Generic "Economy" thread

[DAVOUT]

From an economic point of view, profits, interests and rents are the final result (with salaries ans pensions) of a highly productive country, but they are also an important source of income. The problem is perhaps in the way this income is distributed, but this is a different story ...

[DuncanK]

Do you have any idea what we are talking about Boddington?

[Solly]

The thing is that there is labor here in the US to produce those goods. If we could produce many of those goods ourselvs it would force the corporations to pay us more, and we would be better off. It's not advantageous for us to import these goods if the result is a smaller paycheck.

[DuncanK]

Originally posted by DAVOUT
From an economic point of view, profits, interests and rents are the final result (with salaries ans pensions) of a highly productive country, but they are also an important source of income. The problem is perhaps in the way this income is distributed, but this is a different story ...

The reason the distribution sucks is because labor can not negotiate better wages. It's the same story.

[Andrew1999]

Well, consumer confidence is officially in the toilet. People feel worse now than they did after Sept. 11:

The Conference Board, a business research group based in New York, said its closely watched index of consumer confidence dropped to 64 from a revised 78.8 in January. Economists, on average, expected a reading of 77, according to Briefing.com.

It was the lowest reading for the index since October 1993. It was the biggest month-to-month drop in the index since a 23-point drop in October 1990 and the fifth-largest one-month drop on record.

Thanks, Mr. Ridge! Thanks, Mr. Bush! I guess if you tell people often enough that the world is ending they will begin to believe it.

[DAVOUT]

Originally posted by DuncanK


The thing is that there is labor here in the US to produce those goods. If we could produce many of those goods ourselvs it would force the corporations to pay us more, and we would be better off. It's not advantageous for us to import these goods if the result is a smaller paycheck.

All developped countries have had this terrible problem : low tech products are irresitibly taken over by developping countries (mainly under the pressure of the consumers hangry of low prices), which let the less qualified workers jobless.
There is no easy solution, but it is clear that long term planning is the first coming to mind : we can hardly accept that the closing of a factory or an industry be decided with six months notice.
An appropriate delay would make possible to adapt the workforce to new jobs through education, training, etc.
And meantime, the cheap imports could be taxed (in order to soften the interim period), with the important condition that the amount collected through the special import taxation be send to the developping country for financing investment, technology transfers, etc.

[Solly]

[DuncanK]

DAVOUT,

I don't think that so many factories should be shut down at all. I don't think it's in our best interest to have such disparity in the skill of our labor force. We have very highly skilled labor and then we have a bunch of very low skilled labor. The moderate skilled labor jobes are disappearing and that's causing a problem with distribution.

Even if training programs were better that would just bring down the wages in higher skilled industries. There aren't enough high skilled jobs available for everyone in America, and there never can be.

[DAVOUT]

May I help you ?

Edit : To Boddington

[DuncanK]

The problem with the current division of labor is that you concentrate types of jobs. This creates an advantage with employers becuase they have a greater supply of labor to hire from. They get better negotiating power at the expense of labor. Look at the low paying service jobs here in the US. Employers of high skilled labor would love to see an increase in skilled labor employees, because that would allow them to pay ****, just like they pay the low skilled workers.

[Ned]

Re: Generic "Economy" thread

Originally posted by Jaguar Warrior
This thread is about a few different economics topics. Here are the questions I would like to be answered/debated.

1. Is a trade deficit a bad thing? The United States has a big trade deficit, and has had one for a long time, and it seems to be OK. But would it be better off if it broke even?

I think the US economy and money supply continues to grow a lot faster than the trade deficit. We could keep this up indefinitely without harm.

2. What caused the current recession? Careless 1920's style spending during the Clinton administration, or Bush's lack of an economic plan? Obviously 9-11 had some effect as well. Just how much of an effect did it have?

The ruling by the FCC that telephone companies had to share broadband infrastructure while their cable competition did not. This cause a freeze in telecom spending that had a ripple effect, causing a ballooned stock market to begin to retract. This occurred exactly when Greenspan began to raise interest rates to in the spring of 2000. The combo killed the stock market and caused the current stagnation.

3. Will war with Iraq boost the economy, send it further into recession, or have no effect?

War spending in a stagnant economy has always done wonders.

4. Will the Bush tax cut cause an economic upturn, and in turn create a budget surplus? Or just the economic upturn, or neither.

Tax cuts have always had a stimulative effect. There is no reason to believe this would be any different.

5. Can a Sweden-style economy work under any circumstances? Sweden's economy has really slowed down over the past 50 years, but could it work if it was applied to, for example, the UK?

I don't see how an economy can be "robust" if there is no incentive to work hard.

[DuncanK]

Ned,

The question is whether the the tax cuts will create a budget surplus, not whether they would have a stimulating effect. This is about the Laffer curve. Laffer predicted that a cut in taxes would create an increase in tax revenue, which is absolutely absurd. Taxes would have to be at extremely high levels to see that occur. Is Bush actually saying that his tax cuts will ballance the budget or create a surplus? I haven't actually heard him say that. That would be funny.

[Japher]

technically we are not in a recession.

recession:
A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.

So, technically we are in a recession.

1. Is a trade deficit a bad thing? The United States has a big trade deficit, and has had one for a long time, and it seems to be OK. But would it be better off if it broke even?

I don't know.

2. What caused the current recession? Careless 1920's style spending during the Clinton administration, or Bush's lack of an economic plan? Obviously 9-11 had some effect as well. Just how much of an effect did it have?

Poor planning. Lack of contingencies. An over inflated market, of low replacement rate products generated large companies, with small capitol, large inventories, and non-established repeat buisness accounts.

3. Will war with Iraq boost the economy, send it further into recession, or have no effect?

It will kill the economy in the short term, help it in the long term.

4. Will the Bush tax cut cause an economic upturn, and in turn create a budget surplus? Or just the economic upturn, or neither.

It will help, and may off set the short term downswing caused by the war.

5. Can a Sweden-style economy work under any circumstances? Sweden's economy has really slowed down over the past 50 years, but could it work if it was applied to, for example, the UK?

I agree with Ned. An economy needs to be robust and over rewards equal to the amount of effort put into it. Sweden is going the way of Argentina. A stagnant economy is worse then a falling economy.

[Japher]

The question is whether the the tax cuts will create a budget surplus, not whether they would have a stimulating effect.

DuncanK, maybe you should read the question again... the entire question.

[DAVOUT]

DuncanK,

I cant see any solution to any business problem when they are analysed in term of conflict. Skilled labor is normally considered as the primary wealth of a corporation, and the more employes are skilled the more the employers should be happy, because it is the guarantee that the company will be efficient, and consequently successful. It is generally observed that high skilled employes have no difficulty in finding jobs (under normal economic conditions of course).
The problem of the low paying service jobs is totally different; they are lowly paid primarily because they are not highly valued by the end user, and also because these jobs have an efficiency which cannot be technologically improved.
Where you have a point, is about the fact that although the corporations should act in the interest of the shareholders, they should not act ONLY in their interest, but they should recognize ALSO that the employes have legitimate rights which are to be taken into account in the strategic decisions.