We Are In The Post-Industrial Economy

[eridani]

Since labor and middle class income is shrinking, there has not been enough spending to trigger growth in our consumption oriented economy. So the only other macro economic answer is to offset this weakness with increases in capital spending on buildings, equipment, R & D, and new products. But this isn’t happening.

Robert Samuelson of the Washington Post says, “Corporate America is husbanding its profits. It invests mainly in the safest projects. From 2007 (the previous business cycle peak) to 2012, domestic corporate profits climbed 35 percent while investment in plants and equipment rose only 2.6 percent. American companies had accumulated a huge cash hoard of $1.8 trillion at the end of 2012.[3]

The big companies will argue that they won’t make these capital investments because consumption is not high enough. Yet, the middle class can’t buy more because of falling incomes. So the economy continues to limp along with low growth.

President Obama created the Council on Jobs and Competitiveness in 2011 with the goal of creating 1 million manufacturing jobs. He appointed General Electrics Chief Executive, Jeff Immelt as the council’s chairman. This was a big surprise to me because General Electric had been one of the biggest exporters of jobs – they reduced their total manufacturing jobs in the U.S. from 125,000 to 50,000 people from year 2000 to 2010.

[marions ghost]

1. Interesting

you can see the big turning point right at Booshcheney.

Hoarding instead of investing in the country, while manufacturing output climbs in spite of massive job loss.

They know the figures and they like them.

[chervilant]

2. Every single time:

So the economy continues to limp along with low growth.

Our economy has been "limping along" for years, now. The "recovery" bone gets thrown out when the corporate megalomaniacs think the Hoi Polloi needs its rainbow unicorn fix.

We sheeple need to get a clue. Our current economy is little more than a wealth generator for the uber wealthy.

[seabeckind]

3. So because corporations chose to move manufacturing

we are in that era?

Nonsense.

We still need the production of goods. Corporations moved that production where they could reduce their costs and thereby increase their profits.

Corporations found it was more advantageous for their bottom line to buy a competing technology and eliminate it rather than retooling. Having a big bunch of capital and being able to increase their net worth at the same time was gravy.

Using that capital to invest in money than their own core business was more profitable. I can't remember the term for leveraging worth. Vampire raiders, like Bain, extended this for the corporations that didn't do it on their own or didn't have enough capital to do it.

What all these things, and a few more, did was to turn what once was a tremendous storehouse of basic worth and turn it into a conglomeration of empty husks.

GE reduced their manufacturing jobs in the US because it benefitted them, not because they weren't needed. Another BS economic paper to convince us that our jobs are gone forever and keep us from drawing the proper conclusion -- that the corporate-based capitalism model needs to be rebuilt.

[KurtNYC]

4. We need to transcend having more manufacturing as a goal.

Buying the same good over and over. Disposable electronics, refrigerators, lawn mowers, cars, clothing, plastic crap is a treadmill. Right now we are headed toward a future where most people own nothing at all. Your whole life could be a EULA -- you pay for the right to use stuff but never really own it.

They measure wealth in terms of how many disposable goods we buy but the very fact that the goods are disposable means they aren't wealth.

Real wealth for the average person would be the ability to grow your food and medicines and ANYTHING (tools, clothing, housing, transportation) which lasts long enough to be handed down to the next generation.

[jwirr]

5. Ed Schultz needs to add this graph to his vulture graph. It clearly shows we have been going down

since raygunomics started sending out jobs overseas. This is really damning of the raygun policies.