America Is Bankrupt

I won't defend the work of a quarter century here. Suffice it to say that the idea of the need for a strong manufacturing base, as the hub around which all other sectors spins, is well defended, historically, empirically and theoretically. The work is there to evaluate and accept, or discard - both the actual data, which I've provided, and the theories attendant on it.

As to the America I long for (and my patriotism): I've said my peace. I don't long for some misty past - the things I think are missing are the very things I believe we as a country were founded on. I love my land, and its people. I believe in defending my country, my family, even you, Will, and Gtech, with my life - provided it is not thrown away for some ill-defined, horribly misguided and messianic mission. The man who said "bring it on" to the killers of our young men and women of arms was not cut from the same cloth as General McAuliffe, who said "Nuts" to the encircling German commander at Bastogne.

I also do not believe we are "the best and the brightest." I think such a notion ridiculous, as if there is some special holy water sprinkled on us because we were born between the Atlantic and Pacific Oceans, below Canada, and above Mexico. I honor Europe and its intellectual, cultural and artistic contribution to my history; and I find the arrogance in power at the moment, and the religious right which forms a strong component of his constituency, repugnant in every possible way. Further, I believe the changes that have been wrought by one president's ineptitude and dishonorable practice (my opinion, of course) may well be irreparable.

 

Thanks for the example. Have investments decreased? Would this indicate that America is bankrupt?

And finally (I'm asking because you seem to have a good grasp), how does this fit into the "Economic Outlook for the United States" report by the Federal Reserve?

http://www.federalreserve.gov/boardDocs/speeches/2006/20060303/default.htm

 

You can't cut taxes while at the same time fighting a costly war overseas. W thinks he can have it both ways and the result is a massive deficit that casts a grim shadow over the future of our country. The Dems know that we can't hide from the truth: we are in a war and we have to pay for it.

What would have been fiscally responsible would have been to increase taxes on the rich and corporations and lower middle class taxes or to cut spending and cut middle class taxes. W isn't going to cross the people that put him in power so we are at an impasse. You can't just pick money off the magic money tree (despite what slowhorn says).

 

That wasn't your issue. If I understand correctly, you ask why you can't get a tax cut for the middle class. When show there was, it's now portrayed as something bad. Some people cannot be pleased. I don't think there's any question on that.

 

You took one sentence out of my post, removing context. Rather than reply to your obvious attempt at trivializing this argument, I will refer you back to my post for more careful reading.

 

That one sentence was the foundation for a weak argument. Once again, you ask why there was not a tax cut for middle class. When shown there was one, the argument turns that it wasn't a good thing. Some people simply cannot be pleased, one way or another.

 

That's a very good question. Theoretically they should have, but things get more complicated because the Federal Reserve reacts to economic circumstances.

In our case, as the goods market receded (post 2001), Greenspan decreased interest rates. This should shift that LM curve I was talking about earlier outward (you could also say he printed more money).

In that way, he is able to use the monetary side of things to increase output (to cancel out the inward shifting IS curve that was caused by a recession in the goods market).

Investment is difficult to measure and I personally don't know where to look for estimates. Your question is really interesting and I'm gonna check it out on Google (look for actual data) but just wanted to get in a quick reply first.

Countries can't really go bankrupt in the same way that individuals can. There are two different keywords: debt and deficit. Debt is how much the US owes (total) and deficit is how much that number increases each year (e.g. running a deficit). If we run a surplus (opposite of a deficit), our debt goes down.

I can't vouch for accuracy, but according to http://www.brillig.com/debt_clock/ the current US national debt is over 8 trillion dollars, which is about what I recall from my econ books.

The deficit (according to http://bigpicture.typepad.com/comments/2005/01/actual_us_defic.html) was 615 billion in 2004.

Just for eloquency I'm going to quote my textbook since the author puts it better than I can off the top of my head:

whew, i hope someone reads that cause it was a pain to type!

interesting stuff though and i just wanted to quote Olivier Blanchard because I didn't want to leave anything out (I have a degree in economics, but am [of course] nowhere near the level of Blanchard).

The quote above is from the book Macroeconomics, 4th edition by Olivier Blanchard and those are from pages 6-7 in my copy.

I've read the whole textbook and can definitely recommend it to anyone who wants to understand how the economy works--this was probably the best textbook i ever read in college, in terms of how much i learned.

 

that's not true either--see above. you can, and in fact SHOULD do both at the same time--but not indefinitely, only until the economy has recovered

 

I will attempt to explain what I mean when I say that America is the best and the brightest.

There are two components of this: nature and nurture.

Nature
Every country on Earth has given us its best and it's brightest citizens. Those people chose to immigrate to America, the land of opportunity. The weak and the dim decided to stay home and not take the risk to gain the reward. We the current generation are the descedants of those of those great people. In addition, we constantly accept new immigrants into our society. These people are the hardest working and smartest people from across the globe and they constantly infuse our nation with fresh blood and fresh energy.

Nurture
We Americans believe in individualism. The spirit of individualism embues everything we do. The effect of this is to build better people by giving each individual person more responsibility. Americans do not expect some central government to take care of them -- Americans take care of themselves. Yes, I know this has broken down in post-FDR America and we are becoming a nation of dependent followers as bad as any nation that we emigrated from to come here. This is very depressing for me and I feel that this is a key item which we must address if we are to avoid the destruction of our republic.

 

Kkibak - just to make sure I understand what you are saying - you are saying that expansionism (in this case, waging a war overseas), coupled with a tax cut, in the short term (only), will provide a boost for economic recovery - correct? A Keynesian short term policy?

 

Fair enough, Will, I better understand where you are coming from.

Your problem with my view is that this "America I long for" never existed. I on the other hand believe it is the foundation of our country. And I believe, if I can discern your ethos (from your posts hereand elsewhere), that your ideal of America as the land of individual enterprise - in all markets, goods, labor, etc., has never been truly borne out.

To wit, one example: We industrialized rather late in the game. Like Germany, 1848-1914, the labor market was never a truly fair fight, in the pure capitalist sense of the term. Government clearly aligned itself with high capital to explode our country onto the international scene, to make industrialization in our land a late, furious, and pervasive force, in order to address a perceived inadequacy vis-a-vis the European powers. In order to do this, our government clearly squashed any nascent labor movement in order to ensure heavy capital could proceed unimpinged. There is no way to construe this as anything other than deep interference in what should be, by a purely capitalist standard, a freely mobile labor market. And given that this era was so profoundly important, its reach (and, in my mind, its ills) extending to this day, I'm sorry - I do not think you can so easily lay it all at the feet of some flower children on Sproul Plaza.

 

Oh Dear. I'm always amused why foreigners who don't have any invested interest in being an American keep trying to convince themselves that being an American/living in America is a bad thing. Really, shouldn't you guys spend more time with your own countries? You don't see me starting threads about how crappy Scotland is at the moment.

As the saying goes, "Stop worrying about what the Joneses are doing."

 

This really is sad. It all stems from Mr. America's need to be the top dog.

If America isn't #1 people assume that means our quality of life goes down.

WRONG!

For instance if China's productivity goes above ours, WE too will benefit. We gain new products, cheaper made goods, etc.

Humanity is so innately focused on their own selfish nationalism that they forget what it means to be human. We live together on earth and as long as we have free trade, we will always benefit from each other's production.

FYI, if Japan wasn't in their depression right now, they would be beating us per capita. Korea has a better Broadband usage rate than we do. London has more wifi than New York. Just about every non third world country uses better cell phones and networks than we do.

So the newsflash is: We aren't top dog anymore. Atleast not in EVERY way, like we used to be.

But guess what? I'm still damn proud to be an American.

 

I like how all the bush supporters point always scream "OMG OMG LOOK HOW LOW THE UNEMPLOYMENT IS! OH HOLY COW!"

They fail to realize 99% of these "new jobs" are picking tomato's and flipping burgers at burger king. OMG wow, a bunch of news jobs at burger king, hurray for the U.S. & Bush.

 

This is true.

As Frederic Bastiat said, "In war, the stronger overcomes the weaker. In business, the stronger imparts strength to the weaker."

 

Replying to my own post, this is also why Americans have always been more arrogant than other cultures.

I will attempt to explain this with a story. Imagine you are living in a poorly managed third-world ghetto of a country. For example, the Ireland of my ancestors!

There are hundreds of thousands of you living in rigid societal structures where individualism is seen more as a threat than an opportunity.

Of those hundreds of thousands, which ones decide to leave?

The few who choose to emigrate are those who believe that they will do better in America, the land of opportunity.

Part of this belief will come from an objective assessment that they are more intelligent than their peers. Part of this belief will come from an inner determination to work harder to succeed. Part of this belief will come from a deeply held belief in ones self -- what you might call arrogance.

Put a hundred million of these hard-headed people together in one nation and you are going to get a nation that works smart, works hard, and is damned proud of itself.

This is the way that America has been for the vast majority of its history. It only started to fall apart under FDR and the damage only became frighteningly obvious during the anti-American movement of the 60's.

If we want to get our nation back on track, we have a lot of work to undo the damage that has been done.

 

Will, I would venture that a good many of your Irish ancestors weren't so sick of a lack of individualism, as they were sick of starving to death. Irish Potato Famine?

FDR stepped in to correct a needed flaw in our system. I will say again: there never was such a thing as pure capitalism in our land; in fact, quite the opposite. We cannot escape what was: a woeful imbalance in the labor market between centralized capital, and the might of the State, on the one hand, against a decentralized, beleagured and nascent labor movement,on the other - this is anything but "the invisible hand," and it is every bit a part, an important part, of our economic and political history.

Add to this Hoover's religious desire to balance the budget (making it an automatic policy, much like our current look at daily trade balances and imposing tariffs consequently) and the further decline in subsequent output, and, I'd say, FDR did a helluva lot of good.

Yes. Which shares the same result with the hue and cry "Screw manufacturing! The new age calls for the Service Economy!"

This President, by the way, led the charge to tossing out the implied right to privacy under a "War Footing" doctrine; to that end, he previously sought to discover, and, I would venture to guess, fire, whoever leaked to the New York Times the "domestic surveillance program" he had secretly instituted shortly after 9/11. If we are to believe I. Lewis Libby, former "top aide" to Dick Cheney, this same President leaked sensitive intelligence on Iraq, a leak which is inextricably tied to the defamation (and grave endangerment) to CIA Operative Valerie Plame and her husband, Joe Wilson. (News as of today, 4/6).

This is in part what I mean by the ills brought on by George W. Bush. I believe his arrogance with respect to the European powers is the same arrogance which invests him, in his mind, with the right to trample on my citizenship - as it was established at the inception of our nation, c. 1776, not Haight-Ashbury, c. 1964.

 

One does not need to be a Bush supporter to take pride in their country. Likewise, one doesn't need to perpetuate a lie because their hatred of him has more importance than the truth.

I'd love to see evidence supporting this, but I'm sure you don't have it. If Burger King is doing so well to create 4 million new jobs, it might be a wise opportunity to invest in Burger King. On average (just guessing here, as you might have more experience in this field), a rotating staff of 30 people for a Burger King. What on earth could possibly drive the demand for one hundred and thirty three thousand, three hundred and thirty three new Burger Kings in our country?

Bottom line is, our economy is thriving, we are not bankrupt. It's just another "bash America" opportunity and those with blind hatred for Bush go right along with it.

 

Yes!! Yes!! Gtech is the smartest man alive!

We reduce taxes for the richest people, so they can create more low paying jobs and reduce the unemployment rate to a fake percentage and report fake economic growth and stability!!! HOORAY!!!!

Nobody is buying it.... we all know the rich upper class continues to get richer, and the middle class continues to fall closer and closer to the lower class.

But as long as gtech can say we have low unemployment rates, it doesn't matter if the rich guy save $500,000 on taxes and paid 3 extra people $15,000 a year each....

 

If America falls, it will fall because of advancing technology.

People are creating technology that will do the job instead of a human beings which then leaves that person out of a job. For example, if someone creates a web design program that designs and creates a full website with just a few clicks, then us web designers are out of job, we need to let technology only go so far. Sure it gets you the quick buck, but we need to start caring about others more. Our country is falling every day with what's going on at this very moment, I wish the 90's were still around, it was full of hard working people it seemed like.