I just read a very interesting blog post by David Friedman on the current economy and the differing approaches of the US and the UK (http://daviddfriedman.blogspot.com/2010/11/most-expensive-research-project-ever.html). I haven't decided how much I agree or disagree with, but I thought it would be interesting to post my remarks here:
An interesting observation. However, something I think we seem to be overlooking here (and which was not an issue during the Roosevelt Administration), is the vast increase in outsourcing. How does that affect (or not) the GDP? Also, the outsourcing and automation of many jobs that formerly supported a significant portion of the working population has changed not just the employment rate, but the nature of consumption. Why pay an American a decent wage when you can buy cheap crap from China? Something that I have noticed in the past decade is that we all want jobs that will support an upper middle income (or higher) lifestyle, but we don't want to pay the costs of goods and services that support the jobs that support that lifestyle. It becomes a downward spiral- the more we demand low prices, the more goods are imported and jobs are sent overseas. No jobs or lower-wage jobs increase the demand for lower prices of goods... I think it's the economic version of the saying "Everyone wants to get to heaven, but nobody wants to die".
Of course, I don't have any brilliant ideas for stopping that spiral, or reversing it. And it appears that no one in the Treasury Department or the Federal Reserve has any bright ideas either.
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9 comments:
actually, there IS something you can do about it, one person at a time...Buy American.
That's how WalMart originally made its money and its fame (before old Sam died and the kids started seeing $$$$).
Will it cost more. Yep. But each of us can do it. Kind of like recycling. Or voting.
Hard to do with wages down... but I agree with you. Just don't think people will do it, when there's all that lovely cheap Chinese crap at Wal-Mart and Target.
In our shopping this year, in our relocation we've bought locally when we've had the opportunity. For instance, our mattress set was made in Newberg, OR. And for our remodel, we are really trying to choose materials made in the U.S., preferably in the western part of the U.S. (Douglas Fir cabinets!) Though, most of the time, there are no options made in the U.S.; the retailers just don't carry them.
There is that sort of thing, Sharon, and I think it's cool as all get out. I'd rather buy from a local artisan than Ikea, for instance. However, I think we run into economy of scale- demand for goods is higher than the small businesses can accommodate. And small artisans aren't cheap. Heck, you can get a dress cheap at Wal-Mart, but if I make it, I'm expensive. Mind you, I put out better quality, but if cheap is what you're after, I'm not it...
With all due respect, Domina, I'm sorry to say that your economic theories seem to be the economic equivalent of the four humours and leeching in medicine, phlogiston in chemistry, and spontaneous generation in biology.
Really John? How so?
Oh- and by the way, there's no 'i' in Domna. ;-)
I like this site. Really nice place for all
Why, thank you anonymous! I'm glad you like it!
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