Friday, December 16, 2011
If you want to get a sense of why the world economy is in a funk and the there is a generally glum feeling here in the United States, one has to look no further than the American middle class.Why? Because this group of people has driven global demand and spending for the last four decades. After World War II, the middle class grew exponentially because of several factors: steady job growth fueled by the building of homes and the purchase of autos, appliances, and the accoutrement's that made a great majority of us...well, middle class. Industry was centered around the "blue collar" worker that could make a very good living in an hourly job. Low unemployment meant that workers were in demand and job mobility was readily available to the work force. Not today. The foundation of our economy- the jobs that supported the middle class- has eroded as many of those jobs have disappeared and have been supplanted by lower skill (and lower paying) jobs. As our country tries to recover from the impact of job loss, keep in mind that there are three factors that are in play, and these critical areas will have to improve significantly before our job market and our economy turn around. The first: we must begin again to create net NEW jobs in our economy. The pace of job creation in our country is anemic, and at the present rate of new job creation, it will take us approximately another 3 years until we get back to 2007 employment levels. Second: we must get more people back into the work force. Currently, only 58.5% of the eligible work force is employed. This obviously ties in with job creation, and it is in our nation's best economic interest to have high labor participation. Finally, and this is the most difficult, we must create jobs that are productive and compensate well the employee. One of the main problems our nation faces right now is that the jobs being created will not sustain the middle class. The fastest growing categories of jobs? Food service workers, home health aides, and customer service representatives, according to the Bureau of Labor Statistics. There are no easy solutions to our problems, but identifying accurately where we are and the problems we face are the first steps toward moving toward positive solutions.
The relationship my wife and I have is based on chemistry. She is on Prozac; I'm on Valium.
Here is some insight into some of the problems that we as a nation are facing when it comes to leadership in Washington. Congress pass the Dodd-Frank Act in 2010, and act that has far reaching effects on the financial service industry and in turn, other industries in this country. The Act is 5,230 pages of proposed and partially finalized rules that is a morass of new rules, regulations, and added compliance costs for all companies in the financial sector. Unfortunately for those companies, the Act left open ended how some of the proposed rules would be implemented and the penalties for violation of those yet to be formulated rules. As of this date, only 25% of the rules have been established and implemented. This to me is truly amazing, that we have passed a set of "laws" that are as of yet unwritten and could completely change the way some banks do business. And the tentacles of this law reach into the manufacturing sector as well as there are certain provisions that mandate companies that sell finished goods imported from overseas certify that their raw materials are only from approved countries. If you wonder why job creation is sluggish and why more businesses in this country are moving jobs overseas, take a look at the way Washington works and you will see clearly some of the reasons.
Actually, my wife and I have a strange and wonderful relationship. She's strange. I'm wonderful.
Tucked away inside Obamacare is a provision called the "medical loss ratio", and this little detail has been called the "bomb" that will blow up the private health care system. Why? I'm glad you asked. This provision states that health insurance companies must spend 80% of the dollars they collect in premiums- 85% for large group insurers like Blue Cross- on medical care rather than overhead, marketing expenses, or retained as profits. Friends, this little provision has the power to cause most if not all private health insurers to face a grim future. The Department of Health and Human Services will determine in rules that they are formulating what will and will not be a medical expense for the purposes of meeting this requirement.The high bar that has been set for expenditures on patient care seems well meaning, but it is highly invasive and takes away the discretion of management as to how they run their company. Friends, I have railed against the power grab by Washington for some time; I have railed against socialized medicine; but now for all of us, it starts to get real. Washington and the bureaucrats that inhabit it are attempting a power grab of unprecedented proportions and the control over your life will be astounding if they are successful. This, my friends, is what the upcoming election in 2012 is all about.
Taking a multi vitamin with a beer for breakfast is the same thing as a bowl of Wheaties, right?
And that, my friends is my view.