Posted by Peter W. Schramm
Good economic news on two fronts: While the economy grew at 3.5 % rate the fourth quarter, the NY Times posted a 648M$ loss for the fourth quarter.
Well linked, well observed, Peter.
How long until the Soros bail-out?
This thing about the economy being strong is nice, but mostly nice to coporations and the people who own them. For you and me: (hat tip to American Progress, via Think Progress)
- Job growth is the weakest on record. Job growth during the current business cycle, beginning in March 2001, has averaged an annualized 0.5 percent per month, the lowest of any business cycle since the Great Depression. In fact, this is less than a quarter of the average of all prior business cycles since World War II.
– Sharp spike in costs for necessities. From March 2001 through June 2006, prices for the five largest consumption items–medical care, housing, food, household operation, and cars–grew more than twice as fast as they did for the smallest five consumption items. At the same time, college costs continue to soar.
– Wage gains have been minimal. Real wages have barely moved during the recovery or since the period when the economy stopped losing jobs in August 2003. Between March 2001 and December 2006, real hourly wages grew at an average annualized rate of 0.5 percent, and real weekly wages grew at an average an nualized rate of 0.4 percent.
– Families spent all of their disposable income and then some. For the first time since the Great Depression, the personal saving rate became negative in 2005. In the third quarter of 2006, the saving rate was -1.2 percent, the sixth quarter in a row with a negative saving rate.
Apologies to any CEOs or corporate entities who read NLT.
I tend to agree with Daniel. The GOP has to realize that touting empty statistics like aggregate growth doesnt fool voters...they live the economy. The country can no longer afford so-called "free trade." We still need manufactured goods, and there is no good reason why they shouldnt be made right here. We have millions of people who need decently-paid entry-level employment, and the GOP seems intent on destroying themselves for the sake of the corporate bottom-line (thats doubly true for the immigration question).
Dain wrote: "We still need manufactured goods,..." Newsflash: Weve got em. Id say the NYT is a nearly perfect exemplar of "manufactured goods"...double entendre intended. And the Grey Lady lost a BOATLOAD of money last quarter because droves of advertisers and readers no longer buy their "goods". No amount of protectionism is going to change that fact or trend.
Im an investor and director of a small, rural manufacturing company, which employs ~50 people in a town of 3,800. The issue of how to remain competitive (against lower-cost overseas and domestic labor) while sustaining profitability is all-too-real to me. The long-term solution is greater creativity ("added value") and productivity, not politicians determining winners and losers clumsily through protectionism. They (politicians and educrats) seem to be doing that WRT higher education, and the results would be laughable, if they werent so close to becoming tragic.
Well, well see what tune you whistle when those cheap goods from China bury you and your company. Simple tariffs arent clumsy, and they are needed.
And I might add, why do Americans, all 150 to 200 million workers of them, need to get creative so they can beat state-sponsored exporters like China? Whose capital is being used to develop places like China...the capital that American workers generated for these multinational companies. That capital is now being used against the very people who created it! Expecting a huge laborforce such as ours to "be creative" in the face of a rigged game is sheer nonsense.
Dain: Capital is fungible. American companies and workers need to get "creative" in part because of Chinese state-sponsored competition. We cant "protect" our way to prosperity. I dont mind, in fact I encourage, active govt intervention to ensure a level playing field. If our competitors refuse that, then Id consider, even embrace, tariffs.
Our little company *can* do fine vis-a-vis foreign competition, in part because of the shipping advantage we enjoy for our large, bulky products. But if our management, engineers and production folks dont continually improve their listening, design and manufacturing skills, then well go the way of the do-do bird. And should. It would be EMBARRASSING to catalogue the time and money wasted every year because we fail to execute on the fundamentals. ("What do you MEAN that the prototype we delivered missed several of the customers specs??") So by "creative", I really meant "attentive to detail". Creating "Economic Fortress America" will only - slowly but surely - lower the material living standards of Americans and our trade partners. The good news, from my perspective, is that much of what ails American manufacturing is within our power to improve. Not all, surely. Youre right about a lot of sheer unfair competition being out there. But a LOT of our problems are self-inflicted. Tariffs cant protect us from ourselves.
BTW, wearing a different hat, I did a transaction today with an American company buying raw materials from the U.S. (American suppliers employ ~200 people) and China (Chinese suppliers employ ~500) for manufacture in the Middle East (duty-free trade zone manufacturer employs ~200, including French/Thai designers), for wholesale in the U.S. and Europe. Capital is fungible.
Im neither anti-capitalist or anti-globalist, but I reject the notion that a very large economy can function on services alone. Indeed, we are already beginning to see the off-shoring of many services (programming, for instance), and if that accelerates (as it easily could) we will begin to suffer from Baumols disease (the one-time productivity bump in the service sector due to digitalization will soon run its course).
"Fortress America" built America...we had strong tariffs right up to the 1950s. Very soon now we will no longer have the consumer clout to set the rules of exchange. Before that happens, we need to have a national economy policy that clearly delineates the role of manufacturing in an enormous economy like ours. We will never employ 200 million people in front of computer monitors and hamburger grills, at least not while maintaining a true middle class.
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