Employment in the Great Stagnation

Lester Thurow wrote "The Zero Sum Society" in 1980…

Written during a period of acute economic stagnation in 1980, The Zero-Sum Society discusses the human implications of economic problem solving. Interpreting macroeconomics as a zero-sum game, Thurow proposes that the American economy will not solve its most trenchant problems-inflation, slow economic growth, the environment-until the political economy can support, in theory and in practice, the idea that certain members of society will have to bear the brunt of taxation and other government-sponsored economic actions.

Thurow is 72 now, and out of the public sphere. History was not kind to many of Thurow's speculations, but if I still had my copy I'm sure it would be interesting reading today.

We don't remember the 80s now. Those were the days when Japan was going to take over the world, when a block in Tokyo was worth more than Manhattan. My 1987 Panasonic 8086 was better in every way than any other comparable PC. It was obvious that the entire PC industry would move to Japan, so panicky tariff threats forced Japanese companies to give up the desktop market (they went into laptops instead). Congressmen smashed a Toshiba radio with sledgehammers. In 1989 Sony's Akio Morita co-authored "The Japan That Can Say No" (Do follow that wikipedia link. Morita's criticisms of the 1980s US are particularly interesting.)

Then it all changed. The 90s were good for America, but not for Japan. Concerns about structural unemployment, and about American losing manufacturing, were forgotten until the Great Recession, when it all came back again. I wonder, in retrospect, if the structural unemployment of the 1980s will be seen as the beginning of a trend that resumed with the tech crash of 2000. The picture now is even grimmer than it was in the 80s ...

How Bad Is It? | Talking Points Memo

Last month I showed you what kind of private sector job growth was needed to get us back to pre-Great Recession employment levels. For example, at 200,000 new net private sector jobs per month, it takes 12 years to close the jobs gap, according to Laura Tyson.

The numbers out this morning put July private sector job growth at 71,000. As you can see from this chart, 71,000 jobs per month is literally off the chart on the low end. The Brookings researchers figured it wasn't worth charting anything less than 150,000 net jobs per month because the time horizon for that sort of 'recovery' is too distant to even contemplate....

Or perhaps, even as the gloom deepens, the wheel will turn again. Even though I am a student of Krugman and DeLong, I do wonder how well our economics can model this whitewater world. I honestly don't know what will happen next. I really shouldn't try to make a prediction.

But I will, because, hell, this is the blog where I predicted $5/gallon gas by 2011 -- just before the world economy went off a cliff.

My prediction is that we are seeing a continuation of a secular trend that started in the 70s with the rise of Japan, was transiently interrupted in the 1990s, and resumed about 10 years ago.

This is a trend driven by technology (cheap computing primarily) and by the extremely rapid industrialization of most of the world. These developments are creating prosperity around the world, but they're also producing turbulence and dislocation. When changes are too fast, our economy blows up. Then we put it back together again (sooner with Obama, later with the GOP) until it blows up again.

This turbulence isn't going away. Even as China runs short of labor, India has a vast supply. IT innovation isn't slowing down, and the robots are coming (from Japan, interestingly. The Sun shall rise again.) Heck, Skynet is probably coming too, not to mention our transiently deferred Peak Oil (I'm holding to my sunk costs!).

In America this turbulence favors those with substantial resources, with the capacity to adapt, and with the talents to compete. It is hard, however, on non-wealthy Americans with less than 70th percentile cognitive and social skills. It is exceedingly hard on the bottom 20th percentile. They are the mass disabled.

It's easy to think of solutions to America's problems (see also - 2007, 2004). Health Care Reform was the first troubled step towards separating benefits from jobs. Even without encouragement the market will find new ways to absorb low skilled labor. We can even figure out ways to emulate the Japan of 1990, when the staff/customer ration seemed to be about 1 to 1.

It's easy to think of solutions, but hard to make them work when people like Glenn Beck are cultural heroes.

This is going to be tough.

Public references

Robert Reich (The Great Decoupling of Corporate Profits from Jobs)

Krugman - it's not 1982, it's 2001 on steroids

FiveThirtyEight: Politics Done Right: Labor Force Realignment and Jobless Recoveries

FT.com / Ed Luce - The crisis of middle-class America

… The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the ­multiple is above 300.

The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.

Andy Grove on the Need for US Job Creation and Industrial Policy « naked capitalism - the return of tariffs, and the editorials of the 1980s

Bob Herbert - A Sin and a Shame - NYTimes.com

Comparing This Recession to Previous Ones: Job Changes - Catherine Rampell - NYTimes.com

David Leonhardt on the Ratf*^#: Understanding the U.S. Reponse to the Great Panic - Grasping Reality with Both Hands

How to Make an American Job Before It's Too Late: Andy Grove – Bloomberg

The Ant Tribe - Schott's Vocab Blog - NYTimes.com

The Speculist: What if the Jobs Are Never Coming Back?

Robert Reich (The Future of American Jobs)

China’s Industrial Heart Facing Acute Shortage of Factory Workers - NYTimes.com

The New Poor - The Economy Shifts, Leaving Some Behind - NYTimes.com

Plan B - Skip College - NYTimes.com

Robert Reich - Are Today’s ‘Entrepreneurs’ Actually the Unemployed? - NYTimes.com

Shaken and Stirred - The Atlantic 2005 - predicting upheavals

Robert Reich: Obama, China, and Wishful Thinking About American Jobs

Philip Greenspun - unemployed = 21st century draft horse.

Gordon's Notes related

Apple's battery charger, occult inflation, and the future of American industry

How could Krugman be wrong?

I, Robot. The alternative to Foxconn.

Post-industrial employment: adjusting to a new world (lots of interesting links)

Causes of the Great Recession: China, GPSII and RCIIIT. Now for Act III.

American crisis – imagining a way out

The paradox of 21st century prosperity

Why the US can't separate benefits from employment

Mass disability and Great Depression 2.0

Where has the money gone? To the very American oligarchy.

The day of the American engineer has passed

Neo-Feudalism: Return of the Trades (2004)

On redistribution

Jared Bernstein & Brad DeLong on "Outsourcing": a dialog with interesting discussions

Signs of the end times? Or just new times ... (2005 - conspicuous consumption before the crash)

Krugman on globalization: how to manage the losers (2007)

Resolution 242 - discounting sunk costs

When I was new, one of my hobbies was visiting cults. The recruiters loved me; I suppose I had a credulous face. It was a surprisingly educational hobby, but these days the cults are suspicious. My face is worn.

Now my hobby is self engineering. Resolution 242 is to discount sunk costs in everyday life ...

Sunk Costs - Wikipedia

... In economics and business decision-making, sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered....

In traditional microeconomic theory, only prospective (future) costs are relevant to an investment decision. Traditional economics proposes that an economic actor not let sunk costs influence one's decisions, because doing so would not be rationally assessing a decision exclusively on its own merits....

Evidence from behavioral economics suggests this theory fails to predict real-world behavior. Sunk costs greatly affect actors' decisions, because humans are inherently loss-averse and thus normally act irrationally when making economic decisions.

Sunk costs should not affect the rational decision-maker's best choice...

If you look for sunk costs, you will find them.

When I make a wrong turn, I value the time I've lost. I try to find a route that will conserve it. I ought to discount my lost time and turn around, and take the shorter route. I prefer Pepsi to Coke, but I like the first half of a can of Diet Coke. I don't like the last half, I should throw it out. If my food is no longer tasty, I should throw it away (the calories, in my world, are a harm, not a benefit).

And, of course, there are all the sunk costs of corporate strategies, of long campaigns, of hours of argument. Costs that are very hard to ignore when times change.

With a little bit of practice I'm finding it fairly easy to discount sunk costs in everyday life. Against the pain of turning the car around, I have the satisfaction of defeating nature's programming.

It feels to me like the practice scales. Throwing away a snack when it stops being delicious seems to make it easier to discard obsolete strategies.

Discounting sunk costs is indeed a useful discipline.

After Wave, who will Google kill next?

In my 3rd edition of Google - The Quick, The Sick and the (near) Dead I had Wave on the Walking Dead list ...

Gordon's Notes: Google: The Quick, the Sick and the Dead - 3rd edition:

... The Walking Dead

Blogger (because Google can't fix the #$!$!$ draft editor, there's still no mobile view, and the 5000 item limit goes unfixed)
Google Groups
Google Sites
Google desktop (search)
Google Base
Gmail Tasks (forgotten, useless)
Knol
Google Wave
Firefox/IE toolbars (killed by Chrome)
Google Talk (neglected, Chat confusion)
Google Parental Controls

Now that Wave has died, what's next? I just checked Google Base, and it's now worse than walking dead. On the other hand, Google quietly fixed Blogger's 5000 item list, so it's moved up to the merely Sick list.

My votes for the next four to die ...

• Google Base - though arguably it's dead now.
• Google Desktop (widgets)
• Google Groups
• Knol

Profile of the tech giants – some surprises

In the midst of an unremarkable summary of the state of the Microsoft-Intel alliance, The Economist has a remarkable graphic (click for full size):

 

I was surprised by …

• IBM’s net income: Do they really deliver that much value?
• Apple has a lot more employees than I’d imagined. They’re more than 1/3 of Microsoft’s head count!
• How many people work for Apple, Google and Intel (non-consulting companies). In each case I’d have guessed a fraction of this total. (I knew Microsoft had a huge head count)

It takes a lot of people to run a tech company …

Pole of inaccessibility

This morning I listened to the excellent IOT program on Antarctica. I didn't know ice flowed like molten meta.

Because of that, for the first time, I noticed "Pole of Inaccessibility" on a world map that included the Antarctic ...

Pole of inaccessibility - Wikipedia, the free encyclopedia

... The Southern Pole of Inaccessibility is far more remote and difficult to reach than the Geographic South Pole. On 14 December 1958, the 3rd Soviet Antarctic Expedition for International Geophysical Year research work, led by Yevgeny Tolstikov, established the temporary Pole of Inaccessibility Station (Polyus Nedostupnosti) at 82deg 06′S 54deg 58′E. A second Russian team returned there in 1967. Today a building still remains at this location, marked by a bust of Vladimir Lenin that faces towards Moscow, and it is protected as a historical site. Inside the building there is a golden visitors' book for those who make it to the site to sign.

Wouldn't you love to be able to sign that book? I mean, really.

Whitewater world - the insane numbers of iOS and Android

Tim Bray works for Google, so he's not a great source on the state of Android phones. (He's a smart critic of the iPhone though.)

On the general mobile market though, he's very credible ....

ongoing by Tim Bray - The Great Game

... The Numbers Are Really Big · Insane, I mean. The billion-plus phones sold per year. The number of active subscriptions, which is greater than half of the human population. The number of new Android devices that check in with Google every day. The line-ups outside Apple stores for every new iOS device. The hundreds of thousands of apps. The ridiculous number of new ones that flow into Android Market every day. Everywhere I look, I see something astounding.

This is the big league; bigger today than the computer industry ever was, and growing fast. This is as fierce a concentration of R&D heat and manufacturing virtuosity and distribution wizardry and marketing mojo as humanity has ever seen...

Robotics will be huge over the next decade, but today this is where the revolution is. The numbers are insane. Within seven years most of the world's population between the ages of 20 and 60 will have a net connected high powered computing device in their household. [1]

This is not business as normal. This is the whitewater world. The Great Disruptors of technological innovation and the rise of China and India aren't going away.

Expect severe turbulence.

[1] Moore's Law. Within 3 years it's so cheap to put an app phone together that there's not much cost advantage to build a dumb phone. Then it's all about software, and that price will fall to zero.

Lessons from YouSendIt - breaking up is hard to do

Per the hard-to-find directions, I used the support request form to request YouSendIt account cancellation.

This is what I got back.

YouSendIt: Online File Sharing and collaboration with FTP Replacement - Send Large Files and Email Attachments with Managed File Transfer Solution

... We're sorry but your submission did not complete properly, please try again. If this problem persists, please contact Customer Service...

I'd been getting spam from them. Looks like they're goners.

There's a lesson here. Be very careful what you sign up for. There may be no way out ...

51. Not as bad as expected.

This is for men aged 38 to 45. Everyone else, turn the page.

When I turned 5 nanosols (50 solar years), I did a status and lessons learned review.

I just reread it. I still kind of like it, which is pretty good by my standards. It's not as bad as I'd remembered.

51 doesn't get that treatment. But, in contrast to my recent run of bleak posts, I realized I could say something positive.

It's not as bad as I'd expected. My post-fifty buddies, like primips [1] playing mindgames on nullips, pictured a train wreck. Ok, so that's mostly true. But there are exceptions. So don't abandon hope.

Here are four things at year 51 that are better than expected.

1. After fifteen years of struggle, I have a good solution for my memory fragments. Thank you RespophNotes, Simplenotes and Notational Velocity!
2. I had thirty years of a bad back that got real bad in my 40s. Now I have a great back, with no surgery. Thank you Physicians Neck and Back Clinic.
3. Thanks to #1 I came across a note I wrote 10 years ago. I listed a number of habits and practices that were making me less productive than I could be. None of them are true any more. Honest. Some of them I figured out, others life beat out of me (with brass knuckles).
4. I looked in the mirror about six weeks ago and my denial collapsed. My muscles were not coming back. I wasn't 10 lbs overweight any more, I was 20 lbs overweight and getting worse. I can't exercise more [2], so I adopted a radical new diet program - EALL [3].

There. Don't you feel all encouraged now?

[1] Med slang for women with one spin in labor and delivery.

[2] That's a lie of course, but it's less of a lie than you think.

[3] EALL - "Eat a lot less" and use a good scale daily. I had to permanently drop my food intake around 40, so this is the 2nd permanent drop. I'm not looking forward to drop #3. At least we're saving money.

Apple's battery charger, occult inflation, and the future of American industry

<rant>

This is important. Stick with me for a moment ...

Apple is now selling a battery charger. Yeah, a $30 battery charger.

Apple Battery Charger - The energy-efficient way to power your accessories.

... Each Apple Battery Charger comes with six high-performance AA NiMH batteries .... these batteries have an incredibly long service life — up to 10 years ... extraordinarily low self-discharge rate. Even after a year of sitting in a drawer, they still retain 80 percent of their original charge...

...like Apple power adapters, the Apple Battery Charger is designed with a removable AC plug, so you can replace it with plugs that fit different outlets around the world.

We used to have NiMH chargers. We owned two or three. They all failed. The batteries had very short lifespans. They discharged very quickly. We gave up.

Now Apple makes a charger and they pick the batteries. It works with the extension cables we have for other Apple chargers. It works with the international plugs we have. It addresses every problem we've had with NiMH chargers. We'll buy it for $29.

This is important.

Why?

It's important because from about 1997 through 2007, during the years when China became the world's dominant manufacturer and upset the world's equilibrium, befuddled consumers bought on price alone. Manufacturers trashed their brands in a desperate bid to shed costs, and quality plummeted on everything from toasters to heparin. The price of a VCR/DVD player fell by 50%, but the lifespan fell by 75%. Economists claimed low inflation even as they adjusted prices for "increasing" quality, but in reality quality was falling off a cliff. We had much more quality-adjusted inflation than we were measuring.

In 2008 the economies of the industrialized world collapsed, unable to adapt quickly enough to the twin shocks of the rise of China and India and the machines. Since then consumers have bought far more carefully, and the quality collapse stopped. The drop in inflation, adjusted for quality, was substantially greater than we've measured.

There was one exception among manufacturers over this past decade.

Yeah. Apple. The one significant brand that didn't die.

I have a lot of issues with Apple. Their quality, especially their software quality, is overrated. Even so, there's a reason that 8/10 of our tech money goes to them (not counting the significant portion that pays for telecomm services). Apple, led by the most eccentric and powerful CEO since Howard Hughes and Seymour Cray, behaved like a privately held company with public company finances. When everyone else squeezed margins, Apple's margins rose. Eveyone else fought on price, Apple fought on design and value. We know who won.

If Apple made a toaster, they'd own the toaster market. I'm half-convinced they're going to do that.

If Apple made a van, it would have a 100 amp generator, diagnostics posted to MobileMe with an iPad app, indicator lights that tell you what freakin' door is open, five plug/USB outlets (they'd omit the ugly cigar lighter thing of course), a non-brain-dead security system, a fantastic sound system a geezer could run, a simple key to complement your iPhone remote control app.

I'd buy that freakin' van.

Pay attention America! This ain't hard!

No, actually, it is hard. It's not the technology that's hard. It's not the marketing that's hard. It's trying to be Apple without Steve Jobs and with the baggage of a failed model for organizing work. The American publicly traded company is obsolete.

We're in aftermath (we hope) of the greatest financial collapse in 80 years. If we'd handled the Great Recession (or is it GD II?) like Hoover did GD I, we'd have work camps by now. Part of our rehabilitation requires effective regulatory oversight. Another part, a part I've more to write about, will require solutions to the mass disability of the modern era.

The last part of our rehabilitation requires an alternative to the failed model publicly traded company. We can't rely on one-of-a-kind obsessed all-powerful super-wealthy genius CEOs. We need a different form of corporate ownership. One that will produce the toasters and vans we want with the value we need.

</rant>

Steve Jobs on Parental Controls - the Mac is dead

Sometimes, if you send an email to sjobs@mac.com, someone responds under the name Steve Jobs.

I assume it's mostly a PR person, but I suspect sometimes it is Steve Jobs. I bet Howard Hughes, in his prime, did something similar.

I've never written Jobs about my suffering with OS X Parental Controls or the MobileMe debacle that did me in. Still, I can imagine how the correspondence might go ...

Dear Steve, 

I've tried and tried to make Parental Controls work, but, honestly, they don't. If all the bugs were fixed the very latest version would probably work with the web of 2003. These days, however, all the web sites of interest use https encryption, which isn't supported by OS X Parental Controls.  MobileMe is one of the very worst offenders. Even when we hack around the limitations, Parental Controls is too broad. We want access to our Google Apps, but not to Google Image Search ....

"Jobs" would reply ...

 Buy the kid an iPad.

He'd be right. The family Mac is dead. iOS is the future.

I've wasted weeks of effort trying to make an OS X machine relatively child safe. I can do that with an iPhone or iPad in a few minutes -- assuming the iPhone is configured to sync to the cloud.

All I have to do is turn off three things: Safari, YouTube, and App Install [1]. Then I install purpose-specific apps that provide select services (NOT web apps). So I install Wikipanion instead of linking to Wikipedia. Wolfram Alpha instead of Google Search. Apple's Contacts and Calendar (sync to our Google Apps) rather than Google's web apps. The NYTimes app rather than a link to the NYT web site.

History has moved on.

[1] With iOS 3 if you disable App Installation on the iPhone you can't install from iTunes either. There's no UI indication of what the cause is, the iTunes App Install screen is just non-responsive.

Megan McCardle is the John C Dvorak of the Atlantic

The Atlantic's Megan McCardle can't be as dumb as she seems to be.

She must be the John Dvorak of news journalism ...

John C. Dvorak - Wikipedia, the free encyclopedia

... In a chat with Dave Winer in June 2006, Dvorak mentioned how he deliberately upsets Mac users in order to boost his site traffic...

Dog are seriously weird animals

Dogs are really, really, weird ...

Dog brains in a spin

... No other animal has enjoyed the level of human affection and companionship like the dog, nor undergone such a systemic and deliberate intervention in its biology through breeding, the authors note. The diversity suggests a unique level of plasticity in the canine genome...

It's as though they're evolutionary speed freaks ...

Survival of the cutest' proves Darwin right

... the skull shapes of domestic dogs varied as much as those of the whole order [carnivora]. It also showed that the extremes of diversity were farther apart in domestic dogs than in the rest of the order. This means, for instance, that a Collie has a skull shape that is more different from that of a Pekingese than the skull shape of the cat is from that of a walrus.

Dr Drake explains: "We usually think of evolution as a slow and gradual process, but the incredible amount of diversity in domestic dogs has originated through selective breeding in just the last few hundred years, and particularly after the modern purebred dog breeds were established in the last 150 years."

By contrast, the order Carnivora dates back at least 60 million years. The massive diversity in the shapes of the dogs' skulls emphatically proves that selection has a powerful role to play in evolution and the level of diversity that separates species and even families can be generated within a single species, in this case in dogs.

Much of the diversity of domestic dog skulls is outside the range of variation in the Carnivora, and thus represents skull shapes that are entirely novel.

Dr Klingenberg adds: "Domestic dogs are boldly going where no self respecting carnivore ever has gone before.

"Domestic dogs don't live in the wild so they don't have to run after things and kill them - their food comes out of a tin and the toughest thing they'll ever have to chew is their owner's slippers. So they can get away with a lot of variation that would affect functions such as breathing and chewing and would therefore lead to their extinction.

"Natural selection has been relaxed and replaced with artificial selection for various shapes that breeders favour."

Domestic dogs are a model species for studying longer term natural selection. Darwin studied them, as well as pigeons and other domesticated species.

Drake and Klingenberg compared the amazing amount of diversity in dogs to the entire order Carnivora. They measured the positions of 50 recognizable points on the skulls of dogs and their 'cousins' from the rest of the orderCarnivora, and analyzed shape variation with newly developed methods.

The team divided the dog breeds into categories according to function, such as hunting, herding, guarding and companion dogs. They found the companion (or pet) dogs were more variable than all the other categories put together...

What other animal lives in a world where natural selection has been relaxed and intra-species variation may be immense?

Now to breed a dog that lives for thirty years ...

My iPhone Case - from Apple's FIRST emergency case distribution program

Apple's distributing mostly-black iPhone cases, but there's a 3-8 week wait.

In the meanwhile, I came across this Apple case while cleaning out a closet. It came, I think, with the third generation iPod.

Back then Apple's customers were furious because the lovely shiny jewel was seriously scratchable. After a few days of use it looked like cat fodder.

Apple's grudging response was to include a soft rubber pouch with each iPod. It looked cheap, but the darned thing was seriously well made. I used it for years.

Now it's the slip cover case for my iPhone 4. It gives some protection in my pocket, and it protects the phone from my antenna-killing hands. It will last until my second Apple customer-appeasing case arrives.

History and demographics - notes from a long commute

I've driven from the Great Lakes region to Montreal about twenty times over the past thirty years.

The route has changed.

Two years ago we stopped traveling along the old Erie Canal route. The northern US border, from the Lakes to Vermont, had become too depressing. There were too many signs of dying communities. History moved on eighty years ago, but the post-9/11 collapse of Canadian tourism and the the lousy US economy of the past decade have accelerated the long decline.

This year we're seeing the same changes along the Canadian route. Businesses are vanishing, gas stations are closing, communities are disappearing. In the towns we visited we saw almost no children. I suspect the causes are similar to the American changes, but the demographic decline seems even more marked. Some of these northern communities depended on the lumber trade; they would have had good years before the housing crash, very bad times now.

Fifteen years ago we thought that the net might allow these communities to prosper. I was a small town physician for five years in the 90s, and I liked where I lived. Maybe that will still happen, but there's a lot of competition from places with better airports and milder climates.

It's a story as old as the ghost towns of the old west. These communities are small enough that a few energetic people will keep a few of them alive, but most will fade away.

Update 8/26/10: Three of the cities on the list of the top 10 dying American Cities were related to the old Erie canal and NE manufacturing route: Cleveland, Buffalo and Albany.

Annals of evil businesses - tricking deadbeats

In desperate places, humans do desperate things.

We've a long way to go before we reach the depths of China's shame - the Sung dynasty's North Korea. We're not a different people though. Today can see echoes of that unspeakable desperation in the new businesses of mass disability America.

One of those new businesses is the collection of debts after the statute of limitations has expired. The trick is to get the deadbeat to pay just a tiny portion of the debt ...

Old Debts Never Die - They Are Sold to Collectors - NYTimes.com

... [bad debt] claims are routinely sold on debt collection Web sites, where out-of-statute debt is for sale for a penny or less on the dollar. In most states, it is legal for collectors to pursue out-of-statute debt, as long as they do not file a lawsuit or threaten to do so....

... consumer groups and even some industry consultants argue that collectors routinely harass debtors for unpaid balances that have exceeded the statute of limitations. In some cases, collectors have unlawfully added fees and interest... 

... “It’s so cheap, if you can work it smart, you don’t need to collect that much,” said John Pratt, a consultant to the debt-buying industry and an author of “Debt Purchasing: An Investor’s Guide to Buying Debt” 

... In a report issued July 12, the Federal Trade Commission called for “significant reforms” in the debt collection industry and recommended that states change the murky laws that govern out-of-statute debt. The statute of limitations for debt varies by state, generally from three to 10 years. In many states, collectors can restart the clock if they can persuade the consumer to make even a tiny payment toward the old debt...

... “The point of the payments is not so much to get the money” as it is to restart the clock...

A lovely trick. Use every possible trick to get the debtor to make a small payment, and then they're trapped.

Of course most of the people doing this job will convince themselves they're only repaying deceit with deceit in the cause of virtue. That's a very human rationalization.

If we don't find a way to employ millions of unwanted Americans, these businesses will be more and more appealing.