Fed prediction: It's going to keep sucking for awhile

It was sucking here in Michigan long before it was sucking nationwide. It's going to be sucking for a lot longer - people here have accepted that.

 

Fair enough. Corporate revenues and profits are growing but without the commensurate increase in American jobs that you may have expected 40 years ago. That's a fact of life in a global economy in which Americans have been severely undercut in the labor market by people in developing and emerging countries.

Maybe one thing to do is stop providing incentives to corporations in the hope that they will create jobs just because that was a good formula 40 years ago. It isn't anymore. Any corporate incentive must be specifically tied to defined job growth.

 

Outsourced jobs are still a relatively small factor compared to productivity gains. We still produce more stuff on American shores than ever before. We just do it with machines.

 

OK, but the combination of productivity gains and outsourcing is devastating the American job market real people with real families who want good jobs with fair pay.

 

Eventually though, the American people are going to get tired of hearing, "Well, it's the global economy, sucks for you." In anything, with the way the last few elections have been going, they already are becoming aware, and will vote for the politicians who are best at promising them that they are 'different' and will be able to improve their lives.

I'm dreading what life is going to be like down the road, not only for myself, but for my kids. To me, the choice is either America submits to the global economy and has everyone working for $3 a day, or that the country actually does something about it to maintain as much of a standard of living that they already have accomplished, and maybe even raise up the standards of living from the other countries. Instead, we're lowering our standards to them.

 

What exactly can we do to raise the standard of living?

The relative standard of living we're used to was always unsustainable, and all we're doing is making the long-term worse by flailing around trying desperately to keep the good times rolling for a few more years.

 

No. But we should stop letting them, and their political enablers, tell us that they're the solution to all our economic woes and that they truly have at heart the best interests of the public at large.

 

Well exactly. We should be going ballistic every time some clown politician (who's cashing corporate checks) tell us that the way to fix our problems is to provide corporations with lower taxes and less regulation.

 

Tell these overseas businesses that if they want to do business in America, they have to pay American wages. They refuse, they lose a major part of their market. There's only so many places they can sell their products.

Now, the foreign countries would also retaliate against American businesses by stopping them from selling. Then let them come up with their own McDonalds and Coca-Colas. And yeah, it means we'd be buying Fords instead of Toyotas. Tough. Eventually, you would hope a compromise would be hammered out, rather than just having our businesses cut and run.

Or, the easy thing could happen, and just tax the American corporations at a higher rate for sending jobs overseas, or provide them with tax incentives for keeping jobs here and creating more. But those incentives must have guarantees about the jobs, and not just be given out willy-nilly.

Otherwise, 20-30 years from now, things may get considerably worse in this country.

 

I think you're waving at paper dragons here. Even ignoring the negative consequences, most of what's been lost in wages and jobs were lost to productivity gains domestically, not outsourcing abroad. Unless you want to just smash up all the assembly machines, there's not much you can do.

 

Right now, the loss of jobs is due to a loss of demand, more than anything. When demand raises, jobs will come back.

More than QE2, I'd like to see another round of stimulus. Hopefully, less this time can be devoted to making sure the states don't go belly-up, and more can be actually put into the market.

 

With what money?

The only way to get the money for another round of stimulus is to borrow it. Even without another round of stimulus, we're looking at our gross debt reaching 130% of the GNP within a couple of years. Another round of stimulus, even if our creditors didn't mind funding it, would put us into Icelandic and Greek territories of debt.