Saturday, June 20, 2009

The MBA Bubble Continues

A friend of mine sent this to me.

And what I get a kick out of is not the fact they can't find jobs or that once again your beloved Captain has done his job as an economist and predicted things accurately again. I get a kick out of how they don't know if this is "normal" to be out of a job this long. Telling me they have NOT had the basics of economics taught to them (or some slanted, indoctrinist's view of economics was foisted upon them).

Ergo, I believe it is high time for another "Economic Lesson of the Day" by the Captain.

Now, everybody who is graduating would like jobs. And I know you may have been taught jobs come from Barack Obama's Magical Farting Unicorns and we'll just borrow a trillion dollars in some Keynesian thing and then the "pump will be primed" and then there will be a multiplier effect and then boom! Jobs!

But, I'm sorry kiddies. That's not how it works.

You see, you've been misled. The way I can tell is that (1) people in the general population think the government somehow has something to do with creating jobs. they say the "government must do SOMETHING" and (2) MB-freaking-A's can't even explain why they don't have jobs.

Both of which suggest to me you're working from an erroneous premise and that is that somehow the government is where jobs come from.

I've been meaning to make a post titled "The Great Liberal Economic Oort Cloud" (GLEOC) where liberals (and others) typically believe jobs come from government. The reason for the Oort Cloud metaphor is because they don't really know HOW jobs are created by government, but just assume that's where jobs come from. In reality, it is simply people being too intellectually lazy to think the economics of job creation through. They believe the government with its trillions of dollars and businesses and laws and lawyers and all these "really smart professional people" make this nice big "economic Oort cloud" and farts out jobs. It's not their concern how jobs are really created, it's all really too complicated for them to understand. Thank god we have Barack Obama and really smart Ivy Leaguers heading up the GLEOC!

But allow me to pose another theory (which isn't really a theory, it's reality). The Symbiotic Parasite Host Relationship Model (SPHRM).

You see, if you think about it, without an economy, without a people, without businesses, there is no need for government. If you have nothing to govern, then governments would not exist. Ergo, the GLEOC model is flawed because it puts the cart before the horse. If you believe in the GLEOC, then governments existed and people arose in response.

Obviously it's the reverse. With people, with a society, with an economy comes the need for it to be governed.

Therefore it is the government that lives off of the people and the economy.

Now, this FACT makes government a parasitic organization. It NEEDS a host. If there is no economy or society, there is no way a government can form on top of it. And this is not to say that government is bad or that were are using the word "parasitic" in the pejorative. It is needed and ergo why the relationship between the government and the economy is (or at least should be) symbiotic.

Symbiosis aside, the key thing is the SPHRM is correct in that it puts the horse before the cart. Therefore if you want job creation, guess what?

Yep, I'm sorry, that means you have to grow the private sector.

See, there is no public sector if there is no private sector because the private sector is the host the public sector needs. But if you look at how public sector has been crowding out the private sector you are seeing a parasite that has gone form just 3% the size of the host to now 40% (the chart below just shows federal spending, not state).

The host is frankly going into shock and dying.

Now, I know in college you were told by academians and government paid bureaucrats that you could all major in Puppies and Flowers and all get government jobs as "social workers" or "teachers" or "community organizers" or "government consultants" or become professors like them, but unfortunately that is following the GLEOC model. And the GLEOC model is not sustainable.

If you want jobs you have to grow the private sector. Which means doing things like;

2. ELIMINATING (not cut) any form of capital gains or dividend taxes
3. Simplify the tax code.
4. Put limits on how large the parasite can grow as a percent of the economy
5. Scale down the size of the parasite itself so that the host may grow again

Of course (and this is where I spend most of my time now thinking and philosophizing about economics because this is really where the crux of this whole economics/political dynamic is being fought) what it funny is you've all been brainwashed from high school on to more or less hate the private sector. You hate "evil corporations." You hate "evil Corporate America." You hate "big oil." You're more than willing to vote more and more regulations to strangle the host. "Hey, let's all go green because it's cool!" "Yeaaa! Corporate Social Responsibility is the NEW MBA TREND!" You are all more or less programmed to be part of the parasite (or at least support the parasite) at the expense of the host.

And as I've been pushing the frontier of this particular philosophy out further, I've realized (sadly) you're so brainwashed no amount of reason, logic or plain ole facts and statistics are going to convince you otherwise. In other words, I've explained to you why you don't have jobs. I've explained to you how to get jobs. But you're so intellectually dishonest and weak your ego cannot sustain the fact you've been duped by previous generations. And since pride is now going to get in the way of truth, thereby condemning the host (and parasite might I add) to death, for me and my SPHRM-subscribing colleagues there's only one thing left to do;

Enjoy the Decline!

(oh! And buy my book which is on Kindle for 99 cents! Buying my book qualifies as enjoying the decline)


sth_txs said...

I'm not to sympathetic. The vast majority of MBA's put down Austrian economics and more than a few come across more as some sort of Marxist than someone trained in the philosophies and technical skills for managing a business.

savecapitalism said...

After reading this, I'm enjoying it more already! Super!

On a related note, if you are standing with any ear towards North you may want to pre-emptively cover it with your hand some day soon, as the Canadian "Crack Shack Or Mansion" housing-market is about to go out with a bang large enough to send Terrance and Philip's raining down on your porch!

jules said...

Corporations maaaaaaan!

I like the Oort Cloud analogy, intermittent and unpredictable.

Anonymous said...

A brilliant column, Aaron. It is deeply amusing that MBAs don't realise what is going on!!

The Canadian housing market probably has some months to go. As for the hottest part of it, Vancouver, that seems to be driven by Asian money. Of course Asian money follows the laws of economics too, but there may be a higher psychological value placed on a house than in North America.

Regards, John Lewis

oxygentax said...

It's amazing to see a glimpse into the mindset of a person (or people) blinded by university doctrine.

One of my hires from previous years had a B.Comm with high honors in Human Resources, and assumed that it would still command a 5-10G premium in my accounting firm. She never understood that a human resources degree might as well be a high school diploma if you didn't take enough accounting electives (she didn't).

I would assume that the only reason these MBAs aren't hired yet is that they refused to take a lesser position to get themselves in the door.

Anonymous said...

So they have not been employed for several years. Who the hell is feeding them? Black/grey market job (this would be somewhat justifiable) or parents or even government (from other people's work)?
Just wondering.
By the way, we are flooded by work and looking for new people. But only those who graduated in something useful. And in Eastern Europe.

PeppermintPanda said...

A "Straight A" student graduates from high-school and goes onto college because they're promised "riches" in the form of opportunities and material wealth simply from obtaining a college education. Having received poor guidance and failing to do proper research for themself, this student enters into the Liberal arts to study what they find interesting with no consideration of an eventual career.

Upon graduating from college they find job prospects limited and eventually accept a low level clerical job at a large organization for low pay. Being hard working and ambitious the look for role models of people who are successful and have a similar background to them. What they find is MBAs and Lawyers in upper management, and so they decide to go to business school to get their MBA (or to law school to become a lawyer).

After graduating with an MBA or a Law degree they notice that only the top of the class, or those students who already had substantial work experience at a management level, get a job. They send out their resume to company after company but no one treats them like a serious applicant; after all, would you hire someone as an executive when they only have 2 years clerical experience regardless of what their education is?

If this person is wealthy or well connected they will end up moving into non-profit or union management; and if they're not they tend to move into education or academia.

Paul said...

Brilliant column, and funny as heck. As an MBA who also favours the Austrian school (yes, I am lonely) I can appreciate it on many levels.

Too bad there are so few good comedians these days, I could see it now:

A job-farting unicorn, a job-farting unicorn, my kingdom for a job-farting unicorn!

raliv said...


are you a FairTax guy?

I am riding the fence, myself. Perhaps with a little information for the Capitano, I could make a real decision.


and yeah, I am just graduated and NO JOB HAHA.

Captain Capitalism said...

The Captain is for a flat tax. Same percentage. Everybody pay the same percent.

And (this is key) it's the ONLY tax.

No "fees" or "licenses" or anything.

That way it puts the TRUE price of government in ONE single number so EVERYBODY knows what the cost of government is AND they all get to pay for it.

Sonny Ortega said...

regarding your last comment: are you familiar with the optimal tax theory? Basically, optimal tax is a tax that minimizes dead weight loss and thus minimizes the distorting effect on economy.

So, taxing income is not a good idea, because you create dead weight loss, decrease the quantity traded (i.e. discourage people from making money) and slow down the economy.

The perfect commodity to tax is land, because the supply is perfectly inelastic and so no dead weight loss is created; the economy is not affected. This, IMO, should be the only tax.

The personal income tax (including all payments to the SS etc. - I don't know how it works in USA) would be the FIRST ONE I'd cancel. Well, maybe a close second after corporate taxes, because those are sneaky: they look like they're paid by these abstract "corporations", but they're in fact paid by shareholders (lower dividends), costumers (less investment => higher prices) and employers (lower wages), so everyone pays the tax, but noone knows how much.

Also, there's really no reason why people who make more money should pay more in absolute terms. They didn't do anything wrong; au contraire: they're rich because they served the consumers better than others.

Captain Capitalism said...

In theory it's all nice. But the problem is that it disconnects segments of the voting population for fiscal responsibility.

I want ONE number, 41% or whatever the rate would be. So when people say, "Well, won't somebody please think of the chillldreeeennn." Then I can say, "OK, for ALL OF US to afford that, the rate goes up to 42% and EVERYBODY gets to pay it."

Land based taxation, optimal as it might be to an academic sitting in an office, would create political conflicts between land owners and non-land owners.

sth_txs said...

Donald Trump vs. The Mandarins

by Gary North

Amateur Strategist said...

Link sure knows what to do with the GLEOC...

And I'm sure 90% of MBAs have played this game, what the heck is wrong with them!

Philanthropist said...

These kids are 'Masters' of business? Seriously? They sound totally clueless and can only repeat a couple of media talking points. Each has had a couple years to think critically since graduating, but, but, nothing? They need baby sitters, not employers.

EarlW said...

The problem with a flat tax is that you are still letting the foxes control the chicken coop. It may be 41% (your number) this year, and 43% next year.
Whatever rate we start with, there MUST be a law ensuring the the rate declines annually.

The other problem with a flat tax is that it still hides the true value of the services received. It would not be complicated to allow people to select some of the items they want to support (or not). Ex: Arts support, Foreign Aid, ad nauseum.

Finally, all taxpayers should get (or be able to view) a breakdown of where their tax money has been spent.

Sonny Ortega said...

@ Captain

Aha. That makes sense. But that would also require balanced budget, so that the politicians can't cheat through borrowing.

My proposal for land tax was based on the presumpsion that the State would be somehow (constitutionally) limited anyway, because when it's not, it ALWAYS grows and ALWAYS ends up in socialism.