Not seeing the forest for the trees?

southsiderosie

I saw this quote in last week's Economist:

Despite its problems, America has far more going for it than its current mood suggests. It is still the most innovative economy on earth, the place where the world’s greatest universities meet the world’s deepest pockets. Its demography is favourable, with a high birth rate and limitless space into which to expand. It has a flexible and hard-working labour force. Its ultra-low bond yields are a sign that the world’s investors still think it a good long-term bet. The most enterprising individuals on earth still clamour to come to America. And it still has a talented president who can surely do better than he has thus far.

Yes conservatives are angry and liberals are glum. But are we being too pessimistic?

I'll admit that I have been very pessimistic about the direction of the country, especially after going to Asia last summer where there was a sense of confidence and exuberance that seems to be lacking in the US these days. But I also feel like the Economist does have a point.

Maybe the problem is that the world the Economist describes exists, but only in certain parts of the country. There are large swathes, particularly in depressed manufacturing areas, that seem like they've been left totally behind. And as the gap between these two worlds grows, so does public anger and confusion.

I feel like we are at a critical juncture, but nobody is really sure where to go next, and none of our political leaders have any vision.

Maybe I am just being grouchy. What do other people think?

Denerick

Obama is the future and represents the massive structural reforms the American economy and political system requires if it wishes to remain a superpower. Taxes across the board need to go up, quite dramatically really, and their ageing population needs sorting out.

That said, China's rise is a little overstated. They are enjoying a demographic dividend at the moment but by 2020 the population will begin to age and the economy will begin to slow down as a result. India and certain countries in Africa will be far more likely to change global geopolitics in the long run - rapidly expanding young populations wedded to fast paced economic growth.

Furthermore China is witnessing one of the most gigantic property bubbles ever conceived by man; the cost of labour is rising steadily and are generally feeling the effects of heightened food and commodity prices.

America can still be the most important country on the planet. But it needs to wisen up. At present it has a generally corporatist system - big money buys elections and manipulates the citizens (Who have shockingly low levels of functional literacy - and frankly, high levels of gullibility) and the tax and regulatory system is weighted in the favour of big business.

America has its rustbelts but so do other countries - France, the UK, Germany, even the likes of China and India have their Ohio's and Pensylvania's. Regional imbalances are a function of the unpredictability of economic circumstances. What really matters is that entrepreneurial people naturally flock to the USA because it has the most innovative, dynamic and optimistic attitude in the globe. So long as that remains, America will remain a great big contradictory, horrible, wonderful place.

Black Swan

The US has been in the greatest recession since the Great Depression. Millions of homes have been lost to a record number of foreclosures, there have been historic bank failures, the equity market lost half its value by 2008, unemployment is in the double digits, and a record has been set for the federal deficit. Further, its economy is being drained by two pointless wars by billions per month. It will take time to recover from this recession and to withdraw from the wars.

The prevailing culture that I have been exposed to since crossing the pond for university over 4 years ago has been one of great impatience. It took a decade for the US to get into its current financial and war messes, and no one of reasonable mind can expect it to completely recover in less than 2 years (January 2009 to present), no matter what party is controlling the two houses of congress, or whom is president, yet the voters suddenly throw the Republicans out in 2008 and vote control to the Democrats, only to reverse direction months later and throw out the Democrats and bring back the Republicans. This is political lunacy on a grand scale.

Out of frustration a block of angry voters have irrationally turned to unqualified celebrities like Jesse Ventura or Arnold Schwarzenegger, who may be able to wrestle with an imaginary interplanetary space invader on the silver screen, but are clueless when it comes to governing Minnesota or California. Or they pick an underqualified and obscurely enculturated former beauty queen Sarah Palin, who was mayor of tiny 7000 population Wasilla (and quitter of a governorship halfway through), to be the candidate for the 2nd highest office in the nation, and now the outspoken leader of the sensationalist and platitudinous Republican Tea Party (both of whom endorsed an unemployed former witch to run for the US Senate in Delaware).

Fortunately, there may be hope for future change evident in the recent trend of voters to reject both the Republican and Democrat parties, keeping their options open by registering as Independents.

southsiderosie

Denerick wrote: »

Obama is the future and represents the massive structural reforms the American economy and political system requires if it wishes to remain a superpower...

America has its rustbelts but so do other countries - France, the UK, Germany, even the likes of China and India have their Ohio's and Pensylvania's. Regional imbalances are a function of the unpredictability of economic circumstances. What really matters is that entrepreneurial people naturally flock to the USA because it has the most innovative, dynamic and optimistic attitude in the globe.

Blue_Lagoon wrote: »

The prevailing culture that I have been exposed to since crossing the pond for university over 4 years ago has been one of great impatience. It took a decade for the US to get into its current financial and war messes, and no one of reasonable mind can expect it to completely recover in less than 2 years (January 2009 to present), no matter what party is controlling the two houses of congress, or whom is president, yet the voters suddenly throw the Republicans out in 2008 and vote control to the Democrats, only to reverse direction months later and throw out the Democrats and bring back the Republicans. This is political lunacy on a grand scale...

I think the economic problems run deeper than that. Real wages at the lower end of the labor market have essentially been stagnant since the 1970s. Access to loose credit over the last 20 years has masked the fact that wages lagged far behind productivity, while corporate profits were increasing; i.e. American workers did not capture many of the fruits of their labors, and therefore relies on Mastercard and home equity to fuel consumption.

I do think there are massive structural reforms that need to take place, because the structure of the economy and the nature of work have changed dramatically without a subsequent change in policy. Unfortunately, nobody in government or opposition seems to have a plan or a clue about where they want the country to go in the next 50 years. And I don't think that's a partisan issue, it's a lack of ideas issue.

FatherTed

Excellent posts in this thread.

Meanwhile, Michael Bloomberg hits nail on head:

As the debate rages over China’s trade and currencies policies, the 68-year-old Bloomberg, now in his third term as mayor of New York, was tough on China’s critics in the U.S. He spoke to reporters Saturday in Hong Kong after addressing a meeting of leaders from top cities around the world, dubbed the C40, focused on climate change and environment.

“I think in America, we’ve got to stop blaming the Chinese and blaming everybody else and take a look at ourselves,” he said.

A day earlier, Mr. Bloomberg visited several businesses (incluing a solar panel maker) in Shenzhen, a manufacturing hub that borders Hong Kong.

China’s big push into solar and other environmentally friendly energy technologies has begun to attract negative attention. Last month, the U.S. Trade Representative’s office said it would investigate China’s policies over complaints that the country was using tactics that violated its World Trade Organization commitments to shut other countries out of the burgeoning market for clean energy.

Mr. Bloomberg attacked the notion that using Chinese-made technology to promote green energy in the U.S. was politically objectionable. “Let me get this straight: There’s a country on the other side of the world that is taking their taxpayers’ dollars, and trying to sell subsidized things so we can buy them cheaper, and have better products, and we’re going to criticize that?”

Earlier, in an interview, the mayor was deeply, undiplomatically critical of provincialism and populism in U.S. Congress.

“If you look at the U.S., you look at who we’re electing to Congress, to the Senate—they can’t read,” he said. “I’ll bet you a bunch of these people don’t have passports. We’re about to start a trade war with China if we’re not careful here,” he warned, “only because nobody knows where China is. Nobody knows what China is.”

The mayor said his biggest impression from meeting his mayoral counterparts from China (the C40 includes about a half dozen heads of major cities in China) was their focus on environmental issues.

http://blogs.wsj.com/metropolis/2010/11/06/bloomberg-to-america-lay-off-the-chinese/

Black Swan

southsiderosie wrote: »

Unfortunately, nobody in government or opposition seems to have a plan or a clue about where they want the country to go in the next 50 years.

It's much deeper than that. Rather, the American management incentive structures, as taught in their university business schools and applied in most of their corporations, focuses on short term results, at the expense of long term vision and goals. Corporate boards, CEOs, and management are worried about making their quarterly and annual numbers, which are in turn tied to their compensation and advancement.

The American equity markets are also highly speculative, and short term thinking can be highly profitable for large active investors, or insider management that can affect short term swings in their corporation's stock trading prices. I know of a major corporation formally traded on the AMEX (now NYSE) that laid off employees across their divisions in one quarter to artificially improve the earnings reported in the short term, which in turn influenced the stock analysts to upgrade their stock from hold to buy. Many in management (who had laid off their employees) exercised their stock options in the succeeding quarter when the stock traded higher realizing large capital gains.

Black Swan

southsiderosie wrote: »

And I don't think that's a partisan issue, it's a lack of ideas issue.

It is a highly partisan issue, where winning control of Congress by either the Republicans or Democrats has been more important than working together to solve the nation's serious economic problems.

The labeling of the Republicans from 2008 to present as the "Party of No," to where they voted "no" as a partisan block, or filibustered to block or stall legislation to virtually every measure offered by the Democrats was no accident, and has paid off now with the mid-term November elections where the Democrats lost seats and control of the House because the recovery had been sluggish (in a self-fulfilling way).

Manic Moran

Out of frustration a block of angry voters have irrationally turned to unqualified celebrities like Jesse Ventura or Arnold Schwarzenegger, who may be able to wrestle with an imaginary interplanetary space invader on the silver screen, but are clueless when it comes to governing Minnesota or California

What exactly is your problem with Jesse Ventura? I've called you on this one before, he was quite popular in MN, and as near as I can tell made no particularly poor decisions outside of the pissing off the media, which I think is a good thing to do from time to time.

NTM

southsiderosie

Blue_Lagoon wrote: »

It's much deeper than that. Rather, the American management incentive structures, as taught in their university business schools and applied in most of their corporations, focuses on short term results, at the expense of long term vision and goals. Corporate boards, CEOs, and management are worried about making their quarterly and annual numbers, which are in turn tied to their compensation and advancement...

Ok, but I am not talking about corporations. I am talking about government. Although you could probably extend this to public life in general: where are the big ideas about what we want society to look like in the next 20 to 50 years?

Blue_Lagoon wrote: »

It is a highly partisan issue, where winning control of Congress by either the Republicans or Democrats has been more important than working together to solve the nation's serious economic problems.

The labeling of the Republicans from 2008 to present as the "Party of No," to where they voted "no" as a partisan block, or filibustered to block or stall legislation to virtually every measure offered by the Democrats was no accident, and has paid off now with the mid-term November elections where the Democrats lost seats and control of the House because the recovery had been sluggish (in a self-fulfilling way).

I disagree. When the Republicans took over the house in 1994, they had a very clear plan of action, whether you agreed with it or not. And Bill Clinton quite skillfully skimmed off the politically popular portions of the plan, while making Gingrich and the GOP look like petty idiots. Then that whole Monica thing happened...

Today the GOP is again the party of "No", but they offer no real alternatives. And the Democrats can't break out of the New Deal/Great Society socio-political model.

Denerick

The late 90s was a period of unprecedented economic growth and politics was essentially a theatre. Gingrich was a political genius. Clinton was an even greater one. They should be teaching Bill Clintons political tactics in political science degree's, some of his twists and manoeuvres were almost awe inspiring.

But then that fecking handjob got in the way...

southsiderosie

Denerick wrote: »

The late 90s was a period of unprecedented economic growth and politics was essentially a theatre. Gingrich was a political genius. Clinton was an even greater one. They should be teaching Bill Clintons political tactics in political science degree's, some of his twists and manoeuvres were almost awe inspiring.

But then that fecking handjob got in the way...

I don't think you can teach what Clinton has. He is brilliant, and he loves politics. He also likes people (sometimes a little too much!). The downside is that he has very little personal discipline.

Obama is almost the exact opposite. I don't think he loves politics, and he definitely does not get energized by glad-handing the way Clinton does. But he is very disciplined, and is apparently a devoted husband and father.

Another major difference between the two is that Clinton was deeply involved with the Democratic Leadership Council for years before becoming president. He had a clear ideological bent before coming into office, and I think his centrism helped him more plausibly poach a lot of GOP initiatives. Obama, on the other hand has been very careful to not take strong ideological positions on anything. I distinctly remember an old professor of mine saying that Obama seemed like 'an empty vessel' and I increasingly think he was right. And his lack of involvement in policymaking has not only hurt his own presidency, but the party as well.

I doubt John Boehner will usher in a new day for GOP policy, but at this moment in time, people have got to start talking about how we can concretely begin to turn things around and re-imagine the 21st century. None of the current leadership on either side of the aisle seem willing or able.

steelcityblues

Clinton was very much a Keynesian advocate - introducing new taxes and mediocre government programmes to beat the band, which ended up in the long run contributing to a crippling debt!

He was many things, but he wasn't an economic genius!

That weakness in Clinton worried me 100x more than him getting it on with an intern half his age!

southsiderosie

steelcityblues wrote: »

Clinton was very much a Keynesian advocate - introducing new taxes and mediocre government programmes to beat the band, which ended up in the long run contributing to a crippling debt!

He was many things, but he wasn't an economic genius!

That weakness in Clinton worried me 100x more than him getting it on with an intern half his age!

Note that the posts above call Clinton a political genius, not economic.

That said...what are you talking about? Yes, Clinton introduced new taxes, but he also cut a lot of government programs, including welfare. He also left the country a budget surplus at the end of his second term.

Not only did Bush piss the surplus away, but he dramatically expanded the size and scope of the federal government - this from a 'conservative'. He left the country in a terrible fiscal position, and the global crisis has only exacerbated the problem.

Denerick

steelcityblues wrote: »

Clinton was very much a Keynesian advocate - introducing new taxes and mediocre government programmes to beat the band, which ended up in the long run contributing to a crippling debt!

He was many things, but he wasn't an economic genius!

That weakness in Clinton worried me 100x more than him getting it on with an intern half his age!

To put it politely - utter bilge. Clinton was a realist, he realised taxes were necessary to fund the kind of military that jingoistic American idiots masturbate so profusely over.

The current political climate is at war with reality - it refuses to make cuts to the lions share of the federal budget (The military, medicare and social security) and meanwhile harp on about irresponsible spending yada yada. Here's some fúcking responsibility - have some bloody intellectual consistency and attack the three holy cows that account for the majority of the American deficit. If you do not do that, then behave like a responsible adult - raise taxes so that your grandchildren aren't forced to pay for the profligacy and stupidity of their grandparents.

fontanalis

Is there a danger that the US is too reliant on the financial services industry?
Reading some of Matt Taibbi's stuff and it seems that a lot of it is a confidence game where as long as you're not the last man in you don't get left with the box of sh** (sounds like a ponzi scheme to me), another bubble is likely be it emerging markets or getting stung by the inevitable bursting of China.
Like most western countries manufacturing jobs (apart from highly specialised IT & Pharmaceutical etc) are declining.
The money is to be made in places like financial services and that's where a lot of people want to be but there has to be a saturation point, add the fact that college costs a fortune.

steelcityblues

Denerick wrote: »

To put it politely - utter bilge. Clinton was a realist, he realised taxes were necessary to fund the kind of military that jingoistic American idiots masturbate so profusely over.

The current political climate is at war with reality - it refuses to make cuts to the lions share of the federal budget (The military, medicare and social security) and meanwhile harp on about irresponsible spending yada yada. Here's some fúcking responsibility - have some bloody intellectual consistency and attack the three holy cows that account for the majority of the American deficit. If you do not do that, then behave like a responsible adult - raise taxes so that your grandchildren aren't forced to pay for the profligacy and stupidity of their grandparents.

Well I agree that the level of military spending is obnoxious in a divided, undereducated society like America, but every President be they Democrat or Republican makes no serious attempt to cut this area.

Clinton actually spent more on defense (in the region of trillion) than even war mad Bush Sr. but I know you won't blame your darling for anything and it is always only the Republicans fault. :rolleyes:

Taxes are fine as long as the average citizen is going to get proper investment from their government as aresult. Do you see this happening, because I don't?

Jack Sheehan

steelcityblues wrote: »

Well I agree that the level of military spending is obnoxious in a divided, undereducated society like America, but every President be they Democrat or Republican makes no serious attempt to cut this area.

Clinton actually spent more on defense (in the region of trillion) than even war mad Bush Sr. but I know you won't blame your darling for anything and it is always only the Republicans fault. :rolleyes:

Taxes are fine as long as the average citizen is going to get proper investment from their government as aresult. Do you see this happening, because I don't?

1.Wars in Iraq and Afghanistan
2.Medicare C
3.The 2000 tax cuts

Those are the three reasons for the current (medium term) deficit. Saying 'clinton did it' is so far out there as to be laughable.

InTheTrees

I've been in the US over twenty years and I can see the place changing even despite the recession.

Generally most americans are taking home less while a small percentage are accumalating most of the wealth.

Basically we're heading banana republic very fast. And I don't mean the yuppie clothing store.

kaiser sauze

Jack Sheehan wrote: »

1.Wars in Iraq and Afghanistan
2.Medicare C
3.The 2000 tax cuts

Those are the three reasons for the current (medium term) deficit. Saying 'clinton did it' is so far out there as to be laughable.

I think you will find it was Medicare Part 'D'.