Our economy

[nobody_special]

I must strongly disagree with this. The key is not how much is consumed, but how much is produced. And we don't manufacture much in this country anymore.

Really? What good is producing something if there isn't a consumer to buy?

That's hardly the problem in this country. As I and others have pointed out, we're spending and consuming far beyond our means.

Although it does hurt us to not buy a domestically made product, it doesn't stop the consumer from buying ANY product. If a consumer doesn't buy any product, ALL producers are toast. Look at it this way. When I (consumer)walk into a car dealership (producer of product, loosely represented) I don't HAVE to buy a car there. However, the dealer HAS to sell to the consumer in order to keep being a producer. I'm in the drivers seat, no pun intended...NOT the dealer...

Sure, I agree, but I think you missed my point. Fundamentally, the wealth of the country is simply measured as the difference between it's production and consumption (averaged over some time period). The "service" economy doesn't count, as nothing is produced by it; and the "Information" economy is a house of cards. What really counts are physical goods, especially durable goods. And the US doesn't produce nearly as many of those as we did 20 years ago.

In short, consumption isn't a good measure of the nation's wealth (especially considering the high per capita debt). In the long term, wealth and economic health are determined by things like industrial and agricultural productivity, the trade deficit, and the government's budget deficit... and none of those look good right now.

 

[nobody_special]

I just want to point out that most corporations are owned largely by investors, including millions of little old ladies' 401K mutual funds. Increased corporate profits benefit EVERYONE.

No, they only benefit those wealthy (and wise) enough to have significant investments. Lots of poor people don't...

 

[Bruxley]

And who would these poor folks be working for?

Corporations are the pump that moves the economy. An economy is a FLOW of money and without capital investment the flow slows fast. Without profits those capital investments dry up fast. Without consumers those profits dry up fast. And with inflation the consumption dries up fast. Demonizing a corporation for it's profits is like demonizing an employee for his wages.

 

[wingman]

Increased corporate profits benefit EVERYONE.

I really hope your joking with that statement.

The old trickle down theory is failing bad simply because greed does not allow
for the "trickle" to flow.

We were once a great industrial nation now we are a consumer nation with
service jobs that soon will be held by over qualified college grads. Yep, the old
free trade is working great going one way straight into corporate pockets and
well of course China.:barf:

 

[nobody_special]

And who would these poor folks be working for?
[...]
Demonizing a corporation for it's profits is like demonizing an employee for his wages.

No, it's not the same.

Those poor workers, with no investments, do not see any of that corporate profit. It's reserved for the shareholders. Investments reward wealth, not labor.

 

[Bruxley]

China getting status as a preferred trade partner during the Clinton administration did put the American industrial complex in a death spiral. It was struggling already but that one wiped it out.

When candidates take political contributions from foreign countries there will be such provisions made in return.

Again, what party is it that made such deals as this and NAFTA? And which one is standing up for 'the people' and promising to return those jobs while 'unknowingly' receiving MORE Chinese donations? Hillary of course had no idea her campaign was receiving such donations in either her Senate OR Presidential races. Sounds familiar.

 

[Bruxley]

Wages reward labor. Investments create jobs. Consumtion generates profits and investment continues. Lose profits, lose investment, lose job.

 

[SecDef]

If you have a problem with minimum wage, look at the income of CEO's and re-evaluate. Their wages have skyrocketed. Waaaay more than the lowest levels. If CEO wages increases at half the rate they would still make out like bandits and if you tied most of their income to stock options then there much less impact on the corporate ledger.

The Costco model vs the Walmart model is a good example of where keeping the lowest workers wages and benefits above average has kept employees around a lot longer creating a much better environment. It certainly has NOT hurt the bottom line.

Investors initially balked at the costco policy, but finally learned that taking the long picture and not the short picture (squeeze as much profit as possible everywhere) has worked to create a strong company.

In short, the argument that raising the minimum wage would take a $.50 item and make it $2.00 is ridiculous.

 

[SecDef]

China getting status as a preferred trade partner during the Clinton administration did put the American industrial complex in a death spiral. It was struggling already but that one wiped it out.

When candidates take political contributions from foreign countries there will be such provisions made in return.

Again, what party is it that made such deals as this and NAFTA? And which one is standing up for 'the people' and promising to return those jobs while 'unknowingly' receiving MORE Chinese donations? Hillary of course had no idea her campaign was receiving such donations in either her Senate OR Presidential races. Sounds familiar.

Yes, Bush was so much better that he can't be mentioned in your rant because he is soooo anti-NAFTA. Have you read the news recently?

 

[Marko Kloos]

The "service" economy doesn't count, as nothing is produced by it; and the "Information" economy is a house of cards. What really counts are physical goods, especially durable goods.

The service economy does produce something: wealth. A dollar generated by a service or information technology worker is just as green as a dollar generated by an automobile worker.

What "really counts" is generated wealth, which is just as real when it's done by offering a service instead of a tangible good.

Using tangible goods as a yardstick for economic health is not an accurate measure in the 21st century. Your understanding of economics is a bit spotty.

 

[nate45]

Sub Prime Nation

Pat Buchanan squarely nails the problems on the head in this article that just came out today.

We are in economic trouble. Like it or not.

It goes way beyond political rhetoric or doom and gloomers.

 

[sasquatch]

State of the economy

Where to start?

All of the figures/numbers I provided as rebuttal to PBP were just that.......numbers. They don't come from Rush, Hannity, or anyone else. They are all easily accessed online. Complaining about where the numbers come from is just plain dishonest.

Numbers like the CPI, the GDP, unemployment, oil prices, etc. are useful to compare one year, or one decade, against another. They are to be used in a relative sense.....that is why they exist.

So when I said that unemployment is low, I am comparing 2007 relative to other years. If you don't like the number itself, don't come whining to me.....I don't compile the numbers.

Unemployment since 1990:

1990 5.6
1991 6.8
1992 7.5
1993 6.9
1994 6.1
1995 5.6
1996 5.4
1997 4.9
1998 4.5
1999 4.2
2000 4.0
2001 4.7
2002 5.8
2003 6.0
2004 5.5
2005 5.1
2006 4.6

So, the current unemployment rate of around 5.0 is RELATIVELY low.

Same for the CPI. The CPI for 2007, 2.6%, is RELATIVELY low. The CPI has been over LOW the last 7 years. This means that inflation has been of little concern over the past 7 years.

Adrian

The economy is like that. It isn't a single number and it can't be judged by a single measurement; it isn't a point, and I strongly suspect anyone who pretends it is - Democrat or Republican, conservative or liberal - of being either oversimplistic or underinformed. It's a collection of curves and exchanges, and the arguments that really mean something are the ones about how those curves should be shaped.

Like I said, the numbers are useful for comparisons, and not much else. I, for one, do not believe that either political party has a whole lot to do with the fluctuations. But the current numbers/figures do show that our economy has been very healthy over the last 5-6 years.

Playboypenguin

What...you mean the parts were he only addressed the issues by saying "it is a number" or the part where he didn't address the issues at all?

He just regurgitated a bunch of numers he heard on Rush without seeing what is really behind them. he fails to address the issue that if does not matter if GM (just an example) produces more product than ever before if a smaller percentage of the money goes into the America economy or the working man's pocket...or of the majority of it was made by avoiding taxes and shuttling money overseas.

The numbers I posted can be accessed by Googling them. Rush has nothing to do with them. I doubt that he has compiled a single one of them. If you have "issues" as a result of comparing one year to another, then perhaps you need to understand what the numbers actually mean. Hint: they aren't my numbers.

 

[SecDef]

However, you are presenting these numbers in a vacuum. Even year over year, employment rate doesn't tell you about the economy.

If my high tech job is outsourced to India, and I have to get a job at flipping burger to make ends meet, the net impact on unemployment is zero. The impact on the economy is not zero.

So, with just these numbers, there really isn't enough context to get a full picture of the economy.

 

[sasquatch]

SecDef

However, you are presenting these numbers in a vacuum. Even year over year, employment rate doesn't tell you about the economy.

If my high tech job is outsourced to India, and I have to get a job at flipping burger to make ends meet, the net impact on unemployment is zero. The impact on the economy is not zero.

So, with just these numbers, there really isn't enough context to get a full picture of the economy.

That's why you don't use just one number. You can come up with as many for comparisons sake as you prefer, to "get a full picture of the economy". The few numbers I posted were not intended to be the entire picture. It also isn't fair to say "the economy sucks" without presenting any numbers to back up your statement, is it?

Here is another interesting one, from Social Security:

National Average Wage Index

Year Index
1991 21,811.60
1992 22,935.42
1993 23,132.67
1994 23,753.53
1995 24,705.66
1996 25,913.90
1997 27,426.00
1998 28,861.44
1999 30,469.84
2000 32,154.82
2001 32,921.92
2002 33,252.09
2003 34,064.95
2004 35,648.55
2005 36,952.94
2006 38,651.41

 

[SecDef]

No, I agree. Gotta back things up.

However, we are neglecting inflation numbers, value of the dollar, etc.

National Average Wage Index

Ok, but go back to CEO versus low level salary and see how that is affected.

Interesting, yes. Conclusive? no.

 

[Bruxley]

Other then envy, what is your assertion concerning CEO salaries and the fact that raising minimum wage causes a rise in inflation?

And the statement about China, I don't believe you addressed that past 'so what...Bush sucks too.' You do realize the direct connection between China's gaining preferred trade status and their resulting impact on America's Industrial market don't you? And if a Presidential candidate receives very large political contributions from a foreign government then that government gains favors that result in a heavily negative impact n the American industrial market there ought to be more concern about such contributions from here forward.

My point was, and is, that the very players effecting the negative results are now pointing to those results and claiming to now be the answer. Raise the minimum wage, LOOK INFLATION elect me and I'll stop this blah blah. Give China preferred trade status, LOOK manufacturing jobs are leaving the country,elect me and I'll stop blah blah. Attack corporations and inflict untold regulations, LOOK companies are moving out of the country, elect me and I'll stop blah,blah.

God forbid the cause and effect get connected. That would be partisan and therefore invalid right? Unless it's toward Bush or Republicans in general. Note that reflects an expectation of a higher standard and in expecting one it is tacit recognition that they are one.

 

[kjm]

Hey y'all! Will any of you who know about "obscene" corporate profits please tell me the name of the corporation and the ticker symbol? Please!? I've been looking for one of those obscenely profitable corporations since I've been investing, and dangit! I can't find it though I know people lable Exxon Mobil (XOM) as obscenely profitable. I did look into them, and their profit margins are lower than a lot of utilities (See Excelon or EXC). Then I look to big pharmaceuticals, and I just can't find an obscenely profitable one of those either!

I have found a few decently profitable oil exploration companies, but they're the little guys who are digging holes all over Texas and the Gulf Coast.

Oh- and because I own shares in some of these corporations and read their annual reports (or the good parts anyway), I would like to ask those who don't understand the economy- how eager would I be to invest in a corporation (that either employs you or where some of your retirement is invested unbeknownst to you) that is obscenely unprofitable? It's kinda the point for corporations to make a profit and share it with the shareholders (read: Owners- little guys like me). How many of you were crying like babies when Exxon Mobil was one of the most unprofitable corporations back in the 1980's and was laying off people to keep afloat? Were you crying about the low cost of oil costing American jobs? How much do you want to pay for your goods and services versus keep Americans employed?

So- economically, I think we're doing good, not great. Still- I'd like to find one of those obscenely profitable companies. I'll wait 'til you post those tickers!

 

[nobody_special]

The service economy does produce something: wealth. A dollar generated by a service or information technology worker is just as green as a dollar generated by an automobile worker.

Few dollars are "generated" by the service economy. With few exceptions, services transfer wealth; they don't create it. (An obvious exception is when the service is rendered to, and payed for by, foreigners; but that's not the common case.)

If I pay $50 for a massage (like that'd ever happen ), the only thing of value that has been "created" is the good feeling in my muscles. That's not terribly meaningful to the economy as a whole. The masseuse has gained wealth, but I have lost the same amount of wealth; more, actually, due to taxes.

One could argue that some services do create economic value, such as landscaping. But that doesn't remotely compare to productive industries.

 

[Marko Kloos]

With few exceptions, services transfer wealth; they don't create it.

If you define wealth in those terms, then the building of a car and its sale merely involves transferring wealth as well, since the materials in the vehicle and the labor that went into it don't materialize out of thin air. In order to "create" a car, you have to transfer some of your wealth to the supplier of your materials, and then some more to the guy spinning the wrench.

 

[Playboypenguin]

If you define wealth in those terms, then the building of a car and its sale merely involves transferring wealth as well, since the materials in the vehicle and the labor that went into it don't materialize out of thin air. In order to "create" a car, you have to transfer some of your wealth to the supplier of your materials, and then some more to the guy spinning the wrench.

You are forgetting one of the major rules of manufacturing. "The finished item is more valuable than the sum of it's parts" rule. A working and reliable car is worth more than the materials and manpower that created it. Therefore value has been created.

If this was not the case then they would not be made.