I agree with your post 28, but wonder if it is true that Americans are as wealthy as you imply. For example, $600 billion for the Iraq war (thus far) and 300 million people is $2000/ per man, woman and child. Just paying the interest on the total government debt is large non-productive burden on each person also. Those that own a home have seen the capital gains disappear, but not the debts they finance by rolling the mortgage to a lower rate. etc. Assume you are 45, and will live to 90 and now have 1 million dollars. Also consider the rapidly decreasing purchasing power of the US dollar and the rising cost of health care and education (up 51% in just 5 year, AFTER CORRECTION FOR INFLATION) etc. Is this 45 year old "wealthy" enough not to worry where is food* and medical money will come from when he is 90? -------------------------- *Did I forget to mention that corn is above $4/bushel now that 13% of the cropland has been diverted to alcohol production? Bush plans to boost US alcohol production by factor of 5 by 2017 - Lets see, 13 x 5 = 65% of crop land taken out of food production. - What will that do to the price of corn? etc. Summary unless you have a million in your forties, you are in for some very unpleasant surprises (Counting on Social Security are you? - LOL)
A million in your forties...with minimum wage roughly 5-6 bucks an hour(u.s$). Mean incomes can simply not make this "Magic" retirement number. Again, doesn't this show how bloody rediculous the money "system" has become? Buy gold, land(and be willing to defend it), learn the skills to be self sufficient. Banks serve their own interests. Not the interests of the people, of governments or even the so-called economies they claim to help "grow". When lending money ceases to be profitable, they collect...it is actually just that simple.
The complete opposite is true. It is the LOW paying jobs that are going overseas. And outsourcing is not causing a shrinking of the job market here, if it was, the unemployment rate would be going up. You are still believing the negative economic hype of the last election. Don't pay any attention to politicians when a vote is looming. They have to convince us that things are broken in order to justify their jobs. There is nothing unreasonable about that behavior, but it is unreasonable to believe them, rather than using some common sense. The unemployment rate has been around 5% for a long time. This is a healthy rate, you need a small part of the population BETWEEN jobs, or the economy would not have the ability to react to market conditions. There would be no pool of talent to hire from. Outsourcing is a good thing in every way possible. It helps everyone, even the people who temporarily lose their jobs. It just takes a bit of thinking to see how it helps them, rather than the gut-level reaction to a man who has to go job-hunting for a few weeks.
This is a measure of the % of work force actively seeking a job. not the number who are unemeployed. Many are under-employed or working at jobs less than desirable from a social POV, prostitution, robing, internet scams & spam, bookmaking, panhandeling on street, etc. - they are not in your 5%.
You consider computer programming, Automotive parts manufacturing, Electronic design engineering, Chemical Processing, Electronic chip manufacturing, Machine assembly etc. as LOW paying jobs in USA? Do the rest of the population consider the same too? You must be either a student or a government employee... As to unemployment, we needed 5 managers ($150K - high pay jobs) for a State healthcare system. We got 500 resumes that are presently unemployed. Statistics are one thing...reality is another...
Well, don't take my word for it. Look at the numbers for Real Household Wealth (which factors in debt and inflation): http://www.businessweek.com/the_thread/economicsunbound/archives/2005/09/real_net_househ.html Real Household Wealth is at $45 Trillion, which is $150,000 per man, woman and child. Inflation has been going steady at about 2-3% for several years now, so I don't see what all the alarmism is about on that front. Sure, the price of corn is up, but that's not the only food people eat and, meanwhile, the price of gas has come back down from outer space. I'm not sure what you're talking about when you say the capital gains on homes have "disappeared;" home prices have been growing significantly faster than inflation for years (rates around 12%). The Dow Jones Industrial Average is up 20% over the past 3 years. If there's a housing slump or a stock-market crash, THAT would disappear a lot of the capital gains (and presumably drive up savings), but as of today Real Household Wealth is way up.
^ I agree with many of your points but I believe its pretty clear that their is a housing slump that that capital gains on primary households are down from their double digit gains of the 90's (that were quite abnormal). I'm pretty sure I recently read while they still beat inflation, its more like 4-6% than 12%.
We don't send the top computer programming jobs overseas, only the rote ones. The top programmers in the world work on the West Coast of the US. At Google, Microsoft, Apple, etc... The top automotive parts are made here, the cheapo stuff is made overseas. Same for Electronic Design. We make the top chips right here, and send yesterday's top stuff over the pond. Just look where AMD and Intel make their latest cores! Please tell me that you are aware of this trend. We don't have the productive capacity to make all of the things that are consumed here. We must have other people pick up the slack. So we send off the most labor-intensive, and the least cerebral-intensive jobs to whoever can do them most efficiently. As for the poster who commented on the 5% pool... uh... yeah. Why should we count the people not looking for a job? I'm not sure what your point is. The fact that people who AREN'T looking for a job don't have one is a problem? Fact is, many European countries have double-digit unemployment, and your non-point would apply to them as well, making your non-point even more "non".
Yeah, the 12% was increases in sticker prices over the past few years, and that's definitely cooled off. However, it bears mentioning that real household wealth is also composed of lots of stock holdings (which are much more widely owned than in previous decades). Notice that the plot of real household wealth I linked previously looks a lot like the Dow Jones.
If you wish to include in US wealth, dow jones (stocks) I can agree with you, but that is little different for the boy who sold his dog for $50,000 (well actually he got two $25,000 cats in trade.) Point being that if the productive base is eroding, then the stocks are reflecting more of the hope and expectations than wealth. That "wealth" can drastically drop to 15% of current value in less than a year (as in 1929) - all it takes is for the run on the dollar to begin. The miss management of the US economy is extreme. For example, tonight I learned that 12 billion dollars (more than a large plane full) went to Iraq and disappeared. Sum is too big to comprehend but also learned tonight that India will buy 126 modern jet fighters (Boeing is hopping to sell the "super F-18") the total price tag is between 8 to 10 billion. - a very minor part of that 12 billion is probably buying the new weapons that are shooting down US helicopters. The US voters elected the current “blood for oil” incompetent government and deserves what they are getting. Current year's budget request for Iraq is greater than $2000 per man woman and child (but there will be supplemental request by June, if history is any guide.) It is silly to look only to the past and assume it will continue as it has been. Look to how things like the cost of homes are CHANGING if you want to know the likely future of the US economy. Look to how central banks that are getting out of dollars etc. Look to China's growing middle class and domestic market and the fact that in a few years they will not need to sell anything to the US, and hence not need to accept dollars. Look to oil exporters signing deal with China and now converting dollars into gold and Euros etc. etc. Don't tell me history - it need not repeat.
The argument goes that there's been a significant change in the workforce that isn't reflected in the unemployment rate. The implication here is that labor force participation (i.e., the proportion of labor force to population) is declining, implying fewer productive workers to feed the same number of mouths. While it is true that labor force participation has declined slightly in the US in the last 5 years, it should be born in mind that the rate is still at historically high levels. This is because the past 50 years have seen a boom in labor force participation due to women entering the workplace: http://en.wikipedia.org/wiki/Labour_force No, not really, and that's why we use the unemployment rate to gauge how much of a "problem" the jobs market is for workers. It's implied in Billy T's post that people not in the labor force are leading lives of depravation and crime, and that many people in the labor force are working in degraded jobs. However, this is not an accurate picture. The vast majority of people not in the labor force are children, the elderly and housewives. It is true that some people have retired early, and possibly on less favorable terms than they might have hoped for, but that's not exactly a catastrophe. As far as the quality of jobs for those that are employed, it is true that real wage growth has been sluggish for the past few years, although there has been some small growth recently. Moreover, total compensation, which includes things like health benefits, *has* been increasing steadily in recent years, along with rising productivity. Which is to say that Americans are indeed getting paid more, but rising medical costs are eating up most of the increase. Straightening this situation out would certainly be nice, but the point is that it's a problem of social policy, not an indication of economic decline.
I have no idea what that metaphor is supposed to imply. One can certainly trade stocks in US companies for actual cash, not just expensive felines. Stock prices *always* reflect expectations more than anything else. Moreover, the productive base is not eroding, it's *growing*. American GDP grows at a healthy clip of 3-5%, and the labor force is also growing along with the population. Yes, and we might all be wiped out by a giant meteor or alien invasion or accidental nuclear exchange. The risks of all of these events, and many much more likely ones, is already factored into the values of various assets. I don't see what any of those things have to do with American economic policy. No, that's the entire defense budget. Iraq is only a small portion of that number. Anyway, total money made by the American economy for the current year should come out to about $42,000 per man, woman and child, so that $2000 shouldn't be a big problem. In fact, US military spending as a proportion of GDP is at historically low levels: http://www.truthandpolitics.org/military-relative-size.php
Then why are we buying cheap junk from overseas than selling them? Is that because we can not afford to buy good stuff anymore? Just one HS code is below. Same with most categories. HS 85--ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP; PTS EXPORT 2000 $148B 2001 $122B 2002 $110B 2003 $112B 2004 $124B 2005 $129B IMPORT 2000 $186B 2001 $154B 2002 $152B 2003 $157B 2004 $184B 2005 $207B
The labor force has always been shrinking. That is the great wonder of mechanization. It used to be that all people worked. Old, young, male, female. Everyone worked to feed their own families, and they had very little leisure time. Farm-life was worse than factory-life, which is why peasants flocked to the cities during the Industrial Revolution. Since then, we have made it possible for old people to retire. We have stopped working children to death, and they now play for the first ~22 years of life. You bring up women, but the real fact is that less women "work" now than 100 years ago. True, back then, they were working at home and not getting paid, but there were not the numbers of leisure-class unemployed women the way there is today. All of these points are *precisely* why the only unemployment number that matters is the 5% currently measure of Actively-Seeking-Employment. If we counted the people not working, the number would be closer to 50%, with the elderly, children over the age of 6, stay-at-home-moms, etc... And this was my point to the poster who mocked the 5% stat I threw out. The number is too positive for the poster to integrate into their *sky-falling* doom and gloom look at the world. So... the number must be rejected, and some negative spin put in its place. Because, in the minds of many, our world has never been so worse off as it is today. :bugeye: Edit: (reply to kmguru) Because we are doing less manufacturing and more service-oriented jobs. Are you suggesting that blue-collar jobs are more desirable than white-collar jobs? Because I have worked quite a few of both, and I have to say, working in a safe, air-conditioned, high-paying job sure is nicer than working on a factory floor. Don't get hung up on manufacturing and producing goods. Most things paid for are perishable goods or services, not the sort of consumer goods that politicians cry over. And trade deficits are not necessarily a bad thing. Economists look at a trade deficit as also being a capital surplus. If you are sending dollars overseas, those countries can't just magically turn those dollars into Yen without affecting the worth of both, so they end up reinvesting those dollars back into the US. Capital inflow. Right now there are dozens of new automobile factories opening up in the United States because of this very reason (and also because it is good PR for Toyota, Honda, etc... and it saves on shipping costs, but these are secondary to the need to reinvest dollars) Look at the history of world economies and you will discover that times have never been so good, for so many, as they are right now.
Not at all. However, service jobs such as janitors, call center people, garderners, cooks etc are not exactly white collar...and healthcare personnel is an expense not income for the country. Look at what BLS projects in wage and salary growth: Please Register or Log in to view the hidden image! Another way of looking the same fact is what if the trading partners exhange dollars between them rather than buying or investing in USA. That is exactly what China and Japan are doing. And when there is too much dollars (just paper money!) floating around the world and nothing to buy from USA, then what happens? People will dump the dollars in favor of Euros etc... And talk about investment in USA...yes they are investing in real estate. Soon foreigners will own every choice real estate in USA. That means USA is for sale as this has happened with ports that congress has to step in. When you sell your house and all your assets and foreigners own you, I would NOT call that a rosy future. Do you? unless you are one of them trying to trick us in selling our family jewel!Please Register or Log in to view the hidden image!
No, the labor force has never shrunk, at least in the US. This is because of population growth. You may be thinking of labor force participation rates, but the total labor force has always increased. It may be that the industrial revolution lowered the labor force participation rate relative to pre-industrial America, depending on how you define "work." But it should suffice to point out that labor force participation is way up since WWII, well after the industrial revolution took hold in America. I would submit that the housewife of 1950 is comparable to the housewife of 2007, and it's certainly true that there are far fewer housewives per capita now than in 1950. Likwise, child labor had already been eliminated by the 50's. Which is to say that America has been seeing real, substantial increases in labor force participation over recent decades, which are much more significant than the small declines in recent years. The trend is towards a high level of participation, industrial and information revolutions or no.
Jeez, I guess it's a good thing that America is the second-largest exporter in the world, with annual exports totalling over a trillion dollars. Also, did you know that you can export services? Do you have any idea how much real estate there is in the United States? Also, foreigners can buy lots of things besides real estate. Stock, for instance. The total fixed assets of America amount to something like $50 Trillion, many times more than all of the dollars held by all of the foreigners in the world. The GDP of every other country combined comes out to just over $40 Trillion, just to put that into perspective. Moreover, it's generally a good thing to have foreigners own American assets. It gives them a stake in the America's security and well-being, reducing the odds of conflict. In fact, most countries consider foreign direct investment (which is the economics term for "foreigners buying assets") to be a *good thing.* It provides an important source of investment capital, for one thing.
You're misunderstanding the way in which growing Chinese consumption will affect trade. What will happen is that production *growth* will be driven more and more by expanding internal demand, but that's not to say that exports will not also continue to grow. Note that America, probably the most consumption-oriented of any major economy, exports substantially more than China (and receives more FDI). The goal is not to keep production the same and switch who buys the products, but rather to *increase* production in order to meet increasing demand: this is how economic growth is achieved. To the extent that production growth in China cannot keep pace with growing demand, this will drive up the prices of Chinese goods, and Americans will in turn purchase less of them. However, Chinese production should continue to grow for quite a while, and to the extent that prices for their products go up, other countries will step in to get a piece of the American appetite for cheap imports. Which is to say that there will still be plenty of demand for dollar-denominated trade, even if China ceases to play as big a role. Moreover, a bigger market in China represents a big opportunity for American companies, who have been investing heavily in China for decades now. A large portion (i.e., hundreds of billions of dollars' worth) of all that production infrastructure they've been building is owned by American corporations. This, in turn, boosts the American stock market, driving up American household wealth. It also means that Chinese consumers will be able to afford to import more goods from America, further eroding the trade deficit (and boosting the performance of American producers).
In 2005 for which the data is available, it is $904,379,818,000 USA GDP is 12.4 Trillion. The next one, Japan is at 4.5 Trillion. Should not US be the top exporter in the world for its size?
