America and Manufacturing

[quadraphonics]

My statement was that Mercedes bought, awile back, Chrysler Corp. That was a defence contractor for it made the M1Abrhams tank.

No, Chrysler Defense was sold to General Dynamics in 1992, six years before Daimler-Benz (there is no company called "Mercedes") purchased Chrysler. All they bought was a car company, and they've since sold it back.

I just wanted to point out that companies are bought and sold by foriegners all the time, I just don't keep abreast of who buys what and when. I know that England owns many firms here already.

Yes, and any and all such sales with national security implications must be approved by Congress. Thus, China will never be able to simply "buy up America" on the sly. Not that China has anywhere near enough cash to even think about such a proposition.

 

[2inquisitive]

one-raven,

Three places you will never find common sense: Government, Religion and Corporate America.

I think you have to add the American consumer to your list. I, as most middle class Americans, am concerned with our loss of good paying jobs in the manufacturing sector. I realize I can make little difference on my own, but I make a concerted effort to buy American manufactured goods when I can, even though the cost is likely higher. If all consumers did that instead of looking for the best 'bargains', perhaps fewer factories would close. Even then, it is difficult to determine which products are actually 'made in the USA'. A case in point: there is an underwear manufacturing plant near my hometown, a well-known 'American' brand. I learned that the underwear (men's jockey shorts in this case) were made offshore, except for the brand name labels that are on the waistband. The factory 'finished' the product by sewing on the brand name label with 'made in the USA' on it, packaged the product, then shipped it to retail stores as a made in the USA product. I suppose since a part of the manufacturing process was done in the USA, they could legally claim it was made in the USA. I don't know what percentage of the actual manufacturing process has to be done in the US to claim the product is US made, but I view that as a deceptive practice. This happened several years ago, so regulations may have changed to prevent it from happening today.

Almost the opposite can be true also. A 'import' brand name may be US made. Many import name autos and trucks are actually made in the USA by US workers for the US market. As an example, full-size Nissan pickups and SUV's are made in a factory in my state. Some of the smaller components, such as electronics, are no doubt imported, but even the V-8 engines are made in the US. The same is true for certain vehicles produced by almost all, if not all, Japanese, European, and Korean auto companies. In contrast, a Chevrolet pickup may be made in the US, Canada, or Mexico. The ones I looked at were made in Canada. I don't have a problem with Canadian or Mexican made Chevrolets, but those good paying jobs did not go to US workers.

What do we really export, but money? Nothing that can't be obtained elsewhere, and cheaper.
What does that make us, but redundant?

Food. We export huge quantities of grains, beef, pork, dairy products, etc. The US agricultural sector is very important to our economy.

I think some fail to include the many good jobs that are available in the 'service sector', thinking that is only 'MacDonalds' or the like. Good jobs can be had at FedEx, UPS, the Postal Service, city utilities, social worker positions, etc. They are more difficult to obtain and one will likely have to wait until a position is available. One may have to establish a good work history at lower paying jobs in order to prove their reliability as employees. Good jobs require extensive on-the-job training that employers don't want to waste on an unreliable worker.

 

[quadraphonics]

Food. We export huge quantities of grains, beef, pork, dairy products, etc. The US agricultural sector is very important to our economy.

It's true that America exports a lot of food, but it's also true that, without the various protections that agriculture receives, most of said food could be produced elsewhere for cheaper. The exceptions would be stuff like premium beef, which requires corn as a feedstock. Also, for that matter, corn.

More pertinent, however, are the myriad manufactured products that America exports. This includes airplanes, microchips, turbines, industrial machinery, farm equipment, organic chemicals, pharmaceuticals, telecommunications equipment, etc. Also note that the sale of a single Boeing airplane brings in more revenue than a whole slew of Chinese toy factories.

On top of that, you can export services, and America does this in spades. Chinese toy factories need their outputs shipped to the US market? They buy the services of an American shipping carrier to do it. Malaysian firm needs accounting and management consultants to help them expand operations? Same thing.

My impression is that people think America doesn't manufacture or export anything because there's been a downturn in manufacturing jobs and a persistent trade deficit. But the downturn in manufacturing jobs reflects increases in productivity, not a downturn in manufactured output, and the trade deficit only means that we import more than we export. American exports run to $1 Trillion per year, more than any country except Germany (whom we will probably pass in the next couple of years if exchange rate trends continue).

 

[iceaura]

I honestly don't care if it's mostly planes or whatever as opposed TVs or shoes. Why not? Because the report I linked to way back in this thread showed that unemployment has steadly dropped in the period it covered - 1980 to 2007. It's jobs that matter- not so much what KIND of job.

So the fact that the median wage for an hourly job in the US has been dropping steadily for 25 years now doesn't ring a warning bell?

One way to get unemployment to drop is to cut wages. That's what We've been doing. Lots of jobs, and there had better be, because it takes at least two of them (or a lot of overtime) to rent housing for a family.

Chinese toy factories need their outputs shipped to the US market? They buy the services of an American shipping carrier to do it.

They do?

- But the downturn in manufacturing jobs reflects increases in productivity, not a downturn in manufactured output, and the trade deficit only means that we import more than we export. American exports run to $1 Trillion per year, more than any country except Germany

If our productivity is increasing relative to others, we should be exporting increasingly more than they are, per capita. Instead, it is not, and we are not (for example, the population of the US is comparable to that of Germany, France, and Japan combined. Germany alone out-exports the US total, while paying higher wages and suppying more social services per capita).

The other problem with our declining relaltive productivity and shrinking manufacturing base is the loss of synergistic effects - new products and new ideas and new economic endeavors, or improvements in old ones, come from happy accidents mostly; and these accidents are less common in a world of less opportunity for them.

 

[quadraphonics]

They do?

Yes. Did you think that China had railroads and trucking lines operating in the US or something?

If our productivity is increasing relative to others,

I didn't say our productivity was increasing relative to others. The point was that productivity of US manufacturing has gone up: the same outputs can be produced with less labor. Thus, it doesn't take as many jobs to do the same manufacturing. Moreover, to the extent that we've lost manufacturing jobs to overseas competitors, it hasn't been because they're more productive economies. On the contrary, they're vastly *less* productive. However, the difference in labor costs is so great that it is still more cost-effective to produce stuff in, say, Mexico or China and then ship it back here.

(for example, the population of the US is comparable to that of Germany, France, and Japan combined. Germany alone out-exports the US total, while paying higher wages and suppying more social services per capita).

You forget to mention that Germany has unemployment rates 2-3 times higher than the US, and has just undergone a decade-long slide in real wages. Because of this, Germany's internal market is weak, and so it is forced to rely on exports to sustain its economy (unlike essentially every other developed economy in the world). Moreover, those social services result in higher taxes, so the higher wages don't actually result in more take-home pay. Also, German competitiveness in the export markets has as much to do with subsidies as with productivity.

The other problem with our declining relaltive productivity and shrinking manufacturing base is the loss of synergistic effects

The manufacturing base is not shrinking. We are manufacturing *more* stuff than *ever before*. It's the manufacturing *labor market* that is shrinking. This does not indicate a contraction of the manufacturing base, but rather that demand for manufactured goods is not growing as quickly as manufacturing productivity.

 

[Billy T]

It's true that America exports a lot of food, but it's also true that, without the various protections that agriculture receives, most of said food could be produced elsewhere for cheaper. The exceptions would be stuff like premium beef, which requires corn as a feedstock. Also, for that matter, corn. ....

Certainly was true, but I think no longer is (thanks to the alcohol from corn programs and their new large subsidies). There have been minor riots Mexico's tortia eaters because their local corn is more expensive than what they formally could buy from the US.

 

[Billy T]

...The other problem with our declining relaltive productivity and shrinking manufacturing base is the loss of synergistic effects - new products and new ideas and new economic endeavors, or improvements in old ones, come from happy accidents mostly; and these accidents are less common in a world of less opportunity for them.

What! Doesn't the latest hair style count as "New Ideas"

To Quad:
I will accept that on absolute scale manufacturing output is increasing, if you say so, but as you are one who like to normalize by dividing by GDP etc. how is US manufacturing going as a fraction of GDP? - My impression is that it is shrinking and more and more every year. I.e. greater percentage of the US population live by shining someone's shoes in exchange for them cutting their hair. etc. (figeratively speaking, not literally.)

This would, in principle, be ok if the US were a closed economy, but it is not - it needs to borrow more and more every year. How long do you think these two trends can continue? Will not the foreigners grow tired of only getting green pieces of paper for real goods? - It seem to me that they are already becoming reluctant to accept more of the US Treasury paper. - See some related facts at my new thread "Sovern Funds..." at:

http://www.sciforums.com/showthread.php?t=70867

 

[one_raven]

My impression is that people think America doesn't manufacture or export anything because there's been a downturn in manufacturing jobs and a persistent trade deficit. But the downturn in manufacturing jobs reflects increases in productivity, not a downturn in manufactured output, and the trade deficit only means that we import more than we export. American exports run to $1 Trillion per year, more than any country except Germany (whom we will probably pass in the next couple of years if exchange rate trends continue).

See that's what I'm confused about...
Manufacturing jobs go down, but productivity goes up, right?

Who, other than the owners of the company and the brokers (investors), does that help?
An industry could bring $40 Billion a year into this country, but if they are hiring fewer people, paying them less, offshoring much of their manufacturing process, cutting benefits to all but the officers of the company, spending billions on marketing (which is tax deductible, so we pay for much of it) and raise their prices, how is the American people benefitting from this?
They say our economy is strong because our corporations are making money and being more productive, but well over half the people in this country have seen the salaries drop (adjusted for inflation) over the past ten years consistently.
We, for the first time since before World War II, Americans have more in debt than in savings.
With fewer and fewer skilled labor jobs, we are more expendable, and less secure in our jobs.

I could go on and on for hours (I have) but I'll spare you that for now.

Please tell me how we, as a people, benefit from this greater productivity and cost savings from the "global economy" other than simply lower prices at the register for shit we don't need, which we are less and less able to afford anyway.

 

[quadraphonics]

Please tell me how we, as a people, benefit from this greater productivity and cost savings from the "global economy" other than simply lower prices at the register for shit we don't need, which we are less and less able to afford anyway.

The answer is lower prices on shit that you DO need. Equivalently, higher real wages, which means that you can afford MORE shit.

On top of that, a huge number of people have invested their savings in stocks, whose prices are buoyed by corporate performance. I.e., the "owners of the company" are *you and me*. This is a big reason that Americans save less than they used to: they've come to expect strong corporate performance, and so high returns on their investments. Take this away, and all of a sudden everyone has to save more and consume less, and we go into a recession due to lack of demand.

High-pay, low-skill jobs for a small portion of the American workforce (i.e., the manufacturing jobs that have been displaced) don't help anybody except the few people who have them. Everyone else ends up subsidizing them through higher prices. If you feel insecure in your job, go learn some more marketable skills.

 

[quadraphonics]

I will accept that on absolute scale manufacturing output is increasing, if you say so, but as you are one who like to normalize by dividing by GDP etc. how is US manufacturing going as a fraction of GDP? - My impression is that it is shrinking and more and more every year. I.e. greater percentage of the US population live by shining someone's shoes in exchange for them cutting their hair. etc. (figeratively speaking, not literally.)

According to the link I posted on the first page of this thread, it has remained roughly constant since 1950 or so. Look at Figure 3 on the link. To be fair, there is a slight downward trend, but it's not what I'd call dire.

How long do you think these two trends can continue?

Well, as I just said, there is no downward trend in manufacturing. As far as borrowing: when you say "borrow more and more every year" do you mean "borrow more than was borrowed the previous year" or "borrow rather than repay?" I would submit that it's fine to continue borrowing indefinitely, and even to borrow more and more each year, provided that the growth in the debt doesn't get too far ahead of the growth in GDP. Note that the debt-to-GDP ratio today is actually smaller than it was in, say, 1995, nor is it growing particularly quickly:

http://en.wikipedia.org/wiki/Image:US_Public_debt_per_GDP_1791-2006.svg

 

[madanthonywayne]

I would submit that it's fine to continue borrowing indefinitely, and even to borrow more and more each year, provided that the growth in the debt doesn't get too far ahead of the growth in GDP. Note that the debt-to-GDP ratio today is actually smaller than it was in, say, 1995, nor is it growing particularly quickly:

You're like a breath of fresh air. It's great to see someone around here not screaming, "The end is near!"

But I must say I'm not happy with the constantly increasing debt. I think we really need a balanced budget ammendment. Something that would, say, freeze all government spending (even Medicare and Social Security) when the budget's not balanced.

Deny the geezers their COLA's and they'll make sure the damned budget is balanced pronto!

 

[Billy T]

... Who, other than the owners of the company and the brokers (investors), does that help? An industry could bring $40 Billion a year into this country, but if they are hiring fewer people, paying them less, offshoring much of their manufacturing process, cutting benefits to all but the officers of the company, spending billions on marketing (which is tax deductible, so we pay for much of it) and raise their prices, how is the American people benefitting from this?. ...

Quad has given a reasonable answer to how it helps, even "Joe American" provided he still has a job and no unusual expences, like medical. (He is less likey now to have any medical coverage and his new MacJob's plan is usually not as good as the plan he lost when his factory closed.) A more complete answer would at least mention the fact that Joe American is buying things made in China etc. - It is not mainly increased US productivity that has let him buy more.

Under GWB's administartion, for the first time in more than 100 years, the spread between the rich and middle class is widening. (Because of all those things you mentioned, plus reduced tax rates on the rich and their "capital gains.")* I don't have the ref just now but an index of this would be the % of all earnings going to the top 10% vs to the lowest 30%. etc. Quad is good at finding things and honest, so he I think can give the numbers on something like this.)

This economic polarization of the society is not a good trend for democracy.
-----------------------
*I got the max cash "give-back" check a few years ago. Like others getting that, I did not need the payment, so deposited it into my bank account rather than spend it. (Idea for the "give-back" was sold to public as way to simulate the economy! - What it did in fact was add to the excess liquidity in the banking system. That in turn helped** caused the unsustainable inflation in housing prices. That inturn make everyone think investing in house was OK even with zero down etc - and now US is in the painful process of trying to unwind this GWB stupidity favoring the rich, his most loyal supporters.)

**Greenspan also get a major share of the blame for what I have called the "6L cycle." - See my thread about that for more details at:

http://www.sciforums.com/showpost.php?p=1502039&postcount=1

 

[iceaura]

Yes. Did you think that China had railroads and trucking lines operating in the US or something?

No. I thought I was responding to a comment about the Chinese having to hire American shipping to get their stuff to the US.
Within the US, it's a wash - everyone uses the local shipping.

I didn't say our productivity was increasing relative to others. The point was that productivity of US manufacturing has gone up: the same outputs can be produced with less labor. Thus, it doesn't take as many jobs to do the same manufacturing. Moreover, to the extent that we've lost manufacturing jobs to overseas competitors, it hasn't been because they're more productive economies.

But your conslcusion that higher productivity will bail us out depends on relative productivity. And the Germans have in fact taken manufacturing jobs from Americans by having a more productive economy - as have the Canadians, for that matter. What Germany makes and exports replaces what could be US manufacturing.

You forget to mention that Germany has unemployment rates 2-3 times higher than the US, and has just undergone a decade-long slide in real wages. Because of this, Germany's internal market is weak, and so it is forced to rely on exports to sustain its economy (unlike essentially every other developed economy in the world). Moreover, those social services result in higher taxes, so the higher wages don't actually result in more take-home pay. Also, German competitiveness in the export markets has as much to do with subsidies as with productivity.

So? The US subsidizes its relatively weak exports heavily. The US even subsidizes its internal markets. The US reduces unemployment by lowering wages - in competition with Mexico, say. The Germans take home less,because of taxes ? They pay less for their lives than Americans do, because of those taxes - add what Americans pay for health care and college educations and road transport and debt service to the Americans' tax bill, for a fair comparison of "take home".

The manufacturing base is not shrinking. We are manufacturing *more* stuff than *ever before*.

Entire manufacturing industries have moved off shore. More are following. Their replacements are mostly high-margin and derivative goods, completely dependent on the off shore manufacturing. We are not namufacturing "more stuff" - we are manufacturing different, and generally less, stuff. Our manufacturing base is getting to the point that can no longer support our own economy or provide opportunities for innovation (places like Finland and New Zealand are eating our lunch) - and we are not a small country, that can rely on numerous other countries to cover the slack.

The answer is lower prices on shit that you DO need. Equivalently, higher real wages, which means that you can afford MORE shit.

So the fact that we are seeing higher prices on shit that we do need, coupled with lower real wages, consistently for several years now, means that the question is not answered - right?

Deny the geezers their COLA's and they'll make sure the damned budget is balanced pronto!

You are going to raise taxes on the rich? Or maybe you plan to further reduce the US already inadequate delivery of governmental services.

 

[Billy T]

... I would submit that it's fine to continue borrowing indefinitely, and even to borrow more and more each year, provided that the growth in the debt doesn't get too far ahead of the growth in GDP. ...

I would agree with this, but want to note that there is potentially a strong and disasterous link between GDP and the increased borrowing needs: I.e. The interest rate required to persuade foreigners to continue financing the debt. They are now showing (especially their government's central banks) a recognition that buying Treasury PAPER is a way to LOSE purchasing power. For details on this, see my thread Sovern Funds..." at:

http://www.sciforums.com/showpost.php?p=1518666&postcount=1

I.e. interest rates must rise to get foreigners to buy Treasury PAPER, instead of REAL ASSETS. This is the mechanism of the "disasterous link."

As interest rate increases, the cost of new borrowing goes up linerally with the rate and of course the value of the old debt's principle drops, causing the holders to LOSE purchasing power even more rapidly, and want even higher rates to compensate when they "roll" their old US bonds into new bonds, if they are even willing to roll, instead of collect. If they decide to collect, then the US Treasury must sell even more new bonds to pay them, requiring still higher interest rates etc. This alone is a dangeous postive feed back system, but that is only one side of the "disasterous link" coin.

As the interest rates go up, the GDP goes down as business slows, people can not buy their "starter home" or "move up" etc. This also adds to the dramatic effect on the Debt/GDP ratio.

To make a simple analogy, the US has had a great time skating along while others financed their rental of the skates and few recognize that the US is already on thin ice. I can see (and have documented in several threads here) that the ice is already cracking not far from the skater. I.e.

Rapid growth of Sovern Funds as central banks get out of US Treasury PAPER, Dropping real wages, negative saving rate, factories closing, out sourcing of jobs, 12 year low in housing starts, historically high inventory of unsold homes, house prices dropping in every city in inflation adjusted dollars, London now leading financial service center, not NYC, Auto sales by Detroit very slugglish and slowing, Baby Boomers retiring and claiming their Social Security instead of paying taxes as in their peak earning years. There are many other "cracks" showing to add if I took longer to think about it. (by edit - an unending war with growing expenses)

Where would the US debt to GDP ratio be if interest rate doubles (to not even near the historic highs) and GDP drops correspondingly?

It appears to me that US is just now entering into a very disasterous positive feed back system and can do nothing about it as foreigners learn that the dollar is not a sound investment nor a safe store of wealth.

Note also I did not mention above that China has already enough reserves to destroy the dollar if it chose to, but if done now, that would be painful to China also. They must wait until their rapidly growing middle class (both in numbers as ~ a million pesants move to the cities each month and as their individual salaries rise) can buy all the output of China's factories. If they learn what credit cards are and use them their purchasing power will exceed that of ALL Americans. China will not need the US market and not continue to accept PAPER for real goods. - This will also raise the cost of living for Joe American and he will not be able to buy as many US made products. - more slowing of GDP.

I do not like any of this I see coming, but logic forces that conclusion, which is a dramatic break with the past.

 

[quadraphonics]

No. I thought I was responding to a comment about the Chinese having to hire American shipping to get their stuff to the US.

They don't *have* to do this, but some of them do. Moreover, no matter who ships them here, they have to buy the services of an American company to unload the stuff from the ships. They also have to hire US lawyers and accountants to deal with all of the issues related to taxes, import regulations, etc.

But your conslcusion that higher productivity will bail us out depends on relative productivity.

What are you talking about? I don't recall making any conclusions about what will "bail us out." My point was that manufacturing job losses are primarily driven by gains in productivity, not offshoring. I reject the implicit supposition that we need to be bailed out in the first place.

And the Germans have in fact taken manufacturing jobs from Americans by having a more productive economy - as have the Canadians, for that matter. What Germany makes and exports replaces what could be US manufacturing.

I defy you to prove that this has resulted in a significant loss of jobs, compared to the losses driven by productivity.

The US subsidizes its relatively weak exports heavily.

How do you figure?

The US even subsidizes its internal markets.

Outside of food, I don't think this is at all true.

The US reduces unemployment by lowering wages

No, unemployment is mostly lowered by creating new jobs. US employment policy is (like everywhere else) closely interconnected with monetary policy. If enemployment is high, interest rates can be cut without risking too much inflation. This boosts consumption and lowers the cost of financing new operations, leading to new jobs, which lowers unemployment. By way of comparison, Germany has seen lowered wages *and* high unemployment for the past 20 years.

The Germans take home less,because of taxes ? They pay less for their lives than Americans do, because of those taxes - add what Americans pay for health care and college educations and road transport and debt service to the Americans' tax bill, for a fair comparison of "take home".

Not sure where you're going with the road transport and debt service parts there. But even if the taxes they pay, on the average, result in offsets to expenses, Germans still come out behind. Why? Their economy is much less productive. The per-capita GDP, measured in PPP for Germany is $31,000 per year. In the US it's $43,444. It's true that a lot of the difference is due to America having a larger workforce, and working longer hours, but that just hammers home the point that the burden on a given worker (be it through taxes or direct expenses) is much higher in Germany. They'll one of the oldest populations on the planet.

Entire manufacturing industries have moved off shore. More are following. Their replacements are mostly high-margin and derivative goods, completely dependent on the off shore manufacturing.

So what?

We are not namufacturing "more stuff" - we are manufacturing different, and generally less, stuff.

The dollar value of the stuff we manufacture has gone up. You can insist that building one plane is "less" than building 1000 toy trucks, but I'm not impressed.

Our manufacturing base is getting to the point that can no longer support our own economy or provide opportunities for innovation (places like Finland and New Zealand are eating our lunch)

Ridiculous. America is the innovation capitol of the world. Top engineers and scientists from around the world are beating down the door to get here, and you're worried that we've moved some old auto-parts and toy factories to China? Just in the last decade we've sequenced the human genome, increased the speed of computers by two orders of magnitude, spawned countless new online businesses. We're hard at work on quantum computing, nanotechnology and space tourism, and you're worried about jobs that belong in 19th century Britain...

So the fact that we are seeing higher prices on shit that we do need, coupled with lower real wages, consistently for several years now, means that the question is not answered - right?

First of all, rising prices and falling real wages are the same thing, so there's no "coupled with" here. Second of all, there has not been a consistent decline in real wages. They've been *stagnant*, not declining. If you think they've been consistently declining, it's probably because the pundits who cater to your worldview make a big stink every time there's a decline in real wages, and then don't say anything when there's an increase. In fact, real wages today are slightly higher than they were in January 2001.

 

[quadraphonics]

As interest rate increases, the cost of new borrowing goes up lineraly with the rate

Okay.

and of course the value of the old debt's principle drops,

Huh?

As the interest rates go up, the GDP goes down

It's not that GDP goes down, it's that GDP *growth* goes down. At least for reasonable changes in the interest rates. If you tripled them, that might make the GDP actually decrease, but that's not a realistic scenario.

Another thing: rising interest rates also means that inflation goes down, so the effect on GDP in real terms may be very slight, or even positive in certain cases.

Also, you're forgetting the role that Americans play in the market for treasury debt. Even if foreigners become very reticent to buy bonds due to exchange rate issues, a small increase in the interest rates will attract lots of Americans to the market (and they don't care about the exchange rate, for the most part).

Dropping real wages,

False. Real wages are stagnant, not dropping.

negative saving rate,

Inconsequential given the amount of FDI we receive. Moreover, if interest rates go up, so will the savings rate.

factories closing, out sourcing of jobs,

And yet unemployment is as low as can be expected. Who cares if people work in factories or offices?

On second thought, I care: it's much better to have them working in offices.

12 year low in housing starts, historically high inventory of unsold homes, house prices dropping in every city in inflation adjusted dollars,

Yes, the housing bubble has popped. So what? Like every other bubble, the shock will pass and we'll be left with a slew of new infrastructure. As someone looking to buy his first home, I couldn't be happier about the declining prices. If the Fed also cuts interest rates, I'll really come out ahead.

London now leading financial service center, not NYC,

Who cares? Also, you may be surprised to learn that there are financial companies in America outside of New York. Perhaps you've heard of these cities called "Los Angeles," "Chicago" and "Atlanta?"

Auto sales by Detroit very slugglish and slowing,

Again, so what? Maybe this sends chills down the spines of people who are all patriotic about auto manufacturing, but I've never owned an American car, and never plan to. If a foreign company wants to sell Americans better cars for cheaper, then everyone wins. And Subaru, Toyota, Nissan and others are busy opening new factories here to cater to that market.

Baby Boomers retiring and claiming their Social Security instead of paying taxes as in their peak earning years.

Well, if an aging population is a problem, we've still got it WAY better than the rest of the developed world. Hell, China will probably be older than we are in a couple of decades, what with the one-child policy.

They must wait until their rapidly growing middle class (both in numbers as ~ a million pesants move to the cities each month and as their individual salaries rise) can buy all the output of China's factories.

You're chasing your own tail here. The only way for China to grow its middle class if to build more factories that produce more stuff. Which means that their output never gets any closer to being affordable. They won't be able to get out of this bind until they reach a point where the have a stable middle class and can shift to a service economy. They can't simply borrow their way around external markets.

 

[madanthonywayne]

You are going to raise taxes on the rich? Or maybe you plan to further reduce the US already inadequate delivery of governmental services.

No new taxes, period. Take what ever percent the government is overbudget and cut every government program, every federal employee's salary, every entitlement payment; by that amount. I'll do my part, and accept the decreased payment from Medicare on my Medicare patients.

Who cares? Also, you may be surprised to learn that there are financial companies in America outside of New York. Perhaps you've heard of these cities called "Los Angeles," "Chicago" and "Atlanta?"

Also, the fact that New York is no longer the leading financial service center is because of one stupid law: The Sarbanes-Oxley Act. It should be simple to reform that moronic over-reaction to the Enron scandal. Many are calling for its reform or repeal already.

 

[iceaura]

Take what ever percent the government is overbudget and cut every government program, every federal employee's salary, every entitlement payment; by that amount.

Unless you are prepared to do that with the military, you're still dealing with basically peanuts.

And you're gutting the basic services the legitimate American economy depends on.

 

[quadraphonics]

Unless you are prepared to do that with the military, you're still dealing with basically peanuts.

The military is only 1/4 of the federal budget. There's $1.5 Trillion in non-defence federal spending every year. I guess you can call that "peanuts" if you like, but it seems pretty significant to me.

 

[madanthonywayne]

The military is only 1/4 of the federal budget. There's $1.5 Trillion in non-defence federal spending every year. I guess you can call that "peanuts" if you like, but it seems pretty significant to me.

People have this idea that the military consumes the majority of our budget, and they couldn't be further from the truth, as you noted. Of course, in my opinion, the military should consume most of the federal budget as it is one of the few legitimate constitutional areas of federal action.

Does anyone know by what percent the government is overbudget? The only figures I could find were for % GDP.