May 2011

Why Manufacturing is Central to the Economy

Submitted by on

Originally posted on New Deal 2.0

Paul Krugman recently argued that “manufacturing is one of the bright spots of a generally disappointing recovery, and there are signs — preliminary, but hopeful, nonetheless — that a sustained comeback may be under way.” He points out that the gap between what we sell and what we buy has been improving. This must be set against a background of a manufacturing decline in the United States of historic dimensions; even without adjusting for inflation, the trade deficit in goods for the United States between 2000 and 2010 was 7 trillion dollars. A turnaround in the attention of more perceptive economists and a turnaround in manufacturing may be in the works. But before that, the crucial question is: Why is manufacturing so important?

1. Manufacturing has been the path to development

It has been the strategic achievement of rich nations over the last several hundred years to create a high-quality manufacturing sector in order to develop national wealth and power, as Erik Reinert shows in his book “How Rich Countries Got Rich…and Why Poor Countries Stay Poor.” From the rise of England in the 19th century, to the rise of the US, Germany, Japan and the USSR in the 20th, to the newly industrializing countries like Korea, Taiwan, and now China, manufacturing has been the key to prosperity.

Why the Rich Love High Unemployment

Originally published in Truth Out


The headquarters of JPMorgan Chase in New York. A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion.  (Photo: Jessica Ebelhar / The New York Times)

Christina Romer, former member of President Obama's Council of Economic Advisors, accuses the administration of "shamefully ignoring" the unemployed. Paul Krugman echoes her concerns, observing that Washington has lost interest in "the forgotten millions." America's unemployed have been ignored and forgotten, but they are far from superfluous. Over the last two years, out-of-work Americans have played a critical role in helping the richest one percent recover trillions in financial wealth.

Obama's advisers often congratulate themselves for avoiding another Great Depression - an assertion not amenable to serious analysis or debate. A better way to evaluate their claims is to compare the US economy to other rich countries over the last few years. 

On the basis of sustaining economic growth, the United States is doing better than nearly all advanced economies. From the first quarter of 2008 to the end of 2010, US gross domestic product (GDP) growth outperformed every G-7 country except Canada.

But when it comes to jobs, US policymakers fall short of their rosy self-evaluations. Despite the second-highest economic growth, Paul Wiseman of the Associated Press (AP) reports:

The U.S. job market remains the group's weakest. U.S. employment bottomed and started growing again a year ago, but there are still 5.4 percent fewer American jobs than in December 2007. That's a much sharper drop than in any other G-7 country.

Ben Bernanke Loses Control of the Fed

Submitted by on

Originally published on The Agonist

bentimimf.png

It took a while, but the financial markets are starting to realize that Quantitative Easing will end next month, possibly once and for all. The unprecedented amount of monetary stimulus being pumped into the global economy by the Federal Reserve will come to a sudden halt. Commodity markets have enjoyed a bubbly expansion since the QE2 program was announced, and they were the first to crumble when the Fed began removing the monetary supports. Stock markets are now slowly beginning to follow suit.

One reason the markets took the news sanguinely was because the Fed engineered it that way. After the May meeting of the Fed Open Market Committee, at which it was decided not to renew QE2 when it expires in June, Ben Bernanke gave a first-ever press conference by a Fed Chairman following an FOMC meeting. The media thought it was a masterful performance – which it was, but not for the reasons cited in the press. Bernanke made it sound as if the end of Quantitative Easing was the most natural thing in the world, and that all the voting members of the FOMC agreed with him. The fact is, the FOMC decision was a defeat for Bernanke and his allies, which included the two other officers of the FOMC, Janet Yellen (Vice Chair of the Fed Board) and William Dudley (NY Fed President). Dudley, just a week before the meeting, had gone public with his desire to have a QE3 program standing by, ready to aid a struggling economy.

Mr. Anonymous and the Not-So-Spontaneous Birth of the Libertarian Movement

An important history lesson in our time of decline... Michael Collins

Originally published in Scoop Independent News

By anaxarchos
anax4-Optimized.jpg
Disclaimer: This is not a conspiracy story, though it has all the elements of one. Anonymous shadowy figures, international "societies", complete political "ideologies" created for convenience alone, social institutions corrupted through the mere distribution of cash (science, politics, universities, governments and even the Nobel Prize), and a global strategy designed to "rule the world" - no doubt about it, this one is better than a novel. But, don't get carried away. There are no secret ceremonies or lizard people in this tale. Nor is it a story about groups named after Italian light fixtures or German beer. It is instead the story of how "everyday conspiracies" work. (Image: DonkeyHotey)

Karl Marx wrote that the ruling ideas of any age are the ideas of its ruling class. Looking backward, it is hard to dispute this observation, but how does it actually work? That is what our story is about. It starts with the businessman below and his simple frustration at the success of Marxism as an idea, first among his own workers and then amongst the American establishment whose wide-spread adoption of the appropriately conciliatory "New-Dealism" was entirely in response. In an economic system in which everything is reduced to a commodity, a man of means should be able to simply buy a counter-idea, shouldn't he? So it turns out...

Pages