The ‘Root Cause’ of the USA’s declining economic status~

Maybe have posted this thread in another category. I am a theologist not an economist and disliked that type of subject so bad that I took a much more difficult but alternate course called probability and statistics when in school. So move this thread if ‘obligatory‘.

The USA’s ‘Root Cause’

The title will become clearer as you go, lol. I am often irritated and …well, stupefied when every politician and man on the street makes past and present issues concerning the USA’s gloomy financial situations seem much more complex and difficult to fix than they are. I do not care if it’s the historical issues of 29’ or today’s fabricated scare tactic, the so called ‘financial cliff‘. Most of today’s and yesterdays economic problems are easily understood and easily fixed if the politicians and wall street types had the fortitude to tell the truth and resist temptation. Instead they generate an abundance of smoke and mirrors add complexity designed to deceive and to CYOA, in other words they seek to deceive in order to hide the truth and to cover mistakes.

The cure would be to either create a much more effective and transparent agency to oversee the fed or have Uncle Sam run it without any vestiges of private ownership. It's privately owned now and I feel that is a negative. Second if we are going to remain without gold or some type of tangible securities backing our currency, we should allow the dollar to compete in the open world currency market and seek its rightful unmanipulated level (real value… Gawd, that will be truly scary if and when it happens). That was just a copal of suggestions as to what we (the feds and the voters could do now to buy some time). . When it gets right down to it as I have said its greed and the love of money that is the root of all evil, which includes counterfeiting.

What does everyone think is the cure and the problem? I am not asking for fine details but rather an overall analysis. Oh merry Christmas and god bless this forum.

reva

 

America is saddled with huge low IQ minorities who simply cannot contribute to a hi-tech society.
Does anyone really expect factory jobs to return? And even Pollyanna agrees that we will
continue to lose global market share. Long term prognosis; no happy endings, plenty of chaos.

 

I believe the root cause of the current economic decline is the jobs and wealth we have exported for the last 50 years. In a global economy you need to have a balance between imports and exports. You can't simply consume. If you do, you will eventually exhaust the wealth. That's where we are heading now. The solution is to bring some or all of the jobs and wealth back home. Some of that is happening naturally as the dollar gets weaker. But there are many things we could do to speed that up. We just don't want to do them because they are painful. Instead we have opted for much more serious pain in the future.

 

They can and will. It may require the expulsion or imprisonment of a few key globalists and outsourcers and their theiving infrastructure in DC, but it can be done. No problem.

 

A-freaking-men.

 

I think it was Boone Pickens who said we have presided over the greatest transfer of wealth in the history of the world.

 

A simple fix and cure to this problem is training and education. Everyone has the capacity to learn, even complex formats, systems and formulas. Unless the person has diminished capacity from birth.

 

As has been said for a long time, politicians and "money men" will lie, cheat and steal to no end, if you allow them to lie, cheat and steal.

 

Learn what?

The way we are divesting ourselves of entire industries by the time one learns a job it's gone to a low wage country.

How long before the abandoned masses riot in response to their lack of a future.

But the 1% are doing well.

 

Learn what?

The way we are divesting ourselves of entire industries by the time one learns a job it's gone to a low wage country.

How long before the abandoned masses riot in response to their lack of a future.

But the 1% are doing well.

 

We don't need a high-tech society. What we need are people who can pour concrete, cast steel, and manufacture refrigerators.

 

There is no basis under the US Constitution or any American statutory or decisional law permitting the expulsion or imprisonment of people for transfering capital or jobs overseas. To attempt to do so would violate the Social Contract.

 

The real problem is that America has run out of comparative advantages in a globalized world. Only natural resource development will provide any short term relief. Long term there is no hope without education...and how likely is that?

 

Run out of comparative advantage?

Despite our significantly higher wages, we are the second largest manufacturer in the world. Due to the comparative advantage of automation.

Where have we lost jobs to "comparative advantage", low skill / no skill jobs. Doesn't "comparative advantage" indicate some sort of differentation? No skill, no differentation.

The real question is why, with free K-12, student loans, intern programs, etc, we still have people with no skill?

We have some of the best universities in the world, and some of the worst K-12. Why the disparity - competition.

Annual earning, and low rates of unemployment, are tied to level of education. If we separate out those with an education related to business (science, math, technology, MBA), that rate is even better.

 

No, not competition but lack of commitment. Forty years of rabid anti-tax initiatives have destroyed public education in the US. You get what you pay for and the vast majority of the US decided a few decades ago to not pay what is needed for their children to be properly educated. After a generation it is finally sinking in. Their children are too stupid to get real jobs.

 

When you consider the entire cost of K-12, including benefits, the cost per student is higher than very effective private schools. There have been court ordered doubling of spending in several school districts, with no change in outcome.

More importantly, teachers make a lot more today than they did 50 years ago, when this wasn't a problem.

The problem is the kids don't see the value of education.

Teachers don't care.
Parents don't care, or too busy working
Kids that got an education, weren't able to get a good job, therefore, education is a waste of time
Crime pays

There are many "reasons / excuses".

Competiton doesn't reward reasons and excuses, it rewards results.

 

Given comparative advantage refers to differences in opportunity costs, you can't "run out of comparative advantage".

What we have is simple: Its US relative economic power that is on the decline, reflecting the nature of economic growth elsewhere. That won't be a comfortable outcome for many Americans as they have been brought up with a 'number 1' tunnel vision (particularly right wingers that think god is in fact a lardy American called Dave)

 

There are a very large number of public schools that provide a better education than the average private school for lower cost per student. In many areas a primary consideration of parents looking to buy a home is the quality of the public schools. They willingly pay a premium in house price and in property taxes to ensure that their children will receive a quality public education. These districts tend to pay their teachers salaries and benefits comparable to the best private schools in the area and match or exceed them in educational outcomes. This is despite their mandate to educate all children, not just those who they choose to as the private schools can do. People who live in these areas do not begrudge the taxes that pay for this but pay them willingly and regularly vote to increase them for improvements. They know the relationship between property taxes and education and choose education.

In some places people pay lower taxes and accept that public education will be inadequate. Those who can afford to send their children to private schools, but that has not really done much but lower the overall quality of K-12 education. Since the vast majority of private schools do not provide a better education than well funded public schools and people who send their children to private school regularly vote to de-fund public education, the result is a serious decline in the education of all children, as public schools struggle with less and less funding and private schools compete on tuition cost, both reducing teachers pay and attracting less and less qualified teachers.

Competition between private and public education at the K-12 level has not produced any measurable results in quality improvements for the education of children. The best funded schools, private and public, have always provided the best educational outcomes and that has not changed or is likely to anytime soon. The big problem is that the number of well funded public schools has declined precipitously over the last few decades due to the anti-tax lunatics.

Here where I live home prices are at a premium because the public schools are highly rated. Property taxes are also quite high. There is no shortage of takers for the houses that go on the market. I talk to these people. Young couples with children consider it more than worth it. The high price they pay for their home and the high property taxes are more than offset by not having to send their children to an elite private school. They consider the education comparable, 80% of the graduates go to the university of their choice, 10% to Ivy league schools every year. There are not many private schools with that kind of record. These public schools are competing with private schools and they are winning.

The failure of public education Is not a result of teachers and students, but of adults. Where adults care about education public schools thrive. Where adults care more about their tax rate than the education of their children a systemic failure of public education is inevitable. Just giving an underfunded and failing public education system over to the private sector and expecting that competition will produce better results does nothing to address the real problem, which is the systematic underfunding of public education over the last 40 years.

Replacing tenured teachers with their high salaries and benefits will only go so far. It is already becoming a big problem where it has been tried, teacher turnover is very high and recruiting and training costs are eating into budgets. Finding qualified teachers is becoming difficult, standards are being reduced. Educational outcomes are declining.

You get what you pay for.

The primary competition many states seem to be engaged in these days is the competition to reduce taxes and spending. The short term rewards will be outweighed by the long term consequences.

 

To expect the US and world economy to always grow faster than population is a mistake.

To expect the US and world economies to always grow is a mistake.

To expect the demographics of imports and exports around the world to remain static is a mistake.

For Americans to believe the US can go it alone is a mistake.

If we assume there can always be fluctuations in the economy, sometimes up and sometimes down, and that these fluctuations can require years to materialize and correct themselves, then the only problem we can have is our incapability of not being able to weather the downturns in the economy...

 

I say excessive unprecedented immigration (much of it illegal) in the last few decades, combined with excessive government debt.
I belive immigration was the main root cause of the housing crisis. It was afterall, overcrowding and a shortage of affordable housing that initially drove up prices. Many of those subprime borrowers where also the children of illegal immigrants. And one cannot deny the link between immigration and low wages and higher unemployment.

 

Let's face it, shall we? When you transfer jobs and capital overseas, you have violated the social contract that has promoted and protected your arse for the last 250 years.

 

I whole heartedly, fully agree. I believe that is a first for me! Ha ha...seriously you are correct. Additionally, we (USA) opened the Pandora’s box of our downfall by becoming far too entangled in the one world market, forfeited our semi isolationism of the early twentieth century for an sickening near imperialism and expansionism that includes an unattainable progressive growth rate. So what can restore the USA to our former somewhat ethical values of isolationism and how can we kick the Industrial military complex our greedy war profiting politicians to the curb? The reason is like the cure, that is its so obvious, it's so simple one wonders why we have waited seventy years to do it. Ok brace ourselves ...lol. Hard work.

Our part is to ditch the apathy, or if not apathetic work harder for change. Of course we have to vote for the politicians, if they exist, that will do the hard job of weeding out the curs and freeloaders in government and industry. And (well maybe its not so simple!) we have to vote while the vote like the dollar retains at least a (questionable) bit integrity of its former self. If that does not work or if there are no politicians left that will do what they and WE MUST do, them only two (mostly bad) options remain, that is only 2 remain if the USA continues the slide to self genocide. Number one is civil disobedience even if things get violent. Two, and I will be the first to admit especially as a Christian worse a Christian minister it’s a selfish option. Do as I do, Lol. I have given up on attempting to change government by the (maybe corrupt) vote or by propagandistic influence. So I have began to prep full time (Google ‘American prepper’ for a fairly accurate idea of what prepping is. Basically for this discussing prepping is preparing to weather the coming nightmare be it a natural disaster or man made drastic change.

God bless our fellow 'man' and our beautiful (and so far) unique earth~

reva

 

delete may be wrong thread lol~ brb (I hope) reva

 

I agree.

Agree. Also even a modest or less growth rate is far more difficult to sustain than we have been led to believe. We (USA citizens) should learn that with the current apathy of government and voters to support officials that will make difficult change possible will lead to the type of disappointing economic reality you predict and analyze.

Agree.

Disagree. However I do agree (again) if the situation and fear of making changes needed to semi isolate an non-intervening USA/West successfully.

I agree! Instant gratification is what makes wall street tick. Monthly to tri-monthly profits or at the longest (generally speaking) annual profits are what the owners want. Not 10 20 or 30 year gains. Compare that to the eastern way of thinking which is long term planning and patience. Then apply that to the emerging eastern nations such as China etc. Compare a chess game (eastern think analogy) to a crap game (the west). Lol. The west has had a very long run of luck called the free natural resources of the early 20th century that MADE the Rockefellers and Morgan’s etc. Now the crap game is being lost to the new Morgan’s wearing turbans and pumping liquid gold out of the sands of Arabia. The chess game is being lost to the long term thinking of the NuEast, China SKorea Japan etc. (*)(*)(*)(*) dad always told me that poker money had no home…he was right.

Reva

 

We have proof that we cannot go it alone. About 30-40% of our economy is exports. If you wish to isolate the USA, then you must forfeit the exporting, therefore you will see GDP drop from the current $15 trillion to something around $9.5 to $10 trillion. Since each $100K of GDP creates about one American job, reducing GDP by $5 trillion also eliminates about 50 million jobs...yes 50,000,000 jobs.

Further, with what's left after you stop exports, everything you produce in the USA will cost more than before so now you're faced with mega-inflation.

Economic isolation is not an answer to anything. The US has 314 million potential consumers while the world has 6.7 billion potential consumers. It is very difficult, if not impossible, for me to believe that Americans can consume themselves into economic prosperity...