Why is $ and US in Decline? or Are they?

Because prior unique advantages are being lost to BRIC like states. (BRIC= Brazil, Russia, India & China) that is the view I will try to support in this thread.

My main concern is education, but the rapidly increasing twin deficits, and the miss-guided "war on terror" are not helping.

PART A - Facts on Education:
From Physics Today page 30 March 2005 issue:
(1) "From 1994 to 1998 the number of Chinese, South Korean and Taiwanese students who chose to pursue Ph.D.s in their own countries nearly doubled... and those coming from there to US dropped 19%..." (If more recent data were available, it would be much worse. - The US "terror fear" immigration policy has made the net influx near zero, if not negative. I know of some good Asian professors who have "gone home.")
(2) "The ratio of college undergraduates degrees in natural sciences is 5.7 per 100 students in the US .... "Taiwan and South Korea each award about 11 per 100." For several other countries listed the ratio ranges between 8 to 13.
(3) "Between 1988 to 2001, East Asian papers in science and engineering have increased by 492% while US production has actually decreased slightly!"
(4) "From 1980 to 2001 the US share of worldwide high-tech exports fell from 31% to 18% and China and South Korea's share climbed from 7 to 25%"
End of Physics Today published facts.

Many are concerned about that export of jobs to BRICs (and others) are part of the reason why real US wages have been declining for several years. Jobs immune to export, (cutting hair, serving fast food, etc.) are low pay but knowledge based jobs with high pay are leaving US. For example, there is a significant and growing chance that the X-ray taken in US went thru the internet to India, was analyzed there by an India doctor while the US patient slept, and the report was written and back to the US hospital before the patient awaken. (Not only do Indian MDs work for much less, speak/write English well, but also the time difference is contributing to this growing trend.)

Big US based business certainly can see the trend. For example, Compressed, but not otherwise changed, from FORBES news letter of 21 October 2005:
Cisco Systems, encouraged by 50% annual sales growth to Indian companies over the last few years, is ramping up even higher. .."We originally came to India for the [low] cost. We stayed because of the quality, and now we're investing because of the innovation," says Dan Scheinman, senior vice president of corporate development. He notes that India's universities are churning out tens of thousands of engineers, many of whom used to come to the U.S. after graduating, but who are now choosing to stay at home. ..That throws a harsh light on the dwindling number of young Americans going into the sciences and helps explain why U.S. companies are looking elsewhere to stay competitive. By the 12th grade, American students trail nearly every other developed nation in math and science ability. Indeed, the U.S. produces just 6% of the world's bachelor's degrees in engineering each year. South Korea, with one-sixth of the population, manages to churn out the same number of engineering degrees. ..Still, despite efforts by some American business leaders to curtail the move, the shift to India continues. Two years ago, IBM Chief Executive Sam Palmisano gave a speech in Washington, pledging $200 million of IBM's money to train IBM workers to compete for "high-skill jobs" that might otherwise have been lost to people in other countries. ..{but}..Since then, in an effort to gain certain skills in software and services, IBM has put plans in place to hire more than 10,000 workers in India and has laid off a similar number of employees in the U.S. and Europe.
End of the FORBES text.

PART B - I will mainly leave to others to note details and support with facts, the effect of the budget deficits and war on terror on the supply of research funds and the import of foreign brains (most, much more willing to study and work hard than the easy going US student and workers).

Now some of my comments /opinions:
I have a Ph.D in physics and 90% of my posts at Sciforiums.com are physics related, despite the fact that that I basically lost interest in physics about 15 years ago (Now13 years retired applied physics researcher and former physics professor.)

Several years ago, when I became concerned, especially with the educational aspects of the above problem, I decided that since physics had supported me well for many years and I never paid one cent of tuition to get my degrees, perhaps I should try to do something that might help stem the decline of the Western World to "second world status" compared to Asia during the life time of my grandchildren.

(I am reminded of eagle telling the humming bird with beak full of water flying towards the forest fire to help extinguish it: "You are silly - what can you do?" To which the humming bird replied: "But I must try.")

So I decided to write a scary story. A book, which is actually a very non-standard physics book disguised, so as it might be read by young law & business student types who would never knowing open a physics book. I.e. I would produce a physics student-recruiting tool. I did this. The book is called Dark Visitor and I quickly add: you can read it for free. My motive is as stated, not profit or fame. (I am not really Billy T - who is named as the author.)
I checked the guidelines for posting here. Point 10 of them states:
"...posting information for your own benefit that has no relevance to the thread is called “spamming” or “spam”. Spam is not acceptable here....
Thus, I don't think I am in violation by telling this very thread related information. In fact, if you go to www.DarkVisitor.com site, the home page, you will find more reasons why I think my grandchildren's future is at grave danger. Also on a sub page, you will see a list of the physics that is hidden in the scary tale. (The physically real possibility that a "dark visitor" (small black hole?) is now coming from deep space which can throw the Earth into a new and permanent ice age by a very slight change in the Earth's orbit, even though it passes 12 time farther than the sun from Earth and the eccentricity of the new orbit is lees than that of Mars. - All those "Earth Impact" stories and movies are not very probable, but the dark visitor may be. - That is also supported on the main web page.)

As the humming bird said: Everyone must do what they can to stem the decline of the West. Perhaps China's recent launch of two spacemen will wake a few people up. (Note they also have the world's only magnetically levated train in routine commercial service. etc.) The danger Asia presents to the comfortable live in the West is very real, and they are hard working, smart etc. Even if many wake up soon to this challenge, I am inclined to think the West slept too long to a void becoming anything more that a supplier of raw materials to Asia 100 years from now. But do what you can, for your grandchildren.

 

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Read the last post on the page http://www.sciforums.com/showthread.php?t=46279 , it is Warren Buffet's Squanderville article. Yes America is screwing itself. Warren Buffet has recognized this and proposes a solution.

More basic than physics is nursing. We have so many suffering poor working at low pay dead end jobs while meanwhile we have a nursing shortage and need to hire nurses trained in other nations. Nurses earn several times the Walmart wage. The aging baby boomers will require more nurses. American nursing schools as they are now even if running at full capacty will fall further and further behind in producing the number of new nurses neaded each year.

We need to send Walmart workers to nursing school at government expense and send our unemployed to take their jobs at Walmart.

Back to physics, when America software engeneers lose their jobs to lower paid software engineers in India the idea that education in a technical field guarantees a highly paid job in America has been proved wrong. Knowing which field will become outsourced at what speed is like studying weather patterns. The general trend is that all outsourceable jobs will be outsourced and all of the other jobs will be done by immigrants. The reason for this is that because of an incorrect lack of faith in developing nations together with a misplaced faith in America by foreign investors, America is being lent money it does not have a productive use for. This excess lending to America is creating wrong exchange rates. These wrong exchange rates make it impossible for american labor to compete against foreign labor without being demoralized by falling wages except in fields that have international labor shortages.

You can't count on a international labor shortage in any particular field being maintained because India and China are increasing their supply of highly skilled labor at an exponential rate of growth and the new supply could quickly start entering into new areas of expertise.

I talked to a man who had a one truck moving company in which he employed three illegal immigrants who barely spoke english but cheerfully worked hard for $10 an hour under the table no benefits. He explained to me why he will never hire an American born person of any race. He said, "I want guys who will cheerfully work very hard at $10 an hour. I could pay less than $10 but then my guys would not be reliable. I could get Americans at $10 an hour under the table but they would not stay happy and would not be reliable and would not always work hard. $10 an hour is not enough to make an american like his job."

The same situation is true for highly skilled jobs. You just have to change the pay numbers. This is why the American software engineer in competition with Indian Software engineers is fired rather than being asked to take a 70% pay cut.

 

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This is a good point and it is not only foreigners. A very years ago, I received a $300 check (supposedly to stimulate the economy) from the US government which I did not spend, but like most others who got the max amount (the poor, who would have spent it got nothing.) I deposited it to my savings account.

The supply of money by foreigners and by government does keep interest rates lower and this does help encourage investment, but the investors do so only if they expect to able to sale their product or service. With real wages in decline and several components of the family budget going up faster than general inflation (Tuition, gasoline, medical cost) it is hard for the "working stiff" to shop anywhere but Wal Mart, so the jobs at home at Wal Mart are increasing but this only helps pull down the average wage.

That government tax rebate to the relatively well off did little except increase the debt. I would have produced the missing demand that is the real motive for investing in new facilities etc, much more if it had been thrown out of helicopters flying over poor neighborhoods.

The US economy was once strong but with steady mismanagement has become dependant upon foreign credit, and as the dollar declines, and the debt grows there will be a day of reckoning - the foreigners would lend more. Some countries have started to lessen their central bank holdings of dollars already - They don't want to get stuck "holding the bag" (of green paper with greatly reduced value.)

 

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read more - http://news.bbc.co.uk/2/hi/business/4425446.stm

 

It's utter Bull SHIT. There are not that many decent job opportunities for folks with Ph.D.s in states (more exactly, probability to get those jobs is very low). Even desperate foreigners feel that.

Another BS. I know many college educated engineers driving trucks. So, if university would churn more graduates, how it will make things better? College graduates washing dishes?

Most of science papers is BS. With all due respect, Asian science papers, in the field I know something about, on the average are more useless/worthless than American ones.

Another corporate propaganda. Americans don't go in science/eng. careers cause it suck ass, cause corporations have hundreds of thousands of easily disposable Indians. Corporations would wants us to believe that it's vice versa. They move to India cause there are not enough of educated folks here.

 

dude, phd in engineering?

that is INSANE stuff!!! You are the man...

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PHD in engineering is useless????!!!! That is very very scary. Is it that You can't use the PHD or is it that the pay bad and you could get better pay doing something else? What kind of engineering? If I pry too much don't answer.

There are a lot of Lawyers out there and legal research work is just beginning to be outsourced to India.

Politics beyond city council is a competitive business and like prostitution you may have to let people suck your soul out if you want to to well in that business.

 

All of your comments boil down to one accurate observation: Educating more students in the sciences will not, by itself, stem the decline of western science. If you look where your CD, your TV, your digital camera, your microwave, your computer, etc. were made I think you will agree that the technological leadership has Already been lost to Asia.

Do not kid your self that this only because of lower wages. Sure, that is a factor, but these devices were designed in Asia as well. For example. Japanese engineers are now working on the seventh generation of flat screen displays, which seem to be in everything now days, and the US engineers are struggling to try to design even first generation devices. Or, for example, No one in the US can begin to make a humanoid Robot that can walk and play tunes on a bugle. Where is the world's only magnetically levated train in commercial service? - China (They did get a lot of help from Germany engineers.) Guess what language the next man on the moon will speak. US's twin deficits and tendance to fight for oil etc. are leaving less money to support basics researcher and now even student loans. It is a vicious down hill cycle.

Yes US needs to spend more on educations, but that alone will not stem the tide. The whole values of the society must change. You can see what US society values, by looking where the most high paid are. (Sports and entertainment - nothing of lasting value or with improvement of productivity.)

 

Only crazy people stay in science. There is only insecurity and low wages in science. People are not interested in that. They watch tv cribbs and then want a pool room, not to work overtime for free to produce a paper that only 13 people in the world will read (if you are lucky) while everybody around you saying it is pointles what you are doing (people outside science).

You have to be pretty motivated nowadays to stay in science. Or just be unsuitable for any other job.

 

Kmquru's house photo (below) reminded me of another problem in the US. While people who have six kids live in two bedroom apartments that type of house often is forced upon a childless lady lawyer married to a stock broker etc. That is people with large incomes need the tax deduction of a big mortgage.

Americans usually think "centrally planned" economies result in lots of dumb projects etc. (and I tend to agree), but few realize that the US economy is strongly centrally planned by the complex tax code. Be it "oil depletion allowances" Katrina tax breaks, solar investment credits, or even simple things like when to sell stocks you have a profit or loss in. Very few decisions are made without taxes being a major part of the decision - I.e. on their basic economic merits alone. The old Soviet Union was just less hypocritical, not less centrally planned, and the American economy is going down the tubes as a result too.

Least you think I am a "bleeding heart liberal" upset about that poor family of 8 in a two bedroom apartment, I think a flat tax rate, set annually to cover the budget, is a reasonable idea, especially if mixed with "Keynesian economics" I.e. more than covers the budget in "boom times" and has a deficit during recessions.

 

I think all the 'logical' analyses won't solve the problem

IMO it is insolvable

Why ? because the problem is not even recognised ?

and if I told you you would reject the scientific explanation immediately.....

I have watched the decline for a long time... I have warned to no avail, and I am not going to start again here.

Just accept that there is nothing that can be done.... the 'more basic' minds are taking over from the intoxicated..

Good luck

 

out of interest what were the real imigration, and unemployment rates in the US prior to the current crash?

the reason i ask is that australia has had both a skills crisis and a labor shortage for quite a few years to the point that defence cant get any skilled workers like pilots and air traffic controlers because the airlines and airports are hiring them all and the same thing is happerning across the board.

even though our economy is slowing our unemployment rates keep falling so why is australia not having the same problems as the US?

 

In large part because unlike US Aus. is near Asia and like Brazil has lots of minerals to export. US has a lot of coal, but I think not the high grade "metallurgical" coal (which is up 400% in price in last two years) I do not know for sure, but think China is importing it from somewhere else in SE Asia or Africa. Brazil is farther away but our iron ore it the world's best. Some that comes out of the "Casa de Pedra" (house of stone) open pit mine runs 65% iron!* China had some that ran 25% iron but it is all gone - their's is in the 15% range now.

Both CSN & Vale are extracting from "Casa de Pedra" and have some legal battle between them, which I do not understand. CSN took (or will) out 187 million tons of ore and Vale 152.5 million tons in 2008. Recent report by Golder Associates upped the size of the recoverable deposit from 440 million to 1.6 billion tons (probably in part as the price is up 65% YoY so lower grade parts are economical - just guessing but may just be, as is typical with oil and minerals, that the investment in exploration is only made to find a few years of "proven reserves" more than the current annual need. Oil companies have not been able to do this for last few years - part of why oil costs > $100/Brl. I.e. only a markedly higher price is able to include the more expensive deposits in the "proven reserves.")

With the new report, CSN plans to produce 70 million tons in 2012. Vale not saying its plans, but is making more effort to move up the processing chain - I.e. make more steel sheets etc. -I have long advocated this as it helps Brazil and takes away most of Austrailia proximaty advantage in supply Asia's needs. together they are investing (before 2012, I think, paper not clear) 2.970 billion US$ on inprovements ( rail and port facilities included). There is a real shortage of the giant trucks they use - more than a year wait now for delivery of a new one.

Brazil is booming economy, as is Austrailia - and for the same reason: C H I N A.

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* never did it before but atomic weight of Fe is 55.85 and of course O is 16 by definition so Fe2O3 is 70% Fe - this implies that "Casa de Pedra" is essentailly pure Fe2O3 with an occasional stone in it! It is in a large Brazilain state whose very name translates as "general minerals"


This is some parts of what was once deep inside the Earth - Sorry OilisMastery - not any oil came up with the abundance of minerals and large crystals that cooled very slowly. Brazil's oil is found where the ocean organic sediments were as Brazil separated from Africa. The best of it is under a thick layer of salt. -That was also from the ocean until ocean evaporated on top of the sediment.

Look at a map. Brazil’s oil deposit region fits into the African land mass (once were joined) exactly where Nigeria's off shore oil deposit is. As the continents separated, organic matter collected in the depression and later the sea came. Eventually, when well separated, these now oil rich regions rose some to be the continental shelf they are today. The salt probably deposited as the oceans shrank into the deep non-continental shelf basin of the oceans (Continental shelf was certainly all dry during the ices ages.)

 

Here is part of the answer to thread's question:

“…In an effort to fix the current crisis, the Federal Reserve is massively expanding its balance sheet while seriously diluting the quality of the assets on that balance sheet. On Jan. 14, 2009, the Fed's balance sheet showed $2.1 trillion in assets. That supported $881 billion in currency in circulation. That $2.1 trillion was a huge increase from the $868 billion on the Fed's balance sheet on Jan. 16, 2008. At $813 billion, the cash in circulation a year ago wasn't a whole lot less than what's in circulation now. As everybody from then-Treasury Secretary Hank Paulson to a newly inaugurated President Barack Obama has kept telling us, banks aren't lending. They're hoarding currency by keeping it on deposit with Federal Reserve banks. …”

From: http://articles.moneycentral.msn.co...msnnl_6009.13.2.17&REFCD=emmsnnl_6009.13.2.17

{Billy T comment: In the last year new money of 2.1 - 0.868 = ~ 1.25 trillion dollars has been created (from “thin air”) by the FED & Treasury but it is not yet circulating, just horded. Also the ”velocity of money” of the 0.881 trillion that is circulating is exceptionally low. When this new “printing press money” plus the >0.75 trillion of Obama’s stimulus does begin to circulate (2 trillion more than the ~0.8 trillion that even healthy US commerce needs) with credit finally easy again, what do you think will happen with nearly a three-fold increase in the quantity of money in people’s hands? – Can you say “run-a-way inflation” but the Treasury & FED must try to limit that or the larger than today deficits cannot be financed by selling Treasury bonds at sustainable interest rates. (US is already borrowing to pay the current low interest rates) I would guess that the 10 year Treasury bonds interest rate would go to 15 + or – 3 % as a level that is not yet “run-a-way inflation” and yet not totally destructive of US industry and commerce – only making a long and deep depression (in EU also).} I am not sure whether the “stimulus cure” is better or worse than the current “no liquidity” disease.

Either way, the depression I predicted some years ago as “unavoidable” is now a commonly recognized danger many economists are now speaking of. Again: Do not blame Obama for it when it comes. China can already choose when to collapse the dollar, but probably will wait a few years more. I predicted more than three years ago the “inevitable collapse” of US dollar would be prior to Oct 2014. (and after Oct 2008) and that seems to be a safe prediction still.

 

I tried to find an example where a fast-track stimulus program like we have embarked on has ever worked in such a serious and sudden financial collapse. I could not find one. I read that we ended up in a depression in 1933 because Pres. Hoover was so disgusted with the Robber Baron Gilded Age financial trusts that he refused to bail them out of the mess they caused. He let them have what they deserved. No stimulus came until FDR in 1933.

Myself, I feel confident the plan will work. What I see is that this 2nd stimulus plan will be followed yet by another and, if necessary still another. In the end, it will turn us around. Meanwhile, the stock market, knowing this will happen, has stabilized in the same area. When it recovers and goes up to eventually catch up with the inevitable dollar inflation the stimulus packages will cause, people will begin to take heart and begin to buy up the tremendous residential real estate bargains that now abound. They will take the funds for that from selling the treasury bills that they have, in panic, put their funds into for safe keeping.

charles
http://atheistic-science.com