{"id":37318,"date":"2013-04-05T14:59:22","date_gmt":"2013-04-05T18:59:22","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37318"},"modified":"2013-04-05T15:01:57","modified_gmt":"2013-04-05T19:01:57","slug":"the-real-reason-there-will-be-no-recovery-in-america","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/05\/the-real-reason-there-will-be-no-recovery-in-america\/","title":{"rendered":"The Real Reason There Will Be No “Recovery” in America"},"content":{"rendered":"

By Bill Bonner<\/strong><\/p>\n

Nothing much happened on Wall Street yesterday. The Dow rose 56 points. Gold was flat.<\/p>\n

From the Daily Mail<\/strong><\/a><\/em> in London:<\/p>\n

US sees highest poverty spike since the 1960s, leaving 50 million Americans poor…<\/em><\/p>\n

The number of Americans living in
\npoverty has spiked to levels not seen since the mid-1960s, classing 20%
\nof the country’s children as poor.<\/em><\/p>\n

It comes at a time when government
\nspending cuts of $85 billion have kicked in after feuding Democrats and
\nRepublicans failed to agree on a better plan for addressing the national
\ndeficit.<\/em><\/p>\n

The cuts will directly affect 50
\nmillion Americans living below the poverty income line and reduce their
\nchances of finding work and a better life.<\/em><\/p>\n

As President Barack Obama began his
\nsecond term in January, nearly 50 million Americans \u2013 one in six \u2013 were
\nliving below the income line that defines poverty, according to the
\nbureau. A family of four that earns less than $23,021 a year is listed
\nas living in poverty.<\/em><\/p>\n

The newspaper illustrates its bleeding-heart story with a
\nridiculous example, taken from the streets of Baltimore. A Mr. Antonio
\nHammond abandoned his children for 20 years… and stole copper pipes
\nand other things to support a full-time drug habit.<\/p>\n

“All I wanted to do was to get high,” he told the Daily Mail<\/em>.<\/p>\n

Then Hammond kicked the habit and got a job at $13 per hour. Now he’s
\na success story. And if you believe the Daily Mail, cuts to the federal
\nbudget may make it harder for people like Hammond to escape from
\npoverty.<\/p>\n

Seems much more likely to us that cuts to federal spending will help
\npeople like Hammond get back on their own two feet; the feds won’t have
\nthe funds to keep him in poverty.<\/p>\n

Baltimore has been fighting poverty for the last 50 years \u2013 ever
\nsince President Johnson declared a war on poverty in the 1960s. Spending
\nhas gone up and up, blasting away at poverty with hundreds of billions
\nof dollars.<\/p>\n

But now Baltimore has more poor people than ever \u2013 one in four residents is below the poverty line, according to the Daily Mail<\/em>. And no wonder. When poverty pays, why take up something else?<\/p>\n

No Brave New World<\/h3>\n

We wonder how come there are so many poor people? Wasn’t the Internet supposed to make us all rich?<\/p>\n

Even Hammond can now go online and discover the secrets of business
\nand science. He can know as much about economics as Ben Bernanke. He can
\nknow as much about politics as Nancy Pelosi. He can know as much about
\njournalism as Tom Friedman.<\/p>\n

So how come they get the big bucks and he doesn’t? How come a man who
\ncan know almost everything settles for just $13 per hour? Is that all
\nomniscience is worth?<\/p>\n

Back at the end of the 1990s, we ran into people who thought the
\nInternet changed everything. With so much information at everyone’s
\nfingertips, they thought they saw a brave new world coming.<\/p>\n

We would all have access to the information we needed to increase
\nproductivity and add wealth. No one would be poor again. All they would
\nhave to do is to go on the Internet to find out how to get rich.<\/p>\n

We were suspicious of these claims back then. Information is cheap,
\nwe pointed out. It’s wisdom that is precious, and you don’t get much of
\nthat on the Internet. You have to pay for it… with bitter experience.<\/p>\n

In fact, information \u2013 unless it is exactly what you need, exactly
\nwhen you need it \u2013 has negative value. It distracts you. It must be
\napplied. And stored.<\/p>\n

How much good would it have done Napoleon \u2013 on his disastrous retreat
\nfrom Moscow \u2013 to have the plans for a nuclear weapon? Suppose Louis
\nXVI, mounting the scaffold to the guillotine, had had proof that Sacco
\nand Vanzetti were innocent! Imagine whispering to Hugo Chavez, as he lay
\non his deathbed: “Studies show that people who eat less meat have less
\ncancer.”<\/p>\n

No, dear reader, information is like manure. A little, at the right time, is a good thing. Pile up too much, and it stinks.<\/p>\n

Productivity Falls<\/h3>\n

And now we have proof… that the Internet did not add to the wealth of the US… or apparently anywhere else. From The New Yorker<\/strong><\/a><\/em>:<\/p>\n

For a time, the Labor Department’s
\nproductivity figures appeared to support the idea of an Internet-based
\nproductivity miracle. Between 1996 and 2000, output per hour in the
\nnon-farm business sector \u2013 the standard measure of labor productivity \u2013
\ngrew at an annual rate of 2.75%, well above the 1.5% rate that was seen
\nbetween 1973 and 1996.<\/em><\/p>\n

The difference between 1.5% annual
\nproductivity growth and 2.75% growth is enormous. With 2.75% growth
\n(assuming higher productivity leads to higher wages), it takes about 26
\nyears for living standards to double. With 1.5% growth, it takes a lot
\nlonger \u2013 48 years \u2013 for living standards to double…<\/em><\/p>\n

Since the start of 2005, productivity
\ngrowth has fallen all the way back to the levels seen before the Web was
\ncommercialized, and before smart phones were invented.<\/em><\/p>\n

During the eight years from 2005-2012,
\noutput per hour expanded at an annual rate of just 1.5% \u2013 the same as it
\ngrew between 1973 and 1996. More recently, productivity growth has been
\nlower still. In 2011, output per hour rose by a mere 0.6%, according to
\nthe latest update from the Labor Department, and last year there was
\nmore of the same: an increase of just 0.7%. In the last quarter of 2012,
\noutput per hour actually fell, at an annual rate of 1.9%. Americans got
\nless productive \u2013 or so the figures said…<\/em><\/p>\n

If the sluggish rates of productivity
\ngrowth we’ve seen over the past two years were to persist into the
\nindefinite future, it would take more than a hundred years for
\noutput-per-person and living standards to double.<\/em><\/p>\n

How about that? The Internet. A big dud. A time waster, like television<\/strong><\/a>, not a wealth booster, like the internal combustion engine.<\/p>\n

Regards,<\/p>\n

\"Bill<\/p>\n

Bill<\/p>\n

To learn more about Bill visit his Google+<\/a> page or Bill Bonner’s Diary<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Bill Bonner Nothing much happened on Wall Street yesterday. The Dow rose 56 points. Gold was flat. From the Daily Mail in London: US sees highest poverty spike since the 1960s, leaving 50 million Americans poor… The number of Americans living in poverty has spiked to levels not seen since the mid-1960s, classing 20% … <\/p>\n

Continue reading “The Real Reason There Will Be No “Recovery” in America”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-37318","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=37318"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37318\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=37318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=37318"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=37318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}