Archive for March, 2012

Even Cesar Chavez Opposed Excess Immigration

Friday, March 30th, 2012

President Obama has declared March 31st to be Cesar Chavez Day. In his proclamation, I was amused to see the president claim Chavez as a fellow community organizer:

“Cesar Chavez saw the promise of change – the unlimited potential of a community organized around a common purpose.”

While the president doesn’t say much about his community-organizing days, we do have knowledge of Chavez’s activities. So, how did the Mexican-American Chavez organize his community? Let me tell you…

…but first, if you grew up east of the Rocky Mountains, in a “green, leafy” suburb, like I did, chances are that you have no idea who Chavez was. Maybe you have vague memories of a lettuce shortage, or something about a grape boycott. Well, that was Chavez and his United Farm Workers. The Mexican-Americans that I knew in California spoke of Chavez as a deity; one rung below Jesus himself. If John Steinbeck had written a sequel to “Grapes of Wrath”, his Tom Joad character may have evolved into a gringo version of Chavez. And Bruce Springsteen would have written even more songs about him.

One of the things that Chavez did was try to improve the condition of farm workers by restricting the supply of workers; to raise the equilibrium wage to a point where they could live better than farm animals.

To that end, Chavez’s men picketed the INS to get them to enforce immigration laws. Chavez ratted out his fellow Mexicans to the INS if they were illegals. If he found them on the job, he turned a blind eye while his men administered beatings. And in 1973, Chavez even sent his troops to the border to battle illegals! See this, and this.

The word “immigration” doesn’t appear at all in the President’s proclamation. And for good reason. Because if Chavez were alive today, he just might be voting Republican in November. You see, when Chavez’s men were fighting bloody battles on the border, legal immigration to the USA was around 400,000 per year. Under the Obama administration, it has been nearly triple that – over a million per year. (See my immigration charts.)

Obama’s policy, unspoken though it may be, is to smash down wages all across the economy to goose corporate profits. The exact opposite of what Chavez tried to accomplish.

Today, activists will speak out against state immigration laws like the ones adopted by Arizona and Alabama. And in doing so, they will cite Cesar Chavez.

Bizarre, right?

Some of those activists are simply ignorant of what Chavez stood for. Others, I’m sure, are agents of Team Plutocracy fighting hard to turn the USA into an Asian-style, high-population, low-wage nation, blanketed from sea-to-shining sea with sweatshops and shanty towns, and a stratospheric Gini coefficient.

Wage Equilibrium = Code for Slavery

Thursday, March 29th, 2012

If somebody says to you that we can cure unemployment by repealing the minimum-wage laws so that wages can fall to their equilibrium level, you are either talking to a fool or a slaver. Libertarians like Lew Rockwell fall into the fool camp, and Republican Ann Coulter is an example of a slaver.

First, we already tried this. During the Great Depression (before the minimum wage was adopted in 1938) wages found an equilibrium level below the amount where a worker could purchase enough food to stay alive.

How does the fabulous “invisible hand” solve that problem? Easy, you just let workers starve to death until their numbers are reduced. Eventually, the supply of workers will fall to the point where wages rise to non-starvation levels.

And how long would that take? Well, for all practical intents and purposes, the supply of surplus humans in the world today is infinite. Billions and billions as Carl Sagan used to say. And since the equilibrium crowd is also an open-borders crowd, the USA would very rapidly come to look like Bangladesh – and it would stay that way for a very long time.

As we are seeing in the warehouse industry, we have already entered Grapes-of-Wrath territory while importing a mere 1 million legal immigrants per year.

In the 1930s, Florida deployed law-enforcement officers along its borders to keep immigrants out – its northern borders with Georgia and Alabama to keep Americans out. The state was trying to prevent an explosion of homelessness as migrant workers poured into the state. (California did so also).

Why were the migrants coming if there were no jobs? Because the growers were advertising for them. Since there was no minimum wage, the more workers that showed up, the lower the wages the growers could pay. By increasing the local supply of workers, the growers lowered the equilibrium wage.

Of course, they also created horrible, squalid working conditions where workers beat each other to death to land jobs in order to feed their starving children. The libertarian dystopia didn’t end until the federal government vacuumed up surplus workers and set them to building war matériel.

You and I might be appalled at the state of the nation when thousands line-up to apply for minimum-wage jobs at McDonald’s and Walmart. But do you think our CEOs feel the same way? Or are they drinking champagne and toasting to rock-bottom equilibrium, while scheming to get it even lower?

The historical fact is that the USA grew to the height of its power with the minimum wage, worker-friendly labor laws, strict immigration control, tariffs, Glass-Steagall, etc.

And it wasn’t a coincidence.

None of those things are the poison that the equilibrium-istas would have you believe.

Note: Read more about Florida’s libertarian dystopia during the Great Depression here.

Read it Here First: Slavery Returns

Wednesday, March 28th, 2012

Harvard historian Niall Ferguson just wrote: “Get ready to be a slave in China’s world order.”

But you read it here first six months ago in: “There’s a Sweatshop in Your Future.”

How can I run six months ahead of the Harvard egghead types? Easy question.

Because I can see The Matrix.

And it’s about faith. If you don’t believe in pure evil, you will always be underestimating what the The Matrix has in store for you.

In any case, Ferguson is too worried about the Chinese:

“If China can impose low wages and harsh working conditions in emerging markets, how long before they start doing the same to us?”

So, I have a homework assignment for the professor: Go on a field trip to American warehouses and have a look at the wages and conditions imposed by American managers on American workers. Don’t go to the Costco facilities; they still treat workers like human beings there. And don’t go to the Walmart company facilities; go to their contract facilities instead. You know, the ones where they have plausible deniability.

Ferguson writes about a Chinese-owned mine in Africa:

“A typical monthly wage packet is about £54 — barely enough to feed a family. The Chinese pay Chinese wages for Chinese working hours. That has unnerving implications for everyone who wants to win Chinese investment. If you want the Chinese to put money into your economy, you had better get ready to work as hard as they do — and for as little.”

Foxconn may have its suicide nets, but in US warehouses pregnant women are made to work like dogs in 100 degree heat, with ambulances standing by outside. And many of them are so badly paid that they still quailify for food stamps!

The most thorough reporting that I have seen on the story is from Dave Jamieson at HuffPo: “The New Blue Collar: Temporary Work, Lasting Poverty And The American Warehouse.

Will Record Immigration Sink Obama?

Saturday, March 24th, 2012

During the Great Depression, President Roosevelt shut down immigration to a trickle. He got re-elected – twice. The man was literally, President for Life. During the Great Recession, instead of following Roosevelt’s proven strategy, President Obama did just the opposite. He kept legal immigration going at a record pace. (See my charts here.)

What’s even crazier is that the Democrats seem to think that the immigration issue is their trump card.

I can hardly believe this is happening.

Maybe recent immigrants vote Democratic, but what good is that when their weight on the labor market drives down wages and working conditions thereby minting an even larger number of voters eager for a change of national direction?

The USA has become more conservative over the past year, and many states have turned from blue to red. (See this Gallup poll). And even with the specter of a Republican sweep in November, the legal-immigration issue is not even discussed.

All of the immigration debate is around illegal immigration. I watched almost all of the Republican debates, and I don’t recall a single instance when legal immigration was even mentioned.

And that shows that legal immigration is not a partisan issue. Sure, I think it could sink Obama, but I doubt a Republican president would have done anything different.

People hate it when I write non-partisan political commentary. Both sides howl for the red meat like so many rabid dogs.

Fools!

The multinationals want cheap labor in the USA; just like in their beloved China. President Obama is taking one for the team – Team Plutocracy.

One million legal immigrants per year poured onto an economy already sagging with 13 millions unemployed, and 46 million on food stamps?

Insanity for Americans; nirvana for multinationals.

You partisans are playing small ball. Like my blog motto says: “It’s the sovereignty stupid!”

AAPL Down = IWM Up?

Saturday, March 24th, 2012

On Wednesday, I joked that AAPL was sucking the life out of the small caps. Well, maybe it’s not a joke after all. On Friday, the Russell 2000 staged a dramatic come-back rally, and broke out of the downtrend channel that I drew in the previous post.

While the R2K was up 1.05% on Friday, AAPL was down 0.58%. Did money rotate out of AAPL into IWM? If it did, and AAPL continues to pull back, then maybe the small caps are the sweet spot in the market now.

That’s the bullish perspective. Now let’s look at the bearish side.

The IWM has been range-bound since February 3rd. Friday’s rally brought it up to the top of the range, and the IWM is now overbought on some indicators.

Thursday, the IWM fell on strong volume, and it rallied on Friday on lighter volume.

The false breakout from March 19th still stands with four consecutive closes below the breakout level.

So, the IWM still has work to do.

Momentum traders have made huge profits during this year’s rally. Maybe it’s time they hand those profits back to the mean-reversion traders, if not the perma-bears.

In any case, the small caps need to scrub that false breakout off the chart.