Not Really Labor's Day - NYTimes.com

Not Really Labor's Day - NYTimes.com: "The lack of any fiscal stimulus aimed at lowering unemployment has contributed to this trend. Ironically, the Federal Reserve’s policy of quantitative easing to stimulate the economy and lower unemployment – which some Republicans tried unsuccessfully to outlaw — has probably also benefited those at the top more than those at the bottom. Lower interest rates have driven up the price of stocks, but left those dependent on less risky sources of investment income (such as savings accounts and bonds) stranded with low returns."

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Accelerated adoption of digital technology (reduction in the labor component) and globalization (lower priced labor component) on the classical economic definition of productivity has favored capital investment and its returns. These megatrends have disrupted the expectations and requirements for workers.

This is why I believe the historic Keynesian economic theory that government 'stimulus' will goose the economy no longer works as it has in the past.

The Fed's stimulus efforts (low interest rates, QE, etc.) have fallen short of expectations and have benefited capitalists far more than labor because of the two mega-factors mentioned above.

Add to these difficulties the inertia of the education system and we have a dispirited workforce ill-prepared for today's and tomorrow's economy.

Op-Ed Columnist - Stop Being Stupid - NYTimes.com

Op-Ed Columnist - Stop Being Stupid - NYTimes.com

Bob Hebert takes the American beast by the nape of the neck, growls heartily and shakes it up. He has obviously had his fill of the American economic mess that he says we've created by our stupidity.

We must live with the reality that money moves at the speed of light around the globe and production of goods will go to stable places where the costs are lower. His 'thinking globalization through ' suggests we can control it. We cannot.

"...We were stupid in so many ways. We shipped American jobs overseas by the millions and came up with the fiction that this was a good deal for just about everybody. We could have and should have taken the time and made the effort to think globalization through, to be smarter about it and craft ways to cushion its more harmful effects and to share its benefits more equitably..."

It's true that our leaders have failed us, but we get the leaders we deserve as we jaunt about the credit countryside believing (wrongly) that we can have it all. Hebert's right that living beyond reason in crushing debt is as stupid for a country as it is for a person.

I was reading as our Vermont Socialist Senator Sanders waxed eloquently about how spending nearly a trillion dollars in the next two years on various forms of infrastructure would put people to work and restore our economy. Surely the trillion will do that for those years, but what happens after the next two years? Will those jobs be gone or will we need to pony up yet another trillion that we don't have to keep stimulating? Why is no one talking about the long term...defined as far beyond the next election.

Relying on tax revenues, mandated wealth transfer, and massive long term debt to stimulate the American economy for the long term is a fool's errand. Instead we should be living within our means and encouraging private sector investment and businesses with reasonable labor costs. We need real engineering of businesses, products and services, not financial engineering built on a house of cards.

Perhaps there's a leader, not a pandering politician, somewhere who can convince us of that sober truth.

The Cognitive Age - New York Times

David Brooks continues to display the keen insights that many other commentators miss. As he points out, the free flow of capital and information worldwide is inherently responsible for the phenomenon we call 'globalization,' Sure, countries like China and India have an advantage of cheaper labor, but more importantly, they are absorbing and capitalizing on the notion that education and creativity lead to economic growth.

They struggle, too, with the cultural and political upheavals that the new wealth creates. I believe they will continue to do so. But the U.S. must embrace the reality that if we squander our young people or ourselves by embracing the Hollywood or TV entertainment beast or allow our education system to founder on the shoals of bureaucracy we will quickly become second rate among the world's nations.

"The central process driving this is not globalization. It’s the skills revolution. We’re moving into a more demanding cognitive age. In order to thrive, people are compelled to become better at absorbing, processing and combining information. This is happening in localized and globalized sectors, and it would be happening even if you tore up every free trade deal ever inked.

The globalization paradigm emphasizes the fact that information can now travel 15,000 miles in an instant. But the most important part of information’s journey is the last few inches — the space between a person’s eyes or ears and the various regions of the brain. Does the individual have the capacity to understand the information? Does he or she have the training to exploit it? Are there cultural assumptions that distort the way it is perceived?

...If you understand that you are living at the beginning of a cognitive age, you’re focusing on the real source of prosperity and understand that your anxiety is not being caused by a foreigner."

The Cognitive Age - New York Times

Overseas Investors Buy U.S. Holdings at a Record Pace - New York Times

Are you comfortable with the long-term consequences of globalization? More of America is owned by non-Americans, and this has increased recently as the big banks have sought overseas investments to shore up their balance sheets and increase their cash available after writing down so much bad debt.

Current new U.S. government debt is 75% owned by foreigners. Within 20 years America will be an 'also ran' country, economically. What will that mean for the radical Islamic terrorist fanatics who hate us so much? Will they also hate and attack other non-Islamic countries who have prospered and are secular as well?

If it's Western style secularism they hate, China, Korea, Singapore and Japan should be among their targets. Perhaps it's our financial strength and our military prowess they are eager to diminish by causing us to spend so much on security and securing our economy.

From the NY Times:

Graphic

A Flood of Investment

"For much of the world, the United States is now on sale at discount prices. With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing. Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads to the world’s largest market.

Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said."

Overseas Investors Buy U.S. Holdings at a Record Pace - New York Times

The Futurist's Top 10 Predictions for 2008

These predictions obviously extend beyond 2008 and their overall tenor is pessimistic and problematic. My grandchildren will inherit a very different world than the one I grew up in.

1. The world will have a billion millionaires by 2025.

Is this good news or not? I would argue it is, but the socialists among us will say this represents more unequal wealth distribution.

2. Fashion will go wired as technologies and tastes converge to revolutionize the textile industry.

This is good news because more jobs will be created as
people buy this stuff.

3. The threat of another cold war with China, Russia, or both could replace terrorism as the chief foreign-policy concern of the United States.

Definitely bad news, but should we expect something
different as we have exported our manufacturing base, and lately our financial interests as Asian companies invest in many of America's largest banks and financial institutions to help bail them out of the sub-prime mortgage mess.

4. Counterfeiting of currency will proliferate, driving the move toward a cashless society.

Mixed news here. Criminals are alive and apparently
thriving. If we move more or our financial life online, the security must increase simultaneously.

5. The earth is on the verge of a significant extinction event.

Very bad news, indeed.

6. Water will be in the twenty-first century what oil was in the twentieth century.

More bad news, but big companies will make a lot of money on this....GE for one.

7. World population by 2050 may grow larger than previously expected, due in part to healthier, longer-living people.

Should we expect anything less as medical science and agriculture continue to enable peole to live longer. The strain on the world's resources is the bad news.

8. The number of Africans imperiled by floods will grow 70-fold by 2080.

More bad news for the basket case that is most of Africa.

9. Rising prices for natural resources could lead to a full-scale rush to develop the Arctic.

Mixed news here. On one hand, the expanding
population must have resources, particularly fossil fuels and minerals. On the other hand , more people and development in the cold, but warming, North will displease the environmentalists.

10. More decisions will be made by nonhuman entities.

Not good, but because technology has advanced to this state, robots and other macro and micro devices will pervade our lives.

Taxes in the Global Economy - New York Times

Taxes in the Global Economy - New York Times

Why is it a bad thing for corporations or individuals not to pay more taxes. The Times would have you believe that government is the better decision maker for spending. Not true! If U.S. companies that are successful players in the global economy were made less profitable or handicapped by raising U.S. taxes, our whole economy would likely suffer.

The Times would have you believe that more government is better and that Americans are better served by a more socialist society than the one we now enjoy, though it continues moving toward socialism. Yes, jobs are displaced because of the rising tide of other world economies, but the answer is not 'more government.' We are better served by higher quality education, a more uplifting culture and vibrant capitalism at home.

More taxes is exactly the wrong answer.