Do Republicans think it helps to have such radical spokespeople?

[retro-man]

60's growth around the world was grossly inflated by monetary policy. Following an economic fad, central banking systems around the world ran inflationary policy to reduce unemployment and raise output. Unfortunately, it was only a short term relation, and the direct result was high inflation and high unemployment in the 70's and early 80's. In order to curb the mal effects of the inflationary policies pursued from the 60's onwards, the Fed was forced to make significant contractions in money supply, causing the large recession in the 1980's.

Point taken. I guess, in my efforts to favor one approach over the other, I sometimes overlook the fact that we have never had a sustainable stable-state economic model. I wonder if anybody has even ever tried to devise one. The money economy and the real economy seem like two carts going down parallel tracks, bungeed to each other. One or the other is always shooting ahead, with the other lagging behind, only to be jerked forward itself in turn. They are always out of sync..

[Versa-Tech]

Like I said, I thought most folks did realize its failure. I already posted sources as to its failure, but it required some basic inductive reasoning. I see you lack that, after all, you cite ancient Egypt as a shining example, LMAO. What a tool.

Requires basic inductive reasoning?

 

Obviously you haven't been around long enough to learn that reasoning follows knowledge. It requires a certain level of humility to grasp. The truth is that you don't even know what you don't know. I used the third intermediate as an example of a successful economic policy and you seem to think I'm talking about the new kingdom era. Sorry son, but you don't have the education required to even be in this conversation.

[Roadtrip]

Point taken. I guess, in my efforts to favor one approach over the other, I sometimes overlook the fact that we have never had a sustainable stable-state economic model. I wonder if anybody has even ever tried to devise one.

 

If what you mean by a "sustainable stable-state economic model" is a planned national economy, it has most definitely been devised and tried. Here is an essay on the subject by an economist named Robert Heilbroner - who happened to be a socialist for most of his career. Not that I'm insinuating that you are a socialist - I'm just saying that Heilbroner was an expert on the subject of centrally planned economies, which falls under the heading of socialism in one form or another, and one form would be a sustainable-state economic model. If you read the essay, you'll see what I mean. And you'll see why it doesn't work - at least not in the long term.

 

One of the beauties of our Constitution is that it is silent on the subject of an economic plan. I cringe every time I hear some politician - left or right - discuss their "economic plans." What they really mean is how they are going to pit the interests of one group of stakeholders against the interests of another.

 

The money economy and the real economy seem like two carts going down parallel tracks, bungeed to each other. One or the other is always shooting ahead, with the other lagging behind, only to be jerked forward itself in turn. They are always out of sync..

 

This is an excellent analogy! If we can agree that the terms "money economy" are interchangeable with investment, and "real economy" with productivity or output, then we are on the same sheet of music.

 

But I would also add that there are many, many interacting forces in our global economy that add to this bungee effect that you describe. Prices set themselves in accordance with all these forces.

 

There is no politician, and no number of czars he can appoint, who have the capability to gain the information necessary to manage our incredibly complex economy. Free markets do it for us!

Edited April 26, 2009 by Roadtrip

[suv_guy_19]

Alternative to socialism is the idea of a free market with strict regulation as necessary. We don't need to plan the economy...and we don't need to let it run wild. There is a middle.

[V8 Ford]

Point taken. I guess, in my efforts to favor one approach over the other, I sometimes overlook the fact that we have never had a sustainable stable-state economic model. I wonder if anybody has even ever tried to devise one. The money economy and the real economy seem like two carts going down parallel tracks, bungeed to each other. One or the other is always shooting ahead, with the other lagging behind, only to be jerked forward itself in turn. They are always out of sync..

I"m not sure I understand what you're saying. If you're talking about economic stability, without cycles, I don't think that it's a realizable goal. Human fallibility and uncertainty/lack of information in the short run almost ensure that it will happen.

 

If you're talking about economic models, the simple one's I've studied qualitatively describe the most important phenomenon of a macroeconomy pretty well, monetary effects included.

[methos]

The National Bureau of Economic Research has a publicly accessible database, one that is far richer in content than the "Measuring Worth" Web site.

 

I read somewhere that the U.S. actually had a trade surplus for nine out of 10 years during the 1930s. I figured that the NBER database is a good place to find data that can prove this right or wrong, since they use statistical data obtained from the government. In Chapter 7, I copied data from U.S. Total Exports and U.S. Total Imports for the 120-month period from January 1930 to December 1939, and pasted the data on a simple table on a Word doc with each respective month's results side by side, for easy comparison, and checked off the months for which there was a trade deficit. (I would invite you to do the same. It's about a 20 minute exercise.)

 

The results? The U.S. ran a trade deficit for only 18 of the 120 months during the 1930s; it ran a trade surplus for 102 of those months. If you think a trade surplus is the key to domestic prosperity, then why is it that the decade of the 1930s was so depressed?

 

Trade didn't have anything to do with the Depression. The resulting decline in trade was one of the effects, but the resulting Tariff that was imposed early on was a campaign promise of Hoover's. It's just that when it was passed more interest groups sought protection and it became much larger sparking a trade war. It's something countries are trying to avoid now. Trade is good, but it's far better having a surplus vs. a deficit, at least in my humble opinion.

 

 

And what are we to conclude from this? Absolutely nothing. Rather, there are two facts to consider: (1) The U.S. has a tradition of running trade deficits throughout the course of its history, only to become the wealthiest economy in the world; and (2) when people and nations are free to trade with one another, everyone prospers. (An added bonus is that nations who trade with one another tend not to drop bombs on each other.)

 

 

There is a strong correlation between savings rate and whether a country runs a surplus or deficit. In our case we have a weak saving's rate and a high deficit in our current account balance. I really don't think that there are many economists that suggest this is good. I know there is some that state it's not that bad considering the money is reinvested back into our country. I tend to go along with Buffet in that it's not a good idea when they own several trillion dollars more of us than we do of them.

 

Moreover, our overconsumption means that in bad times, for instance now, it's much harder for us to spend our way out of it; since we don't have the reserves to draw upon. In addition, what happens when we're no longer the draw we once were? For the last six years or so several prominent countries that have heavily invested their reserves in dollars have pulled back divesting their interests.

 

I really believe free trade is good. Everyone benefits, but the way we have created these trade pacts have really been a drag on our growth. It lowers inflation, but only at the cost of shipping jobs overseas/across borders.

[methos]

Requires basic inductive reasoning?

 

Obviously you haven't been around long enough to learn that reasoning follows knowledge. It requires a certain level of humility to grasp. The truth is that you don't even know what you don't know. I used the third intermediate as an example of a successful economic policy and you seem to think I'm talking about the new kingdom era. Sorry son, but you don't have the education required to even be in this conversation.

 

Perhaps you're right; I might not possess the required educational level for this conversation. I think in this case I am going to need to dumb it down a bit. I would love to hear how the Third Intermediate Period correlates to our discussion on supply-side economics (SSE)?

 

As far as our discussion on SSE, I did come up with some peer-reviewed publications, but I won't have access to more recent ones until next week.

 

This one is from one of the more conservative economists, and is one of the few of the time to consider himself a supply-sider and Reagan's chief economist. He really goes over the pros and cons of Reagan's initiative. I won't post it due to the restrictions, but since it is so old, it shouldn't be too hard to find.

 

Martin Feldstein - Supply Side Economics; what remains?

 

Another interesting piece is from another economist that goes over some of the earlier promises of the dawn of the proposals and how they were pitched and how later the authors fought and still fight for redemption. it's called Revisionism in the history of supply side economics. This isn't a complete link, but again, it's an old piece, it can be had.

[grbeck]

Oy! Again with the devastated competitors. I refer again to 1961 information from the 1962 World Book Year book. Keeping in mind that our International trade was a tiny fraction of what it is now: Japan's economy was growing at a rate between 10% and 11% per year - which was considered a problem, 9% or so being considered the "safe" maximum. Imports had increased 30% over the year before, while exports had increased only 5%. Their trade balance was running at an annualized rate of -$1,200,000,000.00. They had Toyota, Mitsubishi, Nissan, Isuzu, Mazda, and some smaller players all manufacturing automobiles - the vast majority of which were selling in the domestic market, and well developed optics, chemical, shipbuilding, and electronics industires. Trade with the U.S. - both directions - amounted to a total of $1,500,000,000.00 (or about 0.03% of U.S. GNP) By 1968, Japan had become the 2nd largest economy in the world. Show of hands: how many people had a Japanese car in their driveway or a Japanese TV in their living room in 1968? We were still living in (relatively) splendid isolation. Obviously, Japan was able to build a lot of prosperity working regionally, and within their own domestic market. Of course, being a resource poor nation, they have to rely somewhat on exports - but only enough high-added value exports to pay for low-added value commodities. (Scarcity may turn this equation on its head.)

 

Likewise, if you had travelled to France in 1961, you would have seen Citroen, Peugeot, Renault, Simca, Facel Vega and a few smaller makers cars on the streets. Germany: VW, Porsche, Audi, Mercedes, NSU (Wankel), Lloyd, Borgward, Messerschmidt, and a few others. Sweden: Saab and Volvo - locally owned and healthy. Italy: Fiat, Maseratti, Ferrari, Iso Grifo and a few other exotics. I'll leave it to the Anglophiles to list how many cars were being manufactured in England at the time.

 

By the mid-60s, the Nordic countries had achieved a standard of living that, taking social welfare into account, compared quite favorably with our own (it still does). We were all getting prosperous together, for the most part without stepping on each others feet.

 

I keep bringing it up because it's important to any narrative of this ear. You simply cannot ignore that the U.S. was in a unique position at this time. And please note that others have effectively refuted the contention that trade deficits - or the lack thereof - somehow correlate with the health of the economy. Unless we are going to say that the U.S. enjoyed a healthy economy in the 1930s, as it ran trade surpluses. I think my father and grandmother, who actually lived through that era, would strongly disagree with that one.

 

Incidentally, if you want to focus on the auto industry, please note that the British and American auto industries imploded because of actions taken in Detroit (and Great Britain), not free trade. Imported autos gave dissatisfied customers an alternative. Free trade didn't cause the problems, it merely gave customers more choices.

 

British Leyland, for example, wasn't driven out of business by imports. It was driven out by stupid managers and a militant union. And most disgruntled customers initially switched to vehicles built by Ford of Great Britain, not imports from Germany or Japan.

 

Chrysler didn't declare bankruptcy because of free trade. Nor is free trade behind GM's problems. The blame lies in the executive suites of the respective companies, along with the UAW (to a lesser extent). What you apparently want is for the government to "protect" our auto industry by either banning foreign cars, or making them more difficult to purchase. Or perhaps they should be subsidized...but what was that about corporations ruling the world and using taxpayer money that had concerned you so much before? If people wanted to give money to GM or Chrysler, they could have bought a brand-new Chevrolet or Dodge. They didn't, so perhaps those companies (and their supporters) need to take the hint...

Edited May 1, 2009 by grbeck

[grbeck]

Thank you for the thoughtful reply. I agree that "both sides" played into the current calamity - the side that wanted to extend home-ownership to anybody and everybody (background theme here is the thought that "ownership" itself might ameliorate some of the lamentable social conditions - i.e. instill a sense of responsibility - that contributed to the poverty to begin with. Perhaps that thought was a bit optimistic) and the side that deregulated everything and fomented the fantasy that financial instruments - especially ones completely beyond the purview of regulation - somehow constitute "productivity". I am glad we have been disabused of that notion.

 

Regarding the growing income gap, as juxtaposed to overall growing wealth: a couple of points (and to you too grbeck): there are numerous studies that show that in some sense "keeping up with the Jones's" although we might not want to admit this of ourselves, does have a utilitarian function, just as surely as does rest and recreation. (See Juliett Schorr "The Overspent American" for reference). Just as surely as you can't work people every single one of their waking hours without breaking them, you also cannot have successive generations falling further and further behind what is presented (by the media, by advertising) as the ideal norm, while a small percentage at the top pull further and further ahead. There is a correlation between the GINI coeffient and quality of life. (By which measure, incidentally, the US is closer to Mexico now than it is to Canada, Western Europe or Japan - that wasn't true 40 years ago.) Other studies go so far as to recognize growing disparity, and the permanent underclass as a threat to democracy. Why would we set up a system that enables an ever-shrinking percentage of the population to have hope for a better future, while an ever-increasing percentage do not? Because that is what we have done. I don't agree with those who can look at the statistics and keep saying that it's ok because "everybody has equal opportunity". If everybody has equal opportunity, why is an ever shrinking portion of the population actually "making it", compared to the previous 2 generations? Why is the balance shifting? Have the majority suddenly become congenitally torpid? I don't think so. I think we have stupidly allowed a system to develop that is undermining our social and economic health.

 

Regarding the work ethic of the Baby Boom generation: speaking for myself: in 1978 I spent my entire college fund - $1,800.00 - to take my first trip to Japan. After returning, I worked graveyard shift as a riveter at the Boeing 747 plant, and later (after the Boeing overtime demands became excessive) for near minimum wage at a roof truss factory, and attended classes in the daytime - sometimes showing up for class in my dirty work clothes without time to change - then sleeping 3 or 4 hours in the afternoon / evening. Didn't help my grades, but I made it through my BA that way. Then I worked a few years in a cabinet shop, and went back for my Masters with help from my wife. I don't buy the notion that baby boomers are lazier than other generations. I will readily agree that the union movement reached a stage of decadent excess during the 60s and 70s - the pendulum swung too far with stupid work rules, and excessive pay during unproductive times. But now we have let it swing too far the other way.

 

Your real problem is with immigration, particularly the illegal variety. If you continually add unskilled laborers to the bottom of the ladder, it will depress wages there. It will also increase things like poverty, teenage births, etc.

 

Meanwhile there isn't any cap on what people can earn, so of course the gap will continually widen.

 

But that has little, if anything, to do with how rich someone is, unless they are directly employing illegal immigrants. Which, if you look, lots of Democrats in places like Los Angeles and New York City do.

 

And if you are concerned about the affordability of various big-ticket items, I'd suggest that you look at the effect of regulations, no matter how well-intentioned. Housing price, for example, are often driven by "open space" preservation efforts. I appreciate open space as much as anyone else, but let's not kid ourselves that regulations do not have side effects.

 

Again, you have to make some hard choices, and, based on your posts, you seem not to want to, or want to blame Republicans or free traders for the negative outcomes.

 

Take automobiles. If the government forces auto makers to certify that engines are clean, invest billions in pollution control research, invest billions more in fuel economy improvements, and make sure the resulting vehicles are safe to drive, then something has to give. And that something is going to be choice, especially when CONSUMERS are simultaneously demanding more reliable, better-built vehicles.

 

Under these circumstances, it is not possible for Ford to offer a vehicle like the 1963 Galaxie 500 in several body styles and with several drivetrain choices. It would bankrupt itself doing so.

 

You have to make a choice. You have said that you wanted clean air to preserve the enviroment and better fuel economy to free ourselves from foreign oil. Well, you will either have those, and drive a Fusion or Taurus available in one bodystyle and (at most) three engine choices, or a 1963 Galaxie with big V-8s, numerous body styles and numerous drivetrain choices - and Mexico City levels of pollution.

Edited May 1, 2009 by grbeck

[grbeck]

Japan: -$72,669,000,000.00

Germany: -$42,820,600,000.00

China: -$266,332,700,000.00

 

What gets really interesting though (if you have too much time on your hands, which evidently I do), is to take population into account: e.g. How many dollars of U.S. goods did each German purchase for 2008, vs. how many dollars of German goods did each American purchase for 2008?:

 

2008 balance of trade per capita with:

 

Japan: $64.74

Germany: $343.39

China: -$1,058.06

 

Ok - who are our chief competitors again? And who doesn't use slave labor and have non-existent environmental protections?

 

First, you have to assume that every product imported from China was once made in the U.S., or that it displaced a U.S. made product. That is simply not the case. The Chinese are taking over the BOTTOM of the market that was once held by various nations.

 

Interestingly, people who have actually VISITED to China (have you?) have said that the cry about "slave labor" is out of date. Please note that paying someone a low wage is not, in and of itself, proof that slave labor is being used (slaves don't get ANY wages). You have to compare what the workers are making to what they would be getting in a rural village in China, and most workers see a HUGE improvement in wages. That is why they are flocking to the cities in the first place.

 

The products you are worried about - the higher value, more expensive products that require a higher level of worker to produce - still come from Japan and Germany. And they do not use slave labor, and have strict environmental regulations.

[grbeck]

Trade didn't have anything to do with the Depression. The resulting decline in trade was one of the effects, but the resulting Tariff that was imposed early on was a campaign promise of Hoover's. It's just that when it was passed more interest groups sought protection and it became much larger sparking a trade war. It's something countries are trying to avoid now. Trade is good, but it's far better having a surplus vs. a deficit, at least in my humble opinion.

 

The Hawley Smoot Tariff made what had been an already bad situation even worse. Other countries retaliated with their own tariffs. Virtually every credible economist agrees that it spread the Great Depression beyond the U.S., and cut down foreign trade at a critical time for American industry and agricultural products.

 

The tariff didn't cause the Great Depression, but it made it worse. That is why, after World War II, both Republicans and Democrats worked to expand trade. They had learned their lesson.

Edited May 1, 2009 by grbeck

[retro-man]

I keep bringing it up because it's important to any narrative of this ear. You simply cannot ignore that the U.S. was in a unique position at this time. And please note that others have effectively refuted the contention that trade deficits - or the lack thereof - somehow correlate with the health of the economy. Unless we are going to say that the U.S. enjoyed a healthy economy in the 1930s, as it ran trade surpluses. I think my father and grandmother, who actually lived through that era, would strongly disagree with that one.

Newsflash: My grandparents and great grandparents lived through The Great Depression too. I find it somewhat amusing that you regard the U.S. as being in a unique position during the 60's (when we ran a trade surplus and experienced economic growth), but not so during the 30's (surplus / Depression). The fact is that, of the 2, the 30s was by far the more unique and unusual situation than the 60s. Neither case, however, allows one to draw a causality between trade balance and economic growth. Other factors were at work: In the 60's a robust, well-paid work force (yes, somewhat insulated from foreign competition) was at work. You have never once addressed the fact that in the early 60s International trade - both directions - amounted to around 3% of the U.S. GNP - a trifle compared to over 33% today - while the other countries I mentioned had robust and growing domestic markets and well-rounded home-grown industries of their own. We made almost all of what we needed, they were making almost all of what they needed. When I first travelled to Japan in the late 70s, everything I picked up said "Made in Japan" on it. This was fascinating to me partly because I saw so many of the same items in the U.S. made in the U.S. (still) although to be sure, by the late 70s Japan had made many inroads in autos, optics, and home electronics - the domestic makers were by no means extinct yet, but were being driven that way by laissez faire philosophy (and yes, union excesses and management stupidity).

 

I also find it ironic (not on your part, but in general) that we find ourselves in a situation where Chrysler is about to be at least partly bailed by Fiat. For most of the past 4 decades, both France and Italy (unlike Japan, which always gets the flack) had laws on the books limiting foreign makers to 5% of their domestic car market. If not for those laws, Fiat might not even be around still to help save Chrysler's bacon, and perhaps bring some decent small cars to Chrysler dealerships. Likewise, Renault may not have survived to help out Nissan a few years ago. And I probably wouldn't have been able to ride in a Japanese colleague's nice Citroen C5 in Tokyo a few months ago. Everybody seems to feel that the law of the jungle - even if it leads down to one surviving species is the best route to go. I disagree.

[retro-man]

First, you have to assume that every product imported from China was once made in the U.S., or that it displaced a U.S. made product. That is simply not the case. The Chinese are taking over the BOTTOM of the market that was once held by various nations.

I disagree: When I go to, for instance, the hardware store and pick up items - padlock, light bulbs, a bag of screws, ..... these are all - every last one - items that used to be manufactured in the U.S.. A thousand and one small, commonplace things. They were absolutely not made in "various nations" (remembering that International trade was 3% of GNP in the early 60s). Now, they are made in China. It's ludicrous to claim that Chinese goods have not displaced U.S. manufactures. Ludicrous. (And why do you suppose those compact fluorescent bulbs come all the way from China in their shipping-friendly, bulky, landfill-intensive plastic packing? Might it be because the factory in China doesn't have to be bothered by expensive luxuries like limiting its Mercury output into the local rivers?) I recently had to retire a 20 year old Pendleton wool overcoat (made in Oregon). I wanted to get a new one: they had stopped making it. Its replacement: Made in China. Likewise, I just replaced 2 old Sport Coats (One made in U.S., the other in Canada). Their replacements: Made in China. I try to buy domestic, but it has gone from difficult to impossible.

 

Interestingly, people who have actually VISITED to China (have you?) have said that the cry about "slave labor" is out of date. Please note that paying someone a low wage is not, in and of itself, proof that slave labor is being used (slaves don't get ANY wages). You have to compare what the workers are making to what they would be getting in a rural village in China, and most workers see a HUGE improvement in wages. That is why they are flocking to the cities in the first place.

So ...... you're implying that China is approaching parity with us in terms of labor standards and environmental protections, based on what these friends of yours have told you? Look, I have Project managed design of a Department Store, a downtown Shopping Center, and been Project Architect on a water park in a seaside development - all 3 of those in Dalian (beautiful City), and am currently engaged in a project in Nanjing and proposing on another in Shenzhen (as well as an ongoing project in Hiroshima Japan). In fact, just got my renewed business visa today. One of my favorite memories is being invited up on stage a few years ago to join a local jazz trio in the lounge at the Dalian Hilton (on the piano: being that rare American who could actually play with them, they were anxious to hear my chops - such as they are). So yes, I have visited China several times over the past 8 years. Doing the things that I have done, I have seen the pretty side of China, the prosperous side of China, the "New China". I have also seen much of the rest of it. China does have foul air and water. I cannot communicate the smell of the air in Nanjing to you in words: you have to experience it (Dalian wasn't so bad). Even in the 5 star hotel, you have to use bottled water to brush your teeth, and keep your mouth shut in the shower. And you better make sure it's the right brand of bottled water - the one with the yellow label, or the green label or else you're getting chlorinated sewage. And you'll get sick anyway at least once before you leave. And you can't get YouTube on the internet: the government blocks it. Incidentally, a lot of those workers flocking to the cities are now flocking back to the country.

 

It may seem I am biting one of the hands that feeds me - but a.) Our trade situation is so out of whack with them that it's not even funny - it doesn't even remotely compare with Japan and Germany despite your efforts (for ideological reasons I suppose) to minimize it, and b.) I don't like the reason why it is that way: pure and simple shareholder profit. Not that I object to shareholder profit per se, but this is slash-and-burn economics: racing to the lowest cost, lowest regulation producer regardless of how egregious conditions are there, and if they start getting too uppity, then move on to the next one, leaving dislocation and misery in your wake. Riddle me this: What can you expect under those circumstances but a trail of environmental destruction and uprooted communities? What can you logically, reasonably expect? Look at Michigan right now: That's the future of Osaka and Hamamatsu, and Shenzhen and Guangzhou in their turn - only starting from a lower base and with a quicker burn rate, so it's going to be even more miserable. How can you do what we're doing in these places, and not expect that? You might think there's a great bargain in there somewhere. I do not.

 

The products you are worried about - the higher value, more expensive products that require a higher level of worker to produce - still come from Japan and Germany. And they do not use slave labor, and have strict environmental regulations.

For now. But they used to come from here. Back to the subject of slash-and-burn economics: As I stated earlier, when I first visited Japan 3 decades ago, I found a country that was self-sufficient in everything except raw materials. Now, when I visit Japan, I see store shelves full of Made in China goods, I see shopping centers built on abandoned factory sites, and I see tent settlements set up in parks and on Castle grounds that weren't there when I first visited, but have grown steadily over time. These things are absolutely linked. China will have its turn eventually. I don't know how anyone can look at what Michigan is going through now and call it a good thing. All in the name of efficiency (and ideology), eh?

Edited May 2, 2009 by retro-man

[V8 Ford]

So ...... you're implying that China is approachi I cannot communicate the smell of the air in Nanjing to you in words: you have to experience it (Dalian wasn't so bad). Even in the 5 star hotel, you have to use bottled water to brush your teeth, and keep your mouth shut in the shower. And you better make sure it's the right brand of bottled water - the one with the yellow label, or the green label or else you're getting chlorinated sewage. And you'll get sick anyway at least once before you leave. And you can't get YouTube on the internet: the government blocks it. Incidentally, a lot of those workers flocking to the cities are now flocking back to the country.

I don't remember the smell of the air, but I do remember a distinct burning sensation in my throat and wiping my nose only to fund soot on my finger. Nanjing is like a paradise compared to where I was though. I'll agree with you about the environmental state of China, but I don't agree with you about manufacturing. I don't think it is essential to the health of a nation that it be the dominant industry, and I think that its decline from preeminent status in the US is a result of the US becoming more educated (there's still manufacturing, and the value of manufactured goods is at an all time high, it just isn't the largest section of the economy any more). It takes guts, muscle and drive to succeed in a manufacturing job. As desirable as those attributes are, unfortunately, education is a lot more rare in the world. Economical allocation of resources is going to see that the jobs go were the greatest supply of qualified labor is available.

 

The guys in China work in the factories because it beats the hell out of being a subsistance farmer, which is the same thing that happened in the industrial revolution in he western world. The standard of living sucks compared to what it is today, but it was a hell of a lot better than scraping an existence in the wilderness. And the standard of living is only going to get better.

[retro-man]

I don't remember the smell of the air, but I do remember a distinct burning sensation in my throat and wiping my nose only to fund soot on my finger. Nanjing is like a paradise compared to where I was though. I'll agree with you about the environmental state of China, but I don't agree with you about manufacturing. I don't think it is essential to the health of a nation that it be the dominant industry, and I think that its decline from preeminent status in the US is a result of the US becoming more educated (there's still manufacturing, and the value of manufactured goods is at an all time high, it just isn't the largest section of the economy any more). It takes guts, muscle and drive to succeed in a manufacturing job. As desirable as those attributes are, unfortunately, education is a lot more rare in the world. Economical allocation of resources is going to see that the jobs go were the greatest supply of qualified labor is available.

 

The guys in China work in the factories because it beats the hell out of being a subsistance farmer, which is the same thing that happened in the industrial revolution in he western world. The standard of living sucks compared to what it is today, but it was a hell of a lot better than scraping an existence in the wilderness. And the standard of living is only going to get better.

Yes, I remember reading that you have spent some time in China. Auto parts business? The smell of the air..... at it's best it is the odd "Captain Spice" sweetness of the coal smoke (that leaves your nostrils ringed in black as you point out). At it's worst, it is the open sewers on the back streets, the caged animals in the markets, the excrement fallen from the open britches of the babies .....

 

An economist - I wish I could remember which one - said "You can't stop making things and expect to maintain your standard of living." I agree with that. The world is not buying our "brains" at anywhere near the same rate we are buying their industrial brawn - so we have a net outflow of wealth. Every time a pension is cancelled, every time a couple more hours are added to the load of a salaried employee, every time another spouse takes a job to help make ends meet, every time another person loses their job at the factory and takes one at WalMart, every time we are asked to kick in more for our health insurance - or lose it altogether, every time we find ourselves going less to the Department Store and more to the discount store, we are experiencing the inevitable result of that outflow. As our prosperity and vaunted standard of living slip compared to the rest of the world - as our advantage fades - we will find even less market for our expertise. I provide services for a living, and am determined to make hay while the sun shines, but I am under no illusion that the country can run on that, or that the world will forever beat a path to our door for these services.

Edited May 2, 2009 by retro-man

[retro-man]

Your real problem is with immigration, particularly the illegal variety. If you continually add unskilled laborers to the bottom of the ladder, it will depress wages there. It will also increase things like poverty, teenage births, etc.

 

Meanwhile there isn't any cap on what people can earn, so of course the gap will continually widen.

 

But that has little, if anything, to do with how rich someone is, unless they are directly employing illegal immigrants. Which, if you look, lots of Democrats in places like Los Angeles and New York City do.

 

Whew! Good thing no Republicans have ever engaged in that sort of thing.

 

And if you are concerned about the affordability of various big-ticket items, I'd suggest that you look at the effect of regulations, no matter how well-intentioned. Housing price, for example, are often driven by "open space" preservation efforts. I appreciate open space as much as anyone else, but let's not kid ourselves that regulations do not have side effects.

 

Again, you have to make some hard choices, and, based on your posts, you seem not to want to, or want to blame Republicans or free traders for the negative outcomes.

 

Take automobiles. If the government forces auto makers to certify that engines are clean, invest billions in pollution control research, invest billions more in fuel economy improvements, and make sure the resulting vehicles are safe to drive, then something has to give. And that something is going to be choice, especially when CONSUMERS are simultaneously demanding more reliable, better-built vehicles.

 

Under these circumstances, it is not possible for Ford to offer a vehicle like the 1963 Galaxie 500 in several body styles and with several drivetrain choices. It would bankrupt itself doing so.

 

You have to make a choice. You have said that you wanted clean air to preserve the enviroment and better fuel economy to free ourselves from foreign oil. Well, you will either have those, and drive a Fusion or Taurus available in one bodystyle and (at most) three engine choices, or a 1963 Galaxie with big V-8s, numerous body styles and numerous drivetrain choices - and Mexico City levels of pollution.

 

Why can't I have both? What ever happened to the idea of progress?

 

As for the cost of clean air, open space and the like, I defer to Oliver Wendell Holmes: "I like paying taxes. With them, I buy civilization"

[V8 Ford]

Yes, I remember reading that you have spent some time in China. Auto parts business? The smell of the air..... at it's best it is the odd "Captain Spice" sweetness of the coal smoke (that leaves your nostrils ringed in black as you point out). At it's worst, it is the open sewers on the back streets, the caged animals in the markets, the excrement fallen from the open britches of the babies .....

 

An economist - I wish I could remember which one - said "You can't stop making things and expect to maintain your standard of living." I agree with that. The world is not buying our "brains" at anywhere near the same rate we are buying their industrial brawn - so we have a net outflow of wealth. Every time a pension is cancelled, every time a couple more hours are added to the load of a salaried employee, every time another spouse takes a job to help make ends meet, every time another person loses their job at the factory and takes one at WalMart, every time we are asked to kick in more for our health insurance - or lose it altogether, every time we find ourselves going less to the Department Store and more to the discount store, we are experiencing the inevitable result of that outflow. As our prosperity and vaunted standard of living slip compared to the rest of the world - as our advantage fades - we will find even less market for our expertise. I provide services for a living, and am determined to make hay while the sun shines, but I am under no illusion that the country can run on that, or that the world will forever beat a path to our door for these services.

Not me working, my Dad's been over there with Ford and its subsidiaries for a while and I've been over to visit several times; according to him he's set the company record for living in the worst places Ford operates longer than anyone in the history of the company.

 

I've seen that quote before, but I"m not sure who its from or where he's going with it. Wealth isn't just from the manufacturing industry as both goods and services are tradeable and improve welfare. $5 output from an auto company contributes just as much as $5 output from a software firm or $5 output from the design branch of a company that then manufactures the product in Asia. Output per person is as high as its ever been in the US and is still growing (well, not exactly at moment, but give it a couple years), so I don't see the wealth of the US declining.

[Critic]

I've seen that quote before, but I"m not sure who its from or where he's going with it. Wealth isn't just from the manufacturing industry as both goods and services are tradeable and improve welfare. $5 output from an auto company contributes just as much as $5 output from a software firm or $5 output from the design branch of a company that then manufactures the product in Asia. Output per person is as high as its ever been in the US and is still growing (well, not exactly at moment, but give it a couple years), so I don't see the wealth of the US declining.

All wealth is derived from labor. However you sound like a text-book economist, and their not too accurate, haven't been for about 100 years and I've been around longer than half that.

 

Real wage growth, the kind that improves a family life has held stagnant and declined for more than the last 10 years.

 

You want to see real wage growth, that happened right after WWII, and that was the Ozzie-Harriet, June-Ward type of home where 1 man could go to work and totally support a growing family with those luxuries of a vacation and a boat Retirment and money for a kids college.

 

Today it requires 2 incomes to even approach that, and also a declining family size.

[retro-man]

All wealth is derived from labor. However you sound like a text-book economist, and their not too accurate, haven't been for about 100 years and I've been around longer than half that.

 

Real wage growth, the kind that improves a family life has held stagnant and declined for more than the last 10 years.

 

You want to see real wage growth, that happened right after WWII, and that was the Ozzie-Harriet, June-Ward type of home where 1 man could go to work and totally support a growing family with those luxuries of a vacation and a boat Retirment and money for a kids college.

 

Today it requires 2 incomes to even approach that, and also a declining family size.

That's been my experience exactly Critic.

Edited May 3, 2009 by retro-man

[Critic]

Things my dad had (on 1 income) that I don't: a boat, vacation property, a Super 8 movie camera, an adding machine, a housewife, job security, actual 2 week vacations, time for friends, hope for retirement, and the expectation that his kids would have it better than him, as he had it better than his father, and his father had it better than his father.

That is not happening now. I can't think of anyone who thinks this way, unless they live in the Hampton's and are passing down old money. Today it's a known fact, you will not have it better than your father, unless you run ... not walk, but run like hell in hopes of just catching equal. Everyone can cite an example of this not being so, but those are exceptions. So the over-all big-picture is of a declining economy. A Rising tide is not lifting and their was no trickle-down. This is what the mass'es are seeing, this is what caused the French Revolution, and it is what is upsetting everyone in this country. For almost 30 years now I've had it beaten into me, that the trouble lies within me and I must work harder. While the real people getting richer are shipping jobs away from me and my children's grasp so no one can improve their life.

 

I said all wealth is derived from labor.

Gold - a great explanation for the cost of gold is in the movie

The Treasure of the Sierra Madre

 

Howard: Say, answer me this one, will you? Why is gold worth some twenty bucks an ounce?

Flophouse Bum: I don't know. Because it's scarce.

Howard: A thousand men, say, go searchin' for gold. After six months, one of them's lucky: one out of a thousand. His find represents not only his own labor, but that of nine hundred and ninety-nine others to boot. That's six thousand months, five hundred years, scramblin' over a mountain, goin' hungry and thirsty. An ounce of gold, mister, is worth what it is because of the human labor that went into the findin' and the gettin' of it.

Flophouse Bum: I never thought of it just like that.

Howard: Well, there's no other explanation, mister. Gold itself ain't good for nothing except making jewelry with and gold teeth.

[Edstock]

A Rising tide is not lifting and their was no trickle-down.

And thus it came to pass that the GOP destroyed the American Dream for everybody but the top 5%.

[Trimdingman]

And thus it came to pass that the GOP destroyed the American Dream for everybody but the top 5%.

 

 

The American Dream is there. All you need to do is get government off your back, and go after it. If you look to the government to help you get there then you don't deserve it. Move to Cuba.

[Roadtrip]

And thus it came to pass that the GOP destroyed the American Dream for everybody but the top 5%.

 

Yeah, that top five percent of income earners gets away with only paying 60 percent of all federal tax revenues collected (much of which is redistributed to the bottom 50 percent of income earners, who only pay three percent of all federal tax revenues collected). How dare those evil, greedy top-five percenters for not shouldering a fairer percentage of the tax burden!

[Edstock]

If you look to the government to help you get there then you don't deserve it.

Public schools, State Colleges? We look to the government for lots of things. Safety regs, and "getting on the back" of businessmen with your mind-set who feel they are entitled to do anything they want.

 

The Dream has been scuffed-up for a majority of citizens, who are no better off than they were in the mid-70's.

 

Trim, I sure hope they develop time travel. That way, you could party like it really is 1899.

[Roadtrip]

Wealth isn't just from the manufacturing industry as both goods and services are tradeable and improve welfare. $5 output from an auto company contributes just as much as $5 output from a software firm or $5 output from the design branch of a company that then manufactures the product in Asia. Output per person is as high as its ever been in the US and is still growing (well, not exactly at moment, but give it a couple years), so I don't see the wealth of the US declining.

 

It would be interesting to see what percentage of those who claim that the U.S. needs more manufacturing jobs would want their children and grandchildren to grow up to become factory workers or construction workers - as opposed to, say, doctors, lawyers, scientists, university professors, or CPAs, all of which are much-higher paying service-sector jobs.