Posted on 07/09/2005 10:01:50 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
The war on terror is so visually dramatic that its gruesome headlines and sound bites actually limit our view of the larger world. In fact, those life-and-death themes often mask an otherwise mustard-or-mayo complacency about broader, even revolutionary change.
The global economic forces that with increasing speed are now altering the United States' economic future are an example. The trends are downright alarming as the post-World War II prosperity that so many Americans still take for granted is clearly imperiled -- in my view, irreversibly so.
Because each year the United States consumes roughly $700 billion more than it produces, it must borrow from abroad to finance its excess consumption. Foreign central banks provide the financing by buying U.S. Treasury bills and other financial assets. For the first time in history, they are reducing their dollar holdings. The nervousness of the European Union, Russia, OPEC, Japan and China about the possibility of a sell-off of dollars as the world's reserve currency may not make for bold headlines, but that doesn't mean that the dangers are any less real.
The chronically overvalued dollar and the export-driven growth and prosperity of so many other countries is causing a steady and sustained transfer of production and technology abroad while putting enormous downward pressure on U.S. salaries.
As a result, the question of how long an international economic system that even mainstream analysts call a massive Ponzi scheme can go on is worrisome, to say the least. The problem is that U.S. household debt is at an all-time high of 120 percent of household income. At some point it will not be possible to consume more unless salaries start rising, which for other reasons is not going to happen.
Strains in the system have been described in terms of a generally "shrinking" world, a "flat" world (by New York Times columnist Thomas Friedman) or as "the great shift to the east" (by strategic analyst Clyde Prestowitz). The essence of these notions is that billions of new entrepreneurial world economic players from China, India and the former Soviet bloc look to compete head-on in the globalization process that for the interests of many U.S. citizens is simply broken.
The Internet and global air express (and faster-than-ever containerized ocean transportation) have negated time and distance, along with standard economic assumptions that labor, capital and technology don't move between countries.
In virtually any manufacturing industry, the notion of "the China price" has become common. It is the price U.S. suppliers to other U.S. businesses have to match to keep their customers. The phenomenon is hardly limited to the consumer goods found at Wal-Mart.
These days Chinese imports mean not just products from low-tech industries with inexpensive labor. In addition to China's masses in the countryside, several hundred million urban Chinese have first-world skills. These are often well-trained mathematically oriented engineers and experimentalists. More significant, industrial solutions with high rates of brainware to hardware mean sophisticated results using simple, cheap equipment -- an investor's dream.
Not to worry. For years we have been told by one pundit after another that the oallowing out of U.S. manufacturing capacity is not a problem, that we are becoming more of a service economy.
While that may sound reassuring, it ignores any fair-minded analysis of India's new, specialized role in the globalization process. There, a combination of skills, low cost, quality work and instant communication means that few aspects of our lives in Seattle will remain untouched as India has become the location of choice for global software and information technology services. India has become for the service industry what China is for U.S. manufacturing.
Even in agriculture, the United States, once the granary of the world, is under attack. We can expect to have a more or less permanent agricultural trade deficit as a result of shifts in world food production. In South America, Argentina and Brazil have become world-class beef-producing heavyweights. Additionally, Brazil in particular has the potential to bury much of the world in low-cost soybeans, as well as other grains.
The message is not that the United States has ceased to be the richest and most powerful nation the world has seen. But U.S. prominence and continuing high rates of consumption cannot be taken for granted. In every aspect of our lives, we have many very capable new competitors changing how smart and how hard we have to work.
Clyde Prestowitz suggests that we impress upon our children that among industrialized countries, U.S. 12th-graders are now in the zero percentile in science and only the 10th percentile in math. Their own self-assessment "feel-good" scores rank them No. 1, which leads me to remind my own high-schoolers that while they are very special to me, what they should want for themselves is to be very, very specialized, so that their jobs and careers are less likely to be outsourced. Their classmates and peers are now in China, or India, and the sooner they appreciate this significance the better prepared for the future they will be.
ping
Something wrong with this statement.
Ross, is that you?
What's the big deal 'bout that? They're merely paper IOUs. Heck, they're probably kept in a file cabinet someplace. Not like they can foreclose on the Whitehouse.
/sarcasm off.
I've been reading essentially this same story for 40 years. Only the identities of the foreign competition that will bury us changes: Europe, then Japan, now China and India. At one point it was even the USSR! Actually, it goes back much further, clear into the 19th century, with those who refuse to believe that Americans can compete.
Meanwhile the US economy consistently outperforms all.
Not that they couldn't be right this time, but a 40 to 100+ year record of false predictions should not be ignored either.
America has been successfully fighting the WOT with only the tiniest fraction of the effort in terms of manpower, material and money that we fought WWII. War production at its heights in WWII was a staggering 44% of American GNP. The entire post-911 2002 DOD budget was a mere 5-6% of US GNP - just barely above the 1939 pre-war spending low.
That's about how long the Government's been running a budget deficit, isn't it?
We've run up a helluva national debt over that period, that's for sure.
Of course, the dollar ain't worth what it used to be, either.
IMHO, the chickens come home to roost when peak Baby Boomers retire and attempt to collect from the system that they've contributed to all their lives.
So wasaaaap?
We are finally getting there: sitting on the beach, with margarita and waiting for occasional hurricane to stir things up (besides muSlimes flying into WT towers).
Wonder why all those dummies keep migrating here, don't they understand that we are doomed (or domed)?
IMHO, the chickens come home to roost when peak Baby Boomers retire and attempt to collect from the system that they've contributed to all their lives.
------
And if the government does not deliver, there will be a shot heard 'round the world...our governmental elite think that their street is ONE WAY -- they are in for a suprise.
Suggest you look up the statistics for budget deficit and national debt per capita and as a percentage of the GDP over time. Absolute numbers are huge, but as a percentage, the only rational way to look at it, they aren't that big.
BTW, you can go the European and other magazines and they talk about how the US has a far more effective educational system than they do.
What is works out to is that US primary and secondary schools are terrible, but our colleges, with all their problems, are consistently the best in the world. Americans entering the job force after college are able to compete with anybody.
Europeans and Japanese work their tails off in high school and coast through college.
The really ticking time bomb is the fact that the US appears to be losing its technical lead in many areas. If other countries are going to do the manufacturing and produce the crops, we have to come up with the creative ideas that will keep the factories and farms going.
If you think the cost of education is high, wait until you see the cost of ignorance.
How 'bout we have a "concert" and ask for "forgiveness" of all our debts?
Simple. We must produce more, import less, export more, and buy more of what we consume from our own countrymen.
I think it is an enormous fallacy that a college degree is absolutely required to get ahead in today's world. I didn't have the chance to go to college, and today I'm in a professional field and frankly one of the leaders in that field.
Never let your schooling interfere with your education.
I wonder if anybody has ever run the numbers as to how much immigration and especially illegal immigration has contributed to the low inflation rates over the last 25 years. I know that food, lawn care, janitorial services, construction and many other labor-intensive economic inputs cost a lot less than they would with less or no immigration, and of course this translates into lower costs for the consumer of these items.
What high immigration has done is split the economy. Lower skill workers income has been kept down, while higher skilled workers, with whom immigrants seldom compete, have continued to increase their income, which has been amplified by the fact that inflation has been low, partially due to low labor rates created by immigrants.
But don't forget to figure in the heavy tax burden to provide services, and the very fact that we are allowing and condoning a criminality mindset where ILLEGAL no longer means ILLEGAL. I mow my own lawn, thank you.
So do I.
But we ought to at least recognize that most of us have enjoyed significant benefits from the illegal immigration. Quantifying the effects of a policy, both good and bad, is a reasonable way to start a discussion about what changes should be made.
Most people tend to look at a policy they dislike and assume that nothing undesirable would ensue if that policy were changed. I'm just suggesting we look at both up and down sides.
Let me add that I have seen the long lines at U.S. Embassies and Consulates in foreign countries (Russia, China, Philippines)with my own eyes: blocks and blocks long, day after day after day. It's this simple - - the whole world cannot come to the United States!! There must be limits and there must be laws, and ILLEGAL must still mean ILLEGAL in every context, including re immigration laws, and there must be PENALTIES for breaking the law. If there are not, then we teach utter and total disrespect for our legal system, and nothing will be seen as illegal after a while -- and we lose!!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.