99 Weeks

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A new WPA might be an alternative worth considering.

The often floated around idea of a Green Works Progress Administration is especially attractive.

Right. A WPA.

In days of old Moses told the Children of Israel to load up their camels and mount up their asses for they are going to The Promised land. In 1936 FDR told the workers of America to light up their Camels and sit on their asses, because this is the Promised Land.

ruveyn

Or, we could turn them into Alpo at 99 weeks, for a more conservative approach.

So, the children of Israel were mounting up each others' asses? What translation are you working from?

http://www.boston.com/business/ticker/2 ... ll_to.html

They failed to extend unemployment benefits again. Have American politicians finally woken up to the realization that common sense is important? The New York Times (owner of the Boston Globe) likes to pretend that the national debt does not matter, but we all know that it does. There is only so much money the world can lend to America and now that China is starting to increase wages for its own workers, domestic Chinese consumption will start to grow and that will crowd out American demand for borrowed money. As Chinese consumption grows, its capacity to lend to America will decrease. By the middle of this decade, America will find it virtually impossible to raise money on global markets as other developed nations with aging populations compete for Chinese capital.

Some of these people have lived off that $400 (after tax) weekly unemployment check for 2 years and they are clamoring for more. They are threatening to riot and commit crimes unless the U.S. government buys them off. They say that if money was made available to financial institutions, auto companies and the healthcare industry, then they should get their share too. The question is, why should anyone give it to them?

The trade deficit is much more important when it comes to dealing with structural unemployment then short-term budget deficits. In fact, its much more important to eliminate the trade deficit so as to reduce structural unemployment than it is to reduce the short-term budgetary deficit.

Other countries have survived with greater deficits, by the way.

There is no known relationship between trade deficits and structural unemployment. Even if there were a fuzzy kind of relationship, it would not matter. The world is presently in a pink zone where all bets are off as never before economic adjustments happen. History, and economic analysis based on historical data, is of little use to us as we have never seen the likes of this new world unfolding before us. What I will say it this: as Chinese wages move up, American wages will have to come down if the United States wishes to maintain full employment. There is no other way to compete.

Transfering away from simple industrial manufacturing, developing industries that the Chinese are not yet able or willing to do is a way.

I wouldn't put too much stock in what people in the big cities who are used to living off the government, and have done so all their lives, have to say. The Black American community, btw, will threaten to riot if somebody looks at them funny. Most of them have never held any greater than menial work, and a lot of their problems are self-created. A lot of America's problems are self-created in that the political watchdogs slept as Bush ran up the credit card to pay for two unwinnable wars. There's no more money, people.

Anybody who hasn't figured out yet that they need to learn tangible skills and employ themselves is already way behind the curve. Unfortunately, there's a culture of dependency on government for the basic necessities of life here, to the point where taxes were raised so high that private enterprise simply closed down and moved to places like China. Government, in all its forms, is not only the major employer here, it is the ONLY employer. We've achieved de facto communism.

The only way that the system can sustain itself is to borrow from those who actually have all the money. All gainful economic activity ceased a long time ago here, the economy is heavily dependent on the spending of financial wizards who create money out of thin air. The government didn't want to shut down the derivatives market because without it there wouldn't BE an economy. So, gambling and borrowing is what our economy is based on.

Simple industrial manufacturing, I like the way you toss it out. It is almost as if saying it makes the falsehood true. There is nothing simple about any manufacturing process. Even making a t-shirt requires highly complex technical skills all across the value chain from growing the cotton, weaving the cloth to sewing the final product. The truth is America no longer knows how to do these things. Apple for instance was forced to outsource the production of the iPad because it CANNOT be made in America. Even though the bulk of the profits are earned by Apple, as Chinese wages rise, Apple will either have to absorb the costs or pass it on to American consumers.

So, maybe we can have a WPA, but where people do more modern things, like pick cotton and make IPADS.

A New Deal public works program will do nothing to solve America’s problems. We know that the United States runs a large trade deficit and also has high structural unemployment. It is actually odd that the two are found together in an economy that has not been disrupted by shocks like war or natural disasters. Broadly speaking, if excess domestic labor is available, then production ought to shift away from foreign producers towards domestic producers and hence reducing the trade deficit until full employment is reached.

To the extent that there is high structural unemployment in the face of a high trade deficit, it would imply that the unemployed are either unwilling or unfit for the work available. For example, if wages are too low, people will choose not to accept the position. Or if the position requires technical expertise that the workforce does not possess, then there is no choice but to import from foreign producers.

America was a net exporter in the 1930s and FDR’s programs did much to stoke needed domestic demand. America is the world’s most indebted country today and totally reliant on imports for much of its daily necessities. President Obama did envision a Work Projects Administration type program and the billions spent on fruitless highway projects was a feeble effort to emulate a bygone era. It made no difference to the payrolls and actually worsened the trade deficit as the country borrowed to spend beyond its means.

The advantage of liberalized trade is that industrial development becomes more mobile. 20 years ago Chinese industrial output for export was primarily low-cost, low tech manufactured goods. As the Chinese manufacturing sector moves into higher technology outputs like consumer electronics and commercial aircraft, the manufacturers are going to have to find new sources of cheap labour. So, yes, Chinese wages will rise--but that will mean that Chinese goods will lose their competitive edge, and the Chinese will be fighting off the Africans the way that North American industry fought off the tigers.

But it's a losing battle. Rather than trying to preserve a pre-existing economy in amber, we should be providing the market with the tools to diversify. We are shifting from a commodities/manufacturing economy to a commodities/services economy. That shift is painful for those who work in the manufacturing sector, but there's no point in pretending that we can sit on the beach and hold back the tide.

The financial growth of the sixteen years of uninterrupted growth was built on the backs of Chinese labour earning forty six cents an hour. But as long as American consumers demand low prices at Walmart, Walmart is going to go looking for forty six cent per hour labour. When that labour is no longer available, then the next economic paradigm shift will come.

It will be a long while before Africa takes a bite out of the manufacturing cherry. Most people living in developed countries simply do not appreciate how difficult industrial manufacturing is. Not only do high quality goods have to be produced, they have to be made to tight cost specifications. To achieve low cost and high quality, a well trained and disciplined labor force is essential. Labor costs are actually secondary considerations. For this reason, China retains its lead in manufacturing even though wage levels in China have long exceeded populous neighboring countries like Vietnam, Indonesia, Bangladesh and India. Although some of the lower value added sectors, principally the garment trade, have been moving out of China, higher value added activities like electronic assembly are actually quite inelastic to wage pressures.

The popular view is that outsourcing to China and India is simply a labor cost arbitrage, and there is no doubt that costs are important, but another reason why companies send their business to these countries is because they do it better. This is probably the first time that some of you have heard anyone say that Chinese and Indian workers are better than their Western counterparts. Consider the Indian programmer. He is probably someone who has spent all his time as a teenager learning how to program. In university, he majored in computer science and by the time he starts his job he has 5-10 years of hardcore programming experience. When compared to the average American programmer, who more likely than not dragged themselves through the computer science requirements of their college program, the Indian guy is leagues ahead.

The Chinese have invested vast sums in infrastructure to ensure their continued competiveness. Despite decades of dizzying growth, the Chinese road building program is globally still the most ambitious. While other third world countries have roads which are crumbling or no roads at all, the Chinese are building 8 lane highways in even less densely populated parts of the country. Try to imagine the sacrifice that is needed to lend all that money to America and still invest incredible sums at home. Everything else like ports, electrical grid, water works etc. are all equally impressive. If you want to know why manufacturers love China, look at their infrastructure stats.

If manufacturing jobs cannot or will not come back to America, what will all that surplus labor do? People say that if the lower level jobs have been outsourced, then Americans will just have to find something else to do. Apparently they will move up the value curve. My question is what is that something? The theoreticians are always talking about how the economic mix in developed countries will change in response to the rise of countries like China and India, and they give idiotic examples like ‘renewable energy’ to bolster their claims; but they never ever actually map out the path to safety. All they say is that the market will take care of itself. If that is the case, then I believe that high structural unemployment in America is here to stay.

The national debt does not matter when it's denominated in currency issued by the debtor. The policy of creating an army of unemployed is immoral, though it's been official policy for the last 30 years. The plutocracy has launched another strike of capital with the goal of increasing that army of unemployed. For that they should be broken on the wheel and boiled in oil.

Deliberately engineering unemployment and telling them that their only means of living will be to scavenge in rubbish dumps shows the depths of their depravity.