Strengthening Constitutional Self-Government

No Left Turns

Economy booming

The economy
"shot forward at an upwardly revised 5.3 percent annual rate in the first quarter, the fastest growth in 2-1/2 years, as companies built up inventories and exports strengthened."

Discussions - 34 Comments

One problem is that much of this growth may not be reaching Mr. and Mrs. Average Joe American. In the last 30 years, real income gains have accrued only to the top 2 income quintiles (typically college-educated dual-earner couples with children). It’s true that the woes of the bottom quintile have to do with broken homes, illegitimate births, and low educational attainment, but that doesn’t help the GOP. With the deindustrialization of America, blue collar folks are taking a real beating.

Has it occurred to anyone on NLT that Pat Buchanan may be right on the downside of "free trade?" I know that if my job was about to be offshored I sure as hell wouldn’t vote Republican...and trotting out umpteen Libertarian economists wouldn’t change my mind.

Are you suggesting that we take the approach of strong protective tariffs and forcing the growth of industry? The seems awfully big government for a supposed Republican.

That’s exactly what I’m suggesting...and it was GOP policy through the 19th and early 20th Centuries. Over a quarter of Chinese exports to this country are of the "high tech" variety...it will only get worse. We are down to 10% of our labor force in manufacturing. Do you have an alternative solution?

We are down to 10% of our labor force in manufacturing.

Please explain to me why this statistic is important. At one time 90% of our labor force was engaged in agriculture; now it is well under 5%. Nevertheless, the United States produces both more food and more manufactured goods than at any other time in its history. What’s more, unemployment is lower than it was back on the halcyon days when America imported virtually none of its manufactured goods. Where is the problem?

Pretty elementary, John. In the days of yore, our economy didn’t use a lot of manufactured goods...today we do, and so someone has to make them. Traditionally, it was industrial productivity that allowed much higher standards of living, whereas professional services (e.g., law, medicine) were limited to elite segments of the population. Today those well-paid entry level jobs are evaporating because they are being offshored to China, where labor costs are some tiny fraction of US wages.

And now, of course, you’ll hit me with some Libertarian, quasi-evolutionary notion about how we’ve outgrown manufacturing...except we haven’t. We are using more manufactured goods now than ever before, but unlike before, the capital is going to 1) a tiny segment of the American labor force, and 2) places like China. We are hemorrhaging capital, jobs are vanishing, and income inequality is (not surprisingly) approaching some of the highest levels we’ve seen since the 1920s. So much for the American Dream.

More later, if you’d like...there’s so much to say on this topic.

The problem, Dr. Moser, is that some people have not read any basic texts.

Elementary indeed. Dain is so elementary he wants to refight battles that were settled 200+ years ago.

On this issue I agree with Dain - I don’t think he is being "so elementary", but he is being a realist.

One can read studies and theories of economics... cite economic statistics, argue the move from agriculture to industrial to "to be named"...

However, if you live in the lower middle class, or blue collar world - you must know that the manufacturing jobs that are lost hits them very hard. Things are tough. Pensions are lost or reduced, health care is lost or reduced, energy costs are rising. It is just real world experience. And most of those that live in that world, don’t care what book you recommend or what economist you quote. If politicians want their vote - they need to understand their situation, position and perspective. They also need to address it with solutions and not theory.

and... to say that he wants to fight battles that were settled 200+ years ago is really a ridiculous notion. We are living in the present. Rational people learn from history - adapt to present issues and move forward with practical solutions to issues at hand.

Well, Steve-O, you snipe, but you say nothing. What battles were settled 200 years ago? As for basic texts, I assume you refer to economics textbooks...brought to you by the people who can’t even predict a mild recession.

No libertarian cant here, just cold, hard facts:

As a percentage of real GDP, manufacturing’s share of the overall economy has remained stable since the late 1940s.

If manufacturing’s share of GDP were the hallmark of an economically healthy society, the most prosperous countries in the world would be...Turkmenistan (39.8% of its GDP is manufacturing) and Cuba (37.2%).

It is true that during the 1990s employment in the U.S. manufacturing sector declined by about 0.4% per year. But this is part of a far broader phenomenon: Japan’s manufacturing sector declined by 1.8% per year over the same period, Germany’s by 2.5%.

Real wages for manufacturing jobs in China increased by 8.9% per year during the 1990s--and therefore China has already begun to lose its competitive edge as a source of cheap labor. During the 1990s China LOST 8.5 million manufacturing jobs.

Overall manufacturing productivity in the United States grew at an average of about 5% per year during the 1990s.

U.S. exports during the same period grew at a rate of 6% per year.

U.S. exports to China have more than doubled since 2000.

Now sit back, pour yourself a beer, and stop trying to scare everybody!

As a percentage of real GDP, manufacturing’s share of the overall economy has remained stable since the late 1940s.

Depends on what you mean by stable. In nomial terms it’s dropped like a rock...in real terms it’s been much more stable, but it has dropped by over 1% since 2000. And ’output’ doesn’t help the working class...only jobs help them, and that’s what we are losing. The manufacturing we have left is capital-intensive, and we’ll be losing that shortly.

If manufacturing’s share of GDP were the hallmark of an economically healthy society, the most prosperous countries in the world would be...Turkmenistan (39.8% of its GDP is manufacturing) and Cuba (37.2%).

and

Real wages for manufacturing jobs in China increased by 8.9% per year during the 1990s--and therefore China has already begun to lose its competitive edge as a source of cheap labor. During the 1990s China LOST 8.5 million manufacturing jobs.

Communist societies put a great deal of their energy into bloated, inefficient manufacturing. The statistics you cite here is the process of recovery from command economics. As China closes down more and more of its SOEs, it will become hungrier for more imported factories...OURS. As for the increase in wages...come on, John...8.9% of nothing is still nothing. The average hourly pay in manufacturing in the U.S. is $21.33. In China it was 69 cents...more than 3 times lower than Mexico! It’s gonna be a while, John, before they price themselves out of the market...chortle.

U.S. exports to China have more than doubled since 2000.

In 2005, we imported about 6 times more from China than they imported from us...again, we’ve got a LONG way to go to match them. And I doubt it will get better...only worse.

In short, John, time to wake up. Capitalism ain’t perfect...not even close, and if you don’t watch out for yourself then you’re screwed. You want to be scarced? Read this book...by Professor Oded Shenkar (Ohio State, the book says...maybe you could take him to lunch).

The Chinese Century.

Guys a business prof...imagine that!

Guys a business prof...imagine that!

Maybe you should take him to lunch--you live a lot closer to him than I do. And what are you trying to prove, exactly? This brilliant prognosticator is an economics prof at Southern Methodist University.

Moser, don’t you know that appeals to authority are stupid unless Dain uses them. http://noleftturns.ashbrook.org/comment.asp?blogID=8554#26552.
Oh yeah, who cares about those hundreds of libertard economists and their textbooks. Dain found a book by some professor! He searched for it on amazon! Now Dain has finally crushed you, John Moser. Just like Lee crushed Lincoln during the war of northern aggression.

While I am pretty much a Hazlett/Mises type of guy I would argue that the above mentioned growth in the GDP is pretty well explained by Keynesian Economics (tax decreases are part of Keynesian fiscal policy accorded a multiplier along with the added government spending, minus the effects of crude oil). I would hate to see Dain be right for the wrong reasons...but to some extent I am not overly bullish on the long term picture (trade deficits are linked to budget deficits)... chief among my complaints would be the idea that if the economy tanked it would in any clear way be because "capitalism isn’t perfect"... I would almost argue that if the economy tanked it would be because "keynesian/monetarist fiscal policy" isn’t perfect, and because the beast(our dear government) has too many credit cards. In other words the reality of our fiscal policy is not more in accord with the folks at Capitalism magazine/Mises Institute/NYU and other proponents of the purest versions of capitalism... but is only mildly informed by this group and is in truth through the spending of congress probably more inclined towards the corcerns of Nick and Dain.

I am sure it is a mistake but Dain sounds a lot like Krugman.

would almost argue that if the economy tanked it would be because "keynesian/monetarist fiscal policy" isn’t perfect, and because the beast(our dear government) has too many credit cards. In other words the reality of our fiscal policy is not more in accord with the folks at Capitalism magazine/Mises Institute/NYU and other proponents of the purest versions of capitalism... but is only mildly informed by this group and is in truth through the spending of congress probably more inclined towards the corcerns of Nick and Dain.

I’m not sure what you mean, John. Federal spending as a % of GDP has been quite stable. Deficits today are certainly in line with those during the Reagan era, and I’ve heard some people say (Keynesians) that the spending pulled us from the recession...although I don’t think that’s true. If the economy tanks it’ll be because of really crazy libertarian economic policies that have funneled growth to the top 40% of earners by destroying our manufacturing base.

As for sounding like Krugman, some of his scholarship is sound, but he lets his nonsensical ideology warp his better judgment too often. I think most of you should realize that "free trade" ideology is relatively new in American history. Pat Buchanan may be lots of things, but I don’t think anyone has accused him of being a Marxist. He (and I) want to use Federal power laid down IN THE CONSTITUTION to create a better environment for ALL Americans, not just the college educated few. Unlike Krugman and his ilk, however, I would never support confiscatory taxation and redistribution...that bloats government and destroys the economy just as fast as "free trade."

Hey, it’s real simple...I think the hard Right (libertarians) and the hard Left (leftists) are WRONG. All extremist philosophies end up working with the same crooked timber of humanity, which of course ultimately defeats them. A good dose of commonsense would go far in today’s polity.

I supose for the sake of argument I will be the libertarian...does this allow me to define the term?

In any case, I challange you to name a single libertarian economic policy. As Dr. Mosier points out the idea of a libertarian economic policy...or libertarian fiscal policy...is somewhat weak, because it is somewhat contradictory(read Bastiat’s petition of the candle makers against the sun..or what is seen and not seen). For the sake of simplification lets agree to define libertarians(in economics) with reference to Mises.org. If you agree that I am setting up the field correctly then you will want to show that the nefarious influence of the Austrian school is responsible for our problems.

You say:"If the economy tanks it’ll be because of really crazy libertarian economic policies that have funneled growth to the top 40% of earners by destroying our manufacturing base."

I ask: How does destroying our manufacturing base funnel growth to the top 40% of earners?

I answer that it doesn’t.

"Free trade" isn’t an ideology...it is an economic ideal that dates back to at least Adam Smith and David Hume and among the late classical folks is best illustrated in my opinion by Fredrick Bastiat.

"Pat Buchanan may be lots of things, but I don’t think anyone has accused him of being a Marxist." I would be the first but it would detract from the simplicity of my argument...in truth Buchanan is a Mercantilist.

"He (and I) want to use Federal power laid down IN THE CONSTITUTION to create a better environment for ALL Americans, not just the college educated few." So you want to use instruments of coersion to prevent one man from buying at the cheapest price...or on the other hand from selling at the dearest?

"Unlike Krugman and his ilk, however, I would never support confiscatory taxation and redistribution...that bloats government and destroys the economy just as fast as "free trade." Do you not agree that we already have confiscatory taxation and redistribution? That this is not done in the name of providing a better environment for all Americans? Of course it is... it is just done in moderation..(if such a word applies). If you oppose it then you must do so on grounds that were first tilled by "libertarian/microeconomists". But you don’t want to use "libertard" arguments do you? (don’t worry you don’t employ them often or consistently.)

In any case, I challange you to name a single libertarian economic policy.

Hardly worth arguing about. Check out CATO...deny that the vast majority of libertarian thinkers favors free trade across international borders. I’ve never met a single libertard who favored protective tariffs. Do they exist? Enlighten me!

I ask: How does destroying our manufacturing base funnel growth to the top 40% of earners?

Easily answered, John. Because the dogma of "free trade" allows easy access to the American consumer market, American capitalists who manufacture labor-intensive goods have migrated en mass to places like China (which DOES have restrictive tariffs and an aggressive national economic policy). The jobs left for the bottom 60% are at places like WalMart...it cuts their wages/benefits in half. On the other hand, the service industry is healthy (up until now), and so college educated workers fare much better...for them the American Dream is still a viable reality. Hence the massive increase in income inequality since the early 1970s.

"Free trade" isn’t an ideology...it is an economic ideal that dates back to at least Adam Smith and David Hume and among the late classical folks is best illustrated in my opinion by Fredrick Bastiat.

I think if you review both Smith and Ricardo you’ll find that neither envisioned "comparative advantage" in cost terms alone. Moreover, both endorsed the idea that national loyalty plays a large role in investment patterns. If you’d like, I can produce the citations.

So you want to use instruments of coersion to prevent one man from buying at the cheapest price...or on the other hand from selling at the dearest?

Absolutely...read Hobbes. Central authority helps us avoid the "tragedy of the commons," and coercion within proper limits is an integral part of governance. We have all kinds of contract/property law that use the power of the state to protect capitalist interests. Why not a few laws that protect our society from the ruin of greed? As a society we have the right to set ground rules. If you want to buy and sell in America then you agree to the rules...and I would set as one of those rules clear favoritism for domestic production. Most other countries do it...that’s how you build great societies.


If you oppose it then you must do so on grounds that were first tilled by "libertarian/microeconomists". But you don’t want to use "libertard" arguments do you? (don’t worry you don’t employ them often or consistently.)

I oppose confiscatory taxation because I want to balance the power of the state with the power of civil society. Unlike libertard arguments, which are rooted in the metaphysic of radical individualism, my views are based on the reality of human nature. We must limit the power of the State, just as we must have ground rules for capitalism. In balance is freedom for both the individual and the group.

"deny that the vast majority of libertarian thinkers favors free trade across international borders."

I don’t! What I deny is the effectiveness of these thinkers on influencing policy. Ultimately, Dain I hope you are right when you say "In balance is freedom for both the individual and the group." Because this balance is always being struck... instead of free trade we actually use the power of government to either restrict trade or offer more open trade with nations. It is a barganing chip, and there are economists who think this is a good thing. I don’t think it is ideal. Ceterus paribus free trade is a good thing. Aside from certain exceptions involving military secrets/weapons/drug traffic free trade is a positive. The Mises Institute argued against NAFTA on the grounds that it was a ballance that ends up mixing poison and food. In the E.U. all sorts of strange problems are cropping up involving subsidies, tarrifs, and trade... but "free trade" as defined by Bastiat... it is somewhat of a concept..an abstraction. An ideal that doesn’t exist in pure form. In truth we aren’t necessarily moving towards "free trade" and the problems we face today can hardly be blamed on "free trade". I hardly see how what you want differs from what Europe is already is doing.

I also don’t envision "comparative advantage" in cost terms alone. But you can keep Ricardo out of it...as he is not a libertarian precursor.

Hobbes was also a Mercantilist. I like his views on laughter...lol.

The real meat and potatoes of this debate would involve me attacking your statement that there has been a massive increase in income inequality since the early 1970’s. I would argue that if you look broader than income... if you look at the cost employers have to pay for workers...you will find that rising medical costs, safety costs(OSHAA compliance), and other government or lawsuit mandated costs have driven up the cost of labor. Naturally such costs are not distributed evenly...but even if they were a $10,000 increase in employer cost would have a greater effect statistically on a $30,000 employee vs. a $200,000 employee. In the the case of the bottom the cost has increased 25% in the case of the top the cost has increased 5%. If the employer was to budget a 40% raise for each the new income would look like this. $42,000 for the bottom of which $10,000 would be eaten by costs leaving income of $32,000 vs. $280,000 of which $10,000 would be eaten by costs leaving $270,000. $270,000 is a 35% raise on $200,000, while $32,000 is only a 6.7% raise on 30,000. Thus if one wanted to one could conclude that 35% is 5.25 times 6.7% and thus that income inequality has increased. So while income inequality has increased it is largely because the costs of labor to employers has increased. As a matter of fact the cost to employers has increased by a greater percentage for low income jobs, particularily manufacturing. But this is largely due to government regulation...or as you would put it the "ballance" between individuals and groups.

The economy is never a static thing...attempts to "ballance" produce costs...costs must be recouped one way or another. Because the costs for manufacturing labor and other cheap labor have increased faster than other costs expensive labor included ceterus paribus...and because like it or not the rest of the world is slowly ambling towards liberal democracy and the protection of property rights... Employers have a strong incentive to send jobs overseas...where lower costs per hour and administrative costs can be had in exchange for some stability, infrastructure, proximity to markets, and customer loyalty.

Great societies are not created by favoritism for domestic production. "I would set as one of those rules clear favoritism for domestic production. Most other countries do it...that’s how you build great societies"

Explain to me how the Dutch ended up being more wealthy than the Spanish...Of course today there are a lot of catholics and people who speak spanish...so it depends what you mean by great societies.

In the end the fact that other countries set rules that(potentially) favor domestic production, does not convince me because I do agree with CATO that ceteris paribus the stronger the protection of private property, the more open the markets, the less currency inflation, the less corruption, the less entagling regulation...the better.

You convincingly cite China as an example against Dr. Moser. But allow me to turn the tables. "The average hourly pay in manufacturing in the U.S. is $21.33. In China it was 69 cents." Sounds like a good argument for establishing rules that favor domestic production...so we can build a great society....like China has...chortle.

Insert Hobbesian laughter.

Oops, about to get sunsetted. John, while it’s true that benefits have increased the labor costs of industries, it’s ridiculous to suggest that benefits, regulations, etc. etc. are the primary reasons for offshoring. 69 cents an hour, John...you can’t beat it, even if you strip every protective law away from workers and the environment. What we’ve got here is a case of industries producing dirt cheap and selling dear. Someone’s making a killing, and it’s not the American working class.

As for free trade being superior to protection, that’s a myth...there’s no evidence of it that’s worthy of defense. And protection DID build great nations -- here is a nice summary of how the West got started on the road to industrialization. Every step of the way, government intervention (particularly in the UK and the USA).

And Ricardo’s not a pivotal figure in libertarian economics...it’s my turn to laugh :)

I have read the following study and conclude it to be invalid drivel.

Then you’re an idiot...it’s straightforward history, dolt!

That’s right. I forgot. Anyone who doesn’t agree with you is a "idiot", "dolt" and should "play in a sandbox." So let it be written.

It’s not my fault that you failed to read it before you criticized it. Only idiots do things like that, but of course the "handle" you’ve selected tells us everything we need to know about your native intelligence and creativity.

Now wipe the drool from your chin and go find a nice bridge to hunker down under, troll.

Dain Has Spoken. So let it be written.

Comment 22 by dain

It’s not my fault that you failed to read it before you criticized it

Comment 19 by Not Dain

I have read the following study

Sorry I forgot that I only told once already that I read it.

Well, I think you are lying. You say it is drivel...in what sense? And what qualifies you to pass judgment on a prestigious scholar’s work? Let’s here a real critique, trog.

Well, genius, Comment 18 is MY comment...you can’t even count...and the double entry is nice as well. Guess I got under your skin a bit...I enjoy troll-baiting :)

When I question authority I critique it, not label it with a cheap shot like you do. And I AM qualified to question this scholar’s work, whereas you almost certainly aren’t.

And you are avoiding the critique I asked for. Admit it...you didn’t read it, did you? Nitwit.

Should be comment 19. Dain, everyone reading this blogs remembers and knows what I am talking about. You never critique anything and LABEL EVERYONE and everything. Everyone is a "Libertard" in your mind or a "nitwit" or an "idiot" etc. BTW, what makes you such an expert? Or is it just a self proclaimed assertion?

BTW, Can you disqualify Bernanke, Krugman, Mankiw, Friedman, Adam Smith, Hayek, Abel (Business Prof at Wharton who co-authored a text with Bernanke)and almost every economist since the 1700’s? I have read all of these gentlemen and your author (who by the way cites over 11 articles written by HIMSELF) sound like a genius. (sarcasm on)

Not Dain, you too have forgotten that appeals to authority are stupid unless Dain uses them. The only true authorities are Dain and the left-wing website he linked to.

I notice that no one has yet given any substantive reason why the pdf I linked to is "drivel." Interesting. And yes, that’s an impressive list of names you’ve got there...more people you haven’t really read?

ND just pulled a play out of the Dain playbook. Reread 26. It must be frustrating to have your own weak illogic thrown back at you.

Yea, but unlike Mr. Creativity, I usually say WHY something is "drivel." You boys are long on personal attacks, but mighty short on substance and critique. Troll brains must be really small.

No you don’t. You insult people and make statements just like the one made by ND. Reread 26.

Wrong. And from this point on I’m going to figure you have some kind of twisted personal stake in "policing" me, and I intend to ignore you, "not dain," and "dan." Probably all the same wacko.

Hey, go get a life...surely there are female trolls out there!

Sorry pal, I am not ND. I am also not wrong. ND’s comment looks like satire. Good satire since it is identical to a dozen or so comments you have made.

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