Posted on 05/23/2003 5:49:40 AM PDT by Phaedrus
In fact, wages for people working in American manufacturing or retail don't buy nearly what they used to in terms of real dollars compared to what the dollar would buy in 1973 or 1982. That looked like a checkable fact, so I went off to check it. The result was kind of interesting. She's half right: the statement is true for a comparison with 1973. The average weekly earnings in Manufacturing today do not have as much purchasing power as the average weekly earnings in 1973. The statement is not true for 1982... the purchasing power is about the same. I did a few more points in between to make certain that the following observation is correct: all of the loss in purchasing power since 1973 took place between 1973 and 1982. I didn't do the math, but it's a good bet that the entire loss of purchasing power took place during the period of double-digit inflation in the Carter Administration.
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As I see it, there are three powerful forces at work the first being the business cycle. Recessions, by definition, are deflationary events. So, too, are subpar recoveries ... The [stock market] bubble and the post-bubble shakeout that has ensued is the second key macro underpinning to the case for deflation ...Globalization is the third leg of the stool. Not only has trade liberalization expanded aggregate supply in tradable goods markets, but there has been a comparable development in the once-non-tradable services sector. The globalization of services the newest and potentially the most powerful piece in this equation reflects three developments: global deregulation, which transforms administered pricing into market-determined prices; surging cross-border M&A activity that has led to the creation of huge multinational service providers; and the Internet, which has facilitated the growth of IT-enabled service exports (i.e., software programming, consulting, design, engineering, etc.) from places like India. In the long run, the supply-led impetus of globalization generates incremental income that supports increased aggregate demand. But todays world is far from that long run. Instead, it is coping with the impacts of the first-round effects of globalization on the supply side, which further exacerbate the global imbalance between supply and demand.
We're currently the world's best at "finding a need and filling it," which is the classic capitalist modus operandi. What we need to examine are the demotivators and barriers for people 1) being able to see the value in solving other people's problems and 2) being able to build a business to offer the solutions.
Problem 1 is primarily a matter of mentality; the capitalist spirit is what gives a person the "antennae" to detect opportunity. Problem 2 is primarily a resources problem: how effectively can one gather the capital, talent, and technology to design, create, market, and sell the solution. Despite the left's worshipping of education, all that is really needed to solve Problem 1 is to reduce the barriers affecting Problem 2. In other words, keep taxes, interest rates, and regulation low, and people will recognize more opportunities to gain profit.
"What the federal government isn't authorized to do, it is fobidden to do." On that basis, Phaedrus, probably 90% of what the federal government is doing right now would be things on the "forbidden list." I agree with Sobran that both major political parties are parties of "big government." We do not see the Republicans exactly rolling back big government, now do we?
But then, there is no apparent social consensus for getting the federal government back into constitutional-trim. Absent that, can we really expect that politicians will lead an effort to do that?
Thanks for the link to Sobran's great essay.
Yes, you're right, and No, we can't. We will, I fear, have to suffer the economic equivalent of 9/11. Too many takers, living for today, voting their pocketbook; i.e. voting other people's money into their pocketbook. It's been too easy for too many for too long but what goes around comes around, as they say. I'm just sorry the kids are going to have to pay for our lack of discipline. But despite what the media dishes up, there are a lot of good kids out there. Strong. And smart. They will need to be.
Sorry, Folks, for all the seeming pessimism. I think we're going to learn once again what it means to help one another, one-on-one, the hard way. All those things that we value so much are going to become less valuable bye-the-bye, and that is a needful change.
And that is the end of this sermon. FreepMail me if you want a private one ... ;-}
Lets find this man, and find the names of those companies. We can take revenge on them. I will for sure.
That's a HUGE albatross for business to carry!
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