Owl 69/70/75
Just an old rugby coach
Posts: 80,655
Joined: Sep 2005
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I Root For: RiceBathChelsea
Location: Montgomery, TX
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RE: US Economy hit bottom...
(01-28-2009 09:00 AM)Artifice Wrote: (01-27-2009 10:04 PM)Owl 69/70/75 Wrote: I'd actually like to engage on some of the points you made in the longer post replying to me.
Please do. Unlike other people on this board, you honestly engage. I really enjoy reading your replies.
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Historically, we've relied on our cheap materials cost and immediate consumer base to attract manufacturing jobs. Though labor costs continued to rise, it was never here because of cheap labor. I don't see that situation as having changed much.
What has changed is the stimulation of the export of labor to foreign markets where labor costs are so trivial by comparison that there really is a "value add", at least to the capital holders & officers. As we've seen, the tide didn't rise to lift all boats, it rushed out and left many beached.
What I would do, from a high level approach, is to reverse the negative impacts of our free trade agreements, including NAFTA, that have driven down U.S. wages, and created the Maquiladora workers on the border that now comprise a third of Mexico's labor force. I would strongly curtail many US Ag subsidies that end up costing us jobs and have us dumping surplus ag product on the mexican market, detsroying their economy. I would end entitlements for and deport undocumented workers.
But, rather than eliminating corporate income taxes, which ultimately just puts more money back in the fat cats' hands, I would continue to push tax credit incentives for American job creation and retention. We cannot be protectionist and have a future either. We need to spur new growth such as foreign owned auto plants (Hyundai in 'Bama) that create valuable jobs. Despite what most think, I'd give even more credit for jobs that ultimately create a trade surplus for the country.
And the biggie? Investment in an entirely new, clean, renewable power grid for the country. Sources (wind, solar, etc), storage, and delivery systems. This is the single biggest investment we can make in this country's future. With modern farming techniques, barring war or distaster, we should always have the ability to feed ourselves, so our number one issue is the ability to be self sufficient energy producers, and dare we think it - supply surplus energy to friendly trade partners around the world. We need to be a world leader in this area. If you think a couple of desert-ridden countries with some backyard crude have power, imagine the U.S. as the major producer of renewable energy...
BTW, I also think that Canada will ultimately challenge us for dominance in this field, if they ever get their act together. They have so much untapped capacity...
OK, I'll give you a few thoughts back in reply.
As for reversing the negative impacts of NAFTA, I'm wondering what you have in mind here. The standard leftist (including Obama) approach is that we're going to somehow change NAFTA. Well, excuse me, but Canada and Mexico are parties to NAFTA and they are both sovereign nations and I don't think we are just going to dictate changes to them. Suppose we say, "This needs to be changed," and they say (as I suspect they will in at least some cases), "F you." Now what? I find it interesting that the left objects so vigorously when the Bushies dictate to Iraq, but they have no qualms about doing the same to Canada and Mexico. NAFTA is a convenient whipping boy, but I think an inappropriate one:
1. Any job that moved offshore to anywhere but Canada or Mexico has absolutely nothing to do with NAFTA.
2. Most of the jobs that moved to Canada or Mexico went there because of unhappiness with the USA. They were going somewhere offshore anyway. The effect of NAFTA was that they went to Canada or Mexico rather than going to China or Thailand.
3. The jobs that are left can be attributed to NAFTA, at least in part, but they are far fewer than NAFTA's attackers would have you believe.
We're in a global economic battle. It's fierce, if friendly competition. Our labor costs are higher than much of the competition, always have been, and hopefully always will be. Historically we have been able to compete because we won in other areas--proximity to US market, productivity of US workers, tax advantages, lower perceived risk. It's those advantages that we have lost in the last few years. We need to either (1) get them back, (2) find others to replace them, (3) cut wages to the bone (not a viable idea), or (4) get used to being a banana republic. Perot is the last US politician who understood this, and we've done next to nothing to address these concerns since he first brought them to light in 1992.
Your idea of alternative energy is a good one, and something that we need to pursue, perhaps even more aggressively on some fronts than you suggest. In particular, I think that the improvement of electric storage technology (which you mention) is probably the keystone to turning energy around--and nobody but you or me is even talking about it. The problem is that alternative energy proponents just aren't realistic about the enormity of the problem. The kinds of initiatives that they are pushing as the solution won't amount to enough to dent the problem. Couple of examples. Obama says that he wants to double the amount of energy from alternatives in three years. If he does that, and nothing else, and historic trends continue, then three years from now we'll be importing more foreign oil than we are today. The anticipated decline in domestic production if we don't start drilling will more than offset the increased energy gained from alternatives. Obama also says that he wants a million electric cars on the road by 2015. If we do that, and do nothing else, we'll import more oil in 2015 than we do now. Of course, if we put more than a million electric cars on the road by 2015, and don't fix our electricity supply, we'll have nationwide rolling brownouts when people come home and start to charge their cars. We need to emulate Brasil--an all hands on deck solution is the only thing that will work. What would probably help most immediately is importing sugar cane ethanol from latin america to supplement domestic corn ethanol. Given Obama's ties to the agri-business giants I doubt we'll see that; nor are we likely to see any overhaul of the agricultural subsidy programs you mention correctly as needing drastic changes. As for your idea of exporting energy, when what we are producing is electricity, it's going to be dicey to develop much of an export market. Canda (which won't need it) and Mexico are options. But go much past that and transmission issues will doom it. Of course if using electricity allows us to export some of our own coal and oil, maybe that would work.
As for your thoughts about corporate taxes, as long as you hold the view of management that you expressed, you're not going to be able to look objectively at what is needed. Democrats can talk all they want about Reaganomics failing, but that's not the message that the rest of the world got. Bill Clinton did exactly what supply-side economics says you should do--keep tax rates lower than the competition, cut spending, and the economy will boom and the budget will balance. The rest of the world took note, and tax rates have plummeted all around us over the last 15-20 years. If we're going to be competitive, we're going to have to join them, regardless of what you feel personally about the issue. We're not going to tax corporations at 40% (including state taxes) and take jobs away from Ireland who taxes them at 12.5%; it's just not going to happen. Another thing I question about liberals is that, for all their talk about the need to engage other countries diplomatically, there's little about engaging economically and basing our policies on how we should best respond to what's going on elsewhere. We ignore these developments at our peril.
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