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Another interesting graphic. I saw one that showed the top 1%'s share income over the last 100 years but couldn't find one that mapped it against economic growth which would be interesting to see. It would seem those years the share went down, the more the economy boomed though.

At about that time, American decline entered a new phase: conscious self-inflicted decline. From the 1970s, there has been a significant change in the US economy, as planners, private and state, shifted it towards financialisation and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing. These decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1 per cent of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.

Meanwhile, for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt, and repeated bubbles since the Reagan years, creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer). In parallel, the political system has been increasingly shredded as both parties are driven deeper into corporate pockets with the escalating cost of elections, the Republicans to the level of farce, the Democrats (now largely the former "moderate Republicans") not far behind.

http://www.aljazeera.com/indepth/opinio ... 68827.html

Some guy with a big brain is bullish on US manufacturing.

Some good stuff in here. I am old enough to remember when the entire US was freaked out about Japan Inc. taking over the US. My, how times have changed. But these things always move in cycles.

It's basic economics. It's now becoming more effective to produce in the U.S. than it is to produce in a lot of different countries. Between the shift in the dollar and the incredibly rapid rise in wages in China, people are starting to do this. In a report, we predicted that this would not happen until 2015. We're surprised in a very good way because we're starting to see it happen in 2010, 2011 and 2012.

And in 2001, oil prices were in the $20/$30 a barrel. Now it's around $100 a barrel. So transportation costs have gone up. People are understanding the risks of intellectual property theft and valuing them in their equations. And then there are the fundamentals of being far away from the customer. It's hard to manufacture when you're 6,000 miles away and you have to interact with people who don't speak your native language. So companies are starting to realize that there are a whole bunch of costs. Our predictions are that by 2015, the manufactured costs in China will be about 10% lower than the manufactured costs in the U.S. for a whole lot of goods.

My Dad has been on this big "it will come back" kick. His whole point is that as transportation costs increase it will be less profitable to build over there. I can't help but think most will go to Mexico though. As for the Japan Inc, now China Inc, and I'm sure India is next on the list. Yeah it's probably over blown to a certain extent but those countries taking American jobs is very real.

The great news is many people are trying their best to buy American and even going out of their way to do so. Of course that was a bit of a fad in the 80s as well. I think the key for an American these days, and particularly American businesses is to be versatile and mobile. Again I can only speak from experience, but what took my business from floundering under previous ownership, to thriving now is expanding geographically, and getting our hands into new things.

I have faith in the American small business and alot of American workers. It's the politicians and morons (tea party and crazy left types) that worry me.

Luckily Mexico is self-destructing with the assist of the American drug user, so nobody is going to be too willing to step into that fracas until the Mexican government enters into another cease fire with the cartels.

cpebbles wrote:Luckily Mexico is self-destructing with the assist of the American drug user, so nobody is going to be too willing to step into that fracas until the Mexican government enters into another cease fire with the cartels.

Failed state.

Hungary Jack wrote:Some good stuff in here. I am old enough to remember when the entire US was freaked out about Japan Inc. taking over the US. My, how times have changed. But these things always move in cycles.

It's basic economics. It's now becoming more effective to produce in the U.S. than it is to produce in a lot of different countries. Between the shift in the dollar and the incredibly rapid rise in wages in China, people are starting to do this. In a report, we predicted that this would not happen until 2015. We're surprised in a very good way because we're starting to see it happen in 2010, 2011 and 2012.

I agree it's coming back, but we shouldn't need an economic collapse to create jobs here either. Even with jobs coming back we need, need, need to put a bigger focus on education. Even production line jobs are requiring more technical skills with the new machines and production materials. I'm not naive enough to believe everyone is cut out for a desk job or that everyone will be able to get a college degree. But the more "service" level jobs we can create in this country the less we'll depend on expensive transportation and cheap labor to keep Americans employed.

vinsanity wrote:

Hungary Jack wrote:Some good stuff in here. I am old enough to remember when the entire US was freaked out about Japan Inc. taking over the US. My, how times have changed. But these things always move in cycles.

It's basic economics. It's now becoming more effective to produce in the U.S. than it is to produce in a lot of different countries. Between the shift in the dollar and the incredibly rapid rise in wages in China, people are starting to do this. In a report, we predicted that this would not happen until 2015. We're surprised in a very good way because we're starting to see it happen in 2010, 2011 and 2012.

I agree it's coming back, but we shouldn't need an economic collapse to create jobs here either. Even with jobs coming back we need, need, need to put a bigger focus on education. Even production line jobs are requiring more technical skills with the new machines and production materials. I'm not naive enough to believe everyone is cut out for a desk job or that everyone will be able to get a college degree. But the more "service" level jobs we can create in this country the less we'll depend on expensive transportation and cheap labor to keep Americans employed.

I don't think the economic collapse is the main catalyst. Productivity is also a key. Currency rates, transportation costs, quality and logistics issues, rising labor costs in China, and labor productivity all issues working in favor of the US right now. This isn't as much about a US decline as changing conditions in China, which were largely inevitable given the rapid pace of its industrialization. That said, I think it also reflects the US economy's ability to adapt and bounce back, at least in certain areas.

Manufacturing industries create the types of ecosystems that spur large scale economic growth. These aren't cheap jobs. Manufacturing wages in small towns of $20-$20 an hour represent very good pay for local workers. The desk jobs you speak of are more likely found in cities like Chicago, focused on commerce and the professional skills required of marketers, supply chain managers, finance people, info tech managers, attorneys, etc. This is where urban public schools are really floundering--creating verbally, numerically and technology literate graduates who can get into these roles.

Hungary Jack wrote:This isn't as much about a US decline as changing conditions in China, which were largely inevitable given the rapid pace of its industrialization. That said, I think it also reflects the US economy's ability to adapt and bounce back, at least in certain areas.

It's about relativity. Not long ago is was cheaper to produce in China, now it's cheaper/ish to produce in the US because China has grown relatively strong. If transportation becomes cheap and wages rise again, is there any reason to think these manufacturing jobs won't move overseas again?

Manufacturing industries create the types of ecosystems that spur large scale economic growth. These aren't cheap jobs. Manufacturing wages in small towns of $20-$20 an hour represent very good pay for local workers. The desk jobs you speak of are more likely found in cities like Chicago, focused on commerce and the professional skills required of marketers, supply chain managers, finance people, info tech managers, attorneys, etc. This is where urban public schools are really floundering--creating verbally, numerically and technology literate graduates who can get into these roles.

We agree on manufacturing industries completely. I like to see these jobs come back and I think that you will always have and need these types of jobs. But there are plenty of ways to keep manufacturing here and create these jobs, while also creating an economy that depends less on them. Toyota has chosen Canada over the US for some of these production plants because of better educated workers and not needing to provide healthcare. We need manufacturing here, but if we ignore the fact that for now production costs are worth it here since it's consumed here, when the tide shifts again (as you even said, cycles) having an economy that can innovate and create new manufacturing processes, can be productive in spite of more efficient manufacturing processes and create service level instead of production level jobs, we'll weather that shift better. Look at a city like Detroit.

There are all sorts of service based and desk jobs that don't need to be found in commerce, marketing, managers, finance, lawyers etc. You don't need to build a car to want to buy a cheeseburger - and someone has to raise the cattle, ship the beef, cook the meat and serve it to you on a plate. Sure some of the largest growth will and should be in areas of medicine, technology, finance and other industries you usually need a college degree to enter, but is that a bad thing? 15 countries are graduating more people with Science and Match degrees than we are. Is it any wonder the Germans, Swiss and Swedes seem to weather this crap better than most? And what do those scientists and engineers do?They build houses, buy cars and eat out.