WOW!!! Just WOW!!! This article puts together everything I have been trying to understand through my recent study of Micro- and Macroeconomics and American Politics…. AMAZING erudition!!!
Let me step back just one step. On the night before Thanksgiving, I watched Liberal Progressive Socialist Democratic Economic Icon Robert Reich on The Colbert Report. They were mocking Walmart for running a food drive for employees… and giving the case for Walmart and McDonald’s to pay a “living wage” to their part-time employees in transitional jobs… which are supposed to be there to train young people to go on to bigger and better things… and were NEVER supposed to be held ad infinitum by people who refuse to educate themselves…. But that’s a totally different issue of Institutionalized Political Slavery…. Basically… Reich and Colbert explicitly state the TRUTH about Keynesian Economics…. Rob the Middle Class through taxes to give to the poor who will just hand it all over to the Super-RICH…. Which explains why the SUPER-RICH in America are usually LIBERAL PROGRESSIVE SOCIALIST DEMOCRATS….
But I’ll let Reich and Colbert explain it… because they are actually revealing the TRUTH about themselves… as though it were farce….http://www.colbertnation.com/the-colbert-report-videos/430682/november-19-2013/america-s-wealth-divide—robert-reich
Now… the explanation of Economic Delusion plaguing Liberal Progressive Socialist Democrats….
This is REALLY simple. Continued Economic Prosperity for any nation is dictated by expansion of the productivity, which is usually measured via Gross Domestic Product or GDP. The long-term Economic Prosperity of ANY nation is dependent on a maintaining a reasonable Debt to GDP ratio, because when the Debt climbs too high, the service on that debt (interest) becomes to high and strangles investment in infrastructure. You will note ironically that was precisely the pitch Obama and the Liberal Progressive Socialist Democrats gave as their rational for exploding the American debt.
Here are some figures for the ten largest economies in the world:
United States GDP- $14.6 trillion Debt %-92.7 Coal-#2 Oil-#3
China 5.7 19.1 #1 #5 Rare Earths-#1
Japan 5.4 225.9
Germany 3.3 75.3
France 2.6 84.2
United Kingdom 2.3 76.7
Italy 2.0 118.4
Brazil 2.0 66.8 #14
Canada 1.6 81.7 #7
Russia 1.5 11.1 #3 #1
Here is a different set of figures that seems to be more current… and shows that American debt has surpassed 100% of GDP and is projected to continue to grow… in an unsustainable fashion…. http://www.bbc.co.uk/news/business-24541140
Notice that the “Advanced Nations” have the highest debt ratios….
Notice that the “Socialists” countries ALL have debt ratios greater than 50% GDP.
Notice that all of the Nations currently considered to be in Economic Crisis (Japan, France, United Kingdom, Italy) have debt ratios greater than 75% GDP.
The reason that Germany is NOT in Economic Crisis is because of its productivity continues to increase. The reason Japan is in TREMENDOUS trouble is because its productivity has decreased. National Dept at some point reaches a tipping point and become a SERIOUS drain on National Productivity.
Three basic Economies exist and they evolve out of three different basic National Strategies. Two are Export-oriented strategies and the other is Domestic-oriented strategy. The Export-oriented strategies are: Natural Resource-oriented and Manufacturing-oriented. Domestic-oriented strategy is Service economy.
I won’t list them, but the vast majority of the twenty countries projected to be the fastest growing Economies in the World over the next five years are Natural Resource-oriented Exporting counties. The rest are Manufacturing-oriented Exporting countries. None are Service Economies. Why…? Inefficiencies and inhibition of productivity. Money flows out to the other countries rather than flowing in.
Now… please allow me to illustrate… using the examples from the article I site at the top of this post by Professor Peter A. Hall….
Germany is an excellent example of a successful Export-oriented Economy, even though they have essentially no internal production of Natural Resources… so they all must be purchased…. What Competitive Advantage does Germany have that allows them to continue to increase productivity year after year? Seems like this should be a complex answer, but again… it’s really very simple. Germany has a sophisticated and coordinated Market Economy that holds down labor costs (wages) because they have a marriage of Industry and Labor Unions that is extraordinarily functional and efficient. That cooperation encourages modest wage increases and a collaborative vocal training system supported via strong associations between employers and trade unions that provide skilled labor at a comparative advantage to other countries. That allows German Industry to produce high-value-added good that compete effectively on quality and price because of excellence, which is a product of innovation. This is very similar to the Japanese model previously, before their labor issues and strangulation by their National Debt. Germany thrives via a Supply-led Economic Model, as do ALL expanding economies.
Contrast German efficiency with Southern Europe… specifically Spain, Portugal, Greece and Italy…. Those countries have fractured labor movements with constant friction between groups resulting in weak associations with employers. The result is not only frequent strikes or threats of strikes, but also lack of collaborative skill development and wage coordination to match labor costs to sale price. Because the Laws of Supply and Demand dictate that consumers will not pay more than necessary for products of dubious quality improvement, the countries of Southern Europe are unable to maintain a viable Export-oriented Economy. So… they must rely on a Domestic-oriented strategy… which must needs be a Politically-supported Strategy… which inevitably opens the door to corruption…. The result is Government mediated Demand-driven Economic Model… which inevitably requires ever-expanding National Debt…. Government spending must increase to drive domestic consumption which then requires periodic exchange rate depreciations to offset the inflationary effects dictated by the lack of competitiveness… which couldn’t occur after they joined the single currency…. So… their debt soared (and sored)…. America has been able to mask these issues because of the sheer size of our Economy compared to all others and our perceived financial stability that has allowed us to consistently borrow money cheaply… because we have traditionally been considered an excellent investment…. And… because we have been pumping… or pimping…. Quantitative Easing…. Printing more money… that devalues our currency and makes imports more expensive and exports cheaper, thus artificially inflating sales… just like we constantly accuse the Chinese of doing….
Bottom line…. An Export-oriented Economy coupled with control of our National Debt is the ONLY viable long-term strategy for continued growth of Productivity… and is required as the Economic Engine needed to power increases in quality of life for ALL American Citizens….
The remedy for the fiscal crisis we are currently facing depends on one factor: improve or competitiveness in the International Marketplace. That is why American Industrial leaders are pushing for Immigration Reform: to curb the increases in labor cost that are stifling the increase in American Productivity. The other answer is increased mechanization and improved technology, but that requires substantial capital investment… which is difficult to justify in the current era of economic uncertainty… because economic uncertainty is why drives evaluation of risks and risks are what drive the cost of investment: the higher the risk, they higher the reward that is demanded….
How do we improve American competitiveness…?
Simple answer. We need to do two things:
1. Improve and expand education opportunities so that we have a pool of people with the talents and capabilities needed to enhance productivity and innovation. We need to SELL this so that the disenfranchised are encouraged to participate in these opportunities to enhance American productivity, rather than incentivizing these groups of people to accept unproductive Political Enslavement under the guise of false empowerment… which is precisely what the current Liberal Progressive Socialist Democratic agenda aims to do….
2. Increase the flexibility of the labor and product markets through structural reforms. Part of this involves Immigration Reform. But Immigration Reform is nothing more than kicking the can down the road if America does not fundamentally change the way we do business through meaning reform of the interactions between labor and industry to encourage cooperation and work to eliminate the fractious, coercive manipulation that are currently being encouraged through our Political Process….
What’s standing in the way of American Economic Progress…? Efficiency…? Increased Productivity…?
Simple answer: a political turf battle. Strong and effective political resistance from well-funded, entrenched producer groups defending strong vested interests…. Read that as the Unions and the reactionary Liberal Progressive Socialist Elite who profit from the current political climate and media…. This is ALL straight out of Saul Alinsky’s treatise Rules for Radicals…. Almost all…. He just says that tactics don’t matter, only the result…. Obtaining and maintaining power…. He understands and accepts that political corruption is part and parcel of Socialism… as long as it’s corruption in the support of his cause….
So… I guess that brings up another thing we need to do:
3. Eliminate Political Corruption. Political Corruption has a very significant negative impact on productivity. One of the main threats to America’s long-term Economic well-being is our current attitude of Political Polarization for Individual Profit. The Democrats made a HUGE issue of political contributes from “the wealthiest Americas” and “Wall Street Bankers”…. Who along with the Liberals on the Left Coast… in Hollywood… and the Unions… funded the successful Democratic campaigns… while claiming to be the party of the Middle and Working Classes….
A hint…. The American Government is COMPLETELY Unionized… except for our military… which has been stripped of all ability to negotiate for the well-being of its employees and their families…. Corrupt Chicago Union bosses rake in hundreds of thousands of dollars in retirement… which is guaranteed and sacrosanct… be being elevated to jobs they never actually perform immediately before retirement…. THAT is corruption. Pure and simple. Being REQUIRED to belong to an organization and pay dues to support political contributions that you oppose… and miss work to attend political rallies… is corruption…. Being required to make defacto political contributions… for which an organization or individuals have already negotiated a quid pro quo in ANY form is defined by Federal Statue as illegal… as corruption… but is par for the course for Labor Unions… and Green Energy Executives…. This corruption also extends to family members of powerful elected officials and political bundlers who are involved in Real Estate and Green Energy…. This political corruption led to the Housing Bubble that started the whole economic mess in which we are currently mired… and that was the result of the profiteering of the most extreme Liberals of the Liberal Progressive Socialist Democrats… and their husbands… and wives… and political contributors…. And I’m not suggesting the Republicans are any better…. I’m simply saying that they tend to be more honest about their intent….
The Keynesian Economic model has been discredited already when it produced the Stagflation of the 1970’s. The Keynesian Economic model is nothing more than a portal… main-line venous access so that Political Corruption can first pass to the heart of America through her Liberal Progressive Socialist Democrat Political leaders….
Our Liberal Progressive Socialist Democrat Political leaders are insatiable, corrupt druggies. So are many of the Republicans. Few actually represent the Will of the American Middle Class or Working Poor, or even Professionals. The American Political Class, Entertainers and Media Celebrities represent no one but themselves. That’s what Keynesian Economics is: arrogant self-interest in the guise of concern for others. Robert Reich and Stephen Colbert are blatantly honest about that… though they probably didn’t mean to let the cat out of the bag. That’s why Sam Walton’s grandson donated so much to re-elect Obama…. It’s an investment…. Can you say EBT…?http://www.forbes.com/sites/briansolomon/2012/10/23/wal-mart-heir-donates-to-obama-pac-defying-rest-of-billionaire-family/
Why would George Soros and Warren Buffet and Wall Street Bankers and hedge fund managers have supported Obama… if they didn’t think they would ultimately profit…? http://www.forbes.com/sites/briansolomon/2012/10/23/wal-mart-heir-donates-to-obama-pac-defying-rest-of-billionaire-family/
They wouldn’t. They ain’t idiots.
Anyway…. That’s the formula for Long-term American Economic Success…. And an explanation for why the delusional Liberal Progressive Socialist Democrats are heading the other way…. Political Corruption….