In 2001 my job as a manufacturing engineer and the manufacturing facility I worked for went to China.  At 55 I knew my career was over.  I’d seen it coming and had a chance to simplify my life and pay down debt because I knew that at 55 I was on my own.  I had money in a 401k and company stock and a few talents that made it possible for me to survive.  Of course after the COBRA ran out I had no health insurance – even if I could afford it no company will write an individual policy for someone over 55.  But I’ve survived and I may live long enough for Medicare to kick in next year.  Of course since I have had no medical care for eight years I will probably be a greater burden to the Medicare system.

Dave Johnson moved from my state of Oregon to California’s silicon valley a few years ago to seek employment opportunities but he explains that things are no better there especially if you are older.

I know so many people here who are over 40, were laid off in the 2000-era dot com crash, still haven’t found a regular job and aren’t going to. They have had occasional “contract” positions—which means no benefits, no security, a 15% “self-employment” tax and no unemployment check when the job ends. And now, 10 years later they’re a lot over 40 and are not going to find a job because so many employers here won’t hire people over 40.

And now there are so many more who lost their jobs in the mass layoffs of 2008-2009 and can’t find a job. So many of them are also over 40. In fact, many were laid off in obvious purges of over-40 workers, offered a small severance that they could only receive if they promised to take no age-discrimination action against the employer. (I don’t say “company” because some of these worked at nonprofits.)

Most of these people will not find another job, but are too young for Medicare and Social Security.

I guess I was lucky I was as old as I was.  It was only four years after my job went overseas that I could start taking money from my 401k’s and IRA’s without penalty.  Two and a half years after that I could start collecting Social Security although I managed to postpone that until I was 64.  And guess what?  They are talking about raising the retirement age to 70 in spite of this:

Blatant Age Discrimination

Age discrimination is a thing with me because it is so blatant here. It’s the culture here, some even say that for programmers it is “35 and out.” At various times looking for work I’ve been told I “seemed tired” and things like that. I was even told once that I wouldn’t be able to market some software because I “wouldn’t be able to get my mind around” how it worked—when I had designed and written part of it in a previous life. One company here is said to have only 200 over-40 employees out of 20,000.

But it certainly is not a problem that only exists in Silicon Valley. Tell your own story in the comments, please, get this discussion going!

What are people supposed to do? You can’t get Medicare until you are 65, and Social Security until 67. But it’s near-impossible to get a job or health insurance if you are over 50. I wonder what the effect would be if the government started again enforcing its own rules on age discrimination and contracting.

So you are pretty much screwed if you are over 40 and the politicians are suggesting it’s alright to screw you for another few years so they have enough money to kill brown skinned people in Iraq and Afghanistan and send lots of money to “defense” contractors – the ultimate welfare program.

As Dave Cohen points out this is because The American Jobs Machine is Broken. And yes it all started with the coronation of St Ronnie of Reagan in 1980.

Aside from the rise of predatory Finance, the most important cause of our descent into hell has been the policy-driven, systematic
destruction of American jobs during the Age of Globalization. Every respectable mainstream economist gave this policy his or her Seal of Approval. This post is a follow-up to Designed. In Silicon Valley, Made In China, which was itself a follow-up to When In Doubt, Blame China.

This post’s title is a riff on Tim Duy’s Why is the American Jobs Machine Broken? This article is worth reading After citing the terrible trends in manufacturing employment, Duy puts 2 and 2 together to get 4—

Note that a number of trends all begin in the 1980s. Absolute manufacturing declines, the rise of persistent trade deficits, the decline in labor’s share of output, growing income inequality, and the Great Moderation. That the combination of these trends is coincidental seems unlikely…

The alert regular reader will note that I always say our Decline began in the early 1980s. Why did economists all tell a story in which shipping jobs overseas was a good thing?

If manufacturing is critically important to driving trends of national well being, an exploration of the decline of that sector is crucial. But that exploration almost always leads back to a very difficult place – international trade. And every right minded economist and policymaker knows unequivocally that free trade is good, and to even question that assumption makes one an ignorant heretic who has never heard of Smoot-Hawley. Therefore, the examination ends. Manufacturing’s decline simply cannot be a problem if it is consequence,of international trade because everyone knows international trade is good…

Indeed, the establishment will defend any assault on free trade with a simple, seemingly unassailable story: NAFTA was followed by the 1990s jobs boom in the US even as the current account deficit widened. Therefore, free trade does not have net negative impacts. Winners and losses, yes, but the former outweigh the latter.

I have told that story myself…

But Duy is recognizing that he was mistaken.

Having established that the comparative advantage of labor costs in developing economies does not tell the whole story of how Americans got sold down the river, Duy offers this non-standard view—

I grow increasingly convinced that the disappointing economic outcomes of the last decade are the culmination of decades of industrial neglect. That economists have dismissed industrial decline with a story of high value knowledge-based workers, a story with specific relevance to the tech boom of the 1990s but that is now defunct. And I am increasingly convinced that these trends have been largely dismissed by the economics community because acknowledging them would cast doubt on value of free trade, failing to recognize that currency manipulation was turning free trade into a zero-sum game.

In short, I have become a heretic.

It’s certainly become a zero sum game for the American worker and a zero sum game for the economy because it can’t recover when too few can afford to buy anything.

Now it all started with Reagan but Clinton was equally guilty and Obama has been no better.  The Founding Father Alexander Hamilton knew what was required to make the USA strong:

Hamilton reasoned that to secure American independence, the United States needed to have a sound policy of encouraging the growth of manufacturing and secure its future as a permanent feature of the economic system of the nation. He argued these could be achieved through bounties or subsidies to industry, regulation of trade with moderate tariffs (not intended to discourage imports but to raise revenue to support American manufacturing through subsidy), and other government encouragement. These policies would not only promote the growth of manufacturing but provide diversified employment opportunities and promote immigration into the young United States. They would also expand the applications of technology and science for all quarters of the economy, including agriculture.

The tariff

Hamilton reasoned that tariffs issued in moderation would raise revenue to fund the nation. The tariff could also be used to encourage domestic (or national) manufacturing and growth of the economy by applying the funds raised in part towards subsidies (called bounties in his time) to manufacturers. Hamilton sought to use the tariff to:

• protect infant American industry for a short term until it could compete;
• raise revenue to pay the expenses of government;
• raise revenue to directly support manufacturing through bounties (subsidies)

Subsidies to industry

Hamilton reasoned that bounties (subsidies) to industry, which would rely on funds raised by moderate tariffs, would be the best means of growing manufacturing without decreasing supply or increasing prices of goods. Such encouragement through direct support would make American enterprise competitive and independent along with the nation as a whole. In part subsidies would be used to:

• encourage the spirit of enterprise, innovation, and invention within the nation;
• support the building of roads and canals to encourage internal trade;
• grow the infant United States into a manufacturing power independent of control by foreign powers through reliance on their goods for domestic and especially defense supplies.

Cross posted at Newshoggers.