I'm reading Economics: Making sense of the Modern Economy by The Economist. A series of short essays

[applegrove]

on the history of economics and current issues as well as the future. It is mind blowing. Did you know they can estimate GDP by looking at sattelite pictures on the world at night and noting the prevalence of artificial lights? Did you know global trade results in 1 Trillion more in Americans' pockets each year (they didn't say anything about how that trillion is actually distributed which is what concerns me). That world trade results in more productivity for manufacturing at home as technology is imported?

I highly reccommend this book.

[Warpy]

1. Unfortunately, the US has been a net exporter of technology

for about the last 45 years or so and the jobs have all gone with it, the executive class pocketing the difference that cheaper labor made. That's why our economy has stalled out and has been kept on life support for much of that time by extending working people endless credit to compensate for sub subsistence wages.

I'm afraid the argument made by The Economist doesn't apply very well to the US.

[applegrove]

3. At the end of the second world war americans became manufacturers to the world. They did not

have to compete with Europe (which was totally broken after WW2), Asia (which was in a 200 year slump), the Soviet Bloc (who couldn't manufacture anything if their life depended on it), africa (subsistance agriculture and control by their european masters) and South America (banana republics). So the USA manufactured stuff for the whole world. And Americans did very well and got very rich in those days. It was inevitable that the rest of the world would start to get their acts together and start to build things. That is part of why the USA has lost so many great jobs. Apparently the only trade deficits the US faces (according to Bill Clinton) are with Opec countries and China. All other trade relationships are a win/win for the USA and their partners. That doesn't mean that some people don't lose their jobs. Americans just end up specializing in what they are best at. But my point is this: that world, where the USA manufactured for the rest of the planet while buying only raw materials from the rest of the world, if that, is gone. It was great while it lasted. How long do you think the Koreans would be using facebook, and microsoft products if the USA insisted on selling them manufactured goods while buying nothing from South Korea? That doesn't mean you don't have tariffs when someone uses unfair trading practices (there should be some penalty for China currency manipulations). But there is now more equality in the world. America has to adapt and do r&d to get the next good jobs that are out there.

[Warpy]

4. And to do that, the people with all the money have to be persuaded

to invest in their own country again. The best way I can see to accomplish this is a return to progressive taxation that rises to a confiscatory level on extreme wealth--unless that wealth is invested here.

[mbperrin]

5. Exactly why those 92% rates worked in the 50s - work the money

in a real industry or lose it.

Low taxes make it possible to hoard with little penalty, and that is why trillions are just socked away at the moment.

[applegrove]

6. You need to send companies out to make money around the world and then tax them when

they bring the profits home. George W. Bush gave the corporations a deal on taxes on the repatriated profits. Obama isn't going to do that. Though he may drop the corporate rate to match Canada and Europe.

[jtuck004]

7. We didn't just "become" the mfr's to the world. We invested in this country, both in social

programs and war, for about 15 years. We continued after the war by sending millions of people through college to become engineers, doctors, etc., through vocational schools to become welders and surveyors and plumbers and...well, you know, I'm sure.

We leveraged those investments into the opportunity to become the MFR's to the world. It's just basic business. You invest or die, because the world will grow, but if you don't invest what you have your wealth will shrink in comparison.

Many people leave that "investment the size and complexity that requires government intervention" part out. We have been leaving it out as a country since about 1980 or so. Now just selling our seed corn while many just circle the drain.

[applegrove]

9. Oh I agree.

[WCGreen]

8. Sounds like a good book...

I'll pick it up after tax season...