Renters financially stressed

December 29, 2015

http://www.cnbc.com/2015/12/09/housings-new-crisis-half-your-income-for-rent.html

I’m finally getting caught up on some things.  One of them is this above-linked article that appeared on CNBC three weeks ago.  It illustrates the fact that, in America, home ownership is declining and housing is becoming less affordable, even for renters.

In Five Short Blasts we saw how a rising population density, as it does with the per capita consumption of virtually everything, dramatically reduces the per capita consumption of dwelling space.  The average citizen of Japan, a nation ten times as densely populated as the U.S., lives in a dwelling less than one third the size of the average American’s.  So it’s only reasonable to expect that, as America grows more densely populated, the same thing will happen:  our homes will get smaller.

Indeed, as the per capita consumption of everything declines, it’s inescapable that employment will decline as well, and poverty will increase.  People who are poor can afford even less, exacerbating the decline in consumption.  Thus, worsening population density and rising poverty work synergistically to spawn a downward spiral.

This article is evidence of the downward spiral in the economic condition of Americans:

“The crisis in the number of renters paying excessive amounts of their income for housing continues, because the market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes. These affordability challenges also are increasingly afflicting moderate-income households,” said Chris Herbert, managing director of the center.  (Harvard Joint Center for Housing Studies)

… Homeownership is now at the lowest level in half a century, and some expect it could go significantly lower. Household formation is expected to continue its slow rise, but almost entirely on renter households, not owner households.

It’s important to note the relationship here between incomes and housing.  Yes, it’s only natural that poorer people will tend to be renters instead of home buyers and will occupy smaller dwellings.  But the trend toward smaller dwellings also reduces employment in the housing industry, just as lower per capita consumption reduces employment in every industry.  We consume less because we grow more crowded.  We grow poorer when we consume less.  And we then consume even less because we’re poorer.  It’s a process that feeds on itself.

There’s only one way to break this cycle – to stop the rise in population density and level off our population at a sustainable level.


Immigration, Muslims and Trump

December 11, 2015

Since economic damage caused by immigration-fueled population growth is one of the key themes of this blog, and since immigration has been a red-hot topic in the media for the past few weeks, it may seem strange to my readers that I’ve been conspicuously silent on the topic.  I’ve been debating whether to wade into this subject, since my focus has been the sheer volume of immigration and not how it relates to any particular group of people.  But Trump’s proposal to ban Muslim immigrants has raised the issue to such a fever pitch that I feel compelled to weigh in.

Trump began the debate on immigration with his position on illegal immigration.  He has a way of alienating many people with inelegant rhetoric, calling Mexican illegals murderers and rapists, but his concern with illegal immigration is a valid one that taps into a deep-seated disgust among the American people with politicians who, for decades, have turned a blind eye to the problem or, as in the case of our current president, actually encourages it.

Then came the Syrian refugee crisis, and many openly worried about the possibility of Islamic extremists hiding among them.  As if on cue came the Paris attacks and, sure enough, among the perpetrators was one who had recently entered Europe as a “refugee.”  Don’t worry, our politicians and bureaucrats assured us, we’re doing everything possible to make sure that such people are screened out of our immigrant pool.  Here it should be noted that many Republican governors, and even some Democrats, vowed that no Syrian refugees would be allowed to settle in their states – a position that seems little different that the one taken by Trump.

Again, almost as if on cue, we get the terrorist attack in San Bernardino.  In spite of the Obama administration’s reluctance to label it a terrorist attack by Islamic extremists, it was quickly obvious to all that that is exactly what it was.  In spite of the government’s assurances that ISIS sympathizers and other jihadists are monitored by the FBI, we now know that the perpetrators had been planning such events for years right under the FBI’s nose and nobody noticed.  So Trump, in his usual fashion of addressing a valid issue in a way that offends, called for a complete shutdown of all immigration by Muslims.

While all politicians and world leaders have been quick to condemn his remarks, polls have shown a lot of agreement among the American people.  Those who agree with Trump can, at the very least, be forgiven.  Americans value tolerance and freedom.  It’s written into our constitution.  But there’s only so much that people can take.

It all started slowly enough, beginning with the American hostage crisis in Iran in 1979.  In 1993 came the World Trade Center bombing which failed to bring down the building, but did kill six people.  In 2001, the “911” attack did bring the buildings down and killed over 3,000 people.  In 2006, Mohammed Reza Tahiri-azar plowed his SUV into a group of pedestrians at UNC-Chapel Hill to avenge the murders of Muslims around the world.  In 2009 there was the massacre at Fort Hood.  In 2013 there was the Boston marathon bombing.  In 2014 there was the New York City hatchet attack on police officers.  Later in 2015, four marines were killed at a recruiting center in Chattanooga.  A sailor was later killed by the same attacker at a naval reserve center.  Finally, there is the massacre in San Bernardino that prompted Trump’s remarks.  The frequency of these Islamic extremist terrorist attacks is increasing exponentially.  In addition to these attacks in the U.S., Americans are subjected daily to a litany of attacks throughout the world including ISIS beheadings and a Jordanian pilot who was burned alive.

To be fair, not all terrorist attacks are the works of Islamic extremists.  There have been attacks by the KKK, left wing extremists, right wing extremists, white supremacists, anti-Semites, black radicals, Christian radicals and eco-terrorists.  However, among the 59 terrorist attacks chronicled by Wikipedia in the U.S. since 1990, nineteen were perpetrated by Muslims.  Of the 3,351 people killed in terrorist attacks since 1990, 3,158 of them died in attacks perpetrated by Muslims.  To put this into perspective, in a nation where Muslims represent about 1% of the population, they have accounted for 32% of the terrorist attacks since 1990 and 94% of the deaths in those attacks.  In a society as diverse as that of the U.S., there are going to be “nut jobs” of every stripe.  But the above statistics seem to speak to a greater propensity among the followers of Islam toward such violence.

In the wake of such attacks, we are told that these people do not represent Islam, but some sort of perversion of Islam.  On this past Sunday on NBC’s “Meet the Press,” Chuck Todd dared to ask the question, “Is the Islamic extremism espoused by ISIS a warped distortion of Islam? Or does it tap into a strain of Islamic thought?”  One of the panelists – Asra Nomani, author of Standing Alone:  An American Woman’s Struggle for the Soul of Islam, had the following things to say on the subject:

… we are opposing a very real interpretation of Islam that espouses violence, social injustice, and political Islam.

… The problem is sitting in the birthplace of Islam, in Mecca, Saudi Arabia, where this interpretation of Islam has gone out into the world over the last four decades, creating militancy groups from Indonesia, to now, San Bernardino, California …

… There are hundreds and hundreds of followers of Islamic State around Europe and the U.S. The Saudis are showing this. And all you have to do is look at the conversation inside of our mosques and inside of our communities. And you will hear it. And I hear it. And I have to say that I saw it in 2002, went to Islamabad, Pakistan, and met women who were supporting this ideology. I call them the Taliban Ladies Auxiliary back then. This young woman in California would’ve been a star member of it.

That the Koran speaks of infidels and seems to justify waging holy war (jihad) against them is indisputable fact.  I think the question is how literally this is interpreted and how seriously it is taken by Muslims.  This lady, who clearly knows what she’s talking about, believes that, at least in the Middle East, it is not just a “strain of Islamic thought” but a rather prominent belief system.

That’s probably not the case among American Muslims.  It seems logical that people who have such a belief system would not willingly migrate to such a land of infidels as the U.S. – what some in the Middle East refer to as “The Great Satan.”  But it’s also logical to believe that a small number would, perhaps rationalizing it as a way of positioning themselves for jihad.

So what’s to be done to protect ourselves from more Islamic extremist attacks in the future?  As justification of the invasions of Iraq and Afghanistan to take on extremists, we were told that “we must fight them over there so that we don’t have to fight them here at home.”  It always begged the obvious question that no one ever dared to ask.  “If they are over there, why would we ever have to fight them here unless you let them in?”  It never made any sense.

Today, as we’ve done for decades, the U.S. admits roughly a million legal immigrants each year.  (Another million enter illegally.) In recent years, that pool of legal immigrants has included probably 100-200,000 Muslims from Iraq, Afghanistan and elsewhere.  Our leaders assure us that all of these immigrants are thoroughly vetted.  Really?  Do you believe that the government is really able to do that? It certainly doesn’t seem so, when the FBI admits that it’s currently tracking thousands of ISIS sympathizers in the U.S. and has made over 70 arrests this past year. It’s impossible to accurately screen that volume of immigrants and to monitor that many extremists. What we’ve learned about the San Bernardino attackers makes it clear that the authorities missed a lot of obvious red flags. Can there be any doubt that they’re missing others? How long before they attack?

There are three major factors involved in mass shootings. One is the mental health of assailants as we’ve seen in the cases of the Aurora, CO theater massacre and the slaughter of kids in Newtown. Second is the issue of gun control. There’s more that needs to be done to keep guns out of the hands of the mentally deranged and known extremists. But, in the cases of terrorist attacks perpetrated by Muslim immigrants (or, in some cases, by the succeeding generation that feels alienated), there has been an obvious failure of immigration policy. Finally someone, however clumsily, has identified what needs to be done – a drastic reduction in Muslim immigration.

“We’re a nation of immigrants,” we’re told. Well, first of all, I suspect that native Americans bristle at that statement. In fact, we were, at first, a nation of invaders and conquerors. Then came the immigrants. And why not? We were a vast land that was virtually uninhabited. The plaque at the base of Lady Liberty proclaims, “Give me your tired, your poor, your huddled masses yearning to breathe free …” So many have come that we now have our own huddled masses, tired and poor, stacked like cord wood in the inner cities. We’ve reached the point where overcrowding is eroding our ability to gainfully employ everyone. So, yes, we are a nation of immigrants. But it’s impossible to keep up the pace. This isn’t the early 1900s any more.

“That’s not who we are,” we’re told in response to the idea of excluding muslims from further immigration. “It’s unconstitutional.” Actually, it’s not unconstitutional. The supreme court has consistently maintained that the rights and freedoms promised in our constitution apply to U.S. citizens and do not extend to foreigners. We have a long-standing practice of discriminating when it comes to deciding who should be granted the privilege of citizenship. Besides, although we believe in freedom of religion, what are we to do when a group of people – that “strain of Islam” that seems common in the Middle East – uses our values and sensibilities as a weapon against us? How are we to deal with a religion that justifies – even promotes – murdering “infidels?”

Our leaders would have us believe that we really have only one option – to fight and defeat them “over there.” That strategy has been a proven failure in Iraq and Afghanistan. When we feel we have accomplished our mission, creating conditions for a democratic election, we draw down. As soon as we do, extremists move back in to fill the vacuum. And all too often, the democratic process that we fought so hard and paid so dearly to establish is simply used to pick the next theocratic dictator. In the end, the situation is worse.  It’s impossible to end the sectarian violence in that part of the world.

“We can’t give in to terror,” we’re told. “That’s exactly what they want us to do!” Really? Is that all these Islamic extremists really want? Fear? Terror? That doesn’t seem like a very lofty goal for martyrdom. What they really want is to rid the world of infidels, or at least their part of it.

Fine, I say, let’s give them what they want. (Remember the old saying, “Be careful what you wish for?”) They want their own culture and society, free of the influences of western civilization.  So let’s leave them alone. We don’t need their oil any more and they don’t need to be offended by the products of western society – and that includes food and medicine. Perhaps it’s time to halt all trade with the Islamic world, and halt all trade with any other nation who doesn’t do the same. We have fallen into a trap of wielding only our military might to address problem areas in the world. We grossly underestimate the power that cutting off access to our market would have.

A little harsh, you might say. Maybe. So we have another tool at our disposal – immigration policy.  The choice is to either do something about our immigration policy to assure that Islamic extremists are excluded from the immigrant pool, or to simply accept that terrorist attacks will continue and write off dead Americans as collateral damage – a price we’re willing to pay.  No one would choose the latter, though our leaders seem to be doing exactly that.

Trump has proposed a total ban on Muslim immigration as the way to make ourselves safe. But there is another way to do it without discriminating against Muslims, and that is to drastically reduce all immigration. In Five Short Blasts I proposed reducing immigration to the point where it is no longer a factor in population growth. That would be a level of about 50,000 immigrants per year vs. over a million per year today. If Muslims were represented in that group in proportion to their total population in the world (in other words, no discrimination whatsoever), then the number of muslim immigrants would decline to about 10,000. That would be about a 95% cut in Muslim immigration without resorting to any discrimination, and the reduction in total immigration would be a huge boost to our long-term economic outlook.  It would reduce the task of scrutinizing immigrants to a manageable level.

We Americans have reached the limits of our tolerance. We can’t take this any more. It’s time for action and time for new policies that will do the job. If you don’t have the stomach for Trump’s approach, that’s fine. I’ve offered an alternative here that would do the job just as well. Either way, something has to be done about immigration.


American Manufacturing in Crisis

December 8, 2015

On the surface, Friday’s release of the trade deficit figure for the month of October looks like the “same ol’ same ol’.”  The trade deficit came in at $43.9 billion  – about the same level it’s hovered at for years.  You might conclude that our trade situation is stable.  You’d be wrong.  Thanks to falling oil prices and growth in domestic oil production, a steady decline in our deficit in oil has masked an alarming worsening of our balance of trade in manufactured goods.

Look at this chart:  Manf’d Goods Balance of Trade.  In the past five years, while our overall trade deficit has held steady, the trade deficit in manufactured goods has very nearly doubled.  And, as you can see, beginning in 2013 the decline has accelerated.  In the last year, manufactured exports have declined by 8%.  Imports have risen only 1%.

Remember President Obama’s pledge in January, 2010 to double exports within five years?  Take a look at this chart to see just how abysmal his failure to keep that promise has been:  Manf’d exports vs. goal.  Manufactured exports in October were exactly the same as they were in July of 2011.  That’s 4-1/4 years of absolutely zero growth in exports.

Other measures of U.S. manufacturing have shown that sector of the economy to be declining at a double-digit pace.  U.S. manufacturing isn’t just in a recession.  It’s in a full-blown depression.  Only auto sales are keeping it alive at all, and there’s a lot of concern that that’s been propped up with ridiculous, sub-prime lending terms – the kinds of loans that produced a housing market collapse in 2008 that nearly took down the whole economy.  But auto loans never got the same scrutiny.

Last week, GM announced that it will soon begin importing some Buick SUV’s from China.  It’ll be the first imports of Chinese autos and will likely open a flood gate that could devastate American auto manufacturing, an event that would likely lead to total collapse of the manufacturing sector of the economy.

All Americans should be alarmed by what’s happening here – by the damage being done by idiotic trade policy that fails to recognize the harm being done to our economy by overpopulated nations who come to the trading table with nothing to offer but a bloated and hungry labor force, like a plague of locusts descending on a field of crops.


November Employment Report Looks Strong – in the “New Normal” Economy

December 4, 2015

All the ducks lined up in a row in this morning’s November employment report, making for what appears to be a strong labor market.  The economy added 211,000 jobs.  The employment level rose by 244,000 and the labor force grew by 273,000.  (Funny how the labor force grows only during months with good employment numbers and shrinks during the lean months, keeping the unemployment rate stable.)  To hear economists tell it, the economy is doing great.  Even the Federal Reserve has begun to sip the Kool-Aid, licking its chops at the prospect of jacking up interest rates next month.

Yup, things look pretty rosy, as long as you don’t back up and look at all of this from a longer-term perspective.  For example, consider per capita employment.  It rose again and now hovers at a post-recession high.  Just don’t compare it to the pre-recession high.  Look at this chart: Per Capita Employment.  Our “new normal” high is 2%, or about six million workers, lower than it was before the recession.  This is corroborated by a chart of unemployed Americans:  Unemployed Americans.  This figure is up by 7.1 million workers.  If you’re one of them, you don’t need me to tell you that you’ve been written off.

I’ll admit to being surprised that the economy has continued to rebound as well as it has, though that’s not saying much.  It’s basically riding three sectors – health care, housing and retail.  Housing has been strong thanks in large part to all-cash speculators, since mortgage applications have been rather weak.  This won’t last.  And health care has been strong thanks to the Affordable Care Act, unleashing millions of new and long-neglected patients onto the market.  And the retail sector is, I suspect, a case of sales being pulled forward by sub-prime auto lending, low oil prices and pre-holiday sales.  It’s just a matter of time before all of this unwinds, as trade deficits that exceed federal deficit spending continue to drain money from the economy and as population growth continues to crowd out per capita consumption.

Nevertheless, the Federal Reserve sees this as a good time to shoot a hole in the boat.  I think it’ll be sorry.