Home Forums Hunting & Shooting Hunter's Campfire Is there Hope for USA economy?

I have had in the past a rather negative long term view of our economy. I believed the mantra that manufacturing is the steam engine that pulls the economic train. Now we don't manufacture much of anything. So where does that leave us? Are we now becoming the quintessential Ducthman??? Buy low- sell high merchants? But the Dutch bought low from India and the east and sold to the Brits and Germans and French. We buy low from China and sell high to ourselves. How long can this last?

Can someone throw a positive light on our situation? I am not an ecomonics student. I am not being sarcastic here... what do we export and produce that is of value and that causes a net increase in our wealth base as a nation?

I know of the following:
Food
Education
Information
Movies
Music
Coal
Timber
Some manufactured goods.
Airplanes
Weapons

What else out there is there? Are we just on a long long coast from the Post WW2 boom when the whole world had to come to us to buy manufactured goods?

Wish I could shed some positive thoughts on your post, but as I have been unemployed for some time now, I'm afraid that I share your lack of optimism! <img src="/ubbthreads/images/graemlins/tongue.gif" alt="" />

God bless and help America!

Well, as the quintessential Dutchman you describe -- one of my businesses is a brokerage-- I can assure you that it's pretty good if your half comes out of the middle!

My other hat is that of an economist, so I'll throw some things out.

Let's start with Olivetti. If you are in the computer business, you will recognize it as the Italian computer group.

In the beginning, we had IBM, and it was good. They made a lot of money in big mainframes. Then came HP, and they made a lot of money in mini computers. And, it was good.

So, the Italian government decided they were going to be players in that market, and they started pouring money into the Olivetti and they cajoled and co-erced other European businesses to buy Olivetti instead of IBM or HP (or Wang, etc).

At some point, all that monetary and political effort paid off, and Olivetti was, officially, a "player".

The moral of the story is that in the meantime, some fellows named Bill and Paul were playing around in their garage, and made all that effort obsolete. In 20 some years, the boys built a company that nearly rivaled the entire Italian GNP.

Seriously. The Chinese are currently doing what the Japanese did in the '80s. They were selling us $10,000 Hondas for $5,000. The Euro's kept them out much better than we did, through quotas, political pressure, etc. When I was growing up, it was ILLEGAL to publish automobile reliability data in The Netherlands!

Seriously. Now, compare the fortunes of Peugeot to that of GM. Sure, GM got it's butt kicked, but where, oh, where is Peugot. Citroen? Renault? Simca? Toast, or on permanent government subsidies (the Continental version of "toast").

And, how are the Japanese doing? Their stockmarket is still half of what it was 15 years ago! You think our economy stinks?

The moral of all that rambling is that you cannot dominate the world by under-selling it. The only way to grow, is to invent a better mouse trap, and selling it. Fortunately, this right where the US has it's strength: creativity, flexibility and a willingness to take risks.

I am very curious as to what the next Microsoft or Micron Technologies will be. I was offered an internship in College with Microsoft, and turned them down. I'd like to get it right the second time around <img src="/ubbthreads/images/graemlins/wink.gif" alt="" />. Dutch.

Dutch;

Real interesting post. We do tend to invent stuff better and faster than most other folks. I just can't get my arms around the idea of what is our economic engine these days. It ain't manufacturing for sure, what what is it primarily? Microsoft? I thought that India was catching up with us and moving ahead in the IT sector.

Or are we moving closer to a two class society, the mega rich and the mega poor?

I guess what I am getting at is this; here where I live in the Cumberland Valley things are kinda tough. From the Potomac to the Susquehanna almost all the good jobs with long term prospects have pretty much vanished. Except of course construction and farming and a few other areas. But Fairchild Aircraft, gone, Landis tool company- raped by corporate mergers, Mack Truck- a sekelton of what it used to be. I could go on and on. Landis tool was world famous for the finest manufacturing machine tools produced in the world. But those apprenticeships are rare as hens teeth as their work force is way way down.

The economy is doing just GREAT! If you're in banking, insurance, or government. <img src="/ubbthreads/images/graemlins/tongue.gif" alt="" />
The rest of us who actually (used to) MAKE things will be needed as pool boys, gardeners, and security guards for all of those CEOs/CFOs retireing at 50 to gated golfcommunities! <img src="/ubbthreads/images/graemlins/frown.gif" alt="" />

You just can't compete on a global econamy when you pay people who are doing menial jobs $20+ an hour! Dixiefreedom, you mention that apprentiships are hard to get at Landis Tools, what does a person working there make?

Dixie from your post I'm pretty sure we're geographic neighbors and I couldn't agree with you more.I have friends that live north of us in an area that can only be described as an economic wasteland.There is not a day that goes by that I don't count my lucky stars!!!

[bleep] Bush He has this country in a quagmire that we are not about to get out of any time soon. All in the name of patriotism.He has played upon our fears like a man playing a fiddle.And they called Clinton "slick Willie".Bush could give that a$$hole lessons.

I grew up in a patriotic career military family.Both of my parents are buried at Arlington National Cemetary and the plane that hit the Pentagon flew over directly over the grave forever desecrating their eternal resting place and for what? Bin laden doesn't even make the back page anymore Bush has an agenda. Iraq is a smokescreen.

Dixie and others here,

Dont get too far down in the mouth on the U.S.A. and its economy. Or the world economy, either. Just for the heck of it, go to:
www.investorsinsight.com

Read John Mauldin's latest article from Jan 7th. All of his previous ones can be read, too. Not pimping for John but, over the years, his prognostications have mostly hit the mark and he has the integrity to tell you when he flubbed and why he mis-predicted. I think anyone with an interest in this subject may get a little from his views.

Another and the very best that I've ever read on "Globalization" and what it portends for all of us and the world is "The Lexus and The Olive Tree". Get it and read it. IMHO, it should be a mandatory read for any high school graduate, before they pick their life's path.

Good thread, Dixie.

Old Toot

Banking, insurance, government, utilities, food industry, energy, or anything we have to have and you have a long term career. These industries, or monopolies in some cases, and the industries that live off of them, will be around a long time.

Dutch, put on your Economist's hat. This whole issue of the health of the US economy has been bothering me for some time. For the life of me, I can't put together a favorable model. Especially for us blue collar workers.

There has to be a balance of trade (imports/exports). What do we export? US Treasury notes for sure, and China is a major buyer there, as is Japan This just leaves us with a long term national debt to China. Fighter aircraft, maybe? Foreign Aid? Wheat, at a profit?

Globally what/where is the (our) market for US products?

The only thing backing the US dollar, with the loss of the gold standard, is the faith of the rest of the world (foreign countries) in the economic stability of The United States.

Doesn't this export deficient directly tie in to the falling value of the dollar against the Euro? And what does this do to the �faith in the Us economy�.

I think I need to go back to school.....

one thing for sure, the working man is screwed as whole. the rich get richer and the poor get poorer
the middle class will/is slipping in america
in 20 years the average american will not hardly be able to afford gas, gas will be 5 to 10 dollars a gallon.

There is a lot of truck driver jobs around here. Probably taking chinese made stuff to warehouses. Lots of warehouse jobs too. Health care seems to be an area that we can't send to China or India, (so far) I don't think they would want me bringing gun magazines to work though.
Great White North

Living here as I do near the Silicon Valley, I can say that the US has the most vibrant economy in the world. We have only seen the tip of the iceberg with regard to technology, communication, transportation etc in this country. This economic engine alone is enough for the prosperity of any nation, and the US has many other natural advantages. I will say that even being blue collar will require more technical education. No one is going to get paid $20 an hour for screwing things together in a factory anymore when people overseas are willing to do the same brainless act for 80cents. That's just something we have to get used to.

Dutch hit the nail on the head: We get manufactured items of great utility in exchange for pieces of paper!! What a concept!! It's a good deal for the USA.

Competition is what keeps this country great, albeit at a cost to those who live in affected regions. But the commies had a great experiment in self sufficiency in isolationism and protectionism, and it left them impoverished compared to the West.

Throughout history, trading nations have always been richest, as well as free, low tax nations. Look at Hong Kong. Free trade, low taxes and competition made it the wealthiest chunk of the Asian mainland. And Hong Kong has virtually no natural resources!

The only economic constant is Change, and while the US economy may have its ups and downs, like any nation, over the long run I'm very optimistic.

retrain, move, try something else. don't blame somebody else. pay attention. work is there, but it seldom comes looking for you.

James Dale Davidson and Lord William Rees-Mogg wrote several books on the way technology has changed Government and the ideas of the people. When a tribe had bows, everyone was equal- as long as he could hunt and fight with the bow. When it cost 20 steers to make an equipped knight(almost impervious to the common man) The rich ruled. The tide started back with the invention of guns. One factory worker was as valuable as another, one soldier with a rifle was about as good as another etc. Now we have the idea of all men being equal again. As the internet, computers etc take over we will see other changes. For instance, the best software writer can write software for the whole world-he's valuable. How much is the second best software program, written by the second-best software programmer worth? If you really want to know more read "the Sovereign Individual" by the above authors.

Dutch, good post.

I always get a little perplexed by the "economy" issue.

Why is GNP so important? Doesn't it just stand as a measure of consumption? Is blatent consumerism a good thing? Europeans consume a lot less that we do here in the states.

I think "economy" like politics is all local. I think the question should be: What is your personal economy? What are you making of it?

Had a college kid from a 527 group come to the house during the election campaigns asking me aren't you worried about the "job" situation in the US? I said no... Jobs will come and go wherever the free market says they'll go.

What about taxes he asked? I said we need to toss the entire IRC (internal revenue code) and go to a flat tax. He asked isn't that kinda tough to do? I said no, it's simple. It's dealing with all the special interests that created it that's tough, politically.

Anyway, the kid made an excuse to leave and get to his next potential Kerry pushover.

Make no mistake, I disagree vehemently with our foreign policy in the middle east. I'm not an isolationsist, but I don't think we should be anywhere near the mideast. Sadam was nothing to us. If his countrymen had any cajones and really had a problem with him, they would have taken him out. Oil and Israel are not worth the mess we are in now. I have one or a few words for the oil issue: the US great plains and bio fuel.

The North Koreans and Iranians scare me more. Chuck in China for good measure. China's human rights history and practices makes me ill.

I'm not pleased with Bush's house cleaning and installation of psychophants. Powell is a great loss as an advisor. I know some support Rice, but I don't. The lack of dissenting wisemen scares the hell out of me.

But, back to the economy... Nobody is making buggy whips anymore. I asked my friends who were hot into the dotbomb craze - where are the earnings to command those mutiples?? They said "who cares, it's momentum investing". Like a game of musical chairs, many got caught holding the bag.

I don't know where the "economy" is going. I do know where "my economy" is going.

Stop thinking of yourself as "blue collar". Bill Gates never graduated from college, to my knowledge. You know what the average "blue collar" worker has in common with a "professional" like a doctor or attorney? There are only 24 hours in a day... how much can you charge for your time?

When you start thinking of yourself as an entrepreneur and not "just" "blue collar" or whatever.. things can change. Taking responsibility for your personal economy instead of waiting for something to happen is important.

I always cringe at the rich versus poor mantra. A doctor may be "richer" than you or I. Or maybe not. This goes back to consumerism. When I was in the large corporate world, I knew folks who actually had the attitude, I have to have a biigger house than the next guy, for whatever reason. I considered them monuments to personal ego. A lot of highly paid professionals get caught up in that game. If you looked at their net worth, they may be in worse shape than you or me.

The only way I know of to get wealthy is to live well within your means, come up with a great idea, multiply your time through the efforts of others and most importantly... act. Also, looking internally instead of externally for fulfillment seems to help. (booze is really an external thing by the way)

Look at the basic human needs - food/water and shelter. Beyond that I think it qualifies as consumerism.

What else do you need? Maybe transportation (not necessarily personal cars). Maybe information.

What else do you "need"?? Not much probably.

Oh, I want entertainment. I want more time. Well you can pay for services for that.

Most manufacturing gross margins are so thin, I can't imagine investing the capital. And, the casualty rate is high. There will always be a need for services. The physical products will always come from the one who can produce the necessary quality at the lowest price and stay in business.

Same thing with services, but without the huge static capital outlay. And, services are usually local. Nobody in India is going to detail your car or clean your house or fix your car or do your dry cleaning. You might say, well those are low paying jobs. Yes, if you are the employee.

If you want to be poor stay poor by staying in a "job" and gripe about "the economy". If you want something else, get an idea that doesn't depend solely on your time, get some freaking courage and act.

Best regards,

TM

I did a quick check over at tse.export.gov and found that we are net exporters of aircraft, ships, food products, chemicals, plastics and plastic fabricated parts, tobacco products, arms and ammunition, synthetic fibers, and many others. Things aren't so bad in some industries. Here is the link, hope it works: US Trade Balance

WRT China, I lived for about three years during the 1990's in Hong Kong back before the turn-over to the PRC. The Chinese folks I worked with were very impressive. They were by-and-large very smart, shrewd businessmen, hard working, and far more willing to take risks than most Americans. The Chinese workers are willing to work for far lower salaries than most workers in the states; we could hire 4 workers in China for about the same cost as 1 American. The Russians were even cheaper, we could hire 5-to-1 there. Make no mistake, those guys are formidable competitors for us.

Globalization just makes good business sense for products that require lots of manual labor to produce, and it can only be stopped by intense government control. To do so would only hurt US consumers because we would pay far higher prices in our domestic markets.

Dan, the US is a net exporter in a couple of areas, including agriculture related (resource based -- we do have a lot of farm land and very, very good farms).

The rest is export based on our innovative products that the "cheap" labor countries haven't copied yet.

That will be true, forever. If you have dealt with the Chinese much (I have, good people), you will find out that their culture is based on "doing it cheaper". Their cultural mind set is that they can get rich by selling lots of stuff cheap. It seems like it is hard-wired in. Again, ask the Japanese how well that strategy worked. It does make for cheap T.V.'s at Walmart, though, and that's not all bad.

There are lots of examples of industries that are withering from overseas competition. These are "old" industries. Tool and die, low-tech assembly, etc. There are university educated, master's levels ENGINEERS in India that would love to do those jobs for $5. per hour. Or $2.00 per hour. As a manufacturer, what would you do? Hire the US worker with the brown bottle flu every Monday, or the Indian Engineer for a fifth of the price?

Now, here's the kicker: lots of IT is now "old industry". A family member of mine runs the internet based software development for a Big Name computer company in Holland. He just hired 200 software engineers in China, and nearly 300 in India. It's not just the US, it's any high dollar wage country. Is it scary? Heck, yes! Is the sky falling? Nope. Just time to move on. It was great while it lasted.....

The latest trend is to use Radiologists overseas. Saves a lot of dough to bounce those X-rays to a sattelite.

A lot of stuff that was "high tech" 30 years ago is now "old industry". The US is still the best in innovation, creation, flexibility. As long as the government stays out of everyones way, simplfies the tax code, and lets people do what they can do, we'll be allright. The two biggest obstacles to creativity are government regulations and people's resistance to change.

No one has a birthright to a lifetime $35 per hour job, filing corners off metal plates. If you want a job, all you have to do is out-smart the father of seven in India, trying to put food on his family's table. You can't blame him, he's just trying to have what you have. Fortunately for the US, creative and innovative people have access to capital, labor, knowledge and markets, all at once. That is the unique competitive advantage we have to exploit.

If I were to enter the workforce now, I'd look at things like the energy sector. Any area where there is a need for rapid innovation. Chances are, the US will be at the head.

On the other hand, figure on an "industry" being "good" for about 30 years. After that, the snapping turtles will be at your heels. IT is at that point. JMO, Dutch.

TM45 and Dutch...a couple of very good posts. dvnv