Skip to comments.Struggling To Advance (Are Americans now lowering their economic expectations?)
Posted on 09/29/2012 7:48:45 AM PDT by SeekAndFind
A majority of Americans now define success as not falling behind. They worry that fundamental changes in the economy are making it more difficult for themand their childrento get ahead.
The road still rises. But the climb is steeper, and the falls are more frequent.
Thats the view of prospects for upward mobility in the modern American economy that emerges from the latest Allstate/National Journal Heartland Monitor Poll. Although an overwhelming majority of Americans still define the U.S. as the land of opportunity, nearly as many agree that getting ahead is more difficult for workers today than it was for previous generations.
Only about one in five Americans say they have been able to get ahead consistently in their lives; many more say they have moved forward somewhat but faced intermittent reversals. And while a plurality of adults believe they have more opportunity to advance than their parents did, Americans are much more uncertain that the next generation will have greater opportunities than their ownwith whites far more pessimistic than minorities.
In all these ways, the survey captures systemic strain between the bedrock American belief that anyone who works hard enough can succeed and the uneasy sense that persistent, and perplexing, headwinds in a globalized economy are making it harder for workers to get ahead.
(Excerpt) Read more at nationaljournal.com ...
If the U.S. were to impose tariffs on foreign countries to improve our competitive balance with our trading partners, the immediate effect would be an enormous increase in prices for a lot of things we take for granted.
I worked in corporate America during the outsourcing boom of the 1990’s and early 2000’s. None of the companies I worked for rolled back prices to the consumer when they outsourced production. They enjoyed the benefits of higher margins for a few years. Much of the margin siphoned off by Wall Street in stock buybacks or overpriced acquisitions that later resulted in write downs of excess goodwill.
As an aside the true projected savings from outsourcing were never realized. Costs in the foreign country were higher than projected due to inefficient management of labor, graft, and corruption. Oil prices escalated, making energy an increasing cost of the product. More on site inspectors and auditors were required to ensure quality and monitor production than originally anticipated. Plus theft of intellectual capital resulted in shorter periods of exclusivity for new products. In most instance, the 50% or better savings projected turned out to be 10-12%. Most of the real 10-12% savings could have been realized domestically by making a similar investment in the modernizing the assets and processes of the domestic operation. However, from Wall Street’s perspective a big advantage of outsourcing was reducing the capital investment in the business to free up funds for financial speculation.
We also forget the subsidies the developing export nations provide exporting factories. In my business the Chinese government rebated 15% of the value of exported goods to the factory, a direct subsidy. It also loaned money for capital investment in the industry at 0% with lengthy repayment terms. Finally, it manipulated its currency to artificially hold down the cost of exports. Tariffs are legitimate response to these unfair trade practices. Tariffs also help the taxpayer recoup some of the costs not paid by importers for maintaing roads, bridges, ports, and other government services (Coast Guard, Customs).
Interestingly, I can easily envision a scenario where wages go up even as manufacturing becomes stronger in the U.S. The problem, though, is that this only involves individual wages and not cumulative wages. To put it simply -- a U.S. manufacturing operation tends to be a state-of-the-art process that requires a lot fewer people to do the same job that thousands of people used to do in the past. The biggest factor in the decline of manufacturing employment in the U.S. in recent decades hasn't been outsourcing at all ... it's been automation.
You last point is a good one because it illustrates the idiocy of many forms of "protectionism" we see in these foreign countries. For all intents and purposes, China has basically been functioning as a slave colony of the U.S. for years ... with their own government propping up industries that produced consumer products almost exclusively for consumption in the U.S. That was the whole point of pegging the yuan to the doller at an artificially low value, wasn't it?
normalcy bias prevents the US from addressing it’s increasing structual issues. Globalization, Technology, and Demographics need to be addressed. The safety net has officially become the dreaded hammock from which productive potential is slowly drained. The generation currently deemed responsible for future growth do not possess the necessary coping skills to change our economic downward spiral.
Actually, it shows considerable “common wisdom” to go into a defensive mode during a depression.
During good times, people tend to overspend and lose their reasonable sense of frugality and savings. “Living day by day” is a good thing when you are a recovering alcoholic, but when “the pressure” is outside of us, it is far better to try and plan ahead.
After an extended slump like now, those who live “ahead of their means” get nailed hard.
Right now millions of Americans pay their rent and utilities, and buy their food and fuel on credit, so as soon as they get paid, it has to go to the credit card company. If they get fired, they are instantly a month in debt and cannot meet their bills. This is why so many are utterly dependent on their unemployment checks right now.
Checks that are soon to end. And even with unemployment, many people slowly deplete their “fat”, other savings and assets. So that when their unemployment stops, they are totally broke.
This next January shows all the signs of a major disaster, because of a confluence of bad things all happening at once. And the Democrats have made it abundantly clear that if they are turned out of office, they will use their lame duck time, up to January 20th, to block any Republican effort to stop a huge crisis.
In fact, they will likely try to do anything they can to make things as bad as possible, while blaming the Republicans who are not even in office yet.
So the bottom line is that for the next 3 months we all have an opportunity to go into maximum defensive mode before January 1st. This means the following.
Keep extra cash at home, not in the bank, and be prepared to act quickly in case their is a bank run, a stock crash, or a Mideast war.
In 1966, when I graduated from HS, minimum wage in Southern California was $1.65 per hr. One hour’s labor would buy eight gallons of gasoline or ten McDonald’s Hamburgers. A glass of beer was five cents. A loaf of bread fifteen cents; you could buy ten of them for one hour’s work at minimum wage and get change back.
A blue collar worker could expect to earn $5.00 an hour. In three months at 40 hours a week he could earn enough to buy a new full size American Car; In a year, enough to buy a modest single family home in the suburbs of Los Angeles.
Today, in California, Minimum wage is nearly $10.00 an hour, but it now takes two hours of labor to buy five gallons of gas. How much is a burger these days? I had a beer yesterday. It was five dollars plus tip. A loaf of bread is anywhere from three to six bucks - a half hour at minimum wage in California. At $50.00 an hour it would take four months to make enough to buy a cheap import car and at least five years to earn enough to buy a house in that same LA suburb (But you would not want to live there today).
It’s not just that the money is worth less. It takes more hours of labor to buy the same commodities.
RE: In 1966, when I graduated from HS, minimum wage in Southern California was $1.65 per hr.
According to the Inflation Calculator, that would be about $10.96 in 2010.
You had a higher effective minimum wage then than now in California ($8/hr).
The point is not how many dollars. Rather how many hours of labor it takes to earn enough money to buy the essentials of life - like food.