Friday, August 26, 2011

The Economic Lesson of the Day

I shall make this as short and simple as possible, because it really is that simple.
Labor force participation shows the percent of the population that CAN work, that actually DOES.

You will notice the dramatic increase after about 1968 which is 100% due (look it up, please dont' question me) to women entering the work force.

You will then see the dramatic decline since this latest recession began which is about 95% due to men leaving the workforce (look it up, please don't question me).

Ergo, I have this simple question to ask.

If more and more women entered the work force, this should then increase the economic growth of the country (which it did). If economic growth increased, then government revenues should have gone up (which it did). Thus, in theory, with "twice" the amount of the population working, yet no need to double infrastructure, double military spending, and other public goods, then government spending as a percent of our total output should DECREASE.

But it has not.

Matter of fact it has more than doubled.

Now, fellow junior, aspiring, deputy, official or otherwise economists I ask you the simple question...

why?

I know the answer, but the question is whether YOU know the answer.

And the answer is two fold.

It is also a very TRUE answer, which will make it an incredibly politically incorrect answer. But since we're in an economic crisis, methink the people are starting to realize the economic costs of being politically correct at the expense of being truthful and living in reality.

Answer away.

25 comments:

Eric said...

You're arguing the point that the people who entered the workforce did so into jobs that are paid with government money. Furthermore, you're arguing that people exiting the workforce are doing so from the private sector.

Amateur Strategist said...

Because the main employment of women is government, which uses tax dollars to employ them. Thus, whatever they get out of women, on the whole, is really little compared to what they are paying women (again, in tax dollars) to begin with.

Second answer; when women entered the workforce they brought a lot of government regulations with them, causing government to spend more constructing labyrinthine rules just to make the womans fell better.

Captain Capitalism said...

So far half right.

The disproportionate amount of employment by women is in government which then negates any genuine real production

But there is a HUGE other factor.

That will be the real test of an economist.

Anonymous said...

Doubling the labor supply without doubling the job market means the real value of each worker is cut in half.

Now we have the "two-income household" pretty much as a necessity to make up for that.

Anonymous said...

It drove wages down.

Hot Sam said...

You're forgetting about the large increase of blacks into the work force. They are overrepresented in government employment.

The largest component of government spending is wages and benefits. Labor productivity of government employees has plunged. We're not only getting more government, we're getting less productive government. It seems to exhibit no economies of scale or scope. The increase in computer technology alone should have made government far more efficient in almost everything it does.

Dwight House said...

Because it will be a cold day in hell before the average politician decides to spend less of other people's money?

Anonymous said...

I don't know if this is the answer you're looking for, but my first thought was that many women spend a lot of time in offices while accomplishing relatively little of productive import.

Thus a female worker might contribute less to the bottom line than a male worker, all other things being equal.

Captain Capitalism said...

I am SORELY disappointed right now! (not really, it was a tough question)

Perhaps a little more guidance.

Despite feminists' claims that I am a misogynist, I actually do care about women and men on an equal level. Matter of fact, I care more about women than feminists do (and that is the honest truth, it's not hyperbole or rhetoric, it's true).

Feminists, who I genuinely believe were nothing more than communist plants to destroy this country, purport that traditional "women's work" was degrading, pathetic and a form of slavery.

I contend, however, that traditional "women's work" was a vital and absolutely NECESSARY cornerstone of society and civilization.

And though not ALL women were cut out nor "condemned" to it, their traditional roles were very much a by product of millions of years of evolution and were not "forced" upon them by an evil patriarchial society, but were there for damn good natural and evolutionary reasons.

It's just that they abandoned them en-masse unnatural in the 1960's and there is a horrible consequence to that.

ie- "traditional women's roles" were no more inferior than "traditional male roles." Matter of fact, they were just as important and vital as the male roles (and if you would get your head out of your asses you'd realize this is so blatantly obvious in that evolutionary design has made it so we have two sexes instead of asexual production, therefore there must be some pretty damn good reason to admit there are differences between men and women)

Now, with all those hints. Please tell me what the SECOND major factor is in my question. It's very simple if you just let go of the economics and let common sense take over.

Twenty said...

Women used to perform a lot of work around the house -- cooking, cleaning, childrearing. When they entered the workforce, all that work had to be done by someone, so it was outsourced to, e.g., restaurants, fast food, daycare, the schools, etc.

Women entering the workforce increases *measured* output two ways -- first of all, whatever jobs they're doing are measured, and secondly, all that now-outsourced work is "on the books", so it can now be counted by the econometricians.

Since the goal of women working has been seen as socially desirable, the story grows more complicated: The outsourcing of traditional women's work has been *subsidized* by the government. So as women's workforce participation increases, so does government spending.

Essentially we're borrowing money from China to pay for childcare* so that women can take jobs where we pay them to generate the paperwork and process the regulatory makework that kills productive enterprise.

Enjoy the decline, indeed.

* Gross oversimplification.

LoneWolf said...

I would surmise that the sudden infusion of feminine "labor" (cough, cough) at the pig-slop cornucopia of Uncle Sam's nanny farm would also beget the unforeseen consequence of forcing society to accept the additional feminine virtues and work ethic that women automatically and unavoidably drag into the workplace - namely, the feminine austerity of perpetual brooding
victim-hood and princess entitlement mentality.

As a result, not only do we have an entire bastion of non-producing sucklings receiving income through direct wealth redistribution off the backs of the true producers and innovators of society, we also have the savagely frothing expansion of exclusive labor and social engineering laws, acts, publicly funded programs, "rights" and protections afforded to these parasites that aren't even a whisper of a consideration to those who possess the unfortunate mishap of being equipped with a penis.

Simply stated, not only are we using tax dollars to pay people to work as heedlessly ignorant barnicles upon national economic growth, but we are also subsidizing (through additional wealth redistribution) the development, creation, evaluation, advancement and enforcement of special protections for these same oblivious leeches, so that they can "compete equally" amongst those who surrender their wages to further the cause of such nonsense.

One needs to look no further than the recent news surrounding Presidunce Obama's executive order to create the Office of Diversity and Inclusion, to quickly figure out how the unwillingness to compete on a truly "equal" level amongst the skilled producers of society, results in the creation of ever-increasing taxpayer-subsidized directorates to make certain that sluggards and sponges can soak up the "American Dream", as well.

The government must now pay administrators, officials, planners, educators (ha - the term is so enchantingly droll), marketing/advertising firms, developers (software, Internet), lawyers, prosecutors, district attorneys, managers, researchers, trainers and an unfathomable array of other "labor" positions by which to advance such programs as:

Title IX

"Equal Pay for Equal Work"

Small Business Loans
(for women and "minorities", or course)

Diversity Programs
(and the vast enforcement effort of
quota policies underlying them)

Sexual Discrimination in the Workplace
(does not apply if you stand up to pee)

Sexual Harrassment Laws
(again, does not apply if you just happen
to be dragging a wrinkly Samsonite
between your legs)

... and there are a cavalcade of others.

None of this bureaucracy existed before WWII... and absolutely none of it has ever produced one penny of economic value to strengthen GDP. And I suppose that is the point, isn't it?

Anonymous said...

strong independent women=weak dependent families?

Anonymous said...

Up here in Canada, our government spends billions of dollars providing services, daycare & income supplements for lower-income families (mostly single mothers), care for the elderly,.....etc

The list could go on forever because our government is always looking for more opportunities to "help" us.

Most of these services used to be provided by women who didn't work outside the home.
And they were supported by their own husbands, not taxpayers.

Now we have a huge army of taxpayer funded female workers to do the things our mothers used to do.And an equally huge (mostly female) bureaucracy to manage them.

Taxpayers provide welfare for unemployed mothers & children who would've been supported by their husbands, a generation ago.

And taxpayers provide the justice system to "process" all the broken marriages....... & the disfunctional kids that the system produces.

I'm sure it's the same story in the US.

Anonymous said...

The government nanny has taken over the jobs that women used to do.

Norman said...

Because government stepped in to fill the void left by the departure of women.

The true lie of feminism is "you can have it all". You can't. A stay-at-home parent (and I was a Mr. Mom for 10 years) has many roles other than diaper changing & bottle washing
- neighborhood social worker
- community police
- daycare for neighbor's kids
- general life trouble-shooting

When you go to the office, who does these other tasks? Right. Ergo, growth in government spending.

CSPB said...

When women began working outside the home, they did not have to depend on men. But it is women's nature to need a protector/provider. So they influenced the government to take that role. As the goverment became women's husband, the goverment role and cost escalated dramatically. And women became less happy because they can't get hugs from the government.

Taylor said...

My guess is that while we may have gained womens' contribution in the paid workplace, we have lost much of the (non-taxable) value they were already providing in the home, on the farm, in the family business.

Furthermore, since every organization is the reflection of the people who run it, the switch to a more female-driven government has changed its priorities to fulfill the role that its women leaders would have otherwise played in their own homes (a role that they might feel is being neglected). e.g.: stop their kids from smoking, keep them from driving drunk, pack their lunch, pay for their education, treat them when they have a cough, make sure they save energy, etc., etc.

Using the government to fulfill the role of a mother (or nanny) is an altogether inefficient way of raising a family and it's certainly a terrible way to run a free country.

(It's might be worth mentioning that previous, male-dominated governments focused on more fatherly priorities: defending their loved ones, encouraging hard work, disciplining wrongdoers)

Jay said...

Okay I am no economist here, but my guess is this.

The biggest expenditures of gov't is welfare (Medicare, SS, ect.) the reason Gov't continued to grow is because of the fact that there is no traditional or "nuclear" family anymore.

It's very similar to the situation being faced in Britain. Women were designed to have kids (sorry don't blame me blame God, evolution, aquabuddha ect.) and so we have women entering the workforce but with them comes a double-standard AKA "Give me equal pay, but allow me to leave my job for many months while still paying me because I'm a woman and I gotta have kids!" Well this puts pressure on profits of any company when they have to pay an employee months for doing 0 productivity, but the problem is most women work in gov't so ergo....the gov't has to pay for their maternity leave. Then of course they demand daycare, better schools (ie more money & less common cents) from of course gov't. However these "career women" are having less and less kids because "being a housewife is a dirty, pathetic job only good for stupid conservative women like Michele Bachmann and Sarah Palin." so they only have 1 or 2 designer babies, which is okay if you believe in the liberal hoax of "overpopulation" except their is one tiny problem......

The Social Security and Medicare ponzi schemes are funded by kids

You see no one worried about SS going bankrupt in the 60s, because there were more kids being born than there were going to be future SS recipients, that's why the old fart who retired in the 80s lived like a rap star. However the babyboomers had less kids because they were told by Liberals that the planet was being over-populated and the world would be like Soylent Green by 2000 and the feminist movement degraded that housewife, so of course women had less kids.

Now here we are in 2010 and there is no money left in the SS trust fund and many people have to rely upon it as retirement because the old ways of "the kids sending a little bit of their paycheck to their parents" are over....so the US govt has to borrow more and more and perhaps tax more in order to fund these unsustainable ponzi schemes.

The reason Britain is in such shambles is because the gov't does everything for you, so: why work? why have families? why get married? why not riot and steal some TV sets?


The reason gov't spending is going up, is because women have allowed the gov't to replace them in mostly all areas sans child-birth.



Is that right Cpt.?

Anonymous said...

Why hasn't government spending decreased?

Uh, because so many more taxpayers of the gentler persuasion feel that we can afford it?

/snark

Bill K.

Anonymous said...

because women are low production workers...
(I'm anonymous to protect my life from the rath that will come from this remark...)

a gooner said...

I think the point is that women worked before and created value in the home. Now, they're working outside and not doing the things they used to do. Because other people are now being paid to do it, those are taxable (as are the women's jobs). So not only do you have an increase of taxable workers, you also have previously untaxed work that is now being taxed, increasing government money in two different ways.

JJ said...

The entry of women into the workforce nearly doubled the household income. With this extra income, prices necessarily rose, so that soon it required two incomes to provide for a typical family, whereas previously it only took one. After a while, two incomes became a necessity, not a luxury.

The rising income/price spiral eventually had to stop, and that happened in 2007 when the housing bubble burst. Government had become dependent on dual income taxes, and when the merry-go-round stopped, the result was a series of craptastic stimulus/bailout/welfare measures to prop up the economy that had been heretofore running on the false (in the 50's sense) American Dream.

Demographics also have a say in this story...fewer women having children, resulting in an inverted pyramid of tax payers versus beneficiaries, and you have part II.

Men's jobs tend to be less recession-proof than women's, owing to the overweight in the manufacturing/construction sector in the former, and the services/public sector in the latter. The mancession was the result. Productive industries tend to lead economies during the recovery, but we have, through gov't trade treaties and perversely ill-targeted subsidies and tax preferences, stripped the US of most of it's industrial base. The public/service sector doesn't have the wealth creation potential to pull us up by our bootstraps, and manufacturers are reluctant to expand seeing no aggregate demand, nor can they obtain capital from the terrified banks, with their toxic balance sheets. Nowhere to go but sideways (or down) during the recovery.

Plus, the over-reliance of gov't on high income earners (due to tax progressivity and refundable tax credits and other benefits) meant that the collapse was even more acute when the economy went south, since it had to resort to borrowing, beyond their capacity to repay, to fund their stimulative boondoggles.

Christine Roemer had it right for once...we're well and truly f*cked!

Giraffe said...

Taylor said: My guess is that while we may have gained womens' contribution in the paid workplace, we have lost much of the (non-taxable) value they were already providing in the home, on the farm, in the family business.

I would guess that is the root of it. We now have to pay the government to do the things mom used to do.

Also, women earning their own money aren't dependent on men. Or at least they don't think so. So men and fathers become optional, divorce rates skyrocket, single motherhood becomes normal, youth become feral, and now the government has to take the Male role as provider as well.

Jack Amok said...

Because the main employment of women is government, which uses tax dollars to employ them...

plus

various versions of:
Women used to perform a lot of work around the house -- cooking, cleaning, childrearing. When they entered the workforce, all that work had to be done by someone, so it was outsourced...Women entering the workforce increases *measured* output ...all that now-outsourced work is "on the books", so it can now be counted...

Are two sides of a coin. The women entering the workforce in the late 60's did not boost productivity. They did not build bridges, or houses, or grow food or even sew clothes. They just started getting paid salaries, and millions of other women started get paid salaries to do the off-books work the SAHMs used to do.

So all that happened is women entering the workforce diluted the value of a dollar. They didn't increase our real output, just the paper output. And by shifting all that "traditional women's work" from off-books to on-books, they drove tax revenues up artificially, without rates needing to go up, so it seemed like taxes were steady.

Which gave the politicians a slush fund to spend on their cronies. Which they did.

By entering the work force en mass and not making real stuff, women just shifted a greater portion of the country's GNP under the government's control by nearly doubling the tax rate on productive activity (i.e. what their husbands were doing...).

Paul said...

There is one thing I would add that I haven't already seen in the above posts. Namely, a lot of the reasons used to justify the expansive government (often nanny-state, they need to protect from ourselves, stuff) not only increases public employment, but it places increasing obligations on the private sector that require private companies to hire people that deal with them. How many companies of any size don't have regulatory affairs divisions, etc.? So the corollary to increased public employment is an increasd number of private sector employment that is needed solely to manage the relationship with the public sector.

Plus, think about what HR should be doing, those mission-critical things that are its raison d'etre: hiring, firing, looking at issues of retention, development, etc. Now, when you look at all the various laws and regs around things like affirmative action, it's often dumped on HR to implement them. One intersting, but often-overlooked, aspect of some of these codes and guidelines are that they carry the force of law, which is often none-too-subtly wielded by either the government or activist groups (who often get government money). Thus meeting these various regulatory obligations can become a much higher priority for HR than its actual day job, due to their being legal ramifications for missing your quota.

And when you need someone to help you deal with all of these government regs and guidelines, what kind of background do you need? Why the same kind as those that came up with them in the first place. And you thought a degree in gender studies, diversity, or environmental studies was useless.

Rather, now the circle-jerk is complete, bye-bye corporate America. Or am I being overly cynical? Pass the Rumpleminze Cap'n, I need a shot.