> -----Original Message----- > From: [email protected] [mailto:[email protected]] On > Behalf Of Bruce Bostwick > Sent: Monday, January 05, 2009 8:30 AM > To: Killer Bs (David Brin et al) Discussion > Subject: Re: Scouted: U.S. to collapse in next two years? > > On Jan 4, 2009, at 9:13 PM, Dan M wrote: >
> > With a few minor exceptions, the USA is running largely on momentum, > which is finite. How does an economy grow on momentum? >We've been migrating from a production-based economy > to a service-based economy by degrees since the Bush I era, and we now > manufacture very little if any of what we consume as most of our > finished goods are manufactured in China, Well, then we don't consume much in the way of finished goods. Our imports from China in 2008 (we don't have Nov. and Dec. in yet) will be about 275 billion dollars. Our GDP is about 14 trillion. So, imports from China are only about 2% of GDP. Medical is far higher, at 16%. >and the vast majority of the > remainder are imported from other countries whose labor is far cheaper > than ours. There is no doubt that the era of high pay, low skill unionized work in the USA is drawing to a close. But, from the start of Bush I to 2007, the US GDP grew by 67%. Comparing with other countries, I was able to only get long term growth until 2003...so from 1998 to 2003, the US GDP grew 53% and Western Europe GDP grew 33%, and Japan by 28%. Since then, I know that the US has continued to do better from '03 to '08, but I don't have it in an easy to get at table. (It's the non-US countries that are hard to quantify...the US data is always easy to get to). That's not coasting. >Unless I'm reading the signs wrong, it definitely seems to > me that the fire has gone out and the machinery just takes a long time > to spool down, and this recent collapse is more symptom than root cause. I suggest that you are reading the signs wrong. I think that your argument depends on the economy still being founded on the same footing as they were in the '60s. But, if you look at the additions to the economy since the '70s, you see that the US has done well. In the mid-80s it was supposed to fall behind Japan in the '90s, but it's Japan that stagnated in the '90s. China is a poor country that is positioned to take advantage of its cheap labor, but it is strongly feeling the hit of the US decrease in purchasing. Factory production _fell in Dec, after years of 10% yearly rises. > I just don't see the fundamentals currently supporting anything more > than a downhill slide into progressive collapse if the systems > currently in place continue to operate the way they're operating now. I think that you and virtually every economist differ on what are the fundamentals. One fundamental is innovation. Another is productivity. US productivity has risen faster than other developed countries. The US is either the home or the main market for virtually all medical innovations. Europe has made it virtually impossible for bioengineering firms to operate, and the US is doing very well there. Since that's the only real hope for biofuels (e.g. algae farms producing aviation fuel), the US is well poised to be the leader in that field. > As a country, in aggregate, we don't really seem to *do* anything > these days other than buy, consume, and move money around. Well, we don't do as much smokestack manufacturing as we had, but remember, we consume (with the exception of energy and food) far less stuff than we did before. With respect to computers and associated electronics, while Japan and the US are strongly competitive, the US is still the clear chip leader. Detroit is in terrible shape due to legacy costs, but its Toyota and Honda sales that lead the drop in auto sales this December. Ford's market share is rising, mostly at the expense of these two companies. Finally, much of 2008's balance of trade problem is due to oil imports. While oil costs have been volatile, they averaged about $100/barrel last year. That means that almost 2/3rds of the US trade deficit went to oil imports. If oil stays in the $50-$60 dollar range, with the slowdown, we should see a dramatic (possibly 50%) drop in the balance of trade deficit. Finally, if the US is in such bad shape, why has the dollar risen, and why (with the US government about to issue another trillion in debt) are T-bill interest rates so low? Even the longest term bonds (30 years) offer less than 3% interest per year. That's the exact opposite of what one would expect of a country that's going down the tubes. >The few > productive industries we have in the USA now (the auto industry > springing immediately to mind) are in such sad shape -- in the auto > industry's case, from putting more energy into fighting a phase c > hange into a PHEV/BEV based market than they are into any real R&D or > new product development -- that they cost more than they generate in > value. To me, that seems unsustainable. Am I missing something > here? They don't have to put any energy into fighting it; the consumers are happily doing it for them. The sale of the hybrid Prias (sp) has fallen about 50%. Electric cars are toys for the rich. Battery technology has not improved much in the last 20 years, even though there is a multi-billion battery market where one can make a handy profit right now, outside of the car market, by marketing a better battery. Contrast this with the bioengineered biofuel market, which the US is clearly leading. European rules are so strict, they might as well prohibit bioengineering. But, in the US, costs for the tools of the trade are dropping faster than Moore's law: almost a factor of two per year. This isn't PC, because we're tampering with nature, but it has a much better chance of working than solutions that have a horrid cost/benefit ratio. That's not to say that I'm not worried about problems for the US. The combination of improved US productivity and globalization has resulted in a significant lowering of the need for US workers. Our healthcare system is Byzantine, and will have to be radically reformed if Medicare is to survive. But, of the developed countries, we are (with Australia and Great Britain) in the best shape to handle the aging of the Baby Boomers. In conclusion, I think the factor that you are missing is that we are in a post-manufacturing economy. Real wealth is created by means other than steel mills and car factories. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
