Month: April 2013

All Recoveries are not Created Equal

According to a new Pew Research report, during the first two years of the (tepid) recover the “upper 7 percent of American households saw their average net worth increase 28 percent, while the wealth of the other 93 percent declined.”

Here’s an analysis from the Washington Post: In recovery the rich get richer

And here is a link to the Pew Report: Rise in Wealth for the Wealthy

This is not necessarily a bad thing in the abstract, but we don’t live in Abstractistan, we live in the real world. In the real world wealth disparity leads to social and political unrest. It is also well documented that when the wealthy control most of the money, there is less in the pockets of average consumers, and hence less economic activity. Do both sound familiar?

 

Rand Paul on Drones

So Senator Rand Paul went from his famous filibusterer objecting to the Obama administration’s drone policy to publicly endorsing the use of drones in law enforcement within the United States.

Remember just a few weeks ago, when Senator Paul took to the floor of the Senate and said: “I will speak as long as it takes, until the alarm is sounded from coast to coast that our Constitution is important, … That your rights to trial by jury are precious, that no American should be killed by a drone on American soil without first being charged with a crime, without first being found to be guilty by a court.”

Well, last night, on the Neil Cavuto show on Fox News, Paul said: “I have never argued against any technology being used against having an imminent threat, [or] an act of crime going on. If someone comes out of a liquor store with a weapon and 50 dollars in cash I don’t care if a Drone kills him or a policeman kills him.”  Excerpt From Cavuto Show on Raw Story

So much for the moral high ground.

 

 

Manufacturing Jobs Returning to the US

There have been a number of news stories recently about manufacturing jobs returning to the United States.

This was the cover story on Time Magazine a few weeks ago. Here’s a link, but it the full article is only available to paid subscribers: U.S. Manufacturing is staging a Comeback

And GE recently announced that it will expand production of appliances in the Appliance Park in Louisville. Here’s a link to the Lane Report article.

These articles note that manufacturing is returning to the US for a number of reasons, but all are based on the economics of production in the US. There are two major reasons for the move. The first is that this allows production to be much closer to product design, which allows the designers to quickly modify the product based on manufacturing experience, and also allows the manufacturers to work more closely with the designers to improve both the manufacturing process and the design of the product. The other major reason for the move is that the increase in shipping costs, particularly for large and heavy products, has greatly reduces the competitive advantage of producing in low wage countries like China.

This is extraordinarily good news for the American economy and for American workers. But one point that bears mentioning is that this seems to throw cold water on the idea often offered by conservative politicians that manufacturing left the US because of overly burdensome regulations. If anything, according to conservatives, regulation during the Obama years has only increased. [This is not really true, but is not the point of this post.] Despite this, manufacturing is returning to the US. If conservatives were right and production left because of burdensome regulation, how is it returning now, when regulation has only increased? Could it be that they were wrong?

It is worth noting that none of these articles mentioned the regulatory burden as a reason for leaving, or a reason for returning.

Reinhart & Rogoff Part 2

Here are two more articles on the problems and fall-out from the Reinhart Rogoff paper.

From Salon: How to Prevent Future Reinhart – Rogoff Meltdowns

From Jared Bernstein: The Reinhart/Rogoff Mistake

By the way, for future reference, Jared Bernstein’s blog is a wealth of good economic information. It is at http://jaredbernsteinblog.com

Also for future reference, the Political Economy Research Institute is also a good source of economic information.  http://www.peri.umass.edu/

Is the Internet Making us Poor?

Here’s an outstanding article on the new world economy and its impact on our lives.

The title is: How the Internet is Making us poor

Actually it is making a few people fabulously wealthy, but the rest of us? Not so much.

Here the link:

http://qz.com/67323/how-the-internet-made-us-poor/

It is actually part of a series on the impact of technology on the economy, and the article contains links to the other articles.

It is my impression that the political instability we are experiencing both at home and around the world is the product of the changing world economy. These articles summarize some of those economic changes.