Can we fix this broken economy? What needs fixing and what is the prognosis.
In the economic crisis of the 1930's, FDR could put people to work building public infrastructure within just a few months of making the decision. Out of work men were employed at low labor rates building roads, bridges and public spaces. Today, you can't build infrastructure like that. Mandatory high union wages, permitting delays, lawsuits and bloated government stand in the way. Stimulating the economy by financing construction programs have yielded little for the investment. It is the vested interests that pay for political campaigns that are put before the public interest and the economy suffers.
You can't export your way out of this mess because trade negotiators have caved to China's strategy of conquering global markets systematically. Whether it is their willingness to exploit their people, ruin their environment or steal patents and designs or subsidize industries to enable them to overwhelm foreign competition. China also won't trade fair. Foreign companies are not allowed free access to Chinese markets. China is dead set to take markets from developed countries. Washington is impotent in the face of such a determined effort to take our hard earned advantages away.
You can't increase employment if large companies in the US continue to replace workers here with workers in Asia. There has been virtually zero increase in hiring by large companies this year. The entire gain in jobs can be attributed to mid and small size companies. Washington will say nothing about this. Big companies are their sponsors.
An economy that pays too much for health care is going to go bankrupt and isn't globally competitive. The US pays twice as much as other developed countries and has worse health statistics. You can't change that when politicians obfuscate the issues in favor of the interests that finance their election campaigns. The trial attorneys, the for profit practitioners, the drug companies that get their highest profit margins in the US and the unions get first consideration in policy making and are among the biggest campaign contributors in America. Health care costs are sapping government budgets and hurting employment. This is probably the most under appreciated economic issue in the country.
The Democratic Party's largest contributors are the Teachers' unions. With the policy makers on the hook to the teachers, is it any wonder we have the most expensive public education system in the world and the one that provides the very worst performance for dollars spent? Employers are complaining, graduates are not well prepared to work and don't have the necessary skills. Despite spending vast sums, drop out rates are outrageous. Outcomes don't matter to policy makers or the unions, but the market place does care and the US is suffering as a result.
The US can't isolate itself from the political problems of the world. So when you consider that foreign military ventures are "Diplomacy by other means", you realize that we are blowing an awful lot of money. We should ask ourselves, can't we be achieving more by improving our spies on the ground, our diplomatic skills and capabilities and cheap soft dollar endeavors economic development projects like health and education assistance abroad. One single F-16 squadron on operations for 2 -3 months will cost more than a whole year of soft diplomacy for an entire developing country. Which is smarter? Which creates the most good will? Which can we afford? Our military entanglements have been mismanaged by the politicians. The goals have been off the mark and the stories peddled to the American public have been disingenuous about the real costs of war.
Showing posts with label education and economy. Show all posts
Showing posts with label education and economy. Show all posts
Saturday, October 15, 2011
Wednesday, February 2, 2011
Sputnik Moment: Does This America Have What it Takes?
The flourishing rhetoric of politicians these days routinely over promises and under delivers. A business probably can’t be run that way, but evidently it works in politics. When President Obama’s inspiring State of Union address rolled out the powerful Sputnik/space race metaphor, he evoked an achievement that should be remembered, but does he or our country have the right stuff to follow through with that challenge?
In 1958, the US was shocked to learn that a Russian satellite, Sputnik had been launched into orbit and was flying over our country freely and unmolested. It was shocking because the US felt it was the unchallenged super power on the planet. Soviet Russia may have been bigger and unconquerable within its own territory, but it had no reach. The United States was dominant politically, militarily and economically. On top of that, Americans believed we had the moral high ground and we that our technology and know-how was second to none. Yet the Soviets had beat us into space and our national security and prestige were at stake.
America rose up to meet the Soviet challenge in space and in 1961 President Kennedy told the nation our goal was to get on the moon within ten years. Less than ten years later, in July 1969, the first NASA astronauts walked on the moon. In eleven years, the US went from being earth bound to putting men and satellites into earth’s orbit almost routinely, then reaching the moon and landing men on it and safely returning.
The space race should be remembered as an extraordinary achievement for this country. Is Obama right to invoke it?
Obama’s Sputnik moment analogy calls us to pull our education system and economy together and to once again be in the first rank of competiveness and productivity. Here are some reasons the call is hollow and we can’t measure up to it.
- Our education system is the most over funded yet unproductive in the world. Achievement in almost every category ranks below average or at the bottom relative to other developed countries yet almost no other country spends so much to educate people. This is a crippling competitive disadvantage. teachers unions, cultural attitudes, policy makers and too many families don’t care.
- Capital investment and returns on investment are overwhelmingly skewed towards financial investment in our economy. At the highest echelons, business leaders, Wall Street and policy makers are too focused on takeovers, financial products and financing and are not serious about investing in the US.
- Never in the history of the country has such a large share of the population been so disenfranchised. The distribution of wealth in the US resembles no other developed nation. Countries like China and Mexico have the same distribution of wealth characteristics. America’s middle class hegemony and thus their commitment to excel have become gravely compromised. Increasingly, we have a culture of defeat.
Income Disparity Graph
- Free trade policies have benefitted the elites and harmed the country. Despite falling relative employment costs in the US, out sourcing of good jobs continues benefitting corporate profit margins. S&P 500 earnings have outperformed the economy arguably at the expense of the domestic economy as the share of jobs that provide an affluent secure middle class lifestyle decline.
- Policy makers and big businesses like Walmart have opened our domestic markets wide open to foreign competition without expecting the same of other nations. China is the worst case and the failure of the last three administrations to hold them accountable for a whole spectrum of dirty trade practices is a gross failure.
Investment Conclusion:
On the margins the President’s goals will be attended to, but really there is little awareness or conviction about what is at stake. There are also too many powerful interests like financiers, self interested politicians and unions who aren’t going to buy into the solutions.
In the short term, a falling dollar and a weak recovery will support US industry, but the issues causing the continuing loss of market share remain.
There is also the reality that many Americans aren’t interested in competing anymore. They are more interested in consuming. The disincentives for small business ownership have multiplied and corporate culture is to get what you can for yourself just like your boss does. Too many Americans have just given up.
In 1958, the US was shocked to learn that a Russian satellite, Sputnik had been launched into orbit and was flying over our country freely and unmolested. It was shocking because the US felt it was the unchallenged super power on the planet. Soviet Russia may have been bigger and unconquerable within its own territory, but it had no reach. The United States was dominant politically, militarily and economically. On top of that, Americans believed we had the moral high ground and we that our technology and know-how was second to none. Yet the Soviets had beat us into space and our national security and prestige were at stake.
America rose up to meet the Soviet challenge in space and in 1961 President Kennedy told the nation our goal was to get on the moon within ten years. Less than ten years later, in July 1969, the first NASA astronauts walked on the moon. In eleven years, the US went from being earth bound to putting men and satellites into earth’s orbit almost routinely, then reaching the moon and landing men on it and safely returning.
The space race should be remembered as an extraordinary achievement for this country. Is Obama right to invoke it?
Obama’s Sputnik moment analogy calls us to pull our education system and economy together and to once again be in the first rank of competiveness and productivity. Here are some reasons the call is hollow and we can’t measure up to it.
- Our education system is the most over funded yet unproductive in the world. Achievement in almost every category ranks below average or at the bottom relative to other developed countries yet almost no other country spends so much to educate people. This is a crippling competitive disadvantage. teachers unions, cultural attitudes, policy makers and too many families don’t care.
- Capital investment and returns on investment are overwhelmingly skewed towards financial investment in our economy. At the highest echelons, business leaders, Wall Street and policy makers are too focused on takeovers, financial products and financing and are not serious about investing in the US.
- Never in the history of the country has such a large share of the population been so disenfranchised. The distribution of wealth in the US resembles no other developed nation. Countries like China and Mexico have the same distribution of wealth characteristics. America’s middle class hegemony and thus their commitment to excel have become gravely compromised. Increasingly, we have a culture of defeat.
Income Disparity Graph
- Free trade policies have benefitted the elites and harmed the country. Despite falling relative employment costs in the US, out sourcing of good jobs continues benefitting corporate profit margins. S&P 500 earnings have outperformed the economy arguably at the expense of the domestic economy as the share of jobs that provide an affluent secure middle class lifestyle decline.
- Policy makers and big businesses like Walmart have opened our domestic markets wide open to foreign competition without expecting the same of other nations. China is the worst case and the failure of the last three administrations to hold them accountable for a whole spectrum of dirty trade practices is a gross failure.
Investment Conclusion:
On the margins the President’s goals will be attended to, but really there is little awareness or conviction about what is at stake. There are also too many powerful interests like financiers, self interested politicians and unions who aren’t going to buy into the solutions.
In the short term, a falling dollar and a weak recovery will support US industry, but the issues causing the continuing loss of market share remain.
There is also the reality that many Americans aren’t interested in competing anymore. They are more interested in consuming. The disincentives for small business ownership have multiplied and corporate culture is to get what you can for yourself just like your boss does. Too many Americans have just given up.
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