A boom in corporate profits, a bust in jobs - Business - Stocks & economy - msnbc.com

Quite a few writers have written about the jobless recovery, in the midst of spectacular corporate profits, especially those of the multi-nationals. Two interesting articles are listed below. My perspective, as I wrote in a comment in the NYT, is as follows:

When President George W. Bush promoted the "Ownership Economy" he clearly signaled that policy was shifting towards "ownership" versus "working." No one should be surprised at the results. The wealthy owners control a large part of the country's assets, and there is no requirement that they create jobs.

The biggest problem in the United States is the lack of critical thinking among a broad cross-section of citizens, and their willingness to be brain-washed with blatant pro- free market, anti-government rhetoric, much of which has been proven to be untrue.
The public wants smaller government and less regulation and less taxes, but more non-tradable jobs! Congress wants to give companies like Cisco a big tax reduction on repatriation of foreign income (expecting it to create jobs) while Cisco just announced a 6500 person layoff.
If the public desires to keep the current jobs and grow them, then it has to a) force its young people to work very hard (which kids in other countries are doing), b) make them learn difficult, value-adding skills, and c) educate them on the role of government. It is hard to see that this could happen when one looks at the current leadership in the government and in the private sector.

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Is There Hope for the Unemployed?

By UWE E. REINHARDT

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The Nontraded Sector
Although a few links in the value chains of the nontraded sector may have been produced abroad as well, the bulk of their links tend to be home-produced.

Thus it is not surprising that, according to the authors of the report, close to 98 percent of the 27.3 million new jobs in the American economy in the last two decades were created in the nontradable sectors, led by government and health care in first and second place.

These two sectors alone accounted for 40 percent of the total job growth over the last two decades. They were followed by retailing and construction, both of which grew on the back of heavy debt financing and a real-estate bubble.

Whence the Future Job Growth?
The American people look to the president and Congress to create jobs — or, more precisely, to create the economic conditions in which job growth occurs.

At the same time, the American people now look to the president and Congress to rein in government spending in general and health-care spending in particular, at a time when a sizable deleveraging by consumers and business has sharply put the brakes also on retailing and construction.

So how can these desiderata –- creating jobs and, at the same time, cutting back on government and health care spending –- add up to a rosy future jobs picture? Can any government actually deliver on these conflicting goals?

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A boom in corporate profits, a bust in jobs - Business - Stocks & economy - msnbc.com: "In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.
Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That's compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.
What's behind the disconnect between strong corporate profits and a weak labor market? Several factors:

• U.S. corporations are expanding overseas, not so much at home. McDonalds and Caterpillar said overseas sales growth outperformed the U.S. in the April-June quarter. U.S.-based multinational companies have been focused overseas for years: In the 2000s, they added 2.4 million jobs in foreign countries and cut 2.9 million jobs in the United States, according to the Commerce Department.
• Back in the U.S., companies are squeezing more productivity out of staffs thinned out by layoffs during Great Recession. They don't need to hire. And they don't need to be generous with pay raises; they know their employees have nowhere else to go.
• Companies remain reluctant to spend the $1.9 trillion in cash they've accumulated, especially in the United States. They're unconvinced that consumers are ready to spend again with the vigor they showed before the recession, and they are worried about uncertainty in U.S. government policies.

"Lack of clarity on a U.S. deficit-reduction plan, trade policy, regulation, much needed tax reform and the absence of a long-term plan to improve the country's deteriorating infrastructure do not create an environment that provides our customers with the confidence to invest," Caterpillar CEO Doug Oberhelman said.

Caterpillar said second-quarter earnings shot up 44 percent to $1.02 billion— though that still disappointed Wall Street. General Electric's second-quarter earnings were up 21 percent to $3.76 billion. And McDonald's quarterly earnings increased 15 percent to $1.4 billion..."