Posted on 03/27/2007 6:41:40 AM PDT by A. Pole
Job growth is falling, and unfortunately, fewer jobs are being created. A lot of new jobs are going to low-cost labor markets, like China and India. The U.S. can't compete with this, nor should it try.
This doesn't mean jobs will never again be created here. New jobs will emerge, but they'll be in different industries and perhaps driven by unique demographics, like in health care, where an aging population is creating the need for workers. (The U.S. has only lost 2% of the payroll base, despite all we've been through; it's a very mild adjustment. Germany and Japan have lost much more, percentagewise.)
As for the more general job decline, such as what we're seeing in manufacturing and some services (programming, for example), the U.S. will continue to lose these jobs to low-cost labor markets. But there is a positive side to all of this, as oxymoronic as that may seem.
Positively Speaking
By outsourcing cheap labor, America has had the benefit of low inflation, steady-to-rising purchasing power, expanding capital markets and cheaper cost of capital. This has also led to other tangible developments such as falling mortgage rates, which has given millions of Americans the opportunity to own their own homes; rising GDP (even with the numerous crises the economy has been through in the past two years); and rising personal savings, from zero in 2001 to roughly $300 billion now.
In other words, although 2 million Americans may have lost their jobs in the past two years, the economy as a whole has benefited from this trend of outsourcing cheap labor. Still, many continue to wonder when new jobs will be created at home.
I'm almost drawn to the conclusion that large supplies of new jobs might never be created, or if they are, their existence will be fleeting because cheap-labor countries will quickly adapt and take them away.
The global economy and markets appear to be saying to industrialized countries, and to the U.S. in particular, that the job of their citizens is to invest, not toil away on a production line. Falling interest rates and lower capital costs have put money and credit into the hands of average individuals, offering them the chance to thrive through investment, rather than physical labor.
Yet for all its utopian significance, this paradigm is being viewed negatively. It's seen as a weakness rather than understood for what it is: the next evolution of a truly advanced society.
To many, job losses reflect some kind of flaw in our economy, a defect exploited by the laboring countries of the world, putting America at a disadvantage. They see job losses and deficits and conclude that the U.S. squandered its economic prowess, and that somehow countries like China, India and Japan have beaten us at our own game.
Funding Growth
Nothing could be further from the truth. Our deficits (trade and budget) are being used to finance the modernization of more than half the world's population. If it weren't for the U.S. economy's engine of growth, countries like India and China would have no chance to lift their standard of living, or at the very least, the process would take longer and be more turbulent.
The citizens of cheap-labor countries also want improved lives, and the only way they can do it is to accumulate dollar assets. They sell us their products, accumulate our dollars and then use those assets to modernize and raise their living standards.
However, many see this reality in reverse, that somehow these countries are "doing us a favor" by holding dollar assets. But they need our assets more than we need their goods.
Consider the U.S. as a person who has worked hard all his life and is now enjoying the fruits of his labor. Rather than thinking of our debt as something negative, or worrying about a small loss in jobs to low-cost labor markets, we should see the huge benefits that we enjoy, like enormous capital markets that provide cheap capital, incredibly high standards of living, and an economy that has the flexibility and resilience (because of the vast amounts of capital that flow through it) to weather unprecedented events like Sept. 11, the corporate scandals and war.
A Resilient Nation
No other country would have been able to get through those events as lightly. Look at Japan and its banking system. For 14 years, the country has been trying to clean up the mess with little success. On the other hand, the U.S had its own crisis with the savings-and-loan debacle back in the 1980s, but it was cleaned up and we moved on.
As more than half the world's population continues its quest to modernize, it will continue to accumulate dollar assets. As a result, the U.S. will have the world's expanding capital base flowing through its financial markets.
The job of Americans, therefore, will be to invest. Your "work" now is to accumulate and manage assets. (Of course, that doesn't mean everyone will become full-time traders. As I pointed out, even in this job environment, we still have 129 million payroll jobs.) The traditional definition of a job is fading, at least in this country. The sooner you realize this, the better off you will be. Those who don't see this shift and take advantage of it will see their standard of living decline relative to someone who embraces this new reality.
Throughout the course of U.S. economic history, this has been true. In the late 19th century, the skilled craftsmen and artisans who had been so much a part of the nation's economy were replaced by assembly lines, which eventually dominated the way things were produced. Before that, the agrarian way of life was lost as a result of mass migration to the cities, where there was more opportunity and where people had a chance to earn higher wages.
Each time, the paradigm shift rewarded those who embraced it, and either impoverished or reduced the living standard of those who resisted its arrival. The same will be true now. Rather than fret over the loss of jobs to China or India, you can adapt by becoming an investor. Buy some real estate, or invest in stocks that pay dividends. When rates rise some more, buy bonds again. And when you can, use leverage to do this. That's what all this capital flowing through U.S. financial markets is allowing you to do. Credit shouldn't be viewed as bad but as an integral part of this new paradigm.
As for those who constantly harp on job loss, debt and deficits, or the fate of the dollar, they'll be left behind in the next phase of the economic evolution. Their view is incorrect; they are married to an old and obsolete way of looking at the world. They have been preaching their doom for decades while the U.S. economy continues to grow and as standards of living continue to rise. Their loss will be our gain.
Get rich bump!
Okay, I'm ready. Forget the 9-5 grind. Now what do I invest in?
In 10-15 years health care jobs will pay about as much as other service jobs - like hotel maids.
Oh yea, and we'll be importing folks from the third world to fill them because they'll be jobs American won't do.
Not me dude. I'm way ahead of the curve. Adapt to the new economy or die. Gonna be a Rock Star, or maybe Pro Athlete.
And you'll see posts here saying what this country needs is a good depression so I can find someone to lance the boils on my butt for nothing.
I believe we are already at a point where a salesman who speaks both English and Spanish can earn more than a doctor who treats HMO patients.
Welfare recipients earn more than a doctor who treats Medicaid patients.
I understand that Ford Motor Co. has come up with a new and innovative marketing plan for the Edsel.
"Rather than thinking of our debt as something negative"
This guy is an idiot.
Apparently he's never heard the wise statement 'The debtor is a slave to the lender'.
It's always been this way, and always will be, no matter how they try to dress it up.
My teenager wants to be a basketball player.
I think I will invest in the mixed martial arts fighting scene.
I cant wait to be on easy street.
There's a big difference between debt on a personal level and debt on a government/institutional level. One of the positive aspects about government debt is that in the current economic climate it is very "inexpensive" debt for us.
Priceless and inane. Everybody knows when times are tough you just dip into your Trust Fund.
For those of you that reject this premise or feel that you need a "real" job vs. investing, here are some good jobs:
http://www.ajb.dni.us (America's Job Bank)
http://www.careerbuilder.com
http://www.hireahero.com (Aimed at Veterans)
http://www.craigslist.org
"As for those who constantly harp on job loss, debt and deficits, or the fate of the dollar, they'll be left behind in the next phase of the economic evolution. Their view is incorrect; they are married to an old and obsolete way of looking at the world. They have been preaching their doom for decades while the U.S. economy continues to grow and as standards of living continue to rise. Their loss will be our gain."
This is very similar to the garbage being spewed during the .com boom, and we all know how that "new way" ended up.
It's all rationalization and spin of the fact that good jobs are harder to find, because there is zero loyalty to hard working employees, and that your job may be outsourced next to India or Mexico to boost executive level bonuses, and this bozo is cheerleading that mindset.
"Okay, I'm ready. Forget the 9-5 grind. Now what do I invest in?"
I don't know, but I'm willing to bet that the author of this piece, and others like him, are ready to sell you their advice and services.
Most of europe would kill to have our low unemployment rates, solid growth rates, modest inflation rates, superb productivity increases, and overall butt-kicking economy. (Except that most of europe is too pacificistic to kill or fight for any reason, including their own survival, but that's another issue. Or maybe that's really the same issue?)
The carping about china is also a crock. If they want to provide below-market rate products to us then let them. Japan tried to do the same thing twenty five years ago, everyone said japan was going to own the USA by giving away everything to us. Another crock. It lead to their almost total economic collapse, and their stock market still has not recovered decades later, and they're in near-recession almost all the time. Great strategy. We should be encouraging every country in the world to give us stuff for less than it costs them to make it, and tell them that is the way to eventually crush us. Wink wink.
ping for later read
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