Sunday, June 20, 2004

The Black Death: Is it the next Bubonic Plague or Globalization in the 21st Century?

"The bubble economy of the 90s really crashed hard, employment-wise at the end of Clinton/start of Bush's Presidency", (a quote from Paul Jenkins,Congressional Candidate for the 3rd District of Texas on Sat Mar 06, 2004).

Not sure about the answer to the title of this post, but I am pretty sure the disease is blowing in from the Far East & Pacific Rim. From where I am standing, it is a pretty strong, pungent smell.

However on the flipside of this issue, UI figures only track two measurements: New weekly unemployment claims and duration of claims.

Basically, these Key Performance Indicators (KPI) should represent the pulse of the non-skilled workforce in normal times; however, during major recessions it becomes muddied and distorted by the skilled workforce layoffs. Another important KPI they follow is the term of average unemployment which we have seen as very lengthy this go around.

Unfortunately, UI loses track of those individuals that exhaust their UI benefits and seem to fall off any tracking system thereafter -- this is a major failure point. At this juncture One Stops & WIA career centers should takeover which I believe they are doing now as of 2004. Unfortunately, a bit too little to late for bunch of families that lost there jobs between 2000-2003.

Another difference to point out regarding this recession versus prior recessions is that this recession created a precedent for massive white collar layoffs. During this recession most of the 50 states are running deficits and are cutting services by unprecedent levels including teachers in the public school system.

If one could visualize what has just occurred economically to something that is more graphic and easier to understand, I would have to offer up this image: The Black Death, the Bubonic Plague during the 14th century.

The Black Death: Bubonic Plague

In the early 1330s an outbreak of deadly bubonic plague occurred in China. Plague mainly affects rodents, but fleas can transmit the disease to people. Once people are infected, they infect others very rapidly. Plague causes fever and a painful swelling of the lymph glands called buboes, which is how it gets its name. The disease also causes spots on the skin that are red at first and then turn black.

Since China was one of the busiest of the world's trading nations, it was only a matter of time before the outbreak of plague in China spread to western Asia and Europe. In October of 1347, several Italian merchant ships returned from a trip to the Black Sea, one of the key links in trade with China. When the ships docked in Sicily, many of those on board were already dying of plague. Within days the disease spread to the city and the surrounding countryside. An eyewitness tells what happened:

"Realizing what a deadly disaster had come to them, the people quickly drove the Italians from their city. But the disease remained, and soon death was everywhere. Fathers abandoned their sick sons. Lawyers refused to come and make out wills for the dying. Friars and nuns were left to care for the sick, and monasteries and convents were soon deserted, as they were stricken, too. Bodies were left in empty houses, and there was no one to give them a Christian burial."
The disease struck and killed people with terrible speed. The Italian writer Boccaccio said its victims often

"ate lunch with their friends and dinner with their ancestors in paradise."
By the following August, the plague had spread as far north as England, where people called it "The Black Death" because of the black spots it produced on the skin. A terrible killer was loose across Europe, and Medieval medicine had nothing to combat it.

In winter the disease seemed to disappear, but only because fleas--which were now helping to carry it from person to person--are dormant then. Each spring, the plague attacked again, killing new victims. After five years 25 million people were dead--one-third of Europe's people.

My observations have yielded a number of 10 Million unemployed/under-employed Americas are among us. Is this number normal or high all through history. Can anybody tell us? I know one thing for certain is that there has never been such a high proportional amount of skilled labor in that dreadful pool of anguish.

Secondly, what value of loss does the number represent within economic terms? Just for effect lets assume the average national income and calculate the minimal effect of $330 billion economic dollars. My, my, my... that is 68% of the annual Defense Budget.

Now, let us apply a half & half scenario to this group of unfortunate again ( non-skilled + skilled average incomes ). I will just be a minute....

How about these figures for thought:

  • $590 billion annually
    $2.065 trillion lost since Jan 2001 over 3.5 years so far....
    $2.065 trillion losses on the horizon for the next 3.5 years
    $4.130 trillion estimated losses until 2008

  • If this current economic situation is not a form of the Black Plague, I don't know what else to compare it to. I will even go one step farther and declare that this event is much larger than The Great Depression due to the fact that the GDP of the nation can withstand, temporarily mind you, these kinds of annual losses. However, the consumer base will begin convulsions in early 2005 if the current course is not altered in time.