When Free Trade Does Not Work

“Trickle-down economics is a myth. Enriching corporations — as the TPP (Trans-Pacific Partnership) would — will not necessarily help those in the middle, let alone those at the bottom.” On the Wrong Side of Globalization, New York Times, March 15, 2014

Free trade does not work if you are dealing with a country that uses slave labor or sacrifices other important issues like the environment or safety. Improving the environment does not happen without costs. The United States invests in technology to help improve our air quality and purity of our drinking water.  Saving our forest land comes with a price. Investing in solar energy helps future generations to live in a better environment but presently it is expensive compared to fossil fuels.

Slavery was banned 150 years ago, even though treating the future generations of the slaves equally is still a work in progress. If other countries still use slaves, we effectively are supporting their bondage and putting our work force at a competitive disadvantage by buying the goods and services they produce. The same is true with a minimum wage law. The company with a domestic production facility that uses unskilled workers is at a competitive disadvantage over other companies that use unskilled workers in other countries that will work for lower wages because of the forces of supply and demand and no minimum wage laws. Continue reading

Emerging Countries and the U.S.

If you were living in or overseeing an emerging country like Brazil, Mexico, Kenya or South Africa how comfortable would you be to have your nation solely rely on your affiliation with the United States for your future?

From afar you see the U.S. having a difficult time taking care of its own business. You see a group of politicians threatening to shut down their government in order to prevent the enactment of a healthcare program that was passed according to law and a Supreme Court ruling it is constitutional. These politicians are willing to risk the credibility of their government in the eyes of the world for the sake of remaining in good standing with a splinter group called the Tea Party. Continue reading

Let The Good Times Roll

If one does not recognize limitations it can lead to psychological problems. We no longer are standing alone on the mountain. We are in the lead but other countries are clawing at our behind.

Over the years we became fat and out of shape. We led the good life for decades and relaxed by taking on excessive debt rather than recognizing our superiority is slipping. We borrowed in excess to let the good times roll and we lost our work ethic thinking we were invincible and wanting more.

The second reason for our decline is more admirable. We encouraged the rest of the world to be like us. At the end of World War II we were the last industrialized country standing and we did not use this superiority to take over the rest of the globe. We encouraged countries to take the route of democracy. We gave them aid and bribed them to become like us. Many of these countries did it and others like China, India and Brazil are now bonafide competitors. A second wrung of nations such as the southern African countries are aggressively in the game

The result is some of our children have grown up, left home and no longer do everything we want or say. Now we are truly in a competitive world and one of the luxuries we no longer can afford is to be the worlds policeman. We are burning resources in an attempt to hang on to this superiority at the expense of our own future. Like all parents, we still love our children but now we must spend more time looking out for our self…. http://lstrn.us/1cNpYjc

Obama And The Economy

“And, to be fair, it has also been a long time since President Obama said anything forceful publicly about job creation.” Japan The Model, NY Times May 23, 2013
The above excerpt is sad. It shows a lack of leadership on the part of the President. It is easy to “lead” in good times and not so easy when facing an economy and Congress like Mr. Obama is facing. However, true leaders become motivated when the challenges are huge.
Historians tend to label presidents “great” more often when the person occupying the Oval Office is facing great obstacles. Roosevelt by most is labeled great because of his guiding hand  to get through the 1930 depression and World War II. Reagan is looked at as great because of turning the economy around and bringing about the downfall of the USSR.
Will Obama be deemed great for overcoming the near-depression of 2007/2008 or will he be a yawn in our history books because he let a stubborn congress get in the way of recovery? So far it looks like we will be yawning.

Austerity Gaff!

Let’s bring this argument between two economic theoreticians into the real world.  Keynesian Economics has lost some credibility in the real world not because of the theory, but rather how politicians have used it in practice over the past 3 or 4 decades. Austerity has become popular because politicians are not willing to admit  they have misused economic theory advocated by Keynes.

Keynes advocates government spending in recessions to offset the decrease in demand from the private sector. Keynes also advocates the paying down of government debt during good times in the public sector. During the last 40 years our politicians were happy to take credit for the government picking up the slack in slow times and reluctant to go to the voter in good times and say it was time to pay back the money Uncle Sam spent to spur the economy during the recession.
It is time for the politicians to go to the woodshed and admit their errors. It is not time to compound the consequences of these errors when our economy is in disarray and facing our stiffest competition since World War II. Stretching out the time period to get our debt under control from 10 years to a 15-20 year time frame gives future generations a chance to experience the same prosperity we have.
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