John Perkins: New Confessions and Revelations from the World of Economic Hit Men

Is Obama an economic hit man in disguise? Is he a multinational corporate lackey created to weaken the US and make America prey to economic hit (predator) countries like China, Russia, India? Read and find out. ----lee

For OpEdNews: John Perkins - Writer
March 15, 2007 at 14:28:28
Excerpted from the book, A GAME AS OLD AS EMPIRE release date, March 19, 2007

Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.

I should know; I was an EHM.

I wrote that opening paragraph to Confessions of an Economic Hit Man as a description of my own profession. Since the book’s first publication in early November 2004, I have heard TV, radio, and event hosts read those words many times as they introduced me to their audiences. The reality of EHMs shocked people in the United States and other countries. Many have told me that it convinced them to commit themselves to taking actions that will make this a better world.

The public interest aroused by Confessions was not a foregone conclusion. I spent a great deal of time working up the courage to try to publish it. Once I made the decision to do so, my attempts got off to a rocky start.

By late 2003, the manuscript had been circulated to many publishers—and I had almost given up on ever seeing the book in print. Despite praising it as “riveting,” “eloquently written,” “an important exposé,” and “a story that must be told,” publisher after publisher—twenty-five, in fact—rejected it. My literary agent and I concluded that it was just too anti-corporatocracy. (A word introduced to most readers in those pages, corporatocracy refers to the powerful group of people who run the world’s biggest corporations, the most powerful governments, and history’s first truly global empire.) The major publishing houses, we concluded, were too intimidated by, or perhaps too beholden to, the corporate elite.

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Suicide by Free Trade

APRIL 12, 2004 ISSUE 
COPYRIGHT © 2010 THE AMERICAN CONSERVATIVE

Suicide by Free Trade       PDF

BY PATRICK J. BUCHANAN

They are calling it “the jobs issue.” For 43 straight months, manufacturing jobs have disappeared. One in six has vanished since Bush took his oath. Now Americans are alarmed over reports of the outsourcing of white-collar jobs. It is an issue on which the presidential election could turn.

And what has been the response of the candidates? Kerry is denouncing executives who move plants overseas as “Benedict Arnold CEOs,” and Bush is echoing his father’s rants against “isolationism and protectionism.”

“Some politicians in Washington want to build a wall around the country and to isolate America from the rest of the world,” said Bush in Ohio. “The old policy of economic isolationism is a recipe for economic disaster. America has moved beyond that tired defeatist mindset ...”

Both candidates and both parties seem clueless about what is going on and what to do about it. For Bush Republicans and Kerry Democrats both backed NAFTA, GATT, the WTO, and MFN for China.

There is this difference, however. Republicans are principled free traders, while the Democratic Party, as a wag put it a while ago, is simply a gathering of warring tribes that have come together in the anticipation of common plunder. Democrats worship power. They will do what they must to get it. Thus they have begun to drop the free-trade mantra and play to the populism of the people. And they have tapped into the public mood. USA Today cites a University of Maryland poll that reveals that, “among Americans making more than $100,000 a year, support for actively promoting free trade collapsed from 57 percent to less than half that, 28 percent.” This is the first time this has happened.

If President Bush is going to spend eight months as a traveling salesman for free trade and a crusader against “protectionism,” as his father did, he is inviting the same result his father got.

An opportunist is to be preferred to an ideologue who will not entertain the idea he may be wrong and that the philosophy in which he was schooled and devoutly believes may be irrelevant to the new era. Like companies that continue to make products no one wants to buy anymore, parties that persist in policies that are visibly failing—like LBJ in Vietnam—end up being abandoned.

If the GOP persists in this free-trade fanaticism, it is courting suicide. For the policy is not working in the eyes of the people. And if Republicans insist the returns from global free trade—a disintegrating dollar and a merchandise trade deficit of $550 billion a year and rising—are good for America, folks are going to conclude that Republicans are too out of it to govern.

Given that the GOP today controls both Houses of Congress and the White House, this may sound alarmist. Yet GOP dominance today does not approach what it was in the 1920s under Harding, Coolidge, and Hoover, before the wipeout.

If the GOP does not offer ideas to halt the de-industrialization of America and the hemorrhaging of blue- and white-collar jobs, it is going to wind up on a landfill.

The problem with the columnists and think-tank scribblers who make up the intelligentsia of the GOP is not that they believe in free markets but that they worship them. They believe that if NAFTA, GATT, the WTO, and MFN for China mean production goes overseas, the market is telling us where production ought to be. And the voice of the market is to be obeyed, because that is the voice of their god.

When Reagan, a devout free trader, saw the U.S. auto industry sinking, he did not let ideology interfere with a rescue. He imposed quotas on imported Japanese cars and saved Detroit, though he was denounced for apostasy and heresy.

Free-trade Republicans are like militant Christian Scientists who prefer to let patients die rather than call in a doctor—which is fine, as long as you’re not the patient.

Americans believe that the interests of U.S. workers and their families come ahead of what may be good or best for the Global Economy. For years they have seen industrial jobs disappear. Now white-collar jobs are being outsourced. They want to know what Bush and the Republicans are going to do about it.

If the president’s answer is to echo his father and denounce opponents as “isolationists and protectionists,” he risks ending up like his father, a one-term president. Indeed, if the issue is jobs, Republicans ought to be thrown out. For not only are they not creating them, they have no idea how to stop exporting them. In their hearts, some of them think it a good thing. They are like the doctors of old who sincerely believed bleeding the patient was the way to get rid of the disease because that is what their textbooks and wise men told them.
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The Missing Case for Free Trade

Another prescient article about the outcome of free trade from Paul Craig Roberts.---rng
March 15, 2004

By Paul Craig Roberts

Belatedly, pundits are beginning to notice that economic growth without job growth is not politically viable. But they still haven’t a clue about what has become of job growth.

Pundits no longer confidently assert that the massive US trade deficit is good for the economy, because it puts money in foreign hands to buy US exports and create jobs for Americans.

Some pundits are even beginning to realize that “lower-priced foreign goods” are not all that cheap when the price is the loss of high-paying US jobs.

But pundits still believe that free trade is somehow going to bail America out and create new industries and high-value-added jobs to replace the ones lost to offshore production and outsourcing (and, I should add, to competition from Japanese industrial policy).

Sooner or later pundits will have to face the fact that the conditions upon which the case for free trade is based simply no longer exist.

Free trade is based on the principle of comparative advantage. For comparative advantage to operate, two conditions are required: (1) a country’s factors of production must seek comparative advantage within the country and not move to absolute advantage abroad, and (2) countries must have different relative costs of producing different goods.

When free trade theory originated two centuries ago, climate and natural resources were important components of GDP. Climate and natural resources could not migrate, and countries’ different climates and resource endowments meant that relative costs varied among countries.

In today’s modern economies, production is based primarily on acquired knowledge. Modern production functions operate the same regardless of their location. There is no necessary reason for the relative costs of producing manufactured goods to vary from one country to another. Only the absolute costs vary, with the advantage going to countries with large excess supplies of labor.

Economists and pundits mistake offshore production and outsourcing for trade, whereas in fact they are merely the substitution of cheap foreign labor for expensive first world labor.

It is nonsense for economists and pundits to claim that the US benefits from the loss of jobs, capital and technology when economic theory tells us that all three are needed for economic development.

Economists need to catch up with their discipline. The latest work in trade theory is Global Trade and Conflicting National Interests, by Ralph E. Gomory and William J. Baumol, published by MIT Press in 2000.

Gomory and Baumol show that conflict is inherent in international trade. In some cases free trade can be mutually beneficial. In other cases, one country gains at the expense of another. In some cases trade is worse than no trade. The authors demonstrate that in no case can all trading countries achieve their individually best outcomes.

Many modern industries are characterized by increasing returns, which means that countries with industrial policies can target industries, wrest them away from free trading countries, achieve a monopoly and retain the industry indefinitely.

Gomory and Baumol remind us that the issue is not whether companies or individual consumers benefit from free trade, but whether the country overall benefits. Specific corporations and consumers can benefit from offshore production and outsourcing, while the country as a whole loses occupations, industries, production capability and GDP.

A country that produces a large share of the world’s goods “has much to consume and much to trade. It becomes a high-wage, high-consumption country. This beneficial effect of being the producer of a large proportion of the world’s tradable industries can be very substantial.” The greater the share of world income a country can achieve, the higher the wages of its workers.

to read entire article click link below

http://www.vdare.com/roberts/missing_case.htm

Getting To Full Employment

Article below is presented for discussion, but is missing the point.  Our unemployment is caused by off-shoring, outsourcing and illegal immigration.  Eliminate these and the other problems swiftly straighten themselves out. -----rng
As a solution to the problem of unemployment, I don't like this one bit. However, it a first approximation to a solution. I humbly offer one of my ideas for consideration. Raid the factory and large plants of our country looking for undocumented workers. Take undocumented workers(if any)and one by one replace same with an unemployed American worker. Repeat until all(or mostly all) unemployed workers in America are employed. True this is not a perfect solution--but I'm trying. Stay tuned for more ideas from me and from others. ----lee


By: letsgetitdone Sunday August 15, 2010 12:19 pm

Given the problems the United States has been having and the unnecessary, misplaced, and wrong-headed, but very real angst of people about becoming insolvent if we continue to increase the size of the deficit, I find myself wondering why we have not turned to another time-tested and very effective New Deal solution to the problem of growing employment. That solution is the Fair Labor Standards Act.

Why not amend the Act so that the standard for a full-time work week is lowered to 35 Hours, while the minimum wage is raised to $10.00 per hour? While this would not by itself create full employment, because many of the already employed, will increase the frequency with which they work at second jobs, I think it’s likely to decrease the unemployment rate by 5% or so. Along with a Federal Job Guarantee program, which would cost much less if it were implemented in the context of a decreased normal work week and an increase in the minimum wage, the employment problem would be gone within 6 months, and the increase in aggregate demand would end the recession.

The benefits for working people of decreasing the hours in a full-time work week are fairly obvious, so I won’t say very much about them, but I do want to point out that doing this is one way of ensuring that some small share of the rapidly increasing productivity that has occurred since 1970 goes to working people, rather than just to the pocketbooks of wealthy Americans who have been enjoying almost all the fruits of that productivity increase over the past 40 years.

Such a measure would also be a cure for the reported $1.8 Trillion in cash that businesses are reluctant to invest, since higher wage costs would cut into the profits of large companies and force some of that cash off the sidelines. In addition, the projected rise of aggregate demand, will provide incentives for businesses to invest and get still more of that business cash off the sidelines.

Republicans, of course, will object to any such proposal saying that business, and particularly small business won’t be able to afford it in a recession. FDR faced similar arguments in 1937 and 1938. Of course, he won the day, and Americans have benefited from his courage ever since.

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http://seminal.firedoglake.com/diary/65369

Deep background on Farmshoring from Wikipedia

A new word you might see in this election and in 2012. --lee

Farmshoring

From Wikipedia, the free encyclopedia

Farmshoring is a term used to describe the shifting of employment from abroad into rural communities across the United States. It is conceptually similar to onshoring (also referred to as domestic outsourcing) which can be defined as "the act of transferring some of a company’s recurring interval activities and decision rights to outside providers, as set in a contract".[1]. Farmshoring refers to a specific variety of outsourcing where, as well as services being sourced outside of the contracting company, they are outsourced from urban to rural locations.

...Farmshoring's details

Recent studies show that the trend to offshore jobs internationally has increased significantly over the last decade. Many factors have contributed to this rising trend, none more significant than the rising cost of doing business in the United States. In 2002, when the United States was trying to recover from recession, a number of reports emerged, highlighting the potential for substantial cost savings for firms which could source (outsource) some of their in-house supplies, particularly information technology services, to low-cost locations. In these reports, experts noted that given the advances in information technology and the low cost of communications, a large number of information technology (IT) services could now be provided from low income countries to firms and consumers in high income countries. A study conducted by The McKinsey Global Institute, an independent economics think tank within McKinsey & Company, revealed that 30 percent of the U.S. economy’s jobs can be offshored. Among the most "at-risk" occupations are office and administrative support jobs, business and financial operations, paralegal and medical workers, graphic designers, technical writers and software engineers.

The objective behind farmshoring is to motivate U.S. firms to send those jobs that would otherwise be destined for places like China and India where labor costs are a fraction of what they are in the U.S., to the "American farm". The prime motivator behind offshoring is reduced labor costs and there is a significant gap between labor costs in developing countries vs. the US. For example, a U.S.-based software developer earning $60 an hour can be replaced by an Indian developer with the same skills for $6 an hour. Or, a factory worker making $21 an hour in the U.S. can be replaced by a Chinese factory worker making $.64 cents an hour. Though rural America cannot compete with such wages, experts believe that the “farm” presents a viable alternative, based on factors other than wages.

Domestic outsourcing can deliver cost savings of 50 percent on installing and managing software, compared to 15 to 30 percent cost savings from overseas offshoring. Additionally, offshoring takes longer to capture cost savings, given the higher start-up costs and other issues associated with offshore arrangements. Security is a major issue with offshoring. In this sense, farmshoring offers a greater sense of control and security with the outsourced firm within U.S. borders. Onshore outsourcing also bypasses the language barrier associated with many offshoring arrangements. Workers in call centers in India for example, have to learn to speak English the “American” way in order to enter into outsourcing contracts with U.S. firms.

With farmshoring, there are no cultural or language barriers, foreign laws and regulations or multiple time zones to deal with. Farmshoring also offers a low-cost, high quality living alternative to metro areas. Housing in metro suburbs is 70 percent more expensive than in rural areas, and land costs are even higher. In the same context, the traffic and congestion is significantly higher in metro areas (40 percent slower in metro areas), requiring metro residents to spend more time traveling to work as well as recreational activities. Farmshoring offers a lower-cost, lower-risk, and high-quality living alternative to outsourcing, enabling firms to obtain the cost benefits associated with outsourcing jobs to low-cost areas, without the risks associated with hiring foreign workers.

As more of the economy processes information digitally, more firms are able to locate practically anywhere they can find skilled labor and advanced telecommunications infrastructure. For example, the U.S. Postal Service uses telecommunications technology that allows its workers in Greensboro, North Carolina to “view” mail in Washington, D.C. Likewise, Northwest Airlines has shifted some of its booking operations to Minot, North Dakota.

... Example: Farmshoring in Lebanon, Virginia

In Lebanon, Virginia, two major IT firms,CGI-AMS and Northrop-Grumman, announced their plans to bring 700 jobs paying an average of $50,000 a year to the southwestern Virginia town.

Beyond incentives provided by the state, for CGI-AMS and Northrop-Grumman, the decision to open divisions in Lebanon, VA was driven by high labor costs in Fairfax and neighboring Reston in the northern part of the State. For other firms, proximity to economic or academic resources is a key motivator. Building on these rationales Virginia Economic Development Partnership (VEDP) Director Jeffrey Anderson is developing a “distributive services initiative” which aims to market the rural Virginia communities of Blacksburg, Danville, Harrisonburg and Lynchburg, to businesses in the northern part of the State looking to shift some of their back-office operations to lower-cost areas. All four communities house 4-year colleges; Virginia Tech in Blacksburg, Averett University in Danville, James Madison University in Harrisonburg, and Liberty University in Lynchburg. According to VEDP, the presence of a large academic institution is attractive because it generates employment, creates a positive academic environment and provides a steady stream of potential new hires. Blacksburg has already been successful in luring some companies out of the northern Virginia region, including UXB and EvolvePoint.

... International trends

offshoring alternative.

Other large companies such as Daimler-Chrysler and Dell Computers have experienced the global trend of industry consolidation. Firms are realizing the need to “bring back” some of the functions that were previously offshored internationally, either because they mistakenly offshored a function that is core to the business, or because of the risk and complexity of managing and measuring offshoring projects and relationships. In spite of this however, the balance still favors offshoring considerably with as many as 3 million IT jobs expected to go overseas in the next few years.

http://en.wikipedia.org/wiki/Farmshoring

Farmshoring brings tech jobs to U.S. boonies

Hey, maybe it will work. Or is it just a scam? Time and the employment stats will tell. So far it's not working out too well. You might see this word pop up again soon. -----lee

By Chris Jablonski | November 9, 2004, 10:55am PST

If you haven’t heard already, there is a new term that is adding more confusion and consternation in the offshore outsourcing debate. "Farmshoring," or outsourcing work to domestic rural locations, is gaining visibility among companies who want to keep US jobs from shipping overseas. While the cost of living and labor wages in rural areas can more effectively compete with the labor savings touted by offshore providers, it’s the avoidance of offshore troubles such as cross-cultural confusion, transnational legal woes, and time-zone differences that is at the heart of its appeal.� Nonetheless, don’t expect it to put a major dent in the offshoring trend. As META Group explains (client reg. req.); farmshoring is currently an intriguing yet improbable alternative to the scope, scale, and potential benefit offered by most offshore outsourcing providers.
to read original article go to

http://www.zdnet.com/blog/btl/farmshoring-brings-tech-jobs-to-us-boonies/735

Texas 2025: 'The Economy of a Third World Nation'

From Human Events

by Mac Johnson
02/06/2007

Just substitute President Obama for President Bush and nothing, absolutely nothing has changed.---rng

An economic problem largely created by an illegal population and policies that have been accumulated from past administrations stretching back as far as the Lyndon Johnson administration and senate legislation inspired by Teddy Kennedy. ---lee



Several weeks ago, Washington experienced one of its many manufactured minor brouhahas when Rep. Tom Tancredo referred to Miami, Florida, as a "Third World" city. Florida Gov. Jeb Bush and others responded sharply, apparently taking umbrage with Tancredo's demographic and economic assessment of the city that sometimes bills itself as "The Capital of Latin America" (which does sound much better than "The Capital of Third World America," I suppose).

Less notice was taken however, when Texas State Rep. Pete Gallego (Democrat, Alpine) observed last week that "by the year 2025, if we keep doing what we're doing now, Texas will have the economy of a Third Word country." No furor erupted. Although I'm sure that in 2025, if any non-Democrat observes that Gallego's prophecy has come true, an indignant furor will then erupt over his/her having the temerity to note the transition.

Gallego's comments were fair though, and occurred in response to the predictions of the State Demographer, Steve Murdoch, as cited in the San Antonio Express-News. Murdoch's forecasts indicate, in short, that within 25 years Texas will likely consist of an aging "Anglo"* population, educated but retired and dependent upon state social services and thus a net drain on the economy, juxtaposed with a majority Hispanic population, young and largely uneducated, and thus unable to contribute much to the economy.


By 2030, 16 to 20% of the state's population will be over 65 and most of these will be Anglo. Hispanics could represent as much as 53% of the population, with Anglos declining to only 30% --an overwhelming and sudden demographic change primarily driven by immigration, most of which has been illegal. In 1980, by contrast, Anglos were 66% of the population, while Hispanics were only 21%, with many Hispanics having roots in the state going back several generations and being as well assimilated as any other ethnic group.

The tsunami of illegal immigration that has remade Texas in a single generation has been disproportionately drawn from the poorest and least educated part of Central America's population. The results have been predictable: such a large and sudden influx has not been assimilated and is thus now recapitulating its poverty and lack of education in a second and third generation.

Read more...

China leads the way in protectionism

Malcolm Moore

Malcolm Moore is the Telegraph's Shanghai Correspondent. He arrived in China in July 2008 after three years in Italy as the Telegraph's Rome Correspondent. Before that, he was the paper's Economics Correspondent.

By Malcolm Moore World Last updated: March 2nd, 2009

5 Comments Comment on this article

After India led the way and boycotted Chinese-made toys last month, China is now terrified the rest of the world could follow suit.

So I wasn’t too surprised to see a hysterical outburst from Long Guoqiang, a fairly senior official at a State Council think tank.

He said China should prepare for a trade war. “We should draw up a list of retaliatory products [to boycott],” he said. “Personally I also think the retaliation does not need to be limited to goods. The retaliation could be more extensive,” he told a conference in Beijing.

Mr Long added that China could even consider a military response. “The best way to deal with trade protectionism is to have a nuclear threat,” he said. Needless to say, he wasn’t taken terribly seriously.

His shrillness, however, points to China’s weakness. The country ran record trade surpluses in December and January as it continued to push its goods out into the world market. As Michael Pettis, an economist at the Guanghua School of Management in Beijing, points out, this is simply not fair.

Major economies should be working together to rebalance the system, and if China is flooding the world with its goods while not buying any in return, why should politicians in the US or Europe, or in South East Asia, keep their trade barriers open and watch their own workers lose their jobs?

Even worse, China is working as hard as it can to increase its manufacturing. It has cut interest rates, increased credit lines to manufacturers, cut taxes and stalled discussions over minimum wages for workers.

Indeed, China may point the finger at the US and shout about protectionism, but China is one of the most protectionist major economies around. I talked with Joerg Wuttke, the head of the European Chamber of Commerce in China. He keeps telling the Chinese that the playing field is not level, but his appeals fall on deaf ears.

“There’s a lot of rhetoric about protectionism from the Chinese at the moment because they are very very afraid. But they have very little leverage when it comes to talking about trade. From our perspective they buy very little from Europe,” he said.

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ObamaCare: Layoffs and Job Losses

March 31, 2010

This is just a small compilation of stories regarding jobs and Obamacare. Read it and weep. -----lee

Job Losses and Layoffs from ObamaCare:

U.S. employers have warned that President Obama’s government takeover of health care would destroy American jobs and harm our economy. President Obama’s health care law is not yet a week old, but already we’re seeing the real-life impact that ObamaCare’s job-killing tax hikes and health care costs are having on America’s employers.

Medtronic
“Medtronic Inc. CEO Bill Hawkins also tore into the tax. ‘This will make us one of the highest-taxed regions in the world, and that’s going to have an impact on the appetite for people to invest in medical innovation,’ Hawkins told the Wall Street Journal, adding that Medtronic could wind up slashing its workforce by 1,000 to absorb the cost of the excise tax.” (Mass Device, 3/23/10)

Zoll Medical Group
“‘This bill is a jobs killer,’ said Ernie Whiton, chief financial officer of Chelmsford’s Zoll Medical Corp., which employs about 650 people in Massachusetts. Many of those employees work in Zoll’s local manufacturing facility making heart defibrillators. ‘We could be forced to (move) manufacturing overseas if we can’t pass along these costs to our customers,’ said Whiton.” (The Boston Herald, 3/25/10)

Theken
“Randy Theken, founder of a handful of Akron-based spinal implant companies that work under the Theken name, said he, too, expects the tax to slow research-and-development efforts and hurt medical device companies. ‘This could also be the first time in decades that we’ve seen medical device manufacturers having to lay off personnel,’ Mr. Theken said.” (Cran’s Cleveland Business, 3/29/10)

Sallie Mae
“The reforms passed Sunday night as part of the health-care reform package could prompt student lender Sallie Mae — which employs 700 people at a Muncie call center — to cut a quarter of its workforce or close its Muncie office outright. The student lender has estimated it could cut its 8,600-member workforce by as many as 2,500 and reduce its locations nationally from 25 to a half dozen.” (The Muncie Star Press, Sallie Mae Could Cut Workforce, Close Local Call Center, 3/23/10)

“Unless the U.S. Senate acts, the Sallie Mae facility in Lynn Haven likely will start ‘immediate’ layoffs due to health care legislation that keeps private loan providers from originating student loans, officials said Monday. ‘Quite frankly, I’m very saddened,’ said Renee Mang, Sallie Mae senior vice president in Lynn Haven.” (Panama News Herald, 3/22/10)

NOTE: Yesterday we launched the ObamaCare Flatlines highlighting how ObamaCare has forced job-killing taxes on America’s small businesses. Here is an update from last night on Prudential Financial:

Prudential Financial
“Insurer Prudential Financial Inc. said Monday that it will take a $100 million charge in the first quarter in relation to the recent health care overhaul legislation. Prudential joins a growing list of companies that have said they will take accounting charges because of the health care bills.” (The Associated Press, Prudential to Take $100M Health Care Charge in 1Q, 3/29/10)

to continue article

Middle class vanishing as new hires divide into high-paid professionals, low-paid everyone else: Analysis

Do I see class warfare in the making? It's possible, if trends continue. ---lee

Published: Sunday, September 05, 2010, 3:05 PM
Updated: Sunday, September 05, 2010, 3:11 PM
CHRISTOPHER S. RUGABER and MICHAEL LIEDTKE,
AP Business Writers

NEW YORK -- Whenever companies start hiring freely again, job-seekers with specialized skills and education will have plenty of good opportunities. Others will face a choice: Take a job with low pay -- or none at all.

Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into two categories of roughly equal numbers:

Share -- Professional fields with higher pay. Think lawyers, research scientists and software engineers.

-- Lower-skill and lower-paying jobs, like home health care aides and store clerks.

And those in between? Their outlook is bleaker. Economists foresee fewer moderately paid factory supervisors, postal workers and office administrators.

That's the sobering message American workers face as they celebrate Labor Day at a time of high unemployment, scant hiring and a widespread loss of job security. Not until 2014 or later is the nation expected to have regained all, or nearly all, the 8.4 million jobs lost to the recession. Millions of lost jobs in real estate, for example, aren't likely to be restored this decade, if ever.

On Friday, the government said the August unemployment rate ticked up to 9.6 percent. Not enough jobs were created to absorb the growing number of people seeking work. The unemployment rate has exceeded 9 percent for 16 months, the longest such stretch in nearly 30 years.

The crisis poses a threat to President Barack Obama and Democrats in Congress, whose hold on the House and Senate appears to be at increasing risk because of voter discontent.

Even when the job market picks up, many people will be left behind. The threat stems, in part, from the economy's continuing shift from one driven by manufacturing to one fueled by service industries.

Pay for future service-sector jobs will tend to vary from very high to very low. At the same time, the number of middle-income service-sector jobs will shrink, according to government projections. Any job that can be automated or outsourced overseas is likely to continue to decline.

The service sector's growth could also magnify the nation's income inequality, with more people either affluent or financially squeezed. The nation isn't educating enough people for the higher-skilled service-sector jobs of the future, economists warn.

Read more...

Is Chinese Mercantilism Good or Bad for Poor Nations?

This is the first time I have seen any one in recent memory use the word mercantilism and China in the same sentence. The truth is out.-----lee


Dani Rodrik
September 09, 2010

China’s trade balance is on course for another bumper surplus this year. Meanwhile, concern about the health of the US recovery continues to mount. Both developments suggest that China will be under renewed pressure to nudge its currency sharply upward. The conflict with the US may well come to a head during Congressional hearings on the renminbi to be held in September, where many voices will urge the Obama administration to threaten punitive measures if China does not act.

In all this discussion, the renminbi is viewed largely as a US-China issue, and the interests of poor countries get scarcely a hearing, even in multilateral fora. Yet a noticeable rise in the renminbi’s value may have significant implications for developing countries. Whether they stand to gain or lose from a renminbi revaluation, however, is hotly contested.

to read full article

How Obamacare Hits Industry and Threatens Jobs

Expect this job loss to trickle down(or up) to your neck of the woods. Obamacare is bad news for anyone, anywhere, at any level of our economy. ---lee

Byron York
Townhall.com

The people at Zoll Medical Corp. saw a ray of hope in January when Scott Brown was elected senator from Massachusetts. Located in Chelmsford, 30 miles outside of Boston, Zoll is the nation's leading manufacturer of heart defibrillators, which save the lives of thousands of heart-attack victims each year. Back in January, as the Senate race was raging, both House and Senate Democrats wanted to impose a crippling new tax on the makers of medical devices, Zoll included, to help pay for Obamacare.

The total tax on the industry would be about $2 billion a year, or $20 billion over the next decade. Companies watched nervously as lawmakers pushed ahead, first the House and then the Senate. But then Brown was elected on the promise to be the crucial Republican vote to stop healthcare reform. For Zoll, things were looking up.

Not anymore. Democrats regrouped, pushed the legislation through Congress, and now the new tax is law. And that means Zoll and other medical-device makers could be headed for hard times.

"We believe that the tax will cost us somewhere between $5 million and $10 million a year," says Richard Packer, Zoll's chairman and CEO. "Our profit in 2009 was $9.5 million."

That would be a devastating blow. Zoll employs about 1,800 people. Roughly 1,600 of them are in the United States, and about 650 of those are in Massachusetts. Once the new tax kicks in, that could all change. "We can't run this company at a break-even or a negative rate," says Packer, "so we will be forced to look at alternatives."

The company's first option is to pass the increase onto customers such as hospitals and ambulance companies. That might or might not work, given that they are coming under increasing pressure to cut their own costs.

The next option is to cut research and development -- a short-term, money-saving move that will surely cost Zoll down the road. And a third option, says Packer, is to "look at trying to shift jobs to lower-cost places around the world." That would be bad news for Massachusetts and the United States.

It's still not clear precisely how the new system will work. The new healthcare bill, along with the "fixes" passed along with it, would impose a 2.3 percent excise tax on medical devices, going into effect in 2013. For Zoll, that's a little better than an earlier version of the tax, which would have gone into effect immediately. Now, at least, they have some time to prepare.

But no matter how it plays out, the makers of the devices that save our lives are going to take a major hit.

"It's a real concern for some of these companies, in that they probably are operating on pretty thin margins," says Brian Johnson, publisher of MassDevice, an independent business journal devoted to the medical-device industry. Johnson adds that even those companies that can pay the tax face perhaps even more serious problems because of recent government actions, apart from healthcare reform, making it harder and more costly to win Food and Drug Administration approval for new products. "As a whole, in terms of stricter regulation and the added tax, that's a pretty big bag they're carrying right now," Johnson says.

And then, of course, there is the continuing economic downturn. All in all, it's not a good time to levy a new and burdensome tax on a highly innovative American industry. And yet that is exactly what Obamacare does.

When I called Richard Packer at Zoll on the morning after the bill was passed, I asked how he was doing. "A total state of depression," he answered, with the kind of short, dry laugh that says it's not really funny. A lot of Americans are feeling that way now.

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Financialization and Casualization of Labour - Peter Rossman (2009)

Normally, this is not my area or inclination but it emphasizes the concerns of labor. As leftist as their solutions are they provide a necessary insight into the effects of financialzation on workers i.e. outsourcing and job loss and ultimately on full employment. An excellent and readable article on financialization can be found on wikipedia. ----------lee

From globallabour.info

Financialization and Casualization of Labour – Building a Trade Union and Regulatory Response
ILO/GLU International Conference on Financialisation of Capital: Deterioration of Working Conditions - TISS, Mumbai, February 22-24, 2009
Peter Rossman, International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF)



Workers today confront a number of seeming paradoxes. A financial universe flush with unprecedented liquidity is afflicted with overnight insolvency. Unprecedented amounts of money are being pumped into the private banking sector, yet workers are being told they're losing their jobs because the banks won't lend and suppliers want cash up front. Private equity-owned companies face bankruptcy as they struggle under their mountains of debt, yet the buyout funds have just completed a season of record fund-raising and are sitting on a half trillion US dollars or more in uninvested capital, so-called "dry powder". Nestlé, the world's largest food company, is ahead of schedule with it's 25 billion Swiss franc share buypack program, while at the same time warning its workers to brace for yet more restructuring and layoffs. Agricultural workers, pushed to the edge of starvation by a decade of falling prices, last year were told that shortages were behind a doubling and tripling of their bill for basic foodstuffs. After a short respite in which prices fell but still remain unaffordably high, they are now being told that record harvests in 2008 mean new potential price increases as growers cut back on acreage.

I think that all of us here today would agree that what we call "financialization", at least as a descriptive term, is both real and meaningful. There has been a significant growth in the specific weight of finance, whether measured as a share of GDP or as a rising share of overall profits. The banks have increasingly turned away from directly financing corporate investment towards directly tapping into wage earners' revenue through mortgage, credit card and other forms of consumer debt. Financial bloat has been accompanied by sluggish output and employment growth, a stagnating or declining share of wages in the national income and widening inequality. Crises have become more frequent and more severe. The global financial system increasingly resembles a giant Ponzi scheme, based on continuous asset inflation and the need for continuous injections of new cash to finance the payouts. Behind this volatility stands the impatient, restless institutional investor, including employee pension funds.

We all know the figures, for example, on executive pay, or that the notional value of outstanding credit derivatives exceeds 9 times global GDP. I don't need to repeat them here. What I want to talk about is what this has meant for workers generally, and specifically for workers in the IUF sectors. One direct consequence for workers in manufacturing and services has been the demand for these sectors to deliver rates of return equal to those that were formerly obtained only in global financial markets. In 2006, Deutsche Bank chief Ackermann declared that investors should aim for a 20% return. In 2007, at the last pre-crisis shareholders' meeting, the keynote theme of his address was, literally, "25% is not enough". The big buyout funds in fact claimed to be delivering annual returns on the order of 30% and more. There are only two ways profits like this can be regularly generated: through high leverage, and by cranking up the rate of exploitation.

Loading up on debt has been one vehicle for generating super returns. Between fourth quarter 2004 and fourth quarter 2008, the companies in the S&P 500 paid out USD 900 billion in dividends and bought back 1.7 trillion of their own shares – 2.6 trillion dollars returned to shareholders on earnings of 2.4 trillion. And this leaves to one side the enormous amounts of leveraged buyout debt generated during the credit boom, which saw a trillion dollars spent on buying companies between summer 2006 and summer 2007 for the sole purpose of taking them private, loading them with more debt to finance dividends and then selling them on. High levels of debt are not simply a means of leveraging profits: they amplify volatility, and transfer risk from investors to workers.

The pressure for increasingly higher returns has meant, in the words of two scholars (who were writing in the 90's about the 1980's!), that firms in the
manufacturing and service sectors have essentially become “a bundle of assets to be deployed or redeployed depending on the short-run rates of returns that can be earned.”*

As a consequence, workers in virtually all sectors face the threat of rapidly changing ownership, permanent restructuring and targets centered on a financial logic that places little or no value in real production, productivity or jobs. Stock markets today directly reward companies which eliminate productive capacity and destroy jobs. Layoffs and closures feed a financial market that thrives on shifting wealth away from productive investment, which in the food sector has steadily declined as a percentage of corporate resources. At Kraft, for example, the world's second largest food corporation, capital expenditure in 2008 was barely 3% of operating revenue - about half the norm of 20 years ago. Even investment in R&D has declined, as a percentage of cash flow. R&D is increasingly outsourced, either to universities, or, in the case of Nestlé, through a proprietary hedge fund on the prowl for startups. If "downsize and distribute" was only a trend in the 1990's, when the phrase was coined, it became a steamroller, particularly in the years following the dot.com and stock market crashes of 2000-2002.

In the European Union, where food processing is the largest employer in the manufacturing sector, and which contributes the largest share of value added in the sector, over 15% of jobs were eliminated in the growth years 2000-2005 (the last for which I have figures, but the trend has intensified) – ahead of textiles, and only behind agriculture. These jobs were not lost to foreign imports: they were lost to the stock market.

Increased profits and sales were not achieved through productivity-enhancing technological change, which barely affected the production process as such. The companies simply squeezed more out of less. Mergers, acquisitions, and financially-mandated reductions in "headcount" meant that medium-sized facilities were closed and production centralized in fewer units transporting products over longer distances, deepening and widening the industry's already substantial carbon footprint.

Those companies now employ fewer and fewer workers to produce their branded products. Outsourcing and casualization have become key tools for enhancing exploitation in the quest for superprofits. Precarious work not only allows employers to achieve massive reductions in the wages bill. It has a chilling effect on the bargaining power of workers who remain directly employed. The organizing task for unions now goes beyond winning global recognition, organizing and bargaining rights from transnational employers. It is to unite the directly employed and the growing numbers of precarious workers producing within the same transnational company systems into a single bargaining power.

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Decline of American manufacturing

From isa.org

InTech

June 11, 2009

by Jim Pinto

Are we headed for a "post-industrial future" as Mr. Pinto suggests? It certainly looks that way if economic policies are not reversed. ----lee

The industrial core of America is becoming marginalized as the country moves toward what seems to be a “post industrial” future.

In his recent articles in Forbes and New Geography, Joel Kotkin writes the new administration seems to have contempt for the old economy: manufacturing, agriculture, energy.

Most of the $800 billion stimulus is being used to bolster banks. What is left is going to green projects, healthcare, and education. So, what is the future role of manufacturing in America?

Look at GM and Chrysler: Their workers are being asked to make huge sacrifices, while their executives are shunned and demeaned, compared with bankers who are being supported and even protected.

The policy ends up eroding America’s industrial base. The ballyhooed expansion of “green jobs” to make up for massive manufacturing layoffs is just a fantasy. Windmills and solar panels will not rescue industrial towns, which will only see more devastation. There are many places where the American dream is dying rapidly.

If this anti-manufacturing trend continues, more of America will become even more sharply divided between a growing class of low-wage workers and relatively few wealthy. This is the hollowing out of America; the demise of the middle-class.

Perhaps even worse, by stimulating everything but manufacturing, we risk accelerating the very imbalance between production and consumption that is one key reason for the nation’s economic woes.

Padding incomes by handing out money without increasing production may prove a great way to stimulate other countries’ economies—industrial exporters like Germany, Japan, and China.

American manufacturing adds significant core value to the country’s economy and well-being, and must be protected. I will be addressing this key point in a future issue of InTech e-News.

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The Death of American Manufacturing

From the February 2006 Trumpet Print Edition »

Globalization and outsourcing are hammering our icons of industry.BY ROBERT MORLEY

For over a half century, American manufacturing has dominated the globe. It turned the tide in World War ii and hastened the defeat of Nazi Germany; it subsequently helped rebuild Europe and Japan; it enabled the United States to outlast the Soviet empire in the Cold War. At the same time, it met all the material needs of the American people.

During this period, many American icons were born. Companies like General Motors, Ford, Boeing, Maytag and Levi Strauss became household names. American manufacturing became synonymous with quality and ingenuity.

On the back of this industrial output rose America’s middle class. High-paying manufacturing jobs, in turn, helped spur a robust and growing economy that depended little on foreign nations for manufactured goods and armaments.

However, manufacturing as a share of the economy has been plummeting. In 1965, manufacturing accounted for 53 percent of the economy. By 1988 it only accounted for 39 percent, and in 2004, it accounted for just 9 percent.

Considering the stupendous list of America’s manufacturing achievements and the vulnerabilities associated with foreign dependence when a nation lacks strong domestic manufacturing, it is alarming when economists are warning that the U.S. is facing the “gutting, hollowing out and closing down of American manufacturing forever” (Benson’s Economic & Market Trends, Feb. 27, 2004).

Job Losses

The loss of the manufacturing industry manifests itself most clearly in job losses. According to the Economist, “For the first time since the Industrial Revolution, fewer than 10 percent of American workers are now employed in manufacturing” (Oct. 1, 2005). But even this figure is probably double the actual percentage, because many workers in a typical manufacturing firm have service-type jobs. In comparison, during the 1970s, approximately 25 percent of American workers were employed in manufacturing. From 1990 to present, manufacturing jobs have decreased every single year; since 1996, they have plummeted by almost one fifth.

Most recently, these job losses and the hollowing out of American manufacturing have been evidenced in the auto industry.

On Nov. 21, 2005, General Motors Corporation (gm) announced plans to cut 30,000 jobs and close nine manufacturing plants across North America. According to its ceo, the decision represented an attempt to “get its costs in line with major global competitors” and “return North American operations to profitability as soon as possible” (Associated Press, Nov. 21, 2005). Following these cuts, gm will have laid off 40 percent of its white-collar staff since 2000.

In a reflection of the resultant loss of confidence in the company, last May gm’s debt (sold as bonds) was downgraded by s&p from investment grade to the highest level of junk status; in September, it was downgraded even further. Now it is five steps below investment grade. Analysts even recommend selling gm stock, with one Bank of America Securities analyst saying it was “inevitable” that gm would eventually seek bankruptcy protection (cnn/Money, Dec. 16, 2005).

gm’s layoffs exclude the cuts announced by former gm-owned auto parts maker Delphi, which filed for bankruptcy protection last October. In 1999, Delphi laid off 18,000 workers. Now it is reportedly seeking to cut two thirds of its 34,000 hourly workers and slash hourly wages from as much as $30 per hour to as little as $10.

Ford, another American icon, has been slashing jobs too. According to Forbes, Ford could cut up to 30,000 jobs and close 10 plants (Dec. 7, 2005).

Egan-Jones Ratings Co., an independent firm, is predicting that “[t]his is the beginning of the end of the U.S. auto industry as most people have come to know it” (TheStreet.com, May 5, 2005).

However, the auto industry is just one example of the overall decline in American industrial might over the past couple of decades. Other U.S. manufacturing giants are failing, too; in fact, the U.S. has lost 3 million manufacturing jobs just since 1998. In 2003, industrial giant Bethlehem Steel folded, causing thousands of employees and retirees to lose their pensions. Any Pittsburgh resident would be able to tell you how unprofitable the steel industry has been over the last 20 or so years. Between 1950 and 2000, the U.S. lost more than 491,000 jobs from the primary metals industry alone—most of those after 1980; from 2000 to 2003, an additional 149,000 of these jobs vaporized. In 2004, Levi Strauss closed the last of its more than 60 American factories. “It was like a death in the family,” said Emma Rice, of Morrilton, Arkansas, who worked for Levi Strauss for 32 years (Times,London, Jan. 10, 2004). Unfortunately, the former Levi-employed majority of Morrilton tell the same tale as those from thousands of towns across America that have also experienced the loss of manufacturing jobs.

But why is this happening?

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Republican 'Young Guns' critical of Bush legacy and party hierarchy

What does the article below have to do with full employment policy? Nothing and everything. The so-called "young guns" are going to be different, no corruption or scandals this time. And they talk about cutting social security and medicare. That supposedly means they are for reform. Social Security? But, there is a 3 trillion dollar IOU in the social security fund. That IOU is for the money the baby boomers paid over and above what they paid for their parents social security. If they aren't given that money that is criminal fraud punishable by imprisonment. There is no mention of ending illegal immigration, outsourcing or offshoring, the only thing that will restore our economy and our tax base and halt our glide into economic third world hell. Read the article, and give these congressmen a phone call to let them know you aren't fooled, and you want a full employment policy now!---rng

Former president George W Bush and the Republican party hierarchy have been denounced for betraying conservative principles by a new generation of congressmen bidding to convince voters that the Right can offer real change.

The president has scrambled to stave off defeat over the economy and will this week launch measures designed to boost small businesses.

He will ask Congress to increase and extend a tax credit for research and development, as a way of boosting job creation, an administration official said yesterday. He is also likely to propose to use tax cuts for the rich passed by Mr Bush which are about to expire for further tax breaks for business.

Many polls and pundits say the Republicans will gain the 39 seats needed to win back control of the House of Representatives but just fall short of winning back the Senate.

But doubts linger that the party can take advantage of the favourable winds as it struggles to persuade voters that it has changed significantly since it lost power in 2006.

A recent NBC poll found only 24 per cent of voters saw the party in a positive light.

The Young Guns book recognises "high profile ethics lapses" and "an inability to rein in spending or even slow the growth of government" led to a breakdown in trust in the party.

During the previous Republican rule, Tom DeLay, the former majority leader in the House, was prosecuted for money laundering and violating campaign finance laws, though he was never convicted. Several other members of Congress were embroiled in scandals involving favours for lobbyists.

"The fact is, we had our chance, and we blew it," wrote co-author Eric Cantor, the party's chief whip.

Critics have pointed out that Mr Cantor, 47, from Virginia, was a member of the party's leadership during the era he is now criticising.

The Young Guns programme run by Mr Cantor and his colleagues and co-authors Kevin McCarthy and Paul Ryan is designed to find new, reliable conservative candidates.

Leaked excerpts indicate that it poses a challenge to the party's most senior leaders.

John Boehner, the Republican leader in the House of Representatives, has distanced himself from a policy document produced by Mr Ryan called a "Road Map for America's Future" that recommended cuts in Social Security, the US equivalent of the state pension, and Medicare, a heavily subsidised health care scheme for the elderly.

With Democrats quick to warn what voters could lose from Mr Ryan's ideas, the Republican leadership has been keen to avoid anything that might surrender their advantage on the economy.

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NAFTA's Effect on United States Employment

This article from Wikipedia is a short helpful introduction to a controversial topic. There are also links you can investigate to widen your knowledge. I have highlighted the job loss aspects below. ----lee

From Wikipedia, the free encyclopedia (Redirected from NAFTA's Impact on US Employment)

The North American Free Trade Agreement's impact on United States employment has been the object of ongoing debate since the 1994 inception of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. NAFTA's proponents believe that more jobs are ultimately created in the USA. They point to factors such as growth in the export industry and lower unemployment rates as evidence of NAFTA’s benevolence to U.S. workers. Opponents see the agreements as costly to well-paying American jobs in the short run. Declines in employment opportunities within manufacturing industries and increases in trade deficits are some of the negative side effects of NAFTA pointed out by the critics...

Job loss

NAFTA's opponents attribute much of the displacement caused in the US labor market to the United States’ growing trade deficits with Mexico and Canada. According to the EPI, the widening of the deficit has caused the dislocation of domestic production to other countries with cheaper labor and supported the loss of 879,280 US jobs.[9] Critics see the argument of the proponents of NAFTA as being one-sided because they only take into consideration export-oriented job impact instead of looking at the trade balance in aggregate. They argue that increases in imports ultimately displaced the production of goods that would have been made domestically by workers within the United States.[9]

The export-oriented argument is also critiqued because of the discrepancy between domestically-produced exports and exports produced in foreign countries. For example, many US exports are simply being shipped to Mexican maquiladores where they are assembled, and then shipped back to the U.S. as final products.[9] These are not products destined for consumption by Mexicans, yet they made up 61% of exports in 2002. However, only domestically-produced exports are the ones that support U.S. labor. Therefore, the measure of net impact of trade should be calculated using only domestically-produced exports as an indicator of job creation.

78% of the net job losses under NAFTA, 686,700 jobs, were relatively-high paying manufacturing jobs.[9] Certain states with heavy emphasis on manufacturing industries like Michigan, Ohio, Pennsylvania, Indiana, and California were significantly affected by these job losses. For example, in Ohio, TAA and NAFTA-TAA identified 14,653 jobs directly lost due to NAFTA-related reasons like relocation of U.S. firms to Mexico.[10] Similarly, in Pennsylvania, Keystone Research Center attributed 150,000 job losses in the state to the rising U.S. trade deficit.[11] Since 1993, 38,325 of those job losses are directly related to trade with Mexico and Canada. Opponents point out the fact that although most of these jobs were reallocated to other sectors, the majority of workers were relocated to the service industry, where average wages are 4/5 to that of the manufacturing sector.[9]

Opponents also argue that the ability for firms to increase in capital mobility and flexibility has undermined the bargaining power of U.S. workers. Fifteen percent of employers in manufacturing, communication, and wholesale/distribution shut down or relocated plants due to union organizing drives since NAFTA’s implementation.[12] The weakening of rights for the American labor force is one example of the “race to the bottom” theory advocated by most opponents that will result from these trade policies. Ultimately, workers are faced with the dilemma of settling for less worker’s rights because the firm always will have the ability to relocate to another country, notably Mexico, where they can attain cheaper labor and will face less resistance from workers.[citation needed] However, it is now common that these incentives are enough to cost American laborers their jobs regardless of the status of the labor unions.


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What Is Full Employment?

This is an excerpt from Wikipedia. Please note the much maligned John Maynard Keynes position on full employment.

Full employment

From Wikipedia, the free encyclopedia

Diagram of macroeconomic circulation. L_S ≤ L_D is the full employment situation, one in which the rate of unemployment is zero or negative (corresponding to a labor shortfall).

In macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so. It is defined either as 0% unemployment, literally, no unemployment (the rate of unemployment is the fraction of the work force unable to find work), as by James Tobin,^[1][2] or as the level of employment rates when there is no cyclical unemployment.^[3] It is defined by the majority of mainstream economists as being an acceptable level of natural unemployment above 0%, the discrepancy from 0% being due to non-cyclical types of unemployment. Unemployment above 0% is advocated as necessary to control inflation, which has brought about the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); the majority of mainstream economists mean NAIRU when speaking of "full" employment.

employability

Economic concept

What most neoclassical economists mean by "full" employment is a rate somewhat less than 100% employment, considering slightly lower levels desirable, others, such as James Tobin, vehemently disagree, considering full employment as 0% unemployment:^[1]

“As a young professor I did a paper where I analyzed the optimal unemployment rate,” said Joseph Stiglitz, a professor atColumbia University in New York, who knew Tobin at Yale. “Tobin went livid over the idea. To him the optimal unemployment rate was zero.”

Rates of unemployment substantially above 0% have also been attacked by John Maynard Keynes:

"The Conservative belief that there is some law of nature which prevents men from being employed, that it is 'rash' to employ men, and that it is financially 'sound' to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years. The objections which are raised are mostly not the objections of experience or of practical men. They are based on highly abstract theories – venerable, academic inventions, half misunderstood by those who are applying them today, and based on assumptions which are contrary to the facts…Our main task, therefore, will be to confirm the reader’s instinct that what seems sensible is sensible, and what seems nonsense is nonsense."

– J.M. Keynes in a pamphlet to support Lloyd George in the 1929 election.

20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and the various economists' political biases.

Before Friedman and Phelps, Abba Lerner (Lerner 1951, Chapter 15) developed a version of the NAIRU. Unlike the current view, he saw a range of "full employment" unemployment rates. He distinguished between "high" full employment (the lowest sustainable unemployment under incomes policies) and "low" full employment (the lowest sustainable unemployment rate without these policies).

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