The Growing Role of Public Sector Jobs in Today's Economy, Ep. 254

In the latest episode of the Capitalist Investor, hosts Tony and Luke, alongside guest Mike Hudzinski, a patent attorney and a returning guest, delve into some of the most pressing economic and job market trends of the day. Here are the five hot topics that dominated this week's discussion:

 1. The Rise of Public Sector and Healthcare Jobs
Luke opened the conversation by highlighting a significant trend in the job market: the predominance of public sector and healthcare jobs in recent employment growth statistics. With 50% of new jobs being created in these sectors, the hosts and guest pondered whether this signals an increasing dependency on government-driven employment. The concern was raised that as the government grows, there might be greater outsourcing of jobs, leading to a potential over-reliance on public sector employment.

2. Stock Market Indicators and Election Implications
Tony and Luke transitioned to discussing the stock market as a predictor of election outcomes. Luke shared an intriguing statistic: a smaller intra-year drawdown typically forecasts an incumbent win, while a more significant drawdown suggests a potential loss. The current year’s moderate 5-6% drawdown seems to indicate a Biden victory, with AI and Federal Reserve interventions possibly bolstering this scenario. The conversation naturally veered towards the role of major tech stocks in propping up the market.

3. Government and Patent Rights
An unexpected but captivating segment arose when Luke inquired whether governments can file patents. Mike shed light on this by explaining that various government departments, like the Navy and Army, do hold patents, often resulting from collaborative efforts with private vendors. This led to a deeper conversation about the implications of government-owned innovation and its potential impact on the public sector job market.

4. Artificial Job Inflation and Economic Sustainability
Tony voiced his concerns about the current administration's spending practices, suggesting that the trillion-dollar expenditure in the first part of the year is artificially inflating economic indicators, including job numbers. He argued that while this might temporarily sustain the economy, it may not be sustainable in the long run. The notion of "make work" jobs versus legitimate, sustainable employment was explored, with the consensus being that many current jobs might not survive in the long term.

5. Technological Innovation and Job Displacement
The episode concluded with a thought-provoking discussion on the impact of technological advancements on the job market. Luke pointed out that industries such as automotive manufacturing are increasingly shifting towards electric vehicles (EVs), which require fewer parts and thus fewer employees. This trend, coupled with the rise of AI, raises concerns about job displacement. The critical question remains: Will these technological advances create new jobs, or are we approaching a tipping point where innovation leads to permanent job losses?

This week's Capitalist Investor episode offered a thorough analysis of the interplay between government policies, stock market trends, technological advancements, and their collective impact on the job market. As always, the insights provided by Tony, Luke, and guest Mike Hudzinski foster a deeper understanding of the evolving economic landscape. Stay tuned for the next episode as the team delves further into the implications of electric vehicles on traditional manufacturing jobs and continuing technological changes.

For more detailed discussions and expert opinions, don’t forget to subscribe to the Capitalist Investor podcast.

Transcript

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Welcome to this week's episode of the Capitalist Investor. We have, as always, diamond Hands, D, Tony the Tiger, me, Cole, Han, Luke, and we've got Mike Kaczynski, who appeared for the first time on our last podcast, a client of ours and also a patent attorney by trade. Thanks for joining us again. Looking forward to digging a little bit deeper. Last time we talked about AI, this time we're talking about more of the job market. I know you're always, we appreciate you always tuning in to, you know, Mark Tapper's nice Fox appearances. And I know you listen to podcasts every week. Obviously, a big thing we talk about is jobs. I think you got a couple things to say on that, don't you? So let's start off by kind of just asking the table. You know, 25% or more of public or jobs created right now are public sector jobs. I think the other 25% are like healthcare. So all the jobs basically being created are in public sector or the healthcare space. And healthcare is a big kind of getting a lot of money from the public sector and through grants and things like that to grow. Is the whole entire world just going to be run by the government? Down the road, the administration gets in and the next one that doesn't like it will start trimming, right? I don't know. I don't know. It seems like the path we're on has happened before in history where governments get too big and they start outsourcing their entire job market. If we get rid of two regulations for everyone we implement in the next administration, we might be heading in the right direction. Do you think that's going to happen, though? Yes, I hope. I don't know. I kind of talked about it before. Right now, the stock market, let's throw out this stat. Intra year drawdowns, top to bottom in the stock market on a six or 7% correction prices in incumbent wins 17% drawdown top to bottom in the stock market prices the incumbent loses. So far this year, we've only seen a five or 6% drawdown in the stock market. Pricing in a Biden victory. Is that being held up, though, by AI, government printing? Is that being held up by the Federal Reserve? What's interesting is I think that's important to pay attention to because are we going to get to some of the poly? Is the likelihood of Trump winning there? I don't know. I say yes. I say yes also. But what about just the stock market overall? What is the width of growth in the stock market? I thought it was just a few handful of stocks carrying the day. So I might not draw down if I'm not in that small basket of stocks that is really performing well right now, carrying the day. When you say the stock market in general is up, it's nothing. Everything that's up. So I might not draw down because I'm just not smart enough to be an Nvidia. Well, let's talk about that. I mean, because one thing we talked about is you're not paying attention every single, like every single day. That's why you hired us, you're working with us because we are paying attention to it, sadly, every single day. It's why I don't sleep at night. But with that being said, not many people think like that. Most people just look at what's on tv and say, oh, well, they're saying the S and P is up 10% this year, 12%, whatever it be. And that's all they're paying attention to when it's fork stocks, like you said, carrying the whole entire market, like 30% of it. I mean, all right, so the equal weight S and P 500, everything's equal, right? Is up three and a three, almost 4% year to date. The S and P 500 on equal weight. The spy is up like 15 plus or minus percent right now. Yeah, there's a huge disconnect. And it is a couple stocks carrying this thing. And Tesla's fallen off the map. So now you got like four stocks or five stocks carrying this thing forward. But my thing is my personal opinion, when you spend a trillion dollars in the first hundred days of the year, it can float a lot of things for a long period of time. So there will, the one thing that will not affect Biden's reelection is the economy. Everyone's gonna be like, oh, inflation. Inflation, yeah, I get it. But everyone still has jobs. And that is gonna be the one thing that is a non topic. But see, when you said everyone still has jobs, I was just looking at some of the layoffs last year, and there are hundreds of thousands of tech layoffs last year. And those were real private sector jobs. And so I'm not sure everybody has jobs. Do you work with, like, governments to file patents? Can a government file a patent, like, for government jobs? That's an interesting question. Yeah. I'm sorry to get you off guard. Yes. So, for instance, the department of the Navy has patents, army has patents. You know, they do collaborative work with vendors of research and development. Right. And so, yeah, the army, Navy, all those services do actually hold patent rights. My uncle was aeronautical. Aeronautical engineer. Yeah. He basically built like landing gear for f 15s. Cool. 20 years ago, 30 years ago. He's got a thousands of patents under his name. He worked for Bfgoodrich and the vendors part, right? That's right. But at the end of the day, like those planes belong to the government and I'm sure there's some type of ip that says you can't obviously share this stuff because it's patented, but that's got to work in some kind of detail like that. At the end of the day, the government owns that patent even though it was written by my uncle who doesn't work for the government. Right. Well, so the government owns it because they bought it and paid for it and they hired a smart person to invent on their behalf. Right. As an employee. Right. 1099. Right. 1099. Guy, go build this for me. Smart 1099. I mean, I don't see. I don't see that as being. That's just the way it is. Yeah. Yeah. So most employees have an obligation to assign the patent rights to their right. But. But if that's the case, if I. Technically the government can own innovation and the government continues to get bigger and bigger and bigger, can't you expect that more and more jobs just continue to get created within the public sector? Because if the public sector grows the technology then is owned by the government. But all the ideas come from the private sector. Right. But eventually, if 50% plus of jobs being created is the government, does the private sector even. Yeah, but in my opinion, the more brilliant people are entrepreneurs that will create whatever. Maybe the government buys them or whatever, but I don't know. I don't disagree with you. That's my concern is that the government just continues to take more and more market share. That's my point with that, until there's. No more market, I mean, they consume what supports them in the first place. It seems to me it's like a snake eating its own tail. Correct. At some point I think we're already there. Again, I think a lot of things right now are artificially being propped up. Could be jobs. There's a lot of money that is being spent right now, a trillion dollars that will float us for a while. And maybe those jobs don't exist next year because it was a front to make sure we just get through this election from the current administration. It could be. And the trillion dollars is just money floating around in the system. It needs somewhere to go. Exactly. And it can just float little things and get people jobs and stuff. That's my opinion. You know, it's not just like, hey, we're gonna buy. We're gonna start building buildings and roads and bridges and infrastructure bills. It's like, across everything. So at some point, you know, there's legitimate jobs and then there's make work. Correct. It seems to me, you know, we. It's wise to invest in legitimate jobs. Bridge building and I. Certain governmental functions that are necessary seems to me for. But once that bridge is built, then what. What's next? Right. Is that job temporary? When does a government job ever go away? Is kind of. That's the concern. That's the concern. And then those people also retire, and somebody has to float that retirement. Oh, I was going through TSA earlier this week, and some guy was bragging that he's gonna retire, like, at 49 with it fat pension. He's like, yeah, I love what I do because I know in 20 years I'll have this, like, $80,000 a year pension and live the rest of my life. That's coming from us taxpayers. Yeah. And that. And that's a fixed benefit pension. It's not that you have a lump sum when you retire and then you have to kind of manage it. It's a fixed benefit going forward, adjusted for cost of living. It's in perpetuity. The last five years, the market is up over 100% or something. Everyone's accounts are up. Right. And that propelled the baby boomers to retire. But they're baby boomers. The next generations were not having as many kids. And when these people start retiring, there's actually. I think there will always be a job market for people to work. Depends on what you want to do, because there's more people retiring than people being born. That's a Ponzi scheme, which I talk about all the time. But the economy's a Ponzi scheme, so if that's the case, you can't have economic growth. Correct. What do you think about that? And that's why they're letting illegal immigrants come in. We need workers. I mean, that's one. That's one of their angles on why they're letting this happen. It's kind of. Well, yeah, it's. Yeah. But it's. That is true. That is true. That's filling the void right now. But still, population collapse is a big issue because job. The job. Yes, there will be jobs that exist is the bigger issue at play. Not that jobs being created from the government, but I. Jobs just aren't going to be able to get filled to produce. I mean, is that a bigger issue? I think so. I honestly, that is the issue. I feel like that will eventually be a real thing. Sounds like it's an employees market. Yeah, it could be taken care of. It could be for a long time, you know, so maybe like, my last comment on the other podcast was like, you know, is technology going to job create job destruction? Maybe. Maybe it's just filling the voids of jobs that people don't want to do or not qualified to do, because no one wants to go to school and work anymore either. So again, another radical of conspiracy theories. But I don't know. I think it's a very interesting. Well, okay, well, let's take a look at this on the next I know episode. We're talking about some electric vehicles in that space. And what's interesting is talking about jobs with EV's. You take a look at states like Michigan. Michigan is basically run by the auto manufacturers. Ford, GM, Stellantis, which I believe used to be Chrysler, Chrysler and those kind of names, traditional gas vehicles, had a lot more parts to them. They took a lot more people to manufacture those parts and had a lot of jobs. This push towards EV's takes a lot less parts and takes a lot less employees. So it's like technology is innovating to the point where you can use the EV space as an example of that, to where jobs are just being displaced. And that goes back to what we were just talking about. So we'll hit on more about what that looks like from the tech space and the patent space, what Mike's seeing over there on the next episode. But I just wanted to bring that up because it kind of does relate to the job market. As technology grows and gets better, it is displacing jobs. The question is it going to create new jobs? I think we are close to a point where it's not creating new jobs, whether it's EV's or whether it's AI. So anyway, thank you for everybody for. Listening to this podcast of the Capitalist investor. Tune in here in a couple days for our next podcast, and we'll see you then. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.