Sunday, April 24, 2011

Silicon Valley CEO's, Barack Obama, Jerry Brown, and DRAM

The problem with volatile dynamic random access memory DRAM is that every time the power goes out, the information is lost. Apparently some Californian's store their history on DRAM, as every time the power goes out of our economy they lose their memories of everything previous.

The San Francisco Chronicle reported Friday:
More CEOs are seeing improved business conditions in Silicon Valley....

In addition to declaring 2010 a turnaround year for the region, the report from the Silicon Valley Leadership Group found optimism going forward: Most CEOs expect their companies to boost hiring in 2011 as well....

"So 2010 was a comeback year for Silicon Valley," said Carl Guardino, president and CEO of San Jose's SVLG, a nonpartisan public-policy group. "We've bounced back from the doldrums of 2008 and 2009."
KGO TV in it's report noted:
...Two-thirds of the companies indicated they added jobs in 2010 and 55 percent of them say they will hire even more people to work in the Valley in 2011. The majority of them hired from one to 100 employees last year.

One single company, Google, is expected to lead the way with its announced plans to add about 6,000 jobs this year. However, to put this in perspective, there are two million unemployed people in California....
At least David Louie at KGO tried to offer some perspective.

On Saturday, the Chronicle reported that Governor Moonbeam visited the group:
Brown was met by a standing ovation from the crowd of CEOs in the Silicon Valley group, which was the first major business organization in California to back his budget plan.

Carl Guardino, who heads the organization, repeated his group's support of Brown's efforts and said business leaders welcome his attempts to address pension and regulatory reforms.

Brown said he has heard some valuable ideas from the group. In a panel discussion with Facebook Chief Operating Officer Sheryl Sandberg, Brown was asked about the group's recommendation that he appoint a "job creation" point person in his administration to help tackle the state's 12 percent unemployment rate.

"It's a good idea; it's in very active consideration," Brown said, adding that his administration is recruiting for the post.

The fact is that the CEO's and their organization do spin well. Governor Moonbeam and President Avatar visit these folks regularly. They extol the virtues the preeminent R&D center of late 20th and early 21st Century technology, biotechnology, and genetics.

And indeed, the San Francisco/San Jose region is such a center. It can support 200,000 well paid permanent R&D jobs and another 400,000 direct support personnel. Add to that everyone who sells stuff to or provides services for these people -medical personnel, government service employees, and restaurant wait-staff - and you could have a thriving community of 2.4 million with 1.2 million permanent workers.

The problem is we're talking about a population of 6.5 million with a workforce of 3.1 million. As noted, the R&D center creates and/or stimulates 1.2 million jobs. Another 1.6 million jobs have been created by other unrelated or marginally related activity, leaving the region still short about 300,000 permanent jobs.

The problem is that the R&D center will gear up again for the phone/tablet/app development and for cloud computing development, directly employ another 100,000 tech types over five years stimulating an additional 200,000 jobs, then dump the 100,000 and more because the profits have been siphoned off. No benefit accrues to the venture capital community nor the Wall Street investment community by creating long-term manufacturing jobs in the region. This creates wild boom and bust cycles that are of no benefit to the State of California budget so long as it remains heavily dependent on income and sales type tax revenues.

Apparently Moonbeam and the tech CEO's are going to create one more job - the post of "Job Czar" in the Governor's Office. Unfortunately, the best thing the Job Czar could tell these folks is to quit hiring now in order to avoid a continuation of this:

I understand that will never happen. Governor Moonbeam and President Avatar have to cater to get funds for elections.

But essentially that venture capital and investment community are leeching off the workforce that absorbs the impact of the boom-bust cycle.

And it keeps the State from creating a stable government and school system.

There is a reason the number of employed persons in the Bay Area is the same as it was in 1990.

The problem with volatile dynamic random access memory DRAM is that every time the power goes out, the information is lost. Apparently some Californian's store their history on DRAM, as every time the power goes out of our economy they lose their memories of everything previous. And the power goes out in the Bay Area/Silicon Valley economy about every 8 to 10 years followed by a period of rediscovery of how really smart these folks are as they see profits grow and what appear to be their businesses creating new jobs.

Only the profits going to investors are real. Half a million workers will be in turmoil because the new jobs aren't real. There will never be more people employed than the 3.2 million at the end of 2000 by remaining dependent upon folks like the members of the Silicon Valley Leadership Group and the politicians who think like them.

Couldn't California politicians at least double the unemployment insurance premium this time around knowing that these leeches are going to put half a million workers out on the street as soon as those workers generate some more wildly high profits for them?

Wednesday, April 13, 2011

Three Californias 2011 - It's Time

In February 2005, over six years ago, an article appeared in the San Francisco Chronicle which included this observation:
I'm an optimist by nature and a Californian by upbringing. I truly believe there is something distinctly alluring about the state in and of itself -- not just the geography but the California of the mind, the ideas and dreams embodied in the notion of the place. There's a cultural climate that says here, new things can happen. Everyone's own private heaven awaits, whether it's the green arcadia of Humboldt County or the well-buffed bliss of San Diego.

But focus hard on the reality of 2005, and what we see is a golden state of dysfunction.

Bad enough that schools are in decline, and that budget deficits stretch as far as the eye can see. The underlying problem is the detachment between decision-makers and the results of their decisions. It is a state so large, hobbled by so many initiatives and expectations that not even a life-and-death issue jars the status quo.
At the time, I saved that article because its writer, 2002 and 2003 Pulitzer Prize nominee John King, so clearly articulated the obvious I wanted to use it on the front page of the web site Three Californias.

That web site was set up in 2005 to provide a single place on line for people to find the long history of proposals to divide California, controversies that began when California was proposed for Statehood.

But more importantly, it is a web site that outlines the reasons why California no longer works as a single state and the logical for dividing the State into three new states.

Here we are in 2011. The State government is in an agonizingly deep financial crisis. Governor Jerry Brown, elected in November 2010, is running up and down the state trying to convince people to push for a tax increase that he cannot get through the Legislature. Everyone agrees that California is "ungovernable."

There is a story from nearly a quarter of a century ago, which may be apocryphal, about when that term was applied to the State:
Then-Sen. Pete Wilson was agonizing over whether to run for governor. Old pal [Stu] Spencer — a political advisor to presidents and governors, most notably Ronald Reagan — invited Wilson to his isolated Oregon ranch for some frank talk among the pines and manzanita, in front of a crackling fire.

“You’ve got the best job in the world right now — senator from California,” Spencer told Wilson, as the sage recalls it. “I don’t know why’n hell you’d run for governor. California is ungovernable.”
In a 2007 piece, columnist George Skelton of the L.A. Times wrote:
Last week, I called Spencer — now 80 and semiretired — at his Palm Springs home and asked whether he still believes the state is ungovernable....

“The public is more polarized,” he said, “because we’re more diverse. We’ve got a bigger mass of bodies and we’re more diverse economically. People are divided about what they want....”

This leads to political “rigidness,” he added. “There’s not much unanimity or desire to compromise to reach a goal.

...People get despondent because they believe something should be done and they can’t get it done.”
If you think dividing the state is a crackpot idea with no foundation, keep in mind proposals to divide California into more than one state date back to the time before California was admitted to the Union in 1850. In the first 150 years of statehood, there have been 27 serious proposals to split the state.

And consider the underlying reason Brown is traveling around the state compared to this discussion of the push to split the state in the 1849 Constitutional Convention, before the State became a State:
…The representation from the southern districts in the constitutional convention was about one-fourth the number from the whole territory. Seven members of the convention were native-born Californians. The greater number of the other members had been in California but a short time.

It immediately became evident that the people of southern California did not desire to have their fortunes linked in civil government with the territory further north.

…William M. Gwin, in his Memoirs, says of the attitude of the convention: “When they met to organize, the members showed a strange distrust of the motives of each other from various sections. The old settled portions of California sent members to the convention to vote against the formation of a state government. They were afraid of the newcomers, who formed a vast majority of the voting population.”

Mr. Carrillo, a native Californian from the Santa Barbara district, …proposed that the country should be divided by running a line west from San Luis Obispo, so that all north of that line might have a State Government, and all south thereof a Territorial Government.
In 1859, the Legislature put matter to the voters in Southern California and a whopping 75% said create a separate state. But the Civil War distracted everyone. In the first 160 years of statehood, there have been 27 serious proposals to split the state.

If the area that became the state was thought to be too diverse and too large to be a state by Californians in 1849 and 1859, and about every 6 years since then, maybe it is too diverse and too large to be governed as a single state.

Just maybe Jerry Brown should take a hard look while he's traveling around. Maybe "it is a state so large, hobbled by so many initiatives and expectations that not even a life-and-death issue jars the status quo," as King observed.

As Brown struggles to find support for his budget plan with particular emphasis on saving our educational system, California Watch has found that:
For nearly eight decades, California's landmark Field Act has governed the design and construction of public schools. But California Watch found a regulatory breakdown that raises questions about the safety of children in buildings throughout the state.
What they found is that many schools have never been certified under the Field Act, the seismic building standards law for public schools enacted after the 1933 Long Beach earthquake.

The 1972 Alquist-Priolo Earthquake Fault Zoning Act, passed one year after the Sylmar quake in the San Fernando Valley killed more than 60 people and caused more than $500 million in damage, requires the California Geological Survey to map the earthquake hazard zones in the state.

As soon as the first maps were released in 1974, development and real estate interests began an incessant attack. Keep in mind that Brown was sworn in as Governor for his first term in 1975. According to the San Francisco Chronicle
"Realtors absolutely hated it," said Earl W. Hart, manager of the Alquist-Priolo program from its inception until the mid-1990s.

In one three-week period in October 1974, Hart reported receiving 52 complaints from real estate agents, developers, property owners and others. During the commotion, the state geologist at the time, James E. Slosson, refused to "water down" the hazard zone maps, notes from the State Mining & Geology Board show.

But in late 1975, Slosson resigned and was replaced by Thomas E. Gay Jr., who began re-examining the fault zone maps. By February 1976, the Fault Evaluation Program was born.

Hart's team no longer included faults without significant ground movement in the past 11,000 years. Previously, the state had used the scientific standard of 2 million years - criteria still used by other states - to draw the zones.

...As a result of the changes, many fault zones shrank or disappeared from the Alquist-Priolo maps.

In the San Francisco Bay Area, 13 maps had fault zones that were removed, according to an internal state geologist report. Out of 708 maps released over the past three decades, the state geologist's office has redrawn 161.
The Chronicle article also notes:
...The Alquist-Priolo law requires school districts to hire geologists to make a detailed assessment of nearby earthquake faults before renovating or building in these zones. Builders, teachers, children and parents are left in the dark without those assessments.

Still, several school districts in these hazard zones have started and completed building projects in recent years without investigating fault-line hazards, records and interviews show.
The question for any reasoning Californian is why do we want to continue government in this fashion.

Is it really important to give Brown his five year temporary tax increase extension to solve a fiscal problem created during his last stint as Governor to put school children in school buildings that are unsafe because of his management during his last stint as Governor? Are we really this stupid?

Well, yes we are. As John King said six years ago:
The underlying problem is the detachment between decision-makers and the results of their decisions. It is a state so large, hobbled by so many initiatives and expectations that not even a life-and-death issue jars the status quo.
It's 2011, it's time to seriously consider dividing the state into Three Californias if for no other reason it will give us all a fresh start on state and local government.

Thursday, April 7, 2011

Texas, California, and economic conventional wisdom

We've learned this week that a delegation of California legislators and Lt. Governor Gavin Newsom are going to Texas. GOP Assemblyman Dan Logue, who is leading the delegation said in a news conference:
We want to sit down with these businesses that could not stay in our state and find out why they left, what caused them to pick up their family, their roots, and move to another state in order to compete, in order to grow their businesses.
What? We've never heard of phones, teleconferencing, etc.? Oh well, at least they are promising not to spend taxpayer money. Campaign funds, maybe.

There is a lot of information already available to dispel the economic growth myths prevalent in our political discussion. Nonetheless, the myths are thrown around like confetti in the various news articles on the subject. Let's review the myths through exploring the facts.

HIGH BUSINESS TAXES MYTH. In 2010 on behalf of some of its corporate clients who needed to make some information-based decisions (as opposed to California voters, press, and politicians who decline to consider information), the accounting firm of Ernst & Young prepared a study titled State and Local Business Taxes.

What they reported was Texas state and local business taxes exceed California's as a percentage of each state's business activity, 4.9% versus 4.7%. What they also reported is that in collecting that higher business tax revenue, Texas gets 42.9% of its tax revenue on business from the property tax, California 24.3%. We can see the breakdown in this table:
Even if they wanted to, these visiting legislators couldn't solve the tax source difference.

Because of Proposition 13, California voters set up a property tax structure that discriminates against newly constructed business sites.

This is not complicated reasoning though apparently too complicated for Californians. The corporation down the street that built its buildings and parking lots in 1976 essentially has had a near-freeze on its assessed value compared to market value for 32 years, while the new business gets assessed at market value. Both pay the same corporate, sales, license, and other business taxes.

But taxes on the business are not the key tax concern to the decision-making process. The real difference is Texas doesn't have a personal income tax, the primary reason many highly paid executives and corporate owners tell people Texas is more business-friendly. Taxes on businesses are not an issue, personal income taxes on rich people are the issue. (I don't know if the delegation will get this information from these executives.)

REGULATIONS, TEXAS, AND ENERGY. Oil, gas, and wind energy resources are core of the Texas economy. No one has to visit Texas to discover that.

California is not particularly friendly to the oil industry, but on the other hand it doesn't have an oil severance tax like Texas. We just don't want oil spill disasters off our coastline and don't like the environmental impacts of oil drilling operations. We don't mind consuming oil products.

We do support wind energy and GE has a wind turbine assembly plant in Tehachipi that employs about 200 people. But we're hearing a lot of politicans mumbling about solar.

GE announced this week that it plans to build the nation’s largest photovoltaic panel factory manufacturing thin-film photovoltaic panels. GE did this after buying the Arvada, Colorado-based PrimeStar Solar, a developer of thin film photovoltaic solar technology with an efficiency record surpasses all of the previously published records for Cadmium Telluride thin film technology.

Does California want to be in the running for this plant that will employ 400 people? All we have to do is pretend that eliminating cadmium related regulations is a good idea.

What do we know about Cadmium Telluride? Tellurium is mildly toxic. Cadmium is extremely toxic.

The European Union's Restriction of Hazardous Substances Directive (RoHS) when established in 2006 covered only the worst of the worst, the evil of the evils, only 6 hazardous materials:
  1. Lead (Pb)
  2. Mercury (Hg)
  3. Cadmium (Cd)
  4. Hexavalent chromium (Cr6+)
  5. Polybrominated biphenyls (PBB)
  6. Polybrominated diphenyl ether (PBDE)
The maximum permitted concentrations are 0.1% or 1000 ppm by weight, except for cadmium which is limited to 0.01% or 100 ppm. You see, cadmium is considered the most toxic of toxics and is to be a primary ingredient in our shift to "environmentally friendly" solar energy.

Since Hexavalent chromium also is on the list, maybe we could entice GE to build the new solar panel plant between Hinkley (of "Erin Brockovich" fame) and Tehachapi, both in Assemblywoman Shannon Grove's District. Grove is going on the trip. To quote Grove: "Our state is driving jobs out of California with high taxes and onerous regulations. We need to put a moratorium on new regulations like AB32 and stop job killing tax proposals like oil severance taxes." Perhaps she'd like us to eliminate all regulation of cadmium within 50 miles of her home to get this new plant there.

HIGH TECH JOB GROWTH MYTH. As I've posted before, politicians are frequently talking about high tech in relationship to job growth.

We now have enough history to discover that high tech companies are not a source for growing employment. If you check employment in the combined Bay Area/Silicon Valley region, you discover that the number of people employed in 1990 was essentially the same as at the end of 2010.

If you graph employment in this high tech region - not unemployment, but people working - you discover the roller coaster nature of the economy (click on the graph for a larger version):

The San Francisco Bay Area and the San Jose Area include the much vaunted major technological centers including Silicon Valley, many established genetic research and development businesses, and many "green" technology centers. They produce a lot of temporary employment in cycles which creates a cyclical demand for workers in home construction, retail, and services.

Right now, because of activity related to a temporary retail surge in smart phones and tablets - all of which are manufactured in Asia - employment is growing again related to "apps" and "cloud computing." Once the development period ends, people will be laid off in large numbers as "app" developers fail to attract customers and the "cloud" companies no longer need anyone but (a) some of those maintenance techs laid off in the dot-com and 2008 crashes and (b) customer support representatives in India.

Why do I think that after this trip we'll hear the same tiresome economic conventional wisdom from this delegation based on the individual politician's ideological viewpoint? Oh well, at least they promise not to charge us for the trip....

Tuesday, April 5, 2011

Growing an American underclass

One difficult part of The Great Recession is the high numbers of over-50 people laid off. This past week CBS Sunday Morning ran a piece "Baby Boomers: America's new unemployables." Interestingly enough this isn't limited to the US as BBC News has an article Growing army of over-50s join the battle to find work.

The problem is made worse by the longer-term nature of the unemployment. As was noted in this Chronicle/Bloomberg article:
6.12 million

That's the number of unemployed Americans who have been seeking work for at least six months. Even though the unemployment picture improved last month, the ranks of these chronically jobless people actually grew - a fact that concerns economists. The group is currently four times as large as its average level since 1970. The overall jobless rate, meanwhile, was 8.8 percent in March, the lowest percentage in two years.

The Wall Street Journal noted today at the end of an article about states planning to pare back unemployment:
The expansive net of unemployment assistance was the result of a downturn that led to the largest pool of long-term unemployed workers on record. More than 6.1 million Americans had been out of work for more than six months as of March. Of everyone who was unemployed last month, 45.5% were considered long-term unemployed.

Persistently high unemployment prompted Congress to repeatedly extend emergency unemployment benefits, but the most recent extensions were met with resistance from some legislators and led to lapses in benefits. Amid concerns about government spending and the country’s massive deficit, Congress could let the program expire early next year.
Unemployment insurance is a critical element of the "safety net" and we've gotten into a trap. Many states like mine (California) failed to make even a modest effort to raise Unemployment Insurance rates on employers during good times after the last recession when the dot-com bubble burst. It was obvious then that the rates generated only about 30% of the revenue needed to cover the initial benefit period in a significant recession.

So in addition to all the benefit period extensions funded by the federal government through borrowing, California's Unemployment Insurance Fund has now "borrowed" $10 billion (and growing daily) from the federal government (which of course borrowed the $10 billion).

Companies like Intel made a bundle without paying anywhere near enough before shutting its last factory in Silicon Valley. Then their executives complain about the deficit and taxes.

The startling fact is that the number of people employed in the Greater Bay Area (including Silicon Valley, the East Bay, the Peninsula, San Francisco and Marin) was roughly the same at the end of 2010 as it was in 1990. If you graph employment in the region from 1990 to today it looks like a roller coaster ride - a steep climb, a steep downgrade, but a short climb, then a final down slope back to where we started.

It's the region that included all the Bay Area's much vaunted tech development, bio-genetic research, etc.

Now we're again seeing positively reported hiring, associated with another dot-com bubble including "apps" developers related to Google and Apple.

We can't continue an economic safety net system that lets these companies underpay unemployment insurance contributions when they're raking in big profits. We know the bottom will fall out followed by a period of significant unemployment requiring more government debt.

It's a destructive and lengthening cycle as noted last week in a New York Times article headlined Comparing Recoveries: Job Changes:

The chart above shows economywide job changes in this last recession and recovery compared with other recent ones, with the black line representing the current downturn. Since the downturn began in December 2007, the economy has shed, on net, about 5.3 percent of its nonfarm payroll jobs. And that doesn’t even account for the fact that the working-age population has continued to grow, meaning that if the economy were healthy we should have more jobs today than we had before the recession.

The unemployment rate (measured by a different government survey, and based on how many people are without jobs but are actively looking for work) ticked downward to 8.8 percent in February, from 8.9 percent in February. That means joblessness is at its lowest rate in two years. The number may go up again, though, as more discouraged workers return to actively searching for jobs when they hear employers are hiring again.
Something has to be done, or 21st Century America will create a growing underclass of old and young job seekers.

Sunday, April 3, 2011

Notes from the Magic Kingdom of California

Recently, I was disturbed to learn that Jerry Brown and the Republican leadership engaged in dueling YouTube posts, joining the UCLA coed whose post about Asians in the library went viral.

On May 30, 2010, I posted the following:
It's fitting that Disneyland was created in California.

It's fitting because we now have two branches of state government that live inside the Magic Kingdom of the late 1950's - in two "lands" far away from reality. The Governor's Office has been relocated to Fantasyland. The Legislature has relocated to Tomorrowland.

Way too many of the voters of California also live inside the Magic Kingdom - in three radically different worlds far away from reality and incomprehensible to each other.

Some live in Main Street USA, a fictional early 20th century Midwest town totally without a corresponding community reality in 21st Century California.

Some live in Frontierland hoping to confront the challenges of the 21st Century with a muzzle loading rifle while wearing a coonskin cap - a reality that never existed in California even when Ronald Reagan was Governor.

Some live in Adventureland where crocodiles, hippos, and other "African Queen" dangers, completely foreign to and absent from 21st Century California, fill people with fear and consume tremendous amounts of their psychological energy.
It's clear now, with the election of Jerry Brown, Californian's put the perfect Governor in Fantasyland - Governor Moonbeam - to replace The Gubernator.

Some may think by my use of the moniker of Governor Moonbeam, I'm calling him names.

Jerry Brown honestly earned the moniker "Governor Moonbeam." After all in a 1978 Rolling Stone interview Linda Ronstadt called her then boyfriend, Jerry Brown, her "Little Moonbeam." Yes, Chicago Sun-Times columnist Mike Royko picked it up and applied it to Brown and later apologized noting that Brown was a serious politician.

But at the time he initially used it for a reason. And it really wasn't because Brown wasn't a serious proposition. In fact, he was a very serious Governor Brown, according to an article by Peter Gwynne in the August 25, 1977, edition of New Scientist:
Now, Jerry Brown has latched onto a fresh political issue with futuristic overtones: space flight. After months of growing interst in present and future space projects, Brown went public two weeks ago. On the event of the first free flight of the Space Shuttle Orbiter, he supervised "Space Day," a celebration of the space culture in Los Angeles....

The exploration of space is necessary, he preached, because it diverts man's aggressive instincts away from war. He called on his own state to lead the US into "the everlasting frontier of space." One possible vehicle for that mission, he said, would be a California state satellite, that could perform such down-to-earth tasks as monitoring scarce water resources, linking classrooms with expert teachers, and improving communications in the state.
Sure, that was forward thinking as we view it from 2011. That was in 1977. He was Governor. His State was in turmoil, lacking a realistic political leader. For those that don't remember, less than a year later, June 6, 1978, the voters confirmed that Brown was completely out of touch with reality - look up Proposition 13.

From the moment Royko coined the moniker, I went "aha.'

I'm not calling him names. I'm trying to remind people what's wrong with this guy, because he's still out of touch with reality. I realize it's probably futile.

Just remember this was the Governor, the dreamer, who froze highway construction, leaving the replacement of many dangerous stretches highway for the future while people died on them for more than decade. He thought people should get out of their cars. Perhaps a good idea, but not for the Governor of the State of California in the 1970's. He was out of touch with reality then, and still is.

And he's residing in Fantasyland. Consider the use of YouTube at this point in time when we need leadership again. Just considering age, the number of people who will vote on any tax measure he may get on the ballot in the near future is inversely proportional to the people who watch him on YouTube.

In that May 2010 post I commented:
Jerry Brown, of course, was the guy who started California down the road to bankruptcy when he was previously Governor and was dubbed Governor Moonbeam. I guess he thinks he can fix the problems he created.
We know now that he did not intend to fix the problems he created. He doesn't think he created any problems back in late 1970's.

▼▼▼▼▼▼

Sometimes it's hard to fault California's voters for deciding to live in the Magic Kingdom. On March 26, the San Francisco Chronicle, together with Bloomberg, published the following:
California added almost 100,000 jobs in February, fueled heavily by a rebound in high-tech and entertainment positions, state officials said Friday. The state's unemployment rate fell to 12.2 percent, down from 12.4 percent in January.

"We have ourselves a recovery on our hands," said Howard Roth, chief economist for the California Department of Finance. "This was an awfully good report."

The strongest growth, on a percentage basis, came in the Bay Area, he said, with increases in technical, scientific and consulting jobs.

"It's the best piece of economic news for California we've seen in three or four years," said Stephen Levy, director of the Center for the Continuing Study of the California Economy. "The basic strength of California's economic base has weathered the storm."
For a week now, I've been trying to figure out why these responsible news agencies did this.

Indeed the Employment Development Department issued a news release on March 25, 2011, one which offered the following tables:

What these tables show is a seasonally adjusted increase in employment of 12,000 or an unadjusted increase of 24,000. So what's with this 96,500 jobs increase?

Well, there are two sources of data. What the news release says is:
Nonfarm jobs in California totaled 14,055,900 in February, an increase of 96,500 jobs over the month, according to a survey of businesses that is larger and less variable statistically. The survey of 42,000 California businesses measures jobs in the economy. The year-over-year change (February 2010 to February 2011)shows an increase of 196,300 jobs (up 1.4 percent).

The federal survey of households, done with a smaller sample than the survey of employers, shows an increase in the number of employed people. It estimates the number of Californians holding jobs in February was 15,917,000, an increase of 12,000 from January, but down 36,000 from the employment total in February of last year.
Of the two sources of data, one is done by the State which surveys a group of employers, and the other, done by the federal government, which surveys a group of households. One reported a gain in jobs of 96,500, the other 12,000. This level of discrepancy in the statistics was not reported in the article.

The feds also provide weekly unemployment claims data. The number of continued claims for the week ending February 5 was 627,285 while the number for the week ending March 5 was 614,229. That's 13,056 fewer continued claims. That just doesn't feel like there could have been an increase in jobs of 96,500 in February. In fact, EDD reported 263,505 initial claims filed in February which seems to correspond to the federal data.

Some "feel good" data regarding jobs nationally was noted on Friday for March. The problem is, the data isn't very reliable and - as honestly graphed by the New York Times - it looks like this compared to previous recessions:


Keeping things simple, no reason for optimism exists. More particularly disturbing in that optimistic Chronicle/Bloomberg article was the statement that the supposed California jobs jump was "fueled heavily by a rebound in high-tech and entertainment positions." Those are "job bubble" positions.

The article also notes that "The strongest growth, on a percentage basis, came in the Bay Area, with increases in technical, scientific and consulting jobs." As I posted previously, here is a 20 year (1990-2010) graph of total employment in the Bay Area (click on it to see a large version):


To summarize the graph, the high tech and bio research capital of California failed to see any permanent job increases over the past two decades.

The fact is The Great California Slump resulted in a net job loss of about 1.4 million in California. It is not likely that by 2020 even a third of these jobs will be recovered on top of the job growth necessary to keep pace with normal increases in the work force resulting from normal population increases.

Finally, what bothers me the most is the quoted glowing comments in the article from Howard Roth, chief economist for the California Department of Finance, a cabinet-level agency under the Governor that prepares his budget proposal. Either Roth is not qualified for the job or the Moonbeam effect covers Roth.

Or to put it another way, we all should understand that Roth's office is located in the Fantasyland area of the Magic Kingdom run by Governor Moonbeam.

Friday, April 1, 2011

The Confessions of a Homeless California Lifelong Democrat

No, I'm not literally homeless, far from it. But I always tried to be "at home" in the Democratic Party of the 20th Century.

It's the 21st Century.

I'm no longer comfortable in the state party of U.S. Senators James D. Phelan, William Gibbs McAdoo, Clair Engle, Pierre Salinger, and Alan Cranston.

I'm no longer comfortable in the state party of Governor Culbert Olson and Edmund G. "Pat" Brown. (I'm willing to be associated with the Progressive Party's Hiram Johnson also.)

I'm just no longer comfortable here in the national party of Presidents Wilson, Roosevelt, Truman, Kennedy, Johnson, and Carter. (I'm willing to be associated with the Progressive Party's Teddy Roosevelt, also.)

Don't get me wrong. The Republican Party hasn't been an option since they threw out Teddy Roosevelt and Hiram Johnson. And it isn't that I have a problem because Democrats make mistakes, for if that were the case there would have been no politician to support at any time.

No. The problem is I'm old. I don't understand what happened to the "political spectrum" that was easily understood in 1955. That spectrum was simple. Fear of the other party really wasn't part of the ordinary  American's political passion. That spectrum looked like this:



Rather than using the now meaningless terms "left" and "right," I've used the color spectrum which permits a blending of governing and economic systems.

Color is the visual perceptual property corresponding in humans to the primary colors called red, green, blue.

Along the inner edge of the circle, at the top middle is the color "violet" which is a mixture of red and blue while at the bottom middle is the color green which is a mixture of yellow and blue.

The top outer edge represents totalitarian government associated with those holding economic power distinguished only by the color bluish violet representing state ownership of the means of economic production and the color redish violet representing corporate ownership of the means of economic production.

The bottom outer edge represents direct democracy government associated with those who participate in the process distinguished only by the color blueish green representing greater economic regulations and more state-owned enterprises and yellowish green representing lesser economic regulation and fewer state-owned enterprises.

As used here, the three primary colors represent economic systems.

The primary color red represents Capitalism which refers to a politically established economic system in which the means of production are privately owned and operated for net income. Net income is either retained by the business enterprise or distributed to the owners for private use.

The primary color blue represents Socialism, which refers to a politically established economic system in which the means of production are state owned and operated for net income. Net income is either retained by the business enterprise or distributed to the state for public use.

The primary color green represents Social Marketism, which refers to a politically fluctuating economic system in which ownership of the means of production can shift between private and state ownership and back, following proper compensation. Government through democracy establishes the mix of ownership.

President Barack Obama and California Senator Diane Feinstein clearly are politicans of the 2011 National Democratic Party. Governor Jerry Brown and California Senate President Pro Tem Darrell Steinberg clearly are politicans of the 2011 California Democratic Party. And therein lies the rub.

I know there are very few people who even know who James D. Phelan, Hiram Johnson, William Gibbs McAdoo, Clair Engle, Pierre Salinger, Alan Cranston, Culbert Olson, and Edmund G. "Pat" Brown were. And there are even fewer who know what social, economic, and international policies they advocated. All of these politicians fell somewhere near the 1955 Democratic Party in the spectrum outlined below:


As you can see from the spectrum graphic, it does not allow for someone to call their views "centrist" unless you mean you have no opinions about the governing system or the economic system. Your opinions mean you could live up near the outer top or outer bottom or any place within the spectrum. It doesn't matter to you.

If you have preferences about form of the governing system you wish to live under ranging from totalitarian to direct democracy, you fall somewhere between the top and bottom. If you have beliefs about the form of the economic system you wish to use to create your economic wealth, you fall somewhere between red, green, and blue.

I, for instance, have little enthusiasm for the extensive use of ballot measures and other forms of direct democracy. So I'm located below but near the middle vertically, colorwise about a teal.

And so when Governor Jerry Brown advocated voting on a tax increase extension which could be done by a two-thirds vote of the Legislature as it was done under Arnold, he placed himself directly at the bottom in terms of a governing system, almost as far away from ME as a totalitarian dictator.

And as President Barack Obama gives us no public option in health insurance with no restrictions on the profits of pharmaceutical corporations and appoints advisers from international banking and multinational corporations, he places himself in a nice persimmon shade with no tint of blue.

Back in 1955, everyone but the kooks would locate themselves on the lower half of that spectrum wheel, in colors that were green tinted by red or blue. Oh how times have changed!

Now, the color is red tinted by green or blue. Someone rotated the spectrum wheel when I wasn't looking so now in our political discourse it looks like this:

Whoever did this is now attempting to make everyone above the middle feel they are somehow radical and un-American.

By rotating the chart, virtually all colors containing green through blue appear to be beyond the generally accepted economic options.

The problem is you can't rotate the wheel because by definition the governing system is the vertical axis.

As seen in this case, totalitarian government appears to have ended up within a politically acceptable range.

Oddly, in last November's California gubernatorial race, one candidate advocated polices that appeared to be consistent with the 1955 California Democratic Party, Laura Wells of the Green Party. Check out her platform planks for education, for the economy (particularly her tax policy proposals and a proposal for a state bank like North Dakota's), for water policy, and health care.


The problem is the Green Party is further to the blue than Wells. And both are very popular democracy oriented. But when I add them to the spectrum, they tend to appear closer to the old Progressive and the 1955 Democratic Party than any other.

As the two parties in the Legislature and the two parties in Congress bicker and talk past each other and generally act in the best interest of the dominant international corporations, it is easy to wish for a political home.