US, + stock options, + up to 20% annual cash bonuses based on employee/company performance, with great benefits (all jobs remote, paid healthclub memberships, free biometric sleep trackers, lunches every fridays, counseling, dental, medical, vision, quarterly onsite parties, etc).

 

The point is there are a huge number of great paying jobs we aren't even aware of that have been created by, or increased in numbers, because of outsourcing. And the increasing wages for the average worker are very clear in our ever rising median real income levels.

 

https://fred.stlouisfed.org/series/MEHOINUSA672N

Edited January 11 by ValueArb

[Dinar]

33 minutes ago, ValueArb said:

 

I just quit an app developer job where base pay was $170k in the US, + stock options, + up to 20% annual cash bonuses based on employee/company performance, with great benefits (all jobs remote, paid healthclub memberships, free biometric sleep trackers, lunches every fridays, counseling, dental, medical, vision, quarterly onsite parties, etc).

 

The point is there are a huge number of great paying jobs we aren't even aware of that have been created by, or increased in numbers, because of outsourcing. And the increasing wages for the average worker are very clear in our ever rising median real income levels.

 

https://fred.stlouisfed.org/series/MEHOINUSA672N

You don't get it do you?  China is thriving, US in going down the flames according to Luca!  He looks at everything through that prism!  Inconvenient facts like millions trying to immigrate to the US from China do not distract him from his vision!

[Luke]

17 minutes ago, Dinar said:

You don't get it do you?  China is thriving, US in going down the flames according to Luca!  He looks at everything through that prism!  Inconvenient facts like millions trying to immigrate to the US from China do not distract him from his vision!

US is not going down the flames at all, just the amount of capital existing in that country will do wonders, never bet against america. BUT China is not to ignore and they deploy a lot of positive things that the west lacks IMO, they are a serious competitor and that also explains the serious anxiety by western governments. 

 

My point was that the US more and more outsourced manufacturing, has few very high paying jobs in finance and technology sectors and LOTS of service jobs of whom many can be put into the bullshit job category. Does the whole country REALLY still need to work 50 hours a week and maintain that work ethic? Its hilarious if you look at it from above, many many people could probably work 15 hours a week and call it a day but thats not how the contracts are set up, most people are also not willing to share that they spend at least 1/3 of their time unproductive just browsing the web or working very slowly, its just not necessary anymore and it will be even less in the future. 

[brobro777]

1 hour ago, Gregmal said:

A lot of this is also skewed and fragmented regionally. Its a classic center of the world syndrome we see in places like NYC and LA...but productivity is plenty healthy in many places. I cant even name all the real world examples of this because there are so many, but it really is a regional thing. The reasons range from incentives, to work ethic, to legislative stuff...but its real. I saw guys putting up roofs and constructing a Walmart on Thanksgiving Day in FL...in NY you need to spend 3-5 years asking some scumbag politician permission and bribing union people just to get your building permit. I went to Short Hills the other week to get my wife a birthday gift at Cartier...something Ive done plenty times before...store was now closed and "appointment only" because animals in hoodies and goofy looking sneakers keep stealing with no repercussion. Ultimately jobs and productivity is a function of the business environment...and on top of it being very much a blue collar bull market for employment right now, its also area dependent. But too many people get sucked into the big city narrative stuff and thats gonna lead one astray. 

 

12 years to build a Target in LA - https://lamag.com/featured/hollywood-target-opens

 

Haha

 

 

[Luke]

But instead of everybody working less and consuming more, you had capital form a sort of "rental class" that lives paycheck to paycheck, being forced to rent most things instead of owning them and never joining the post fordist aristocrat party! 

[cubsfan]

4 minutes ago, Luca said:

US is not going down the flames at all, just the amount of capital existing in that country will do wonders, never bet against america. BUT China is not to ignore and they deploy a lot of positive things that the west lacks IMO, they are a serious competitor and that also explains the serious anxiety by western governments. 

 

My point was that the US more and more outsourced manufacturing, has few very high paying jobs in finance and technology sectors and LOTS of service jobs of whom many can be put into the bullshit job category. Does the whole country REALLY still need to work 50 hours a week and maintain that work ethic? Its hilarious if you look at it from above, many many people could probably work 15 hours a week and call it a day but thats not how the contracts are set up, most people are also not willing to share that they spend at least 1/3 of their time unproductive just browsing the web or working very slowly, its just not necessary anymore and it will be even less in the future. 

 

I don't really get this at all. Why would anyone want to work 15 hours a week when the opportunities are there to make money?  You know how expensive housing is in this country and how terrible inflation has been. How is someone looking to provide for a family, buy a house, pay for college going to make it working 15 hours per week. That's insane.

[Gregmal]

2 minutes ago, brobro777 said:

 

12 years to build a Target in LA - https://lamag.com/featured/hollywood-target-opens

 

Haha

 

 

Totally….we were excited hearing that Topgolf was looking to open near us in NJ a few years ago. In 2022 some stuff actually got approved at the local level in Parsippany. However after some updates it was stated that “there is no set opening date although they are hoping for 2026”….4-5 fuckin years lol. Then St Joe decided they want to do one and it gets approved in Dec 23 and will be open spring of 2025….some of these cities and regions are total jokes.

[rkbabang]

51 minutes ago, Gregmal said:

59 minutes ago, brobro777 said:

 

12 years to build a Target in LA - https://lamag.com/featured/hollywood-target-opens

 

Haha

 

 

Totally….we were excited hearing that Topgolf was looking to open near us in NJ a few years ago. In 2022 some stuff actually got approved at the local level in Parsippany. However after some updates it was stated that “there is no set opening date although they are hoping for 2026”….4-5 fuckin years lol. Then St Joe decided they want to do one and it gets approved in Dec 23 and will be open spring of 2025….some of these cities and regions are total jokes.

 

12 years to build a Target.  2-5 years to build a Topgolf.  With 1930's technology the Empire State Building was built in a year.  The US used to be able to build shit.

 

"Construction started: March 17, 1930

Opened: April 11, 1931"

 

 

[Gregmal]

41 minutes ago, rkbabang said:

 

12 years to build a Target.  2-5 years to build a Topgolf.  With 1930's technology the Empire State Building was built in a year.  The US used to be able to build shit.

 

"Construction started: March 17, 1930

Opened: April 11, 1931"

 

 

Yes the reason being that since then, the population of several groups of undesirables has exploded in NY. The largest group being government. Additionally, it’s now sport, to hoot and holler and protest about what other people are doing with their own private property. 

[Spekulatius]

1 hour ago, rkbabang said:

 

12 years to build a Target.  2-5 years to build a Topgolf.  With 1930's technology the Empire State Building was built in a year.  The US used to be able to build shit.

 

"Construction started: March 17, 1930

Opened: April 11, 1931"

 

 

Great depressions help to get stuff done. See Hoover dam and Golden Gate bridge. 

[bargainman]

5 hours ago, ValueArb said:

 

I just quit an app developer job where base pay was $170k in the US, + stock options, + up to 20% annual cash bonuses based on employee/company performance, with great benefits (all jobs remote, paid healthclub memberships, free biometric sleep trackers, lunches every fridays, counseling, dental, medical, vision, quarterly onsite parties, etc).

 

The point is there are a huge number of great paying jobs we aren't even aware of that have been created by, or increased in numbers, because of outsourcing. And the increasing wages for the average worker are very clear in our ever rising median real income levels.

 

https://fred.stlouisfed.org/series/MEHOINUSA672N

 

Well there's all sorts of jobs that have been created that one would never have even imagined.  would you believe there are people making millions of dollars getting a ball and running it to the end of a field?  and then there's also people making not quite as many million dollars trying to stop those people from getting the ball to the end of the field   heck there's even folks making millions of dollars playing video games!   And get this, there are people travelling around the world living like royalty,  making their living by telling others how ...   They travel the world living like royalty for under 50K/year.   I mean I'm not even kidding.  https://www.youtube.com/@GroundedLifeFinances/videos

 

Anyway with regards to someone's comment about dermatologists,  I read somewhere of that the main medical body of the USA  very specifically limits supply  because they don't want too many doctors  because of well you can imagine...   Supply demand right? 

 

There also seems to be an undercurrent ifyounger folks leaving the us a for  some of the european countries because they are tired of the work work work culture and would rather work to live than live to work.         

[bargainman]

By the way regarding all of the construction and manufacturing, I wonder how much the inflation reduction act has been having an effect.  It's a huge investment if it sounds like a lot of it is going into stateside manufacturing especially around green energy related enterprises.  

 

I'm not sure how reputable FT is, but this is definitely an interesting overview.

https://www.youtube.com/watch?v=cfaubxeS5HU

 

[mattee2264]

What I find extraordinary is that people hyper focus on the Fed's every move and uttering and completely ignore the influence of fiscal stimulus of $500bn a quarter and the expansion of government jobs which is fully offsetting the impact of any private sector weakness and job cuts. 

 

A recession requires an output gap and that isn't going to happen when you have such a massive fiscal plug. 

And if the private sector were to recover and the ROW (especially China) see an economic recovery then that is going to result in a lot of inflationary pressures which will result in another inflation shock. Especially as all the conflicts in the world are going to cause supply chain issues. 

 

And of course everyone is positioned in long duration assets such as Big Tech, long bonds etc. anticipating continued disinflation and rate cuts. 

 

 

[Luke]

6 minutes ago, mattee2264 said:

What I find extraordinary is that people hyper focus on the Fed's every move and uttering and completely ignore the influence of fiscal stimulus of $500bn a quarter and the expansion of government jobs which is fully offsetting the impact of any private sector weakness and job cuts. 

 

A recession requires an output gap and that isn't going to happen when you have such a massive fiscal plug. 

And if the private sector were to recover and the ROW (especially China) see an economic recovery then that is going to result in a lot of inflationary pressures which will result in another inflation shock. Especially as all the conflicts in the world are going to cause supply chain issues. 

 

And of course everyone is positioned in long duration assets such as Big Tech, long bonds etc. anticipating continued disinflation and rate cuts. 

 

 

Yes, in a way there is already Keynesian intervention happening and the system is getting floated continuously. 

 

[Spekulatius]

3 hours ago, mattee2264 said:

What I find extraordinary is that people hyper focus on the Fed's every move and uttering and completely ignore the influence of fiscal stimulus of $500bn a quarter and the expansion of government jobs which is fully offsetting the impact of any private sector weakness and job cuts. 

 

A recession requires an output gap and that isn't going to happen when you have such a massive fiscal plug. 

And if the private sector were to recover and the ROW (especially China) see an economic recovery then that is going to result in a lot of inflationary pressures which will result in another inflation shock. Especially as all the conflicts in the world are going to cause supply chain issues. 

 

And of course everyone is positioned in long duration assets such as Big Tech, long bonds etc. anticipating continued disinflation and rate cuts. 

 

 

Right- the treasury is the boss, the Fed just manages their checking account.

[Red Lion]

16 hours ago, Luca said:

My point was that the US more and more outsourced manufacturing, has few very high paying jobs in finance and technology sectors and LOTS of service jobs of whom many can be put into the bullshit job category

I think dinar mentioned this above, but the boots on the ground say there are a lot of excellent jobs in the construction trades. That’s certainly what I see on the west coast. 
 

I think our bigger problem right now is that the entire younger generation want to be influencers rather than pickup any of the highly paid trades right in front of them. 
 

It’s a good thing we don’t have too many manufacturing jobs because I don’t think we would find anyone to work them. 

[james22]

1 minute ago, RedLion said:

I think our bigger problem right now is that the entire younger generation want to be influencers rather than pickup any of the highly paid trades right in front of them.

 

The rising cost and increased politicization of higher education only helps the trades.