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Do you think the US economy is changing permanently?
Do you think that the currant recession is a simple natural hiccup of capitalism or do you believe it is more important than that? Do you think that the US economy is changing permanently from Goods based to service based? Is it changing this way?
The mess of the US economy is not a simple hiccup. It is the result of a gradual development from a manufacturing based economy towards a service oriented economy.
The problem is that technological progress is spread almost evenly over our planet. You find combines for harvesting crop in India and the western plains. Technology for coal mining, producing cars or information interchange is the same all over this world.
You may ask what does technological progress have to do with the state of the US economy, especially if much high tech is originated in the US. Answer is simple. Technological progress defines what manufacturing, producing percentage of GDP is necessary to keep things going. That number is roughly 15% on world average. The US has only 10% producing industry and that reflects directly into the trade balance. More stuff has to be imported than exported to maintain status quo. But because for an economy this is a zero sum game, someone has to lend the money to buy the equipment and natural resources from the friendly world in the neighbourhood. In the beginning (1970ties and 1980ties) this process was only slowly emerging. In the late 90ties and 2000 things became obvious (at least for some smart people at the helm) and someone came up with an interesting method to let participate the average American in the borrowing game, the subprime bubble was born.
The reason why the US economy is not recouperating should be fairly logical: The bubble is only a symptom, the real cause is the lack of productivity, of producing industry. The bubble seems to be gone with Lehmans, industry is still down.
It has changed, but I don't like the word permanent because nothing is permanent in economics or life otehr than deather and taxes. We have moved largely to an economy that is too heavily based on consumption for one thing. Consumption makes up about 70% of the US economy. This is because we have become completely uncompetitive from a labor market standpoint. The US benefited greatly after WW2 from the lack of competition. Europe & Japan were in rubble, Eastern Europe and the Soviets were under Communist control and the rest of Asia and South America were undeveloped. As a result of our lack of competition we had a labor force that could make demands on all all kinds of benefits that were not carefully thought out. As an example, we had automakers who made pension guarantees that did not properly address the changing demographics and life expectany changes. They ended up in many cases paying people in retirement just as long as they worked. It was unsustainable. Now we are dealing with the fact that the rest of the world can make products that are in many cases just as good for a lot less money. Since Americans are always looking for something less expensive, those jobs won't come back for a long, long time.
The largest problem is the Federal Go'vt. Starting a business almost anywhere in the US means facing nothing but headwinds. They make it a literal obstacle course of rules and restrictions that are highly discouraging from a tax standpoint, and more importantly a regulatory standpoint.
The US still leads the world from the stand point of innovation, but not the mass production of this innovation. The future of the US economy should be the energy sector. The latest discovery in North Dakota rivals the natural resources of Saudi Arabia. If we could get the Federal Gov't (particularly the dept of interior) to back off the restrictions on the US using it's own resources, this can revolutionize our economy.
From a labor force stand point, jobs will continue to go oversease until the gov't decides to create more business friendly enivronment to operate in. I am not optomistic about this in the short term. Our regulators don't seem to think it's their job to help you learn the rules to operate within. Instead they seem to think it's their job to prevent you to operate. As long as that is the culture, you'll see more control by a fewer number of large multinational companies that can weather the storm, and startups will struggle.
Simply put, YES! This is what needs to happen to bring the US economy back, returning to our roots. Back to the time when smaller enterprising business' had equal opportunities to contribute their expertise to their local communities by offering service AND goods with a smile and everybody knew who you were.
The internet is the key to gaining back this control by small business' getting a piece of the action NOW, before it is too late. From there, it will blossom. As small businesses acquire more and more market control by forming alliances together, interacting, socializing, and giving personalized service to their communities, corporate America will see their shares dwindle little by little and the small businesses will see a rise. Local businesses can advertise online, targeting their local followings and get their customers back across the thresholds of their brick and mortar businesses again. There will be a meeting place in the middle between corporate America and small business, which will provide a more equal share of our nations wealth to all. As this wealth becomes more evenly distributed, jobs will come back! We will all want to better educate and hire our own and the improved economy will allow for it.
This will not effect our industrial, manufacturers, and distributing sectors of business because "local" businesses will still have a need for their goods and resources to offer and conduct their business.
This is just a small-town country girl's opinion here. But hey, I do have the right to my own opinion and to express it freely, as long as we continue to live in a country that believes in "Liberty and Freedom for ALL"!
"As small businesses acquire more and more market control by forming alliances together" - will it not give birth a giant multinational soon ?
As our large corporate, banking, and political "alliances" continue to build, won't the same in fact happen? I personally would rather see the control in the hands of the multitudes than the hands of the fewer most wealthy making all others slaves.
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