The Rise Of Informal Work

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This post by Charles Hugh Smith predicts an "underground" economy for 2009 and in the years to come.

Trends for 2009: The Rise of Informal Work

December 30, 2008


The crushing costs of formal business (State and local government taxes and junk fees rising to pay for unaffordable pensions, etc.) and the implosion of the debt-bubble economy will drive millions into the informal economy of barter, trade and "underground" (cash) work.

As small businesses close their doors and corporations lay off thousands, the unemployed will of necessity shift their focus from finding a new formal job (essentially impossible for most) to fashioning a livelihood in the informal economy.

One example of the informal economy is online businesses--people who make a living selling used items on eBay and other venues. Such businesses can be operated at home and do not require storefronts, rent to commercial landlords, employees, etc., and because they don't require a formal presence then they also fly beneath all the government junk fees imposed on formal businesses.

I have mentioned such informal businesses recently, and the easiest way to grasp the range of possibilities is this: whatever someone did formally, they can do informally.

Chef had a high fixed-cost restaurant which bankrupted him/her? Now he/she prepares meals at home and delivers them to neighbors/old customers for cash. No restaurant, no sky high rent, no employees, no payroll taxes, no business licenses, inspection fees, no sales tax, etc. Every dime beyond the cost of food and utilities to prepare the meals stays in Chef's pocket rather than going to the commercial landlords and local government via taxes and fees.

All the customers who couldn't afford $30 meals at the restaurant can afford $10. Everybody wins except commercial landlords (soon to be bankrupt) and local government (soon to be insolvent). How can you bankrupt all the businesses and not go bankrupt yourself?

As long as Chef reports net income on Schedule C, he/she is good to go with Federal and State tax authorities.

Now run the same scenario for mechanics, accountants, therapists, even auto sales--just rent a house with a big yard or an apartment with a big parking lot and away you go; the savvy entrepreneur who moves his/her inventory can stock a few vehicles at a time. No need for a huge lot, high overhead, employees or junk fees. It's cash and carry.

Lumber yard? Come to my backyard lot. Whatever I don't have I can order from a jobber and have delivered to your site.

This is the result of raising the fixed costs of starting and running a small business to such a backbreaking level that few formal businesses can survive.

One example of hundreds/thousands: 20 years ago I paid about $200 for a building permit for a $40,000 starter home. (Not in California, in Hawaii.) Locally in California you pay $350 just to have a staffer "review" your plans--even for a modest bathroom renovation. If they reject your plan for some reason, you still pay the fee. If they approve your project, the permit is much, much more. Oh, and they charge you for the electrical and plumbing permits, too.

Yes, I understand the movement to charge end users of government services; those who use the services should pay. Fair enough. But then what's happening to the 8.5% sales tax we pay, the $10,000 property taxes we pay, and the hundreds or thousands in other fees and income taxes we pay? Why don't those taxes go down if end users are picking up the tabs for "government services"?

Why have state and local government budgets all climbed by 30%-50% in a mere decade?

In a way, it doesn't matter; very few can operate a formal business profitably, and so they close their doors and scrape up a living in the informal cash economy. Local government will see its revenues wither and eventually insolvency will force a radical re-thinking of government revenues, expenses and services.

Until then, watch for the informal economy to grow and the formal economy to wither.

Click Here for the rest of the article.

http://www.oftwominds.com/blog.html

Made in USA, Assembled in China

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As our economy tanks, there will be all sorts of rip offs in the mail to get our money. Our household has stopped purchasing anything made in China. On an ad like this iHeater, it was like pulling teeth to get a strait answer as to where it was made. We had to call the telephone number on this ad to inquire as it is not apparent anywhere on the ad. The person on the other end of the phone seemed shocked at the question about the origins and it even seemed like he might be lying. This unit is actually "supposedly" made here in the US, but assembled in China. How much sense does that really make, and why should I believe a word of it? Maybe because I am blogging this, folks will make those phone calls to these representatives and perhaps the outsourcing jobs to China will come shining through as a no no from now on! We should know how cost ineffective it is to ship pieces of something across the world in order to be put together. Why...If we made the unit parts here can we not put the unit together here? I would not be surprised if this unit would be recalled soon. I have zero faith in this product and I resent the fact that it would even be legal in this country to sell it. Hopefully there won't be too many house fires and deaths as a result.

We Can Make It Work!

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New Color for Fiestaware

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We collect Fiesta dinnerware by Homer Laughlin, and I neglected to post the new color this year. The new color for 2008 is Chocolate.

A Mural From The Museum Of Trash

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I am really into murals and public art. I truly feel there should be a museum of trash in every state. Check out Hartford Connecticut's Museum of Trash. I found this museum through this blog.

The mural is called History of Trash Mural, by Ted Essestyn.
http://www.crra.org/pages/edu_museums.htm#htfd Copy and Paste this address for a more detailed description of what all is in this mural. It takes you to a land management site where you can click on a link that will take you to an Adobe format description of this mural. It is worth the effort.

There is no such thing as clean coal!

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I mean really. How can you see something like this and still believe in "clean coal"?

Best Christmas Present Ever

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The Federal Lands that Bush was trying to sell to the big oil companies in the final days of his office have been saved just in time for Christmas. Thanks Tim Dechristopher!

Lets Put The X BAck In Christmas

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Well, Well, Well

Blogroll Me! "God said fire, not a flood next time!"

Will Ho For Booze

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The Nightmare Before Christmas

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Queen Najla and The Columbus Womens Drum Chorus

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Come see Queen Najla and The Columbus Womens Drum Chorus tonight at Norka Futon.

Two Letters

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Two letters from Economicrot.

Dear Employee,

Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation's history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis......................As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.
Thank you for your urgent action and ongoing support.

Troy Clarke
President
General Motors North America
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From Gregory Knox,

In response to your request to call legislators and ask for a bailout for the United States automakers please consider the following, and please also pass this onto Troy Clark, the president of General Motors North America for me.

You are both infected with the same entitlement mentality that has bred like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping the nation, awaiting our new "messiah" to wave his magical wand and make all our problems go away, while at the same time allowing our once great nation to keep "living the dream"... The dream is over!

The dream that we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded "laborers" without paying the price for these atrocities...and that still the masses will line up to buy our products. Don't tell me I'm wrong. Don't accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle and countless other automotive OEM's and Tier ones for 3 decades now throughout the Midwest and what I've seen over the years in these union shops can only be described as disgusting.

Mr. Clark, the president of General Motors, states: "There is widespread sentiment in this country, our government and especially in the media that the current crisis is completely the result of bad management. It is not... "

You're right - it's not JUST management...how about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass...so they can come in on the weekend and make double and triple time...for a job they easily could have done within their normal 40 hour week. How about the line workers who threaten newbies with all kinds of scare tactics... for putting out too many parts on a shift...and for being too productive (mustn't expose the lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?!?) Do you really not know about this stuff?!?

How about this great sentiment abridged from Mr. Clarke's sad plea: over the last few years ...we have closed the quality and efficiency gaps with our competitors. What the hell has Detroit been doing for the last 40 years?!? Did we really JUST wake up to the gaps in quality and efficiency between us and them? The K car vs. the Accord? The Pinto vs. the Civic?!? Do I need to go on?

We are living through the inevitable outcome of the actions of the United States auto industry for decades. Time to pay for your sins, Detroit.

I attended an economic summit last week where a brilliant economist, Alan Beaulieu surprised the crowd when he said he would not have given the banks a penny of "bailout money". Yes, he said, this would cause short term problems, but despite what people like George Bush and Troy Clark would have us believe, the sun would in fact rise the next day... and something else would happen...where there had been greedy and sloppy banks new efficient ones would pop up... that is how a free market system works...it does work...if we would let it work... But for some reason we are now deciding that the rest of the world is right and that capitalism doesn't work - that we need the government to step in and "save us"...save us, hell - we're nationalizing...and unfortunately too many of this once fine nations citizens don't even have a clue that this is what's really happening...but they sure can tell you the stats on their favorite sports teams...yeah - THAT'S important... Does it occur to ANYONE that the "competition" has been producing vehicles, EXTREMELY PROFITABLY, for decades now in this country?... How can that be??? Let's see... Fuel efficient... Listening to customers... Investing in the proper tooling and automation for the long haul... Not being too complacent or arrogant to listen to Dr W Edwards Deming 4 decades ago. Ever increased productivity through quality, lean and six sigma plans... Treating vendors like strategic partners, rather than like "the enemy"... Efficient front and back offices... Non union environment...

Again, I could go on and on, but I really wouldn't be telling anyone anything they really don't already know in their hearts I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into - my children do this on a weekly, if not daily basis, as I did at their age. I do for them what my parents did for me (one of their greatest gifts, by the way) - I make them stand on their own two feet and accept the consequences of their actions and work them through. Radical concept, huh...

Am I there for them in the wings? Of course - but only until such time as they need to be fully on their own as adults I don't want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government.

Detroit and the United States need to pay for their sins. Bad news people - it's coming whether we like it or not the newly elected Messiah really doesn't have a magic wand big enough to "make it all go away" I laughed as I heard Obama "reeling it back in" almost immediately after the vote count was tallied..."we might not do it in a year... or in four..." where was that kind of talk when he was RUNNING for the office. Stop trying to put off the inevitable ...That house in Florida really isn't worth $750,000...People who jump across a border really don't deserve free health care benefits... That job driving that forklift for the big 3 really isn't worth $85,000 a year...

We really shouldn't allow Wal-Mart to stock their shelves with products acquired from a country that unfairly manipulates their currency and has the most atrocious human rights infractions on the face of the globe... That couple whose combined income is less than $50,000 really shouldn't be living in that $485,000 home...

Let the market correct itself people - it will. Yes it will be painful, but it's gonna be painful either way, and the bright side of my proposal is that on the other side of it is a nation that appreciates what it has...and doesn't live beyond its means...and gets back to basics...and redevelops the work ethic that made it the greatest nation in the history of the world...and probably turns back to God.

Sorry - don't cut my head off, I'm just the messenger sharing with you the "bad news"

Gregory J Knox
President
Knox Machinery, Inc.
Franklin, Ohio 45005

12/18/2008 2:07 PM

Lydia Brownfield at Thirsty Ear Tonight!

Come see Lydia tonight at The Thirsty Ear. Don't miss the show tonight! She won't be back playing in Ohio until mid-January! Come on out to the Ear tonight and get your face rocked off!

Merry Christmas From The Family

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I wish I had written this song.

Brothers Drake Fine Mead

Are you looking for something special to give for Christmas this year? Consider giving the gift of Mead. Brothers Drake Fine Mead is located at 206 Oak Street, Columbus Ohio. Tasting and sales are Tuesday-Saturday, and group events are by appointment. I know these guys, and their product is top shelf. Celebrate in good cheer with Eric, Woody, Ben and Betty.

ECONOMICROT

ECONOMICROT

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Another Truth Teller

Blogroll Me!I am reading this guys book right now. The Book is Called The Black Swan.

Bush's Final F.U.

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It is hard to imagine that George W. Bush could do much damage in the time that he has left in office. But he is making the best of the time he has left. Click here for the latest scoop on his "midnight regulations".

Queen Najla tonight Healing Spirits Sacred Songs

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Come hear Queen Najla and The Columbus Women's Drum Chorus play tonight at The Christian Spiritualist Temple

THE EVENT
Healing Spirits Sacred Songs

Join us as we celebrate the season with sacred rhythm and song from around the world, including carols, poetry, chanting, and drumming

Saturday, December 13, 2008, 6:30 PM to 9:00 PM

The Christian Spiritualist Temple

77 South Sixth Street (Corner of Sixth and State) Columbus 43015; parking west of the church
No admission charge/donations accepted

Featured artists include:

Vocalist James Brittan
Spoken-word Artist Rosemary Valentine
The Cosmic Soul Band
Wahru Cleveland and the Columbus Women's Drum Chorus
The Women's Sacred Song Circle
Flutist Christina Cappelletti

Questions? Contact postmaster@christianspiritualisttemple.org

Kunstler Cast

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I have written about James Howard Kustler several times and shown you some of his paintings and his writings. Today though, after the auto industry's bailout was denied by the republican senate, I found myself wanting to hear my weekly Kunstler Cast. James has cryptically written that "most people have bought their last automobile and just don't know it yet"! The site is temporarily unavailable this morning, but I imagine James is busy writing something profound for us about the new developments. Check out the pod cast for his latest commentary.

Uncle Sam's

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Here in Columbus Ohio the best pawn shop is Uncle Sam's.
I feel a fondness for Uncle Sam's Pawn Shop and the employees there. I confess I have never felt that way in a bank. As the financial system is folding like a house of cards, pawn shops are thriving. Uncle Sam's has the best selection of musical instruments. If you buy one set of guitar strings you get another set for free. They have been in business since 1950. Not only do they make loans, but they also have layaway plans. The PayDay lenders have closed shop and the banksters are no longer loaning money to the "little guy". I am grateful to have the option of getting a small loan to get me through the tough times. 3 Cheers for Uncle Sam's Pawn Shop.

The Big Three

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Compare

Here is 21 Elmhurst Street Detroit Michigan in 1969 and the same spot in 2001. Once a thriving neighborhood and now a neighborhood in decline.

It is doubtful that a bailout for the big three will improve places like this.

Notice how in 69 the street is full of cars, and in modern times it has become a desolate place. Notice the lack of Elm Trees in 2001. What was once welcoming front yards are now behind chain link fences. This could very well be the future for any city in America. I snagged these two photos from a discussion thread on a site called Life After The Oil Crash. LATOC is A site totally dedicated to the ramifications of Peak Oil. Detroit is one of the cities that could very well thrive in the future as it is strategically located for trade. Unfortunately though, the age of the automobile is almost done. Perhaps some of the new greener technology can be produced there instead of over seas. Perhaps neighborhoods like Elmhurst Street will thrive again.

Martin Janis Center due to close Dec. 31st

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The Martin Janis Center will close December 31st due to budget cuts. This unique center is housed on the border of the State Fairgrounds and it is a shame that it has to close. It is located on a main busline and is completely handycap accessable. The building itself is uniquely designed to resemble a pyramid. I have been attending a ceramics class there off and on for a year. The layout is great in that the lower level is jam packed with work spaces that house The Columbus Model Train Club (pictured here), a complete wood shop that is staffed by volunteers. It has the only Lapidary workshop that I know of in Columbus. I haven't explored the Stain Glass workshop, but I have worked in the Ceramic lab and there are several wheels and kilns to meet the needs of potters of all skill levels. On the ground floor there is a beautiful stage that seats over 400 people. Also a mirrored dance floor that is perfect for dances and enough room for a live band. The building is well maintained and staffed. I have not visited the library or the fitness room, but I plan on looking in on these spaces and taking some pictures to share on this blog. It is my understanding this 38,000 square foot space is staffed by 3 with 1 maintenance person. There is a kitchen with a nice cafeteria that serves $4 meals. This facility is leased for a $1 a year. All in all there are 36 different classes and programs. I will keep you posted as to what is happening with this loss. I am hoping that enough people will step up to the plate and try to work something out. It would seem to me that the Davis Center curriculum could easily be merged with the Janis Center rather than lose both these recreation centers. I for one will be writing letters to my legislators and city council members to try to get them to reconsider. In times like these we need to figure out how to utilize spaces such as The Janis Center rather than keep them closed. I think we could raise the prices for the classes and rent out the dance floor and auditorium. I can imagine keeping the Center open on weekends to expand its use rather than close the doors on the opportunity to make more money.

Lydia Brownfield Rocked Norka Last Night!

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We had a blast at Norka Futon last night for the December Gallery Hop. I don't usually blog about an event after it has passed, but I was very impressed with the performer this time around. If you get a chance, you got to see Lydia Brownfield. I will be blogging about her next gig at The Thirsty Ear Thursday December 18th.

Trader Joe's alternative grocery store

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Once a month we shop at Trader Joe's here in Columbus. There are two Trader Joe's in Columbus Ohio. The selection of food is top notch. Check out their website for the history and location nearest you. It is the best place to shop for party food as well as your regular grocery shopping. If you bring your own grocery bag, they give you a raffle ticket to fill out for a drawing of $25 value of Trader Joe's groceries. That is true incentive to do the right thing, and stop wasting plastic and paper each time you shop. Hope to see ya there.

http://en.wikipedia.org/wiki/Trader_Joe%27s

Peter Schiff Gets Cut Off !

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I blogged about Peter Schiff a couple days ago. His Wall street predictions have been right on the money. I can't resist posting his most recent YouTube where he gets cut off.

RIP Odetta Holms

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Adaptive Reuse Of Car Parts

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When the Auto Companies go out of business then we will need to try to salvage what we can. Here are a pair of sandals from the 1970's the soles made from tire tread. I had a pair of these in the 70's, and I remember that the rest of the sandal wore out but the tread was still in tact.

Peter Schiff Tells It Like It Is

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I admit that I am a skeptic as to the direction that Wall Street and the currant Government is choosing for us before Barack Obama can even take office.

Peter Schiff has correctly predicted the collapse of the housing market 2007 and was ridiculed every step of the way. He is now predicting the collapse of this economy and we had best listen to what he has to say. I would feel much more comfortable having Peter be a key player in the next administration as he knows that we can not print our way out of this mess. Check out the latest YouTube from a recent radio program.

Two Trees

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There are two gorgeous trees (Redbud, and Yellow Ash) on my street that my girlfriend harvested seeds from this year for my seed exchange website Got Seeds? So far no one but Pamela from Peak Oil wants to trade.
This time of year seems so dreary here in Ohio. It fills my heart with gladness to imagine spreading the beauty of these trees and plants. Winter may not seem so long if I can keep planning for next years garden.