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WSJ: The Great American Jobs Machine--U.S. has fewer taxes and regulations onerous for employers
Wall Street Journal ^ | August 8, 2005 | Editorial

Posted on 08/08/2005 5:22:46 AM PDT by OESY

We would like to take a moment to pause and marvel at the U.S. economy. Friday's Labor Department report of more than 200,000 new jobs in July, and two million over the past year, provides the latest bullish details. But the larger story of American job creation, and its causes, is even more impressive.

First, more Americans have jobs today than at any other time in history. Second, over the past two decades or so, the U.S. has created more than 40 million jobs -- twice as many as Europe and Japan combined. And third, the U.S. has one of the lowest jobless rates of all developed nations.

It was only a year ago that John Kerry was blasting the "jobless recovery." Lou Dobbs was flogging "outsourcing" every night on CNN as a sign of peril for the American workforce. That criticism now looks wildly off base. The 5% jobless rate today is almost a percentage point below what it was during the same stage of the business cycle during the vaunted "Clinton expansion."...

But just when it seemed there was reason to celebrate, a new study by the Federal Reserve Bank of Boston warns that the low U.S. unemployment rate is a "false signal" of prosperity....

Labor economist Diana Furchtgott-Roth of the Hudson Institute has thoroughly refuted the Boston Fed study. She finds that "most non-participants are out of the labor force by choice -- in school, parenting their children, or retired early."....

We are undeniably losing some manufacturing jobs over time (although manufacturing output has risen as a result of new technology and productivity gains).

But those positions are being rapidly replaced with information, technology and service jobs -- most of which pay more than factory work and are less physically grueling....

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; Foreign Affairs; Germany; News/Current Events; Politics/Elections
KEYWORDS: bankofboston; bush; clinton; dobbs; economy; france; furchtgottroth; hudsoninstitute; jobs; kerry; thebusheconomy; unemployment
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1 posted on 08/08/2005 5:22:46 AM PDT by OESY
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To: OESY
She finds that "most non-participants are out of the labor force by choice -- in school, parenting their children, or retired early."

I retired 6 years ago at age 54. I wonder if I have been counted as "unemployed"?

2 posted on 08/08/2005 5:28:23 AM PDT by Graybeard58 (Remember and pray for Sgt. Matt Maupin - MIA/POW- Iraq since 04/09/04)
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To: OESY

"But just when it seemed there was reason to celebrate, a new study by the Federal Reserve Bank of Boston warns that the low U.S. unemployment rate is a "false signal" of prosperity.... "

Federal Reserve Bank of Boston. Might as well have said the Federal Reserve Bank of Peking.


3 posted on 08/08/2005 5:30:17 AM PDT by EQAndyBuzz (Liberal Talking Point - Bush = Hitler ... Republican Talking Point - Let the Liberals Talk)
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To: Graybeard58

yep, me 11 years ago at the age of 49, bet i am counted as unemployed too.


4 posted on 08/08/2005 5:33:49 AM PDT by fatrat
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To: OESY

Just think how rich we would be if we returned to a pre-New Deal ratio of government to GDP.

This article does omit one big factor: Lots of people are bringing home big bucks as war contractors. We'll need a bit more economic cushion before letting the air out of that.


5 posted on 08/08/2005 5:35:36 AM PDT by Haru Hara Haruko
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To: OESY
First, more Americans have jobs today than at any other time in history.

Excuse me, but there are more Americans now than at any other time in history.

Second, over the past two decades or so, the U.S. has created more than 40 million jobs -- twice as many as Europe and Japan combined.

There's the operative word - created. Were the jobs actually needed or worth while?

And third, the U.S. has one of the lowest jobless rates of all developed nations.

Apples and oranges. We aren't responsible for other nations' job rates.

6 posted on 08/08/2005 5:38:20 AM PDT by mtbopfuyn (Legality does not dictate morality... Lavin)
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To: OESY
When the Chinese and Japanese stop loaning us money to build McMansions that we can't actually afford, and those construction jobs, materials jobs, and furnishing jobs that are associated with residential construction dry up, will we still be in a feel good mode? When the inflation from all that credit dries up, will the value of the McMansions fall? Will the stock market fall? Will the credit inflated jobs still be there when the boom is over? The constant is the debt; it will still be there, but the means to pay it back will not be so clear cut.

Forget the consequences of our decisions. If it feels good; do it. When the construction workers are through constructing, the building materials makers are through making, and the furnishers are through furnishing, who will pay the taxes that fund our gargantuine government and all of its social welfare programs including Social Security and Medicare? Oh, I remember, Ben Bernacke and his famous printing press will simply steal the wealth of the people who didn't participate in the giant borrowing and spending spree that the WSJ is gloating about. Government will ensure that nobody escapes being punished for the sins of a few. Welcome to the Democrats', and now maybe the Republicans', view that we are all created equal and all in this together whether we want to be or not.

7 posted on 08/08/2005 5:44:14 AM PDT by Reaganghost (Our freedoms will never be safe as long as a single Democrat holds elected public office.)
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To: OESY

Same paper had small article saying that renowned Prince from Saudi Arabia, world class investor, Citibank former "owner", is selling his interest in Canary Wharf? Londons secondary financial center? Has he made enuf, or (conspiracy here!) doe she know it's gonna get hit? Paranoia reigns!!


8 posted on 08/08/2005 5:51:10 AM PDT by litehaus
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To: Haru Hara Haruko

For some time I've suggested that government jobs should be substracted from the employment rolls when computing various employment-related statistics like these. I for one am a bit surprised to see the Wall Street Journal accept these figures at face value.


9 posted on 08/08/2005 5:53:22 AM PDT by Alberta's Child (I ain't got a dime, but what I got is mine. I ain't rich, but Lord I'm free.)
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To: OESY

thx for posting the Journal's editorials, even in part. I don't to read the paper in the morning any more.


10 posted on 08/08/2005 6:01:28 AM PDT by the invisib1e hand
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To: mtbopfuyn
Apples and oranges. We aren't responsible for other nations' job rates.

Absolutely correct. Moreover, other nations calculate jobless rates differently. Canada, for example, has a more liberal definition. If you read the newspaper employment classifieds once a week, you are counted as an active job seeker. Once corrected for differences in how the labor rate is calulated, Canadian unemployment rates are 0.1 or .02 percentage points higher than in the U.S. and not the 2-3 percantage points as they appear.

11 posted on 08/08/2005 6:16:08 AM PDT by doc30 (Democrats are to morals what and Etch-A-Sketch is to Art.)
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To: OESY; Willie Green; Wolfie; ex-snook; Jhoffa_; FITZ; arete; FreedomPoster; Red Jones; Pyro7480; ...
The 5% jobless rate today is almost a percentage point below what it was during the same stage of the business cycle during the vaunted "Clinton expansion.".

The very fact that free traders use low "jobless rate" as the argument is a proof that they speak in bad faith.

First unemplyment does not count people who are not on job market and counts menial jobs or derivatve jobs same way as the jobs which are highly skilled and advance the economy.

Free traders/free marketeers are not so stupid no to know it. But they think that general public is stupid.

12 posted on 08/08/2005 6:26:52 AM PDT by A. Pole (Mandarin Meng-tzu: "The duty of the ruler is to ensure the prosperous livelihood of his subjects.")
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To: Graybeard58
I retired 6 years ago at age 54. I wonder if I have been counted as "unemployed"?

No, you just "left" the job market. But if you start a new McJob you will be gainfully employed.

13 posted on 08/08/2005 6:29:44 AM PDT by A. Pole (Mandarin Meng-tzu: "The duty of the ruler is to ensure the prosperous livelihood of his subjects.")
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To: A. Pole
First unemplyment does not count people who are not on job market and counts menial jobs or derivatve jobs same way as the jobs which are highly skilled and advance the economy.

That's true, but how do we accuratley measure the state of the economy? Personally, I don't know anyone who is jobless who doesn't "want" to be. Some of them think they don't choose to be jobless, but given their level of irresponsibility, drug abuse, etc. they are in essence choosing to be jobless.

As for the quality of the jobs, I just don't know if there is anyone one good way to measure it. Surely, the free-traders over-exaggerate on one end, but the protectionists do as well. For 20 years we have been told by the protectionists that the only jobs being created are "hamburger flipping" jobs. Meanwhile Dell, Intel, Cisco, Mircosoft, etc. have been created.

14 posted on 08/08/2005 6:42:17 AM PDT by Rodney King (No, we can't all just get along.)
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To: A. Pole
It doesn't matter what faults the "jobless rate" figure has. It is being used for comparison purposes. It's 5% now, it was 6% during the "Clinton expansion." That's a comparison of apples to apples. It doesn't matter if you don't like apples.
15 posted on 08/08/2005 6:46:05 AM PDT by bayourod (Winning elections is the only thing. Those who glorify losing are unclear on the subject of democrac)
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To: Alberta's Child

I have suggested that each government job should be counted as two or more jobs LOST rather than gained. My reasoning is that almost all government employees are in fact COUNTERPRODUCTIVE and waste the productive efforts of others.


16 posted on 08/08/2005 6:48:46 AM PDT by RipSawyer (I wouldn't mind being broke if I weren't so short of cash.)
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To: A. Pole
I think it is important for you and others to re-think the employment picture in the US and reflect on the positives on these threads.

During the last serious down turn, I would say in 2002 but even before in 1992, many technical people with advanced degrees that were accustomed to earning in the 6 figures or very high five figures were fired or downsized. I know of no one in my field who is out of work because of this and most of us are better off, but we are not employed in the traditional sense. We work for ourselves as consultants to the same companies who fired us or their competitors or have started up similar companies, and we make more money, have more time off, and pay taxes at a lower rate. We are individual companies, who can deduct all sorts of expenses off of our tax bills, can vacation when we want (within reason), and can never be fired again unless we just decide not to work.

I know engineers who have started up home improvement companies, started restaurants, gone into the motel business, or do what I do, consultant work in my chosen field.

If one doesn't have a job it is their own damn fault, period. I know what you will say, that it isn't the same type of job, right? You are correct, the job I have has no paid vacation, paid holidays, paid medical, paid life insurance, or any retirement, and you might say that I have no security as well. Unless you are Manny Ramirez for the Boston Red Sox, you have no job security. Job security was a concept that began following, and lasted only about 40 years after WWII. There never will be again, so get over it.

I make much more than I ever did, have more to show for it, can take time off in the morning to play ice hockey or go to the gym and work out, can take long weekends, and have a better lifestyle. The problem is, many peers who work for a company for a salary think I'm either rich or semi-retired. They are right but I don't tell them that, I want them to think I am still hungry.
17 posted on 08/08/2005 6:49:11 AM PDT by Final Authority
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To: OESY

read later


18 posted on 08/08/2005 6:53:28 AM PDT by Sam Cree (Democrats are herd animals)
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To: A. Pole
Thanks for ping.

MAN OPENS FRUIT BUSINESS

WASHINGTON, D.C. December 31, 1930. The Hoover Administration reported today that unemployment rolls are down because many have started own business and are no longer looking for work.

19 posted on 08/08/2005 6:57:27 AM PDT by ex-snook (Protectionism is Patriotism in both war and trade.)
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To: A. Pole
In my circle of family, friends, acquaintances, etc. I know a lot of people who are always complaining about "unemployment," "loss of jobs," etc. -- and yet I don't know a single person who has been unemployed at any time during the last two years for any reason (other than their own volition).

I think that sums things up pretty well.

20 posted on 08/08/2005 7:00:25 AM PDT by Alberta's Child (I ain't got a dime, but what I got is mine. I ain't rich, but Lord I'm free.)
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To: Graybeard58
I retired 6 years ago at age 54. I wonder if I have been counted as "unemployed"?

Yes! Get back to work. You are ruining the figures. :-)

21 posted on 08/08/2005 7:02:38 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Reaganghost

I agree, but the ironic thing is that all this debt is seen as a good thing by people who call themselves "conservative."


22 posted on 08/08/2005 7:03:16 AM PDT by junta (Is Mexico an ally in the WOT?)
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To: All
We desperately need to find that one-armed economist Harry Truman was looking for.

It's so tiresome to see the pro government-subsidized "cheap" labor, pro "free tradin' transfer of technology, wealth, and jobs" crowd crow about how great things are; but on the other hand economists point to falling wages for some, lagging wages for others, underemployment for many, lost consumer demand as jobs go offshore, and economic facts such as imported productivity.

Then there's the household v. establishment debate over the number of jobs created. If you are not getting paid are you really employed? Household says yes. If you are not a W-2 employee are you counted by the payroll survey?

There are studies like some from Northeastern University, Pew Hispanic Center, and CIS that show jobs losses for citizens and established immigrants and huge gains in employment by recent immigrants (legal, ILLEGAL it matters not).

Somewhere between there is truth?

Or is "truth" determined by dollars that one side gains over the other?

23 posted on 08/08/2005 7:13:27 AM PDT by WilliamofCarmichael (Hillary is the she in shenanigans.)
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To: Mind-numbed Robot
The un/underemployed should move to NYC.

THE BEST PAYING COUNTIES IN THE USA
Here's where workers can earn the most.
August 8, 2005: 9:41 AM EDT By Les Christie, CNN/Money staff writer

NEW YORK (CNN/Money) - The nation's biggest county, Los Angeles, has more businesses than any other, according to a new report from the Census Bureau. But among the 50 U.S. counties with the most businesses, New York County, better known as the New York City borough of Manhattan, has the best-paid workers.

The release, which covered data through March 12, 2003, reported that the average annual payroll per employee in Manhattan during 2003 was $73,032. That was 14.6 percent higher than the next highest paid county, Silicon Valley's Santa Clara County, where the average worker earned $63,704 a year.

==============

Look what NAFTA-CAFTA had done - obviously NYC must be where all those 'good jobs' were created.

24 posted on 08/08/2005 7:20:31 AM PDT by ex-snook (Protectionism is Patriotism in both war and trade.)
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To: Final Authority
I think it is important for you and others to re-think the employment picture in the US and reflect on the positives on these threads.

Your post was excellent but you are wasting your time with these guys. Their goal is to sell gloom and doom. They would look for a pimple on Miss Universe.

25 posted on 08/08/2005 7:21:38 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: A. Pole

What they need to do is count the numbers of people who are working temp jobs, not just working.

Sad to say, but it makes a difference in job security and outlook, as I have known for about 13 years now!

You cannot imagine the relief at finally having a full time job again!

...in the service sector, too! Technical, but FIELD SERVICE.


26 posted on 08/08/2005 7:24:28 AM PDT by RaceBannon ((Prov 28:1 KJV) The wicked flee when no man pursueth: but the righteous are bold as a lion.)
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Comment #27 Removed by Moderator

To: Graybeard58

Nope. If you're filing tax returns you're counted as employed. The 5% is that part of the population that are unemployable.


28 posted on 08/08/2005 7:31:42 AM PDT by hubbubhubbub
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To: mtbopfuyn
Apples and oranges. We aren't responsible for other nations' job rates.

We may not be responsible for other nations' jobs but our consumption is responsible for creating hundreds of thousands of jobs (or more) around the world. The American consumer has lifted countries out of poverty and offered hope to those who had none.

As those economies develop and per capita GDP increases, they become markets for our high value goods and services. It's apples to apples and it's all good news. Sorry.

There's the operative word - created. Were the jobs actually needed or worth while?

Where do you think you live? That's just a ridiculous thing to ask.

29 posted on 08/08/2005 7:43:27 AM PDT by Mase
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To: hubbubhubbub
Nope. If you're filing tax returns you're counted as employed. The 5% is that part of the population that are unemployable.

You mean that I am still supposed to be paying taxes on my income?

Just kidding.

I live in the socialist state of Illinois and retirement income is exempt from state taxes. Our socialist governor was making noises about taxing that income but dropped it. I think he heard about the angry mob of senior citizens getting the tar and feathers ready for him. I gotta give him credit though, he is trying to be a good little socialist.

30 posted on 08/08/2005 7:46:46 AM PDT by Graybeard58 (Remember and pray for Sgt. Matt Maupin - MIA/POW- Iraq since 04/09/04)
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To: Mase
There's the operative word - created. Were the jobs actually needed or worth while?

Where do you think you live? That's just a ridiculous thing to ask.

That is why I decided against replying to his nonsense. Obviously he has more grasp of leftwing political points than economics.

31 posted on 08/08/2005 7:52:13 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Graybeard58

You weren't a mechanic were you


32 posted on 08/08/2005 7:55:52 AM PDT by wildcatf4f3 (whats wrong with a draft?)
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To: Reaganghost
When the Chinese and Japanese stop loaning us money to build McMansions that we can't actually afford

First of all, what are the Chinese and Japanese going to do with all the dollars they receive? They can spend them or invest them. If they had a better place to invest them, they would.

Second, who says we can't afford our homes? The average American household has more than 57% equity in their home. American household net worth is at an all time high of $49 trillion with only 20% of that coming from home equity.

When the inflation from all that credit dries up, will the value of the McMansions fall? Will the stock market fall?

And just where is all this inflation you say exists? The bond market doesn't see it. Do you see something they don't?

that we are all created equal and all in this together whether we want to be or not.

This is really all about your personal circumstances, isn't it?

33 posted on 08/08/2005 7:56:03 AM PDT by Mase
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To: wildcatf4f3
You weren't a mechanic were you

No, but why do you ask?

34 posted on 08/08/2005 7:58:17 AM PDT by Graybeard58 (Remember and pray for Sgt. Matt Maupin - MIA/POW- Iraq since 04/09/04)
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To: A. Pole
[The jobless rate] does not count people who are not on job market and counts menial jobs or derivatve jobs same way as the jobs which are highly skilled and advance the economy.

What ever happened to "From each according to his abilities"? I thought that you people valued the work of the common laborer/peasant.

35 posted on 08/08/2005 8:07:21 AM PDT by Redcloak (We'll raise up our glasses against evil forces singin' "whiskey for my men and beer for my horses!")
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To: A. Pole
The very fact that free traders use low "jobless rate" as the argument is a proof that they speak in bad faith.

Fine. Forget the unemployment rate. Let's look at other economic indicators. Where is the bad news in these?:

GDP growth
Rising wages
Low interest rates
Tame inflation
Manufacturing expansion (26 months in a row)
Service sector expansion
Corporate earnings
Export growth
Household net worth
Home ownership
Home equity
Number of Americans invested in the stock market
Consumer confidence

I am amazed by your ability to ignore all things positive in favor of doom and gloom based on anything but fact. It is truly unfortunate that you will not be happy until our economy is truly hurting. The public is not stupid, they just don't share your irrational moroseness.

36 posted on 08/08/2005 8:13:22 AM PDT by Mase
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To: Mase

Im not doubting you, I am just curious as to what type of high value goods and services.


37 posted on 08/08/2005 8:19:38 AM PDT by winodog (We need to pull the fedgov.con's feeding tube)
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To: A. Pole

Considering how many people now comprise our workforce (almost 134 million on the non-farm payroll), and given the welfare-state mentality that pervades much of the industrial world, a 5% unemployment rate is miraculous. It also does not include many thousands of undocumented jobs held by day laborers, illegal immigrants and those paid "under-the-table". If we could eliminate the illegals, we'd have an even lower rate.


38 posted on 08/08/2005 8:24:06 AM PDT by andy58-in-nh
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To: Final Authority
If one doesn't have a job it is their own damn fault, period

My sentiments exactly, for literally all of my adult life I've been hearing the same doom and gloom rhetoric about the economy, the deficit, outsourcing etc, etc.Yet for all of that time I've been employed.In fact for most of that time I've had two and sometimes even three jobs.I suppose one shouldn't have to work two jobs to get by but then again how many millionaires do you suppose got to where they are by working 40 hours a week?

39 posted on 08/08/2005 8:25:00 AM PDT by edchambers (Neocon foot-soldier of the Haliburton death squad)
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To: ex-snook
...the average annual payroll per employee in Manhattan during 2003 was $73,032.

Too bad it takes at least 150K/year to live there. ;)

40 posted on 08/08/2005 8:33:19 AM PDT by Mr. Jeeves ("Democracy...will be revengeful, bloody, and cruel." -- John Adams)
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To: Final Authority
I know engineers who have started up home improvement companies

Wow! There's a winner!! Rooooooight.

.... started restaurants

Did you know that 60% of all restaurants fail in their first 3 years? Still more in the first five?

... gone into the motel business

Wow. Another winner!

... or do what I do, consultant work in my chosen field.

With the exception of consultants, which is good work "IF YOU CAN GET IT" all the other options you ticked off are complete losers. Subemployment PER SE. These are not the careers these people trained for or wanted. Good bye vacation benefits, retirement, health plans, etc. And oh, yeah, let's not think to hard about the failure rate of start-ups in general... All so that importers can get a fractionally cheaper toaster...at the expense of their fellow citizens who they vilify.

Remember this little document?

U.S. Constitution:
We the People, of the United States of America, in order to form a more perfect union....

41 posted on 08/08/2005 8:39:42 AM PDT by Paul Ross (Definition of strict constructionist: someone who DOESN'T hallucinate when reading the Constitution)
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To: winodog
Im not doubting you, I am just curious as to what type of high value goods and services.

Here is a link to US exports, by products, for 2000-2004.

US Exports: Goods

Computer software, aircraft, armaments, entertainment, medical equipment, pharmaceuticals (90% of all new pharmaceuticals are created here in the US) agricultural products etc, etc, etc.

As for services, the US is the world leader in banking, other financial services and insurance. Construction is a service and, again, we are the world leader. Other services include transportation, education and professional business services.

Here is a link to an older article that offers a good explanation about service exports:

Service Exports

42 posted on 08/08/2005 8:52:45 AM PDT by Mase
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To: Paul Ross

What can I say, you are a loser as are anyone who claims to be educated but can't earn a living.

Read the other posts that agree with me. They agree that you (your kind) are among the losers in life. Get over it and get a job.


43 posted on 08/08/2005 9:18:08 AM PDT by Final Authority
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To: Mase
Where is the bad news in these?:
GDP growth
Rising wages
Low interest rates
Tame inflation
Manufacturing expansion (26 months in a row)

Actually the latter news item...manufacturing... , even with the cooked numbers, has been declining the last two months. You are a perfect example of the cooked frog. Happily swimming in his pot of water on the stove as the temperature is brought to a boil. Your sides failure to recognize what is going on is of monumental proportions. Which, when the exrement hits the fan, our nation will "truly be hurting" and the side espousing phony Fed numbers will be the reason for the calamity, not the ones who counseled caution.

Your irrational failure to question obviously dubious numbers, or comprehend the pivotal foundational nature to America her manufactures represent... Every single bloody word you say shows you don't understant what has been happening to manufactures. Even the Gold Bugs are apparently appreciating the phoniness in the official economic numbers...with increasingly apoplectic declarations. Terms which make the standard Free Republic conservative look awfully mild and tame by contrast. So why don't you get out of your cocoon of fantasy, your comfort zone of Greenspanisms, and check out what the rest of the planet is saying:

DOLLAR RALLIES ON TERROR?
By: Bill Bonner, Eric Fry & The Mogambo Guru,
The Daily Reckoning
Monday, 23 February 2004

Dolalr Rallies on Terror?!

We often opine that the world is full of fraud. Today we begin with proof.

Or rather, a few egregious examples - the first brought to you by the Bureau of Labor Statistics, explicated by the New York Post's John Crudele, courtesy of the great Mogambo Guru:

"By now my readers should have a PHD (pretty high disdain) for Capitol Hill math," writes Crudele. "This one, though, is a cake taker. I'll translate: Included in the 112,000 new jobs in January were 76,000 jobs that supposedly exist because people who weren't hired in December couldn't be fired in January. Got that? They didn't get hired in December, or fired in January, so they showed up as new employees in January as a statistical fluke. So, really there were only an abysmally small 36,000 new jobs in January."

In other words, the 76,000 jobs are a fraud. "Weak holiday hiring," wrote the Labor Department in its release, "...meant that there were fewer workers to lay off in January, resulting in seasonally adjusted employment gains for the month." The key words here are 'seasonally adjusted' - meaning that although holiday hiring was weak, government quants went ahead and added imaginary seasonal jobs to the total figures anyway.

Yet...on Friday, the governors of the Federal Reserve, like so many comic book heroes, professed en masse their belief that real "job creation" is on the way. "It's just a matter of time," Fred 'let's-all-join-hands-and-buy-an-SUV' McTeer assuaged the huddled crowd of attendees at an economic education conference in Texas.

"In all likelihood," Alan Greenspan (ranking former member of Time Magazine's Committee to Save the World) soothed a Chamber of Commerce group in Nebraska, "employment will begin to increase more quickly before long as output continues to expand." Ben 'Printing Press' Bernanke messaged reporters in Washington by "expressing" the view that "hiring will strengthen significantly this year..."

Speaking in St. Louis, William Poole suggested that if the U.S. economy expands by 4 to 5 percent in 2004, as the preponderance of the world's talking heads seem to agree it will, then there will be "significant increases" in employment.

Their post-huddle story in a nutshell: If U.S. GDP grows at the expected rate...jobs will appear. Will they, we wonder? Probably. In the U.S.? Not likely. India and China? That would be our guess. But leaving aside the politically juicy issue of "off-shoring" of jobs, let's consider the pedestal on which the faith of the Fed's super-heroes is resting: the growth in GDP figures themselves.

Rather than relying on annualized GDP growth rates, "a more precise measure [of the strength of the recovery]," writes Richard Freeman in the Executive Intelligence Review (also by way of our friend the Guru), "would be to compare debt to the productive portion of GDP."

The "productive portion" of the economy - manufacturing, agriculture, construction, mining, public utilities, and transportation sectors - produces the "actual wealth" from which debt, both personal and national - both being racked up at staggering rates - gets paid off. Yet according to U.S. Commerce Department data, the productive portion of GDP is now less than 30% of total GDP.

Perhaps the real reason new-hires are failing to show 'in the numbers' as quickly as our friends at the Fed would like is masked by using a flawed (or at least easily manipulated) measure of 'U.S. growth.' Recent GDP reports, after all, measure countless paper transactions following an historic burst of government stimulus - rather than real economic activity.

Hmmmn. Just a thought.

To make the case a little more poignant, Freeman sheds light on another little 'adjustment' the government likes to make use of: "The Commerce Department reports the 'manufacturing sector of GDP' in dollar terms, not output terms; and it adjusts it by the notorious 'Quality Adjustment Factor,' which artificially overstates production." Thus, even the officially stated 30% of GDP that is supposed to be the 'productive portion' is just a statistical fluke.

"There it is in one compact sentence," excoriates the Mogambo, "proof that the government is a pack of lying weasels!" Mogambo unpacks his outburst...below.

The Daily Reckoning PRESENTS : Mogambo on Monday! This week our hero is rudely interrupted while trying desperately to mind his own business...

GREENSPAN'S FOLLIES
by the Mogambo Guru

Last week, we were graced with the sight of Sir Alan Greenspan himself on TV testifying before Congress, which mainly consisted of Congresspersons demonstrating that they are either clueless, or that they couldn't care less, since they are there at the testimony apparently only as a welcome respite from their regular duties of spending us into the poorhouse, and passing more and laws that make living in America more and more unpalatable and uneconomic.

Now, to tell you truth, I did not hear much of the testimony, as I usually get so angry at the vapidity of the questions or the glib evasiveness of Greenspan's answers, or the outright lying, or his saying that he does not want to discuss this in public and how the questioner ought to drop by his office so they can close the door and that Greenspan can tell him how things really work, or maybe he would prefer to have some of Ashcroft's Patriot Act armed- and-armored agents drop by the Congressperson's house, late one night, so that THEY could explain it to him, if you catch his drift, and so I usually just stop watching the damn show, and missed most of the testimony. Almost all. I hate it.

But Mr. Eavis says he watched the testimony, and Mr. Eavis is the Senior Columnist for theStreet.com, and he wrote a nice piece about Greenspan's testimony, which he entitled "Probing Greenspan's Easy-Money Madness." With a title like that you know he is probably as dyspeptic as I am about the whole thing. He writes, "But one line in Greenspan's testimony Wednesday shows that he is unfazed by the soaring debt levels of the U.S. He said: 'All told, our accommodative monetary policy stance to date does not seem to have generated excessive volumes of liquidity or credit.'"

If Mr. Eavis says that this is what Greenspan said, then I have no reason to doubt him. So I'm going to believe him, especially since Greenspan has already proved that he is unreliable, and will lie to me just for the sake of lying, as far as I can tell, like when I finally get through to him on the phone, and as soon as he hears my voice he says "This is a no Mr. Greeniespan. Him gone. Me clean office plenty fine, chop chop" and then he hangs up, but I know it was him. He isn't fooling anybody.

But I can see how he figures that he IS fooling me, since he does it every six months in front of Congress, who are supposed to be so bright and trustworthy and educated and upholding the Constitution.

Anyway, I'll tell you what was spooky. One day last week, I am just minding my own business, going through the motions of the normal routine, when suddenly the meaning of when Greenspan said becomes clear to me in all its glaring treachery...and the next thing I know, I'm running down the street screaming in fear, and banging on the doors of neighbors, and when they make the mistake of opening the door in response to my repeated knocking, and ringing of the doorbell, and kicking the side of their house, and peering in the windows and yelling "Hello? Hello? I can see you in there! Why won't you answer the door?" then when they do finally open the door, then I'm grabbing them by their necks and screaming in their faces, yelling that "Alan Greenspan has just testified that he sees no evidence of excess liquidity! Do you know what this means? Do you?"

By this time my voice has risen an octave and gradually working to higher and higher decibels, and in my unfathomable rage I'm spraying their faces with flying specks of spittle. "Do you understand me?" I'm screeching. "Do you have any idea of the profound and horrific consequences of a chairman of the central bank to say that he sees no evidence of excess liquidity?"

Never mind that Greenspan's denial gives Mr. Ben Bernanke, he of the printing press, a green light to print up even more money out of thin air that will find its way into all sorts of nasty speculative bubbles. Never mind that it means that even more bad credit will be given over to debtors who will never pay it back, like the government. Never mind that the future value of the Greenback - which wasn't looking all that rosy to start with, especially sharing the first syllable of its nickname with the most profligate U.S. Fed Chairman in history, as it does - now appears to be vanishing into nothingness.

No...this sort of deceit is all too close to another of Greenspan's favorite lies, and let me give you the scoop on that idiocy, namely that inflation is low. But it is too easy to attack Mr. Greenspan on these counts, as they can be successfully dismissed by anybody in the whole freaking country who has spent money, as the prices of everything are up, and many of them spectacularly so. So we have proved that he is a clueless weasel about liquidity and inflation.

But there is another one of Greenspan's follies that just won't go away, and it has as much credence as Greenspan's ridiculous insistence that inflation is low, and that is the whole productivity thing.

So let's attack him about this productivity thing. But we are again stopped at the front door of the Fed by some tough-looking security guards, so we turn around and decide that we will confine ourselves to attacking him verbally, and by that I mean in writing, so you can see how confused I am in my anger. But even in my current bewildered state, I obviously have a lot more on the ball than this Greenspan fella.

Anyway, suppose you, as a successful capitalist swine, hire a hundred guys to make a hundred widgets, and sell the widgets for a dollar apiece, and thus GDP is $100. So far, so good. Then a few days pass, and we wake up with a blinding headache in a strange, seedy little hotel on the outskirts of town with a one-eyed woman who says her name is Darla, and when we frantically call in to the office, we find that you raised the price to two dollars, and you also figured out a way to make widgets with only fifty employees! The hike in price, unfortunately, reduces widget sales by 25%. But GDP jumps to $150! And because you fired half the employees, labor costs plummeted, and the next thing you know Alan Greenspan jumps on an airplane and flies down to visit your factory and give you an award as Proud Poobah of Productivity, which you deserve because productivity has soared. In the old days, it took a hundred guys to make a hundred widgets. Now it takes only fifty guys to make seventy-five widgets, and you doubled the price to more than make up for it. You're a genius!

But unemployment is up by 50%, total sales volume is down, and inflation has soared to 100%. Only a Fed chairman as clueless as Alan Greenspan could possibly only see the upside in this.

And so we have successfully debunked Greenspan's insistence that productivity is a miraculous tonic for the economy, that inflation is "low," and that the volumes of liquidity and credit in the U.S. system are "not excessive."

Is there any lie Sir Alan has left untold?

Regards,

The Mogambo Guru for The Daily Reckoning

P.S. I went to the Treasury website for the public debt, publicdebt.treas.gov, and saw that the debt is $7.025 trillion, a new all-time record. Just for laughs I scroll down to the bottom, and the list ends 9/30/87, when the debt was $2.350 trillion. That is, oddly enough, approximately the date that Greenspan took over the Federal Reserve.

So, under this guy Greenspan, we have gone into debt to the tune of another $4.675 trillion. One lousy Fed chairman has tripled our debt in seventeen lousy years. I am appalled and disgusted. Ugh.

Editor's note: Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the editor of the Mogambo Guru economic newsletter, an avocational exercise the better to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning, and other fine publications.

44 posted on 08/08/2005 9:40:11 AM PDT by Paul Ross (Definition of strict constructionist: someone who DOESN'T hallucinate when reading the Constitution)
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To: Final Authority

Get over yourself. I am more gainfully employed than you will apparently ever be, Wally.


45 posted on 08/08/2005 9:41:31 AM PDT by Paul Ross (Definition of strict constructionist: someone who DOESN'T hallucinate when reading the Constitution)
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To: Final Authority
What can I say, you are a loser

Proof that you are as I described: "All so that importers can get a fractionally cheaper toaster...at the expense of their fellow citizens who they vilify."

46 posted on 08/08/2005 9:45:18 AM PDT by Paul Ross (Definition of strict constructionist: someone who DOESN'T hallucinate when reading the Constitution)
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To: Mase

Thats impressive.


47 posted on 08/08/2005 9:45:24 AM PDT by winodog (We need to pull the fedgov.con's feeding tube)
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To: Paul Ross
Which, when the exrement hits the fan, our nation will "truly be hurting" and the side espousing phony Fed numbers will be the reason for the calamity, not the ones who counseled caution.

Trying to pin down just when this 'calamity' might happen is the haystack needle with you doom 'n gloomer, protectionist, isolationist, alarmists. At least you didn't link us to the tipping point unclear article.

My guess is that you've been preaching the end is nigh for as long as you've been on FR. Just when will this all add up to disaster? Can you narrow it down some? Is it six-months? A year? Two years? Sometime between now and 2025?

According to you, GDP calculations are a fraud, wage growth is a myth, inflation is at 5.7% even though the 10-year bond is yielding 4.25%. You think we don't make anything here anymore yet we continue to set records for manufacturing output.

You live in a very grim world which is the polar opposite of most American's. Just because economics is the dismal science doesn't mean you have to be gloomy, Eeyore.

48 posted on 08/08/2005 10:02:19 AM PDT by Mase
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To: Mase
"The bond market doesn't see it."

My guess is that when the Asians quit buying treasuries, the bond market will see a lot more than they are seeing now. When the price of bonds drop, stock market investors will start seeing things differently as well.

And when the dollar starts sliding again, maybe you will be able to see it, too.

"Do you see something they don't?"

As a matter of fact, I do. Do you remember that one day Enron was the world's most admired company and that a month later, its off-balance sheet liabilities began to be revealed and two days later, Enron was virtually worthless? Gokhale and Smetters calculated the off balance sheet unfunded liabilities of Social Security and Medicare. Depending on the growth rates that were assumed, the net present value of those unfunded liabilities was estimated at somewhere between $34 and $77 trillion dollars with their best estimate being around $55 trillion. And for each year that we fail to deal with the problem, the estimate is that the unfunded liabilities will increase at an annual rate of $1.5 trillion. If the off balance sheet liabilities are included, that $49 trillion net worth you were describing vanishes or is even negative. Countries and economies that are doing things right do not have negative cash flows and zero or negative net worths.

The Comptroller of the Currency has already concluded that no nation in history has ever had sufficient economic growth to cover the unfunded liabilities as estimated by Gokhale-Smetters. The United States is faced with three choices: bankruptcy, hyperinflation or selling the public lands of the West to liquidate the liabilities that cannot be funded from income. At present rates, without the unfunded liabilities, the people of the United States are spending $2 billion dollars a day more than they earn. If you factor in the $1.5 trillion, we are actually consuming $6 billion a day more than we produce. And by 2012, it will rise to more than $10 billion a day. Why, in no time at all, we'll all be rich.

Borrowing to increase productivity can raise income. What do you see? Does this graph look like borrowing to increase consumption or borrowing to increase income?


49 posted on 08/08/2005 10:47:06 AM PDT by Reaganghost (Our freedoms will never be safe as long as a single Democrat holds elected public office.)
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To: Mr. Jeeves
" ...the average annual payroll per employee in Manhattan during 2003 was $73,032."

Too bad it takes at least 150K/year to live there. ;)"

Hey doubt many of these 'average' people live in Manhattan. They hit the trains out at 5 or earlier. Now the people who clean up or clerk the offices they live in Manhattan and they pull those averages down quite a bit.

50 posted on 08/08/2005 11:08:30 AM PDT by ex-snook (Protectionism is Patriotism in both war and trade.)
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