Depressing Krugman Article - What if this is the new normal?

[Blackjack200]

http://www.nytimes.com/2013/11/18/opinion/krugman-a-permanent-slump.html?_r=0

Mr. Summers began with a point that should be obvious but is often missed: The financial crisis that started the Great Recession is now far behind us. Indeed, by most measures it ended more than four years ago. Yet our economy remains depressed.

He then made a related point: Before the crisis we had a huge housing and debt bubble. Yet even with this huge bubble boosting spending, the overall economy was only so-so — the job market was O.K. but not great, and the boom was never powerful enough to produce significant inflationary pressure.

Ugh, I've been worried this might be the case. I don't think we've had a booming economy since the 90's. And that's almost 15 years ago now.

 

[Gonad the Barbarian]

The new normal is probably the best case scenario. As the population becomes less and less necessary for the production side of the economy I expect things to get worse. I'm actually surprised to see Krugman flirting with this. I think we need to start looking less at things like temporary stimulus and more at fundamental changes to our economy and how we can adapt to it.

 

[poofyhairguy]

I don't think we've had a booming economy since the 90's.

Time to create a new bubble!

 

[AViking]

Anyone work in the same industry as an older family member? Ever discuss business? What's remarkable is how much things have changed. What was once true is not true any longer and with consolidation and eroding domestic markets what once was can never be again.

When I grew up there were mom and pop stores everywhere. Now? Not so much. Hardware stores, pharmacies, computer stores, book stores, etc. They are mostly sucked up into oblivion. If you're working with import and export everything is driven by mega corporations who divide the country into sections based on freight cost. You are not going to be starting a mill, smelter, factor anytime soon. Those days are over.

The way I see it we need to really get smart about mobility. Keeping dead cities floating makes no sense. Detroit for example. We also need to really focus on what we're great at and pump money into it. Research, computers, aerospace, etc. That means investing in our education and really getting people going.

When I was in University there were head hunters there trying to hire us to teach. There is a serious shortage of science teachers. Starting salary though was in the 20's. Totally stupid. I just laughed at them. We need to get highly intelligent and motivated teachers into our science classrooms and pay them accordingly. We need to fire idiots who teach our children but really shouldn't.

I could go on but the bottom line is that we have had a bubble driven economy for at least as long as I've been an adult. We create massive bubbles and destroy enormous quantities of wealth when they burst. We make the rich richer but destroy the middle class and grow the lower class. That is not a good long term plan.

We need to produce something. A service sector economy is not good and that's really what we've become. The idea that our entire economy can be kept afloat on consumerism is stupid. We need manufacturing, innovation, research, science, and new projects to push our economy forward. Maybe something like replacing the combustion engine with an electric one on every car on earth. Maybe solar power. Maybe mining asteroids. Who knows.

Alternatively we could just clear cut the whole planet and all sell each other smoothies while borrowing massive amounts of money and pretending that everything will be fine in a few years.

 

[AViking]

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

The United States economy is 80% service sector based.

 

[poofyhairguy]

We need to produce something.

We do. We produce brands and soft power.

Brands are why Chinese people are willing to pay $1000+ for a $600 iPad MADE IN CHINA.

Brands are why a team in India who is doing white collar work programing are willing to trade a chunk of that money for brown sugar water.

Soft power is why terrorists wear blue jeans, or why English is growing faster (in vocabulary) than any other language.


The days of over paying Americans to work factory jobs are long gone. Even if we could support their wages, and the fact that Americans refuse to pay more for American products proves we can't, we can't compete with other nations that don't require the factories to avoid environmental harm. The best we can hope for is that the talented 30% of America keeps designing brands and products the world wants, while the other 70% pushes those products to the public at large.

 

[sm625]

You have to keep in mind who Krugman serves. He serves the elite who care nothing about the plight of the plebs, so long as the plebs do no wake up and realize that this is a controlled descent/return to fealty and serfdom. Krugman's job is to sell serfdom to the masses. He does this by making up a bunch of bullcrap to make the mass looting operations sound like viable policy tools. Take "quantitative easing" for example. Krugman's job is to provide "intellectual cover". Because the elite know that the people are not educated enough to understand that these are actually mass looting programs designed to transfer more and more wealth to the rich using the mechanisms of state power.

Also, this whole system of very cynically sweeping all the inflation under the rug and then literally pretending its not there... its just sick what they get away with. But that's what you get when the population refuses to be educated. One day the people may learn how euphemistically named mass criminal operations such as QE translate into massive govt deficits AND massive bubbles in sectors of the economy such as education and healthcare. But right now the people jsut cannot make the connections. They cant see how the Fed buying some bonds allows corporations to borrow money at a lower rate, which in turn allows the corporation to post a larger profit, which in turn allows the stock market to levitate, and also allows corporations to afford even more lobbyists to go and get more laws like Obamacare, which codify ever rising rates of inflation in the aforementioned sectors. And rest assured that inflation will also be swept under the rug, and the people will vote for the next hopey-changey corporate hack that promises the next round of anally violating hopey-changiness.

By the way, Bernanke is right about one thing. QE does provide liquidity. It provides liquidity for all the corrupt operations within the banking system and washington DC. It lubricates the flow of banking money into the hands of lobbyists so that they may tighten their control over the legislative bodies. This money also works its way into the media to further dumb down the populations by hiring more useful idiots like Krugman to provide yet more intellectual cover. You got all these pathetic hacks just like Krugman yapping and squawking and tweeting a bunch of crap, and none of it touches on the truths of our power structure. But the masses eat that crap up and then they go and vote and wonder why nothing changes.

 

[SMOGZINN]

The new normal is probably the best case scenario.

More then likely we are riding a new bubble.

As the population becomes less and less necessary for the production side of the economy I expect things to get worse. I'm actually surprised to see Krugman flirting with this. I think we need to start looking less at things like temporary stimulus and more at fundamental changes to our economy and how we can adapt to it.

I completely agree. We are moving into a post-labor world and we have no idea how to handle it. Our current system obviously won’t work. Our current system is based on people producing a product that has an inherent value, and that new technology that removes jobs ultimately adds jobs back. That has not been true for a long time, and I think what we are seeing now is that our economy is in a death spiral. We keep finding temporary ways to boost us back up, but they are either a lie, or based on borrowing the money from future generations. We have always assumed someone will figure out a fix to the problem we have created and future generations will be able to pay back what we have borrowed. But the only fixes that could possible work are way too radical for anyone to even consider.

We have been fooling ourselves for far too long that rising stock prices mean we are wealthy even though your average citizen has less disposable income then they have since the great depression. Most middle class Americans are struggling just to make ends meet. Saving for retirement is a luxury most can’t afford. Personal debt keeps rising.

This isn’t new. This is not ‘The Great Recession’ this is a continuation of what has been happening since the late 1970’s. We keep finding things to temporally boost ourselves, but if we correct for the bubbles we see a steady downwards trend. The bubbles hide the truth, which is that our economy is in real trouble.

 

[ThinClient]

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

The United States economy is 80% service sector based.

and, yet, our country's manufacturing quantity is in the top three

 

[Engineer]

Time to create a new bubble!

They have never really ended....

http://www.cnbc.com/id/101207676?__source=yahoonews&par=yahoonews

 

[Engineer]

http://www.nytimes.com/2013/11/18/opinion/krugman-a-permanent-slump.html?_r=0



Ugh, I've been worried this might be the case. I don't think we've had a booming economy since the 90's. And that's almost 15 years ago now.

Wow, about the time that we started shipping our jobs out en masse...good paying jobs for middle class folks that didn't require them to mortgage their lives away on an education that many would not use. Jobs that 'made stuff'...wealth.

We are now reaping what we sowed from the short term gains (for those at the top) propped up by debt spending and bubbles.

The building foundation has been ripped out and the building will eventually fall.....just a matter of time.

 

[Engineer]

A really good article showing why the US economy is not moving. If the average Joe isn't moving, neither is the US economy (except bubble movement). The reason the average Joe isn't moving? 'Shareholder Value'.....pretty simple concept.

(Very good article - IMO - title doesn't do the article justice)...

http://finance.yahoo.com/news/walmarts-employee-food-drive-reveals-120012647.html

 

[BoberFett]

Hmmm, I think I've been using the term "new normal" for a while now... :hmm:

 

[IronWing]

We do. We produce brands and soft power.

Brands are why Chinese people are willing to pay $1000+ for a $600 iPad MADE IN CHINA.

Brands are why a team in India who is doing white collar work programing are willing to trade a chunk of that money for brown sugar water.

Soft power is why terrorists wear blue jeans, or why English is growing faster (in vocabulary) than any other language.


The days of over paying Americans to work factory jobs are long gone. Even if we could support their wages, and the fact that Americans refuse to pay more for American products proves we can't, we can't compete with other nations that don't require the factories to avoid environmental harm. The best we can hope for is that the talented 30% of America keeps designing brands and products the world wants, while the other 70% pushes those products to the public at large.

In the broader sense we are moving (reverting?) from a production based economy to a rent based economy where income is derived from what one owns not what one produces. This is reflected in expansion of "intellectual property" rights law and the more agressive U.S. attempts to convince other nations to recognize and enforce our IP policies. U.S. foreign policy is being re-cast as a rent collection tool of property owners.

Rent based economies have a history of stagnation and class stratification. In the world of IP we see this as copyright for older property is extended again and again. Why risk new production when one can milk old properties? Is Mickey Mouse really the pinnacle of cartoon craft or merely a well defended brand? How many cartoonists could have Disney been employing over the decades since Mickey would have lost copyright protection if Disney hadn't bribed lobbied Congress to extend copyright?

 

[rudder]

and, yet, our country's manufacturing quantity is in the top three

I think that is true more in terms on dollar value of stuff manufactured. It takes a lot of cheap Chinese plastic crap to equal the dollar value of one Boeing 787. The U.S. produces a lot... we just don't need a whole lot of people to produce everything.

 

[momeNt]

Our economy is working exactly as it was intended, to preserve the wealth for the banks and the elite.

When the economy was faltering in 2008, they corrected it IMMEDIATELY with bank bailouts and stimulus for the measures of wealth that are important to the Fed/Banks/Elite.

The people who manage the economy are not concerned with the 99%, government programs are there to keep them limping along and to keep them docile. Their main objective is preserving the wealth of the 1%.

The Fed acts as a dam holding large amounts of wealth in very few hands, eventually it will break and we can see some economic order restored in this country.

 

[Doppel]

When I grew up there were mom and pop stores everywhere. Now? Not so much. Hardware stores, pharmacies, computer stores, book stores, etc. They are mostly sucked up into oblivion. If you're working with import and export everything is driven by mega corporations who divide the country into sections based on freight cost. You are not going to be starting a mill, smelter, factor anytime soon. Those days are over.

Yep. I am not terribly old, but I recall more. Starting a small business now, like a small shop, who even really does that? You're DOA probably. And hell I am not likely to visit you anyway because I know I can get the same product for cheaper at a big box or online.

Fact is most "storekeepers" I talk to now are simply doormen and cashiers. I've bought cameras, but never from a guy who knew much about them, who had worked with them for 30 years. Last TV I bought was online.

Anyway, Krugman is right on this, but it's nothing new. I think it's been fairly obvious for a long while that the great recession was great for a reason. Look how damn slowly unemployment has gone down, and much of that is people just finally giving up looking for work.

Manufacturing will be increasingly hollowed out by automation. Disruptive technology is creating new industries and jobs at a stunning pace and destroying old at probably a more stunning pace.