Some of the posts were about women’s rights, and I support that, no questions asked.
I am not sure how we can grow our way out. The United States economy is mature and in secular decline due to increasing competition and mismanagement. We have peaked. Sure, there is an argument to be made that we are the technology leaders in computing and biotech, but that is only true for now, and the barriers to entry on that are declining. The credit bubble had a lot of causes, but one of those causes was the concentration of smart labor in the financial field – that occurred because finance the best prospects for wealth accumulation in the economy. That fact is partly due to finance itself, but is also true because of absence of opportunities elsewhere in the economy, which is not an encouraging sign (i.e., who gets rich in domestic manufacturing these days?).
Let me take this opportunity to say I think there’s some truth in what TF says here.
However, I don’t believe that full laizzez-faire will solve this problem, either, because 1) things like environmental decay still happen, and 2) when assets finally get concentrated in a small number of hands under the kind of “winner take all” rules that modern technology enables, then the economy stops responding to the interests of anyone except the small number of asset owners. Even the uber-wealthy lose here, because there is effectively no one left to buy their products and society turns into a kind of techno-feudalism.
Ultimately, a world in which all assets are controlled by a tiny minority is no freer than a world in which all assets are owned by the government. Which is why I think the middle ground that TF so despises is actually the most important ground to navigate.
I’m not sure, either (and that’s what keeps me awake at night). But if we can’t, then it almost doesn’t matter about the debt, we’re going to implode either way, and the only real choice is which form of execution to prefer and when. :-/
I think there is some hope, but a lot of the things that made US creativity translate into US productivity and growth seem to be widely dispersed now. You can have a creative idea that leads to a breakthrough product, but you basically reward a few innovators here (yay for innovators, I do support that), but the employment benefits are primarily realized abroad (good for them, but it means we aren’t going to put people back to work as easily via innovations).
I don’t agree that it doesn’t matter. Lots of mature companies can create value in the absence of growth by allocating capital efficiently – the idea that things need to grow forever is an investor fallacy (not criticising you, but this is a recurring theme in the stock market and a boon to value investors). It’s really about maximizing cash flow available to fix the debt, and growth is only one mechanism for that.
In the case of the US, we “create value” by first not destroying value with untenable entitlements. We need to raise taxes and cut spending and do both pretty severely, and then lump it as a nation. If we can both grow revenue and cut spending, we’ll be able to clean up the balance sheet in a no growth environment (and since growth is likely to be positive (if low), that’s even better). Clearly, this would take years and would require a sustained effort.
The problem is that people are extremely selfish. Baby boomers (“the locust generation”) feel entitled to all this wealth, and they’re the largest voting block (and they do vote). Probably we’re going to continue to destroy value for younger generations. It’s one of the greatest media fictions of our time that Gen Y is called the “Entitlement Generation” because all I’m entitled to is a gutted economy and a sinkhole of debt. But the problem is fixable, if there were a political will. We lack that with Obama, and that’s why I’m disappointed.
Basically, if the United States were a stock, it would have tremendous structural potential but look scary on the math. The one key question for any investor would be, who is managing this and do they understand how to create value? And the answer to that is no. USA stock is a sell.
Re: (2) there is no evidence of “winner take all outcomes” in a truly competitive environment. the outcomes we’ve seen time and time again can always be traced back to some kind of government protection against competition. If you can give a concrete example of this occurring without some form of welfare/market protection coming from the government, you can fart in my dinner…spray fart.
Re: (1) I’d argue that more privatization and competition would be far better for the environment than the current system of government intervention. I’ve got binders full of examples of how the government has made things worse. in a true capitalist system, no one has the right to degrade or destroy your personal property. the onus would be on the producers to mitigate negative environmental impacts of their activities, or they’d have to enter some sort of rational arrangement where known negative effects of any given externalities were compensated by a pigouvian type fee. Obviously this is a difficult problem, but this ideal should guide all decisions on how to deal with it. Please don’t tell me you think the current government has this ideal in mind with their current policies.
Fellow Business Executives: As the CFO of this business that employees 140 people, I have resigned myself to the fact that Barack Obama is our next President and that our taxes and government fees will increase in a BIG way. To compensate for these increases, I figure that the clients will have to see an increase in our fees to them of at least 8%, but since we cannot increase our fees right now due to the dismal state of our economy, we will have to lay off six of our employees instead. This has really been eating at me for a while, as we believe we are family here and I didn’t know how to choose who will have to go. So, this is what I did. I strolled through our parking lot and found eight Obama bumper stickers on our employees’ cars and have decided these folks will be the first to be laid off. I can’t think of a more fair way to approach this problem. These folks wanted change; I gave it to them. If you have a better idea, let me know.
It’s called the business world. I recently met with the CFO of a large restaurant franchisor (the largest in the country for their brand of restaurants, which is a household name).
I asked, how will Obamacare impact your margins, and are you prepared for that?
CFO: “It limits our ability to give people more than 30 hours a week, otherwise we have to pay health benefits. We have systems in place at the restaurant level that prevent people from hitting 30 hours, and we’re putting in a corporate cross check system to enforce that. It will have almost no impact on us.”
Me: “So Obamacare did nothing?”
CFO: “Not nothing, it reduced the number of hours our hourly people will be scheduled each week.”
Oh snap, I don’t think it’s working as intended. Now the marginally employed will need to find a second marginal job. My friend is an exec at another large restaurant chain, and they’re in the process of doing something similar.
^ ^ the upside of this is that a lot of those employers are eyeing seniors because they don’t mind working 16 or 20 hour weeks and they will need money to make up for the gutting of Medicare. College students don’t want these jobs anymore anyway, so I guess it’s a win-win.
Politics is nothing bu anecdotes. How many Obama rallies DIDN’T include something along the lines of “Yesterday in (insert city name) a single mother who is working 3 jobs grabbed my arm and said…”? Answer, none. Ditto for Romney.
Average US Weekly Hours Worked (Non-Farm Payrolls Total Private Sector). Keep in mind Obamacare passed in March of 2010.
2012- 33.7
2011- 33.6
2010- 33.4
2009- 33.1
2008- 33.6
2007- 33.8
2006- 33.9
Yesterday I was talking to a young blue collar manufacturing worker with 2.5 children, named Joe. I asked him, “Joe, what do you think of these shameless anecdotes targeting unintelligent audiences?” He looked me in the eyes, offered me a firm American handshake, and told me, “CFAvMBA is smarter than this.” Listen to Joe CFAvMBA, because that’s my America. Black Swan 2016.
Passed in 2010, but goes into effect in stages. The pertinent part for this discussion, the Employer Mandate, does not go into effect until 2014. The stats also do not indicate how many jobs contribute to those hours. When the Employer Mandate goes into effect, I actually wouldn’t be shocked to see average hours go up as people who were previously working one 40 hour/week job will have to work multiple part-time jobs totalling 40+ hours/week to make 80% of the money.
higgmond is correct, the relevant part doesn’t go into effect until 2014. I’m not sure it will be a large negative change overall for most people, but if the plan was to force companies to pay for healthcare, I don’t think it will work – they’ll just find ways around it. I think the focus should have been reducing healthcare costs overall (as we have discussed many times on this board), thereby making healthcare something the average person could afford.
I also agree that this probably hurts marginally employed people, since now they’re going to have work two jobs for the same pay (I don’t know that it would be lower). It basically fractionalized their labor output, and it’s hard to see any reason that would be a positive for them (it give the evil corporate overlords even more power now, at least in the case I referenced).
My point was simply that regardless of the impact in 2014 (which is still speculative), such anecdotes as posted above regarding the current situation often bely actual statistics. I’d pull average pay as well, but if someone wants to show that’s been impacted they can do the work. I’ll just assume it’s going up till then.