5 Myths About Our Sputtering Economy

[DeepModem Mom]

WP op-ed: 5 Myths About Our Sputtering Economy
By James P. Moore Jr.
Sunday, December 14, 2008; B03

For months now, the nation's economic obituary has been splashed across the front pages of nearly every newspaper in the country. Journalists and pundits alike have warned that America's long-running global dominance has come to a screeching halt, eclipsed by growing markets in such places as China and India and frittered away by our own mismanagement, excesses and myopic approach to the future. We're long past due for a reality check. The United States and the incoming Obama administration face formidable challenges, but the country is by no means on its last legs. Here are a few key myths that need to be dispelled.

1. The United States has lost its competitive edge.

Not by a long shot. By almost any measure, the United States continues to outperform other countries around the globe (including rising giants China and India) in such areas as innovation, technology, higher education, worker training, the ability of the labor force to move from job to job, and more. Just this fall, the Swiss-based World Economic Forum released its latest global competitiveness report, and once again, the United States easily topped the list. The study noted that despite the current financial turmoil, the United States is blessed with strong productivity and can "ride out business-cycle shifts and economic shocks" better than other countries.

2. The United States long ago gave up its global lead in manufacturing to China.

Not yet. Yes, U.S. production plummeted this fall, and yes, the domestic auto industry -- the poster child for America's aging manufacturing infrastructure -- will never return to the output it could manage a decade ago. But even with all this grim news, the United States has held onto its manufacturing lead -- particularly in such key sectors as pharmaceuticals and aerospace, in which it produces almost 25 percent of the world's output, according to the World Bank. China produces roughly two-thirds that amount, the bank notes, and the global downturn has badly hurt its manufacturing sector over the past several months. Sure, China and India have been closing the gap, but with a little bit of creativity, vision and determination on the part of U.S. industry, the Obama administration and Congress, we can hold our own.

3. The U.S. economy is about to be eclipsed by China's....

4. The United States is no longer the economic engine of world trade....

5. The United States is no longer an attractive market for investment....

So where does that leave us? As Warren Buffett put it recently, the U.S. economy has gone from springing a few leaks to spewing one big gusher. But given our history and unique ability to adapt, we are anything but down and out. The world has changed, and the United States must respond more nimbly to the hard realities of global interdependence. But as "the sage of Omaha" reminded us, this is a fine time to buy into the long-term future of America -- not out of blind patriotism but because it makes good, sound business sense.

(James P. Moore Jr. is a professor at Georgetown University's McDonough School of Business and the director of the school's Global Leadership Initiative.)

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/12/AR2008121203364_pf.html

[graywarrior]

1. Interesting and encouraging article

Thank you for posting this

[DeepModem Mom]

2. Couldn't resist -- the only encouraging one I've seen in many months! nt

[graywarrior]

3. Yeah. We all tend to believe the worst.

Granted, things are bad, but hell, we're Americans AND we will soon have a great leader at the helm.

[jwirr]

4. These points could also be called the things we are trying to protect. nt

[panader0]

5. I read a while back here at DU about some of the problems

facing China in the near future. A lot to do with the environment, and how they are booming too fast and will have to cut back. Maybe a smarter DUer can find the link.

[FreakinDJ]

6. Tossing out One Side Trade Deals would go a long way

Most of those deal were negotiated solely for 1 Wall St conglomerate or another.

Toss them out a re-negotiate for the good of the country as a whole would go a long way to restoring the financial health of this country

[lib2DaBone]

7. Cancel NAFTA... ..No More tax breaks to off shore jobs

[Demeter]

8. A Nation Cannot Live on Aerospace and Pharmaceuticals Alone

There is nothing this nation cannot produce--and it should produce it all for local consumption. Free trade cannot be one-sided, and it has been for decades, thanks to the GOP.

And the universal health care payment system is 50 years overdue. That's just for starters.

There's nothing wrong with this country that some serious infrastructure, serious white crime prosecution, and serious education won't fix. And if a few GOPpers lose their jobs, their fortunes, or their heads, so much the better for the rest of us. Let them be the object lessons, from now on.

[tomreedtoon]

9. All five of the points are lies.

This is an academic. He does not live in the real world, any more than Washington insiders or Bush does. I bet he hasn't even been to a K-mart this Christmas season and seen the loneliness and desperation of those vacant store aisles.

Hell, he lives in Georgetown. He has grad students buy his groceries.

The woods are burning, Dr. Moore. Maybe you should join the rest of the country in a couple of emotions you might have read about once...panic and despair.

[idlisambar]

10. Sorry, but most of this should provide little comfort

1. The United States has lost its competitive edge.

Not by a long shot. By almost any measure, the United States continues to outperform other countries around the globe (including rising giants China and India) in such areas as innovation, technology, higher education, worker training, the ability of the labor force to move from job to job, and more......

If the US were really "outperforming" other nations in terms of competitiveness it would show up in the trade statistics. The criteria for competitiveness used here are bogus. For example, the ability to move from job to job is not a virtue in itself because the flip side is that people are more easily laid off. Contrast this with Japan's system of lifetime employment with its many "bend don't break" mechanisms that allow firms to weather hard times without disruptive layoffs. As for innovation and technology, the US lead here is legit in some areas, but our strength is mainly in basic research, most of which takes place in universities and is generally available to anybody. A lot of it is even sponsored by foreign firms who then get first dibs to take a technology commercial. Other nations do more R&D in private industry which is more easily translated into business advantage.

The bottom line is that if we were really competitive it would show up where at the point of competition -- international trade -- and it doesn't.



2. The United States long ago gave up its global lead in manufacturing to China.

Not yet. Yes, U.S. production plummeted this fall, and yes, the domestic auto industry -- the poster child for America's aging manufacturing infrastructure -- will never return to the output it could manage a decade ago. But even with all this grim news, the United States has held onto its manufacturing lead -- particularly in such key sectors as pharmaceuticals and aerospace, in which it produces almost 25 percent of the world's output, according to the World Bank....


The US is by far the largest developed nation, so our total manufacturing output should be relatively high compared to smaller nations and developing countries such as China. The real question is whether our manufacturing output is sufficient to support our large population at the lifestyle we are accustomed and the answer is a decided no. In fact, Japan with less than half of our population almost equals our manufacturing output.



4. The United States is no longer the economic engine of world trade.

....There is simply no country, now or in the immediate future, that can replace the United States' sheer global buying power....


Give your daughter your credit card and she has a lot of buying power too, that is until it's time to pay up. The true power ultimately lies with those who produce not those who consume. Those with the ability to produce can always gradually shift there productuve capacity and know-how toward themselves as the market here dries up.

[Daveparts]

11. The Chinese Toy

With Santa and his elves working mightily at the workshop you might be surprised to find that Santa’s elves are Chinese. They are rural people mainly young people coming to work in the factory because Santa pays such high wages. Fifty cents an hour, I know that sounds low by western standards but they have 100% medical care and retirement. You don’t get to be Santa by being stupid, you see Santa outsourced the workshop several years ago and opened a Chinese firm. With his merchandising rights and the off shore tax advantages the big man is jollier than ever!

You see it works like this, Santa orders a toy made in his workshop for two dollars and has it shipped to the U.S. with the total cost being three dollars. It cost Santa a dollar to actually make the toy so he makes one dollar on each toy. That doesn’t sound like much but remember what kind of volume the fat man does. Say he sells five million super racecars sets and seven million Dolly dream houses that’s twelve million dollars and that’s the beginning! Now you take that three-dollar toy and you sell it to Wal-Mart for five dollars that’s another twenty four million dollars! Ho! Ho! Ho!

No wonder this man is jolly!

Wal-Mart home of low prices and even lower wages sells the toy for ten dollars! Boy are they laughing up their sleeve at the rube in the red suit. They made five dollars on the toy and Santa only made two and if the truth be known that Santa owned the factory three. But Wal-Mart doesn’t have to provide 100% healthcare or retirement after all they’re not Santa Claus. You know what you call that? That my friends is GDP Gross domestic product with the emphasis on gross.

Every time Wal-Mart sells that toy it adds five dollars to the GDP not only that! It’s worker productivity! As your Wal-Mart sales associate rings up your Chinese made purchases the profit is added up, ten toys an hour fifty dollars less six or seven dollars and hour wages he or she has generated $44.00 for the GNP That worker is a dynamo a regular money machine. And don’t forget Santa made $2.00 selling them to the bandits of Bensenville.

Now President Bush like members of Congress would hate to end up on Santa’s naughty list because any sort of trade restrictions would be bad for Santa and he’s making a list and checking it twice! But more than upsetting the old timer it’s because they love America. (Flags and patriotic music here!) In 2005 the US imported 285 billion dollars worth of Chinese imports. TEST. If Wal-Mart made $5.00 on a $5.00 investment what would you expect importers to make on a 285 billion dollar investment? Now we exported 41.5 billon dollars in exports to China and just like Santa we made a profit on both sides. Ho! Ho! Ho! is the picture getting clearer? Even if they wanted to impose restrictions that would be bad for America! Billions of dollars in GDP gone!
Worker productivity slashed! Wall Street would panic!

So that won’t happen but the administration just sent their top trade negotiator to China and he vows to set them straight! And if you believe that, you probably believe in Santa Claus.

[eridani]

15. Toys for the world

Are made by kids
And not by elves at all!
We work them night and day
For very little pay
And tiny little hands
Make all our favorite brands
That fill up the shelves at every shopping mall.

Toys for the world
That Santa brings
So our own kids can play
What's underneath your tree
Is our economy
The little girls and boys
Who make our children's toys
Are not getting squat from us on Christmas Day.

[KG]

12. lies, damned lies and statistics.

this is just a steaming pile of ass-cover bullshit from a business school professor.

[tomreedtoon]

14. Can somebody go beat the crap out of this professor?

If for no other reason than to keep his crap out of the newspapers.

[Miss Authoritiva]

13. Past Performance is No Guarantee of Future Results.

I'm sorry folks, but it's over. American political and economic hegemony is over. This huff'n puff declaration of American exceptionalism -- "but given our history and unique ability to adapt, we are anything but down and out" -- borders on the delusional coming from a Georgetown University business professor, but I guess it's something that a director of the school's Global Leadership Initiative must say at least 50 times a day in order to get a paycheck.