The fruits of Bushonomics

The Boston Globe ^ | 8/6/2003 | Robert Kuttner

[Radix]

GEORGE W. BUSH faces a race between the ill-advised economic policies sown in the first half of his term and the bitter fruit that those policies are starting to bear. If the sour effects of his economic policies are evident by mid-2004, he is in deep political trouble. For now, at least, Bush can say that the economic news is mixed. The unemployment rate went up to 6.4 percent in May. It dropped slightly, to 6.2 percent, in June -- but only because more and more people have dropped out of the labor force entirely as payrolls continued to shrink.

[Radix]

It is late in the day. I am surprised the Lance Romance did not post this first.

Robert Kuttner is clearly a Marxist puke. I have been busy today, but I could not let this Commuunist get away with this without pinging at least one person.

[Radix]

ping

[Archangelsk]

Bilge except for this:

In practice, global trade with few ground rules has exported more jobs than it has imported.

No perception of a turnaround in jobs means no election victory for the President.

[Asclepius]

America's trade deficit with the rest of the world continues to widen.

There is no trade "deficit." For every good or article that arrives on our shores, some unit of value has been transferred somewhere else. Hence, no deficit. If by trade deficit what is meant is that more goods are flowing in than are flowing out, this simply reflects the realities of a service economy, an economy where only six percent of us labor in manufacturing (yet we produce more manufactured goods than we ever have). We have the largest, most productive financial service sector in the world. But how does one account for the export of services? If we were to compare total imports-exports, manufactured goods and services, the so-called deficit would evaporate like the fog in an economist's brain.

[Archangelsk]

(yet we produce more manufactured goods than we ever have)

Source please.

[CROSSHIGHWAYMAN]

The so-called economic boom of the 1990s was due to cooked books and a stock market bubble......that's all.

Clinton's huge tax increase of 1993 payed off big time when the over-inflated markets delivered billions of hollow profits.

The unsustainable tax revenues were squandered by fat-cat greedy polititians at the federal and state level.

Considering the return of the business cycle, boom and bust, two wars and the horrific results of Sept. 11, the American economy has displayed miraculous strength.

[Asclepius]

Source please.

Drucker's book, _Managing in a Time of Great Change_. But the Drucker article anthologized in the book merely surveys data readily available elsewhere. We simply have an economy many, many times larger than we ever had during our so-called industrial era, so even though we produce less as a percentage of our total output, we produce more in terms of manufactured goods than we ever, ever have. Couple that with a frightening, bone-chilling leap in our labor-yield that we achieved during the eighties and nineties, a leap in the labor-yield such that it takes far fewer of us to produce far, far more of the good things of this world (e.g. only two percent of us work the land, yet we produce more food than we ever have, more than we can possibly ever eat, enough to feed most of the world--we produce so much and so cheaply that our farmers are going bankrupt right and left).

[america-rules]

"If by trade deficit what is meant is that more goods are flowing in than are flowing out, this simply reflects the realities of a service economy"

OK, then why did we have a Trade Deficit during the 70's, 80's and 90's when we were making all those nuts and bolts etc. ?

[JNB]

The moron Paul O Neil when he was Sec of the Tresury sucked up to the banks too much, refused to back away from the strong dollar policy and took away new 30 year bonds from being issued. Sure, it was of great short term help to housing, but long term, those wreckless moves are going to be quite painful.

[Asclepius]

OK, then why did we have a Trade Deficit during the 70's, 80's and 90's when we were making all those nuts and bolts etc. ?

Why indeed. We have been transitioning to a service-information based economy since the thirties, with heavier, dirtier, more human, material, and capital intensive enterprises leaving our shores since much earlier in the last century. Andrew Carnegie at the turn of the last century knew the steel industry was collapsing, and he diversified. The strength of our economy is its scale and diversity and flexibility and ability to adapt to changing conditions.

[alloysteel]

The one axiom from which all else is reasoned backwards: Bush is bad. Therefore, whatever policies he espouses are also bad. Empirical evidence to the contrary, even good short-term results, must inevitably lead to bad long-term disasters, some of which must be invented out of whole cloth, if necessary.

And 9/11 never happened, in this parallel universe.

[Go Gordon]

Considering the return of the business cycle, boom and bust, two wars and the horrific results of Sept. 11, the American economy has displayed miraculous strength.

The next time this tripe about our economy (as spewed in the article) is trotted out, the author should be required to list all the countries with a higher standard of living and countries with better economies than the USA. After the deafening silence, laugh in his/her face. Even with all we've been through, we're still numero uno.

[alrea]

Bush optimists contend that interest rates are going up because investors, sniffing a recovery, are shifting to stocks, leaving less demand for bonds. Dream on.

Jul-28-03 NASDAQ @ 1,740.59 VOLUME: 15,358,200

Oct-18-02 NASDAQ @ 1,270.13 VOLUME: 16,659,700

Sniffing my hiney; a bull already passed this journalist by. Demand? Folks probably are getting out of bonds to maintain principle as rates rise in a very obvious recovery.

[Archangelsk]

Drucker and Tom Peters have been touting that stuff for years. The salient fact of the matter is that we've outsourced the parts and pieces of manufacturing to overseas concerns and then ship the before market items to the big assembly plants here for the big whoop-de-do put together (classic example, Boeing). Statistically, yes we have more manufacturing "numbers", but the profitability is in the small parts that make the larger parts. We've lost that capability a long time ago.

[Asclepius]

Drucker and Tom Peters have been touting that stuff for years.

I'll say! And it just gets better and better. The classics never go out of style.

The salient fact of the matter is that we've outsourced the parts and pieces of manufacturing to overseas concerns and then ship the before market items to the big assembly plants here for the big whoop-de-do put together (classic example, Boeing). Statistically, yes we have more manufacturing "numbers", but the profitability is in the small parts that make the larger parts. We've lost that capability a long time ago.

I'll say. We lost it sometime in the thirties. And yet we have the largest, most productive economy in the world. I wonder how you would explain the contradiction. I mean, your reasoning would predict that we should have become a third world country sometime in the fifties, when we enjoyed a prosperity unrivaled until the sixties, the eighties, the nineties etc., years upon years of economic growth, expanding markets, technological breakthroughs etc. If our tade "deficits" gave us all this, then we need bigger deficits.

And look at the countries where that so-called "capability" is going. Do you really want to live in e.g. Sao Paulo, Jakarta, Mexico City, Cairo? Why, if they are absorbing our heavy, dirty, labor and resource and capital intensive industries, are they so awfully, awfully poor?

[BushCountry]

Here is some more bad news, the numbers are looking up in every regard except employment (Unemployment typically lags the rest of the economy, since employers usually wait until a recovery is guaranteed before they hire new workers), in fact, it has been projected recently that the increase in GDP will be around 6.5% for next year. Company profits are up, durable goods are up, stock market up, tax rebates are in the mail, consumer confidence up, home sales up, consumer and business spending up, etc... Businesses, which cut spending on equipment and software in the first three months of this year, boosted such investment in the second quarter at a sizable 7.5 percent rate. That marked the biggest increase in three years. And, after six straight quarters of slashing spending on new plants, office buildings and other structures, businesses boosted this spending by 4.8 percent in the second quarter. The US service sector surprised experts with a fourth consecutive month of growth in July that helped fan hopes of a recovery, according to Institute for Supply Management. Demand for U.S. manufactured goods rose at the sharpest rate in three months in June as a solid rise in orders for long-lasting items joined with a small gain in demand for other goods, the government said Monday. Indeed, the survey shows that the percentage of CEOs saying they're worse off now than they were 6 months ago has dropped from 51% to 26%. Americans applied for mortgages to buy homes in near-record numbers the first week in August. Applications for mortgages to buy homes rose 6.9 percent in the week ended Aug. 1 to their second highest level on record.

[Huck]

Bump. This is good. I don't recall seeing you around. What's the name of that Drucker book? Someone else I was talking to mentioned it, but couldn't remember the title.

[Asclepius]

What's the name of that Drucker book? Someone else I was talking to mentioned it, but couldn't remember the title.

Managing in a Time of Great Change. It's an anthology of some of Drucker's articles etc. Here's an amazon link.

http://www.amazon.com/exec/obidos/tg/detail/-/0452278376/qid=1060226647/sr=8-1/ref=sr_8_1/002-5017986-7547239?v=glance&s=books&n=507846

[Huck]

Thanks. I'm gonna check my library. Enjoying your posts so far. Hope someone engages you some more.