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Chris Burgwald

Daniel, although I don't have the knowledge you're looking for, I'm going to offer a thought anyway. :-)

Do you think that people really say that manufacturing is the backbone of our economy, or do they say that manufacturing is vital (or at least important) to our national security? Perhaps I'm thinking of different folks than you... in my case, I think of Pat Buchanan, who worries about the loss of manufacturing to other countries, not so much for purposes of the economy, but for purposes of our national security, AFAIK (you know: dependence on other nations for things essential to our military, etc.).

Thoughts?

Dominic Schmelzer

I also have just a few thoughts...
When we say that a society is mostly hunter/gatherer (aboriginal) or agricultural (most of Africa), do we consider it better off only because a greater portion of their economies are dependent on those economic sectors than ours are? The same question with manufacture. The societies which are most advanced will likewise depart from a dependence on manufacturing by becoming more efficient (the US up to the mid '70s) or by outsourcing this job to someone who is willing to do it more cheaply (all the countries mentioned in Kasriel's article). In the end, the Industrial Revolution will have eaten all of its children, not only those in the US. The result of rising productivity is redundancy, oversupply and a move away from that particular economic activity in the long run - as long as the country/region is able to move to the next level of economic activity, which the US has been able to do (the process is still in its adolescent stages or so) but which Germany and Japan have not been able to do quite so well. Instead, they have been busy "perfecting" the previous level of economic activity - thus their present woes, at a very high level, of couse, but I fear there will be much longer-lasting structural difficulties.

A comparable pattern to this process can be seen in Great Britain *before* the Industrial Revolution. In the early 18th century, British agriculture experienced a comparatively large leap in productivity resulting from the new "Norfolk Methods", for instance, in the 1730-40s, copied by the Germans only at the end of the 18th century. This increase in productivity more than likely gave GB the extra capacity (and unemployment!) necessary for the definitive step into industrialization, although there are about 30 other factors which were likewise important in that historical process. The US vs. Germany/Japan discussion is one of "you can pay me now or you can pay me later". The US paid its dues in the 1970s and '80s; the others are either playing catch up (China/Tigers) or paying (beginning to pay) their dues (G/Jap).

Now, let's depart from the overall process and look at the *experienced* German situation. (Somehow I felt like you were addressing me with the question to the German/US dichotomy:-) Materially speaking, I am living in one of the richest and best organized parts of the world. But tribal life can also be highly "civilizedW and well-ordered. At the same time, it is a desert here. The Germans themselves call Germany a "service desert". If you want help here, the attitude is that you have to demand and/or fight for it. No smiles go with that beer and pretzle. Is that a German thing, or is that a question of the deregulation/lean government that did not happen here two decades ago? Probably a mixture of both. The educational system is also demonstrating a serious layer of rust. Everyone knows that "the system" (edu / soc.sec. / health / gov. spending and social net / tax / etc...) has to change. But no lobby likes to make concessions. And, as long as the present vehicle's motor is still running, why not tinker around on the old one another decade or two? The system will probably have to break first...

Don't be irritated by differences in 1/3rd per capita GDP. There are many monetary factors involved in such figures and can be statistical anomolies, whether the economists are baking the figures or not. But I do fear that this difference will continue growing in the mid-term. And my fear is not aimed at the US, at least not in the long term.

My question is, how can and when will the US raise real median income, helping share the pie better, so that the Germans will find change desirable?

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