China Rising, US Falling ?

[lindismith]

Yeah, it’s just that that $6.99 t-shirt at Target comes with a big social cost.

As for the oil issue – maybe we wouldn’t have all these political problems if we weren’t so dependent on foreign oil. And is the cost of a barrel really a free trade price? Or is it set by a cartel that has us by the you-know-whats?

I’m all for free trade, but I keep wondering what it means to my kids. We’ve said it so often on this board, but what is this country producing anymore? The jobs are leaving. Even the good jobs. Will my kids have as high a standard of living as us?

[gold_dredger_phd]

Your kids will have a Third World standard of living!
There will be inflation in commodities and the money supply, but no meaningful rise in wages for most people.

People in this country will have to learn to pick fruits and vegetables like they did in the 1930’s in California since those will be some of the jobs available during the Greater Depression.

I know a guy that sleeps in the laundry room of a house that he owns. He’s renting out the available rooms just to make the mortgage payment. He makes over $100K per year at his day job.

How’s that for living standards in today’s California?

[gold_dredger_phd]

There’s no such thing as a “social cost.”

Social is a word that negates whatever term follows it and is used by leftists in politics and academia. Sorry, “leftists in politics and academia” are a complete redundancy.

Examples:
social security
social costs
social justice
social product
social democracy
social studies
social statistics
social republic
social solidarity

[(former)FormerSanDiegan]

“I know a guy that sleeps in the laundry room of a house that he owns. He’s renting out the available rooms just to make the mortgage payment. He makes over $100K per year at his day job.”

– This example is not representative of living standards by any stretch of the imagination. AT 100K, he could afford to rent a 3BR/2BA home in some of the nicer areas of SD @ 3000/month. Your friend is either a victim of bad circumstances (large medical bills ? divorce/alimony?) or poor financial judgment, not a low standard of living.

[powayseller]

Lindi is right. If oil became more expensive, we would have spent the money on finding a replacement. They do exist. Why doesn’t every home in CA have solar panels?

Trade is important, as each country has unique resources and skills. However, our government leaders have allowed big business and their Fed member banks most likely, to profit at the expense of the American worker and our future productivity.

When we started moving our manufacturing off-shore, there should have been a move to replace auto and textile manufacturing with something else: better farming, pharmaceuticals, engines, alternative energy. Instead, they just went for cheaper goods from overseas. There was no rhyme or reason to it, no planning at all.

Likewise,the entire development of our society with far-flung suburbs and millions of miles of freeways (just a guess) should have been recognized as unsustainable by the urban planners in the 1950’s and 1960s. Did they think that oil is the only resource on this planet that is in unlimited supply? Don’t get me started, I’m getting real pi**ed off at the way our elected officials have let this country go to pot.

Corporations are just as bad. They use corporate bonds and their big profits from the recent liquidity boom to buy back stocks, so the stock price goes up. Then the insiders sell the stock at high prices, in anticipation of the decline which is coming. Not enough money is invested in the future of the company, in building it up. The money goes to elevate the share value for the insiders.

Then we’ve got the bubble in private equity funding. What value is created by that? Just as with free trade where we shift higher paid jobs to lower wage countries and don’t replace those jobs with anything at all, what good comes of it?

If we really want to help the poor countries, we should teach them how to farm and manufacture. Maybe I’m just rambling…

[gold_dredger_phd]

Some of the people on this board must be communists.

Why do you believe in central planning? You seem to have faith that the government can predict oil prices and knows when to “invest” in alternative energy. Why should the government or anyone else have invested in alternative energy back in 1998 when oil was $10-12 per barrel? That’s the lowest price since the Great Depression.

The whole of the Soviet Union was about central planning and the place, despite having a wealth of natural resources, went bankrupt.

No one planned the cities and suburbs 50 or more years ago around the “end of cheap oil”! All they wanted to do was build houses for returning GI’s at prices ordinary people could afford. They weren’t worried that oil was going to run out in 100 years! This was a time when they had fantasies about nuclear powered cars and electricity that was “too cheap to meter” and other nonsense.

In 1968 Stanley Kubrik made the film, “2001: A Space Odyssey” that showed an optimistic picture of a possible future. Men were going to go to the moon in the next year. It was only a natural extension of the current trends then to postulate moon bases in 2001.

Instead of that future imagined in 1968, the year 2001 gave us 9/11.

[lewman]

Ha ha ha I swear if you post this thread in china, people would think that some of the comments (opposing free trade, capitalism, proposing that government should do this and that to protect jobs etc) must have come from those who still enjoy the old days when the chinese government took care of things and citizens just followed.

Essense of capitalism & free trade is frictionless flow of capital to maximize mutual, aggregate benefit. If it’s more cost efficient to mine copper in Australia, then the Aussie shall be mining copper, and if it’s more cost efficient for americans to produce cars then it will happen so. Certain people will lose out because their skills become obsolete but in aggregate standard of living (in financial terms; nobody can calculate the fuzzy stuff like social costs that’s all too subjective) should improve for the masses.

Whether we like it or not, this is just the way the world is going. The US can choose to shut its door and start falling back on protectionism then as a result some will cheer (say auto workers) but ALL people will suffer from a reduced standard of living.

Use me as an example. I graduated with a degree in computer science & engineering but I’ve transitioned to the financial sector where there’s relatively more job security while some of my buddies back in california worry about losing their jobs to indian engineers who could do the job at a fraction of their salaries. Since my first job, I’ve worked in Los Angeles, Cheyene Wyoming, Hong Kong, and now Beijing and by “internationalizing” my career I’m hopefully less affected by one country/city’s demise compared to friends who would and must stay in Los Angeles.

In the 21st century, economic darwinism is alive and well, and whether the US can continue to thrive depends entirely on whether its citizens can adapt to the environment of globalization, or whether it will go the way of so many of the great nations that once ruled the world.

Personally I would not write off the US just yet.

[Anonymous]

powayseller: “If we really want to help the poor countries, we should teach them how to farm and manufacture. Maybe I’m just rambling…”

I’m not sure how to interpret this, but in a way the industrialized countries did help others in these domains. Think of the Green Revolution in farming that allowed many Third World countries to become self-sufficient in food, and the manufacturing techniques (some lawfully acquired, some not) that enabled various countries to become exporters of goods. There are downsides to all this, but countries do benefit from exchanges of ideas.

[gold_dredger_phd]

Lindi is right. If oil became more expensive, we would have spent the money on finding a replacement. They do exist. Why doesn’t every home in CA have solar panels?

{Solar power right now is a boondoggle. Too expensive compared to coal, hydropower, wind power, natural gas and nuclear. If you think it’s such a good idea, then go out and buy these solar panels yourself. Sunlight only provides 1.5kW per square meter under the best of conditions and if your panel is 10% efficient, then you can make 150 watts while the sun shines! Woo-woo!

Oil is becoming more expensive.

There is no “collective we”. }

Trade is important, as each country has unique resources and skills. However, our government leaders have allowed big business and their Fed member banks most likely, to profit at the expense of the American worker and our future productivity.

[Business exists to make a profit as does everyone who gets a job and goes to work. Businesses exist to make money, not provide jobs. Providing jobs for people is just a means to an end which is *to make money*.

Fortunately, our government leaders have been smart enough not to interfere with private business to the extent that people still have jobs in this country. Otherwise this place would be like Germany where they have 10% unemployment and the government there pays generously for people not to work. ]

When we started moving our manufacturing off-shore, there should have been a move to replace auto and textile manufacturing with something else: better farming, pharmaceuticals, engines, alternative energy. Instead, they just went for cheaper goods from overseas. There was no rhyme or reason to it, no planning at all.

{Thank god that there was no planning at all! Why shouldn’t they move manufacturing off shore? No one in this pristine state of California wants a factory next to them since it would pollute the pristine air or view or reduce property values. Do you want to live next to a steel mill or a chemical plant? Probably not, so don’t complain.

You want the government to pick winning industries for the future to replace the textile mills?

Curse the people that shop at WalMart for wanting cheap goods. Their wages have been stagnant since the late 1970’s, so the only way they can maintain their standard of living is by paying less for things. }

Likewise,the entire development of our society with far-flung suburbs and millions of miles of freeways (just a guess) should have been recognized as unsustainable by the urban planners in the 1950’s and 1960s. Did they think that oil is the only resource on this planet that is in unlimited supply? Don’t get me started, I’m getting real pi**ed off at the way our elected officials have let this country go to pot.

{I guess you think that urban planners should be able to see into the future 50 years so that you would not get p*ssed off! They did not invent the crystal ball yet and as far as I know, it’s still in the future. Where would your have put people that want to live in the suburbs? In beehives in the city? Dormitories near their factories?

Elected officials can get elected. That is their qualification. What do you expect? If you don’t like their lack of omniscience, then run for office yourself. }

Corporations are just as bad. They use corporate bonds and their big profits from the recent liquidity boom to buy back stocks, so the stock price goes up. Then the insiders sell the stock at high prices, in anticipation of the decline which is coming. Not enough money is invested in the future of the company, in building it up. The money goes to elevate the share value for the insiders.

{Corporations exist to make money for their shareholders, in theory. In fact, corporations are run for the benefit of the upper management. Accept this fact of reality. With concentrated benefits to upper management and diffuse costs to shareholders, why shouldn’t management pay itself as much as possible?

You get all of your economic news from Mother Jones and Utne Reader. I suggest reading, “Where are the Customers’ Yachts” to find out how Wall Street works.

Corporations should return the excess cash to their shareholders, otherwise they just go one an empire-building spending spree. }

Then we’ve got the bubble in private equity funding. What value is created by that? Just as with free trade where we shift higher paid jobs to lower wage countries and don’t replace those jobs with anything at all, what good comes of it?

{It puts the UAW out of business permanently which is a service to this country. The UAW was run by communists in the 1930’s and the leadership learned much of their economics from the same place you obviously did. Maybe the federal government can make a “jobs bank” for them where they can get paid 95% of their working wages and read the paper.

If you are worried about all this “private equity funding” then have the Sarbanes-Oxley Act repealed. There would be little incentive to take companies private. }

If we really want to help the poor countries, we should teach them how to farm and manufacture. Maybe I’m just rambling…

{Who says we should help the poor countries? What did they do for us? We have enough debt without giving them free money! These people already know how to farm and manufacture, they just need the government there to guarantee private property rights, have an independent judiciary, and not interfere in the economy. They don’t need help from us. Banana republics are banana republics for a reason. Look at Iraq. }

{I’m done rambling if you are.}

[lindismith]

Great post! I share your indecision, on everything. I guess that’s what makes me a bleeding-heart-liberal, sock-it-to-em-capitalist.

I dunno, I’m idealist. I wish things weren’t the way they are, but they are, so I deal. I think there’s a solution to everything. You know, the hydrogen-fueld Hummer….

[powayseller]

Thanks for all the food for thought. I don’t read those magazines you mentioned; those ramblings are purely mine.

I just saw a CNN video on Abu Dhabi. One of the developers said that they had planned so well for their future, their worldwide investments returned as much as their oil, so they are no longer dependent on oil revenue. Is planning for the future really so bad? video on this page

What do you make of this analysis of the similarities between the Soviet and US collapse? Will the US come out of this recession stronger, or will we have an economic collapse like the Soviets? Be prepared, it’s an uncomforting read.

[Anonymous]

Thank you for the US/USSR article. But it seems that the central argument of the author is that the Russians were so miserable that little changed during their collapse. That’s not “being prepared” it’s more like “already being in it”. And I’m not sure what all the Peak Oil stuff is doing in there – I don’t know about 1990 but today Russia is a net exporter of oil, and prices were collapsing during the 80s-90s. If anything they got hurt by an oil glut, not a shortage.

[Anonymous]

Great points, Gold Dredger.

U.S. manufacturing will come back as a result of the recession/depression: the downfall of the dollar will make U.S.-produced goods cheap to foreigners and a relative-bargain (compared to imports) to Americans.

Yep, the UAW and AFSCME (government employees) need to, and will, be put out of business (or at least neutered); these unions have made their members’ services much too expensive.

Things are out of whack, and the recession/depression will cure many of those ills.

[(former)FormerSanDiegan]

gold_dredger_phd –

Based on your numbers for solar power, I can cover my monthly electric usage by having a 4mx4m set of panels. I probably have room for twice that much on my roof.

Using your numbers, assuming 8 hours of sunlight
1.5 kW * 0.1 efficiency * 8 hours/day * 16 sq-m = 19.2 Kw-hours per day

OR
576 kw-hours per month
(And even more in the summer due to longer days).

I know it would take a decade or so to recoup initial purchase and installation, but why is solar power such a bad idea for home use ?

[PerryChase]

My gas and electric bill averages to about $100 per month even with the A/C runnning for a 4-bedroom house. I would never install Solar and have to maintain the system unless I could recover the cost in 10 years or less.

Because we are not a planned economy, America’s economic systems is highly flexible. It takes jolts to snap us out of our complecency. That’s what recessions are for.

As far as China goes, they will eventually surpass us in GDP simply because for their population. When that happens, their will be able to afford as good a military as ours and their political and economic influence will be monstruous.

From a standard-of-living standpoint, it will probably take another century for the Chinese to achieve per capita GDP parity with America.

America also has the option to swing its doors wide open to immigration in order to grow economically. But that will affect Joe Average and he won’t like it.

[Author]

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