Important Difference between recoveries Great Depression and "Great Recession"...

[blankslate]

Here are two charts

They're from this opinion piece...

http://in.reuters.com/article/2012/03/15/column-dcjohnston-rich-idINDEE82E09U20120315

While the article in an opinion piece I think the data represented gives lie to the idea that supply side and trickle down economics actually benefits anyone but the people who own capital and make their living from ownership of that capital.

People who are wage-earners have pretty much been given the short end of the stick, this time around. As the stock market seems to be recovering wages are barely going up. Unlike the situation in the recovery after the Great Depression

Personally I'd rather there be a economy where the bottom 90% also get some benefit from the "recovery" such as it is. I think a serious misstep was made when the U.S. gave up its defensive measures by which it protected it's manufacturing base in the 90s.

Another thing to consider is that China and other countries actually prop up their industries and perhaps give them an unfair advantage over American companies...

http://www.fareedzakaria.com/home/Articles/Entries/2012/1/26_The_Case_for_Making_It_in_the_USA.html

In 2009, when Bridgelux, a light- emitting-chip manufacturer, was searching for a new factory site, the company considered the cost of building in the U.S. or elsewhere. The government of Singapore offered to pay half the setup cost of the plant. “Why can’t we do that here in the U.S.?” CEO Bill Watkins asked. “The rest of the world is chewing us up alive.”

Andrew Liveris, CEO of Dow Chemical Co., has also been arguing for a national policy aimed at reviving manufacturing. Companies cannot compete with countries, he notes in his book, Make It in America.

In theory, I am deeply skeptical of government industrial policy. Government doesn’t know how to pick winners and losers, it will make mistakes, and the process will get politicized. All this is true. And yet when I look at China and South Korea and also Germany and Japan, I see governments playing a crucial role. They do make mistakes— their versions of Solyndra— but they seem to view them the way venture capitalists would. Their role is to seed many companies, only a few of which will succeed. Once these companies are identified, government helps them compete against big U.S. multi nationals. There used to be a joke about Marxist economists who would say of a deviation from pure communist economics: “It might work in practice, comrade, but it doesn’t work in theory.” That’s what industrial policy looks like these days. The theory doesn’t make sense, but it’s hard to argue with the result.

Of course if any Politician were to try and address these issues today he'd have to weather attacks calling him socialist and marxist and then people would point to how China is succeeding because they're paying lower wages and we should just cut costs... except that it's not happening that way. China does proactively help it's industries... instead of waiting until one is going to fail then offering a loan to keep a company solvent.

 

[Craig234]

Very good info. And it shows what the agenda of many in the government - campaigns funded by the wealthy - is, the shift in wealth to the top.

 

[Bowfinger]

I don't think this is news to anyone who is honest and paying attention, but it's an effective, graphic way to present the information. It's long past time for the so-called 99% to get their America back. We can only hope information like this will dislodge them from their complacency.

 

[Ausm]

Excellent info and I am ducking for the inevitable onslaught of the Rabid Right backing the 1%.

 

[xBiffx]

So what is the solution? Pay people an exorbitant amount of money for the work they do/products they produce? Nothing like the left pointing out the problem, yet bringing zero solutions to the table.

 

[Genx87]

Why does he pick 33-34? Why not 30-31?

 

[blankslate]

So what is the solution? Pay people an exorbitant amount of money for the work they do/products they produce? Nothing like the left pointing out the problem, yet bringing zero solutions to the table.

Well I think this is a clue as to what I think the solutions are

I think a serious misstep was made when the U.S. gave up its defensive measures by which it protected it's manufacturing base in the 90s.

I'll say it more explicitly though. The U.S. should explore every means possible to see if we can get out of free-trade agreements. Look at helping companies build manufacturing plants here the way the Chinese do for their companies.

Let the Bush Tax Cuts expire and return to the top marginal rates that were in place in the 90s. (39% iirc).

Perhaps even roll back the tax cuts Reagan put in place.

 

[blankslate]

Why does he pick 33-34? Why not 30-31?

Who know's maybe the source that he used to make up the chart didn't have clear data for those years. Piketty and Saez are apparently fairly well known economists google brings up numerous results for them.

 

[schneiderguy]

The great depression didn't end in 1934.

 

[Infohawk]

It's too bad all the Democrats are just indulging themselves by praising Obama for this current "recovery" when there are still things to be considered which most Democrats should care about. I don't see any evidence that income disparity or the health of the middle class is turning around. We've seen market ups and downs over the past 30 years but the general trend has been the decline of the middle-class.

 

[Genx87]

Who know's maybe the source that he used to make up the chart didn't have clear data for those years. Piketty and Saez are apparently fairly well known economists google brings up numerous results for them.

I'd say cherry picking numbers myself. 33-34 was when the recovery started. While 09-10 was when we were in free fall. A more appropriate timeframe in the great depression for a comparison to 09-10 would be 30-31. And the numbers certainly wouldnt look pretty.

 

[CADsortaGUY]

Why does he pick 33-34? Why not 30-31?

The great depression didn't end in 1934.

1929-1939 is usually the generally accepted date range of the great depression. I wonder why the author used just a small slice... Hmm...

 

[blankslate]

I'd say cherry picking numbers myself. 33-34 was when the recovery started. While 09-10 was when we were in free fall. A more appropriate timeframe in the great depression for a comparison to 09-10 would be 30-31. And the numbers certainly wouldnt look pretty.

Probably not but a recession should hopefully have a shorter recovery time than a depression. Cherrypicking? perhaps. Sounds like you just want to attack the source of information rather than engage in a debate about the issue though, imho.

 

[blankslate]

The great depression didn't end in 1934.

True there are a lot of details about this that needs to be hashed out. I'll say this though, it's likely that if supply side economics (voodoo economics to hear candidate Bush tell it) didn't get such a hold on the minds of many, that we'd actually see the bottom 90% getting wage increases along with today's "recovery" as well.

 

[Genx87]

Probably not but a recession should hopefully have a shorter recovery time than a depression. Cherrypicking? perhaps. Sounds like you just want to attack the source of information rather than engage in a debate about the issue though, imho.

You will notice I am not attacking the source. I am questioning the numbers.

It is hard to have a meaningful debate when the basis is cherry picking numbers. I mean what are we going to debate from these numbers? That if you take numbers coming out of the bottom they will look better than taking numbers on the downward slide?

I dont think there is any debate in that, do you?

 

[theeedude]

Ryan plan would cut taxes on the top earners by 10%, and gut Medicare to pay for it. Because clearly the problem with America is that the super wealthy are not mega wealthy.

 

[blankslate]

You will notice I am not attacking the source. I am questioning the numbers. It is hard to have a meaningful debate when the basis is cherry picking numbers. I mean what are we going to debate from these numbers? That if you take numbers coming out of the bottom they will look better than taking numbers on the downward slide? I dont think there is any debate in that, do you?

Actually we don't know why the numbers were chosen in that chart. Maybe the author was lazy?

I've done similar things when the numbers weren't easily available and numbers from another time period where presented in an easy format when I was writing term papers. Procrastination will get you but I wasn't writing a thesis.

We would have to see the actual report the charts came from and then find the relevant information. I doubt anyone here really feels like( or has the time in any case) doing that.

Why not debate the numbers? If you don't feel like doing so why make a post that can be interpreted as trying to discredit the source?

 

[werepossum]

Here are two charts

They're from this opinion piece...

http://in.reuters.com/article/2012/03/15/column-dcjohnston-rich-idINDEE82E09U20120315

While the article in an opinion piece I think the data represented gives lie to the idea that supply side and trickle down economics actually benefits anyone but the people who own capital and make their living from ownership of that capital.

People who are wage-earners have pretty much been given the short end of the stick, this time around. As the stock market seems to be recovering wages are barely going up. Unlike the situation in the recovery after the Great Depression

Personally I'd rather there be a economy where the bottom 90% also get some benefit from the "recovery" such as it is. I think a serious misstep was made when the U.S. gave up its defensive measures by which it protected it's manufacturing base in the 90s.

Another thing to consider is that China and other countries actually prop up their industries and perhaps give them an unfair advantage over American companies...

http://www.fareedzakaria.com/home/Articles/Entries/2012/1/26_The_Case_for_Making_It_in_the_USA.html



Of course if any Politician were to try and address these issues today he'd have to weather attacks calling him socialist and marxist and then people would point to how China is succeeding because they're paying lower wages and we should just cut costs... except that it's not happening that way. China does proactively help it's industries... instead of waiting until one is going to fail then offering a loan to keep a company solvent.

I very much agree, except most such policies are called populist rather than socialist. But unless and until we figure out how to protect our manufacturing base, we're going to continue hemorrhaging money as a nation.

Part of this is entering the Information Age, where IP is the new currency and manufacturing is simply less important. This virtually guarantees that manufacturing will follow the lowest labor costs, which in turn depresses the value of all blue collar work. But the lion's share of value in a product is in the manufacturing, so if we outsource our manufacturing we're always going to get back less than we receive from IP royalties. Also, those who manufacture a product rapidly become the people who truly understand the product and its manufacturing, and thus how to make marginal improvements to it. So even our IP rapidly loses its value. In the case of Red China, it's done an extremely good job of building its scientific and technical base; pretty soon, Europe and the US won't really bring anything to the party.

 

[Ausm]

So what is the solution? Pay people an exorbitant amount of money for the work they do/products they produce? Nothing like the left pointing out the problem, yet bringing zero solutions to the table.

You mean like the Right just totally ignoring the problem?

 

[blankslate]

pretty soon, Europe and the US won't really bring anything to the party.

I think Germany is the exception to the manufacturing example of Europe. However, they do market their exports as premium and luxury items when it comes to their cars.

This is interesting since when I did live in Germany I did see economy versions of Mecerdes and if I remember right a I even saw a mercedes that wasn't much bigger than a SMART car.

 

[Ausm]

Why does he pick 33-34? Why not 30-31?

I rather it was raised up to around 50% like it was in the 60's and somehow the Rich still seemed to survive....

 

[Genx87]

Actually we don't know why the numbers were chosen in that chart. Maybe the author was lazy?

Oh come on, really? He just manages to lazily pick numbers coming off a low and compares them to numbers tanking? Give me a break, lets at least call a spade a spade.

He would have to see the actual report the charts came from and then find the relevant information. I doubt anyone here really feels like doing that.

Just a guesstimate based a chart on the great depression wiki page. I would say 30-31 saw a contraction of about 10-15% in per capita income. While 33-34 probably saw a solid 5-8% in growth. We bottomed out in 1932.

Imagine what a different opinion piece he would have to write if he compared the first full year of the great depression to the first full year of the great recession?

Why not debate the numbers? If you don't feel like doing so why make a post that can be interpreted as trying to discredit the source?

That was my point in my previous reply. What is there to debate? I dont think anybody would argue the numbers didnt look good coming off the bottom in 33-34 while arguing the numbers dont look bad on the downward slide in 09-10.

 

[Genx87]

I rather it was raised up to around 50% like it was in the 60's and somehow the Rich still seemed to survive....

What do you want raised and how does this reply to my post about his deciding to pick 33-34 vs 30-31?

 

[Genx87]

I very much agree, except most such policies are called populist rather than socialist. But unless and until we figure out how to protect our manufacturing base, we're going to continue hemorrhaging money as a nation.

Part of this is entering the Information Age, where IP is the new currency and manufacturing is simply less important. This virtually guarantees that manufacturing will follow the lowest labor costs, which in turn depresses the value of all blue collar work. But the lion's share of value in a product is in the manufacturing, so if we outsource our manufacturing we're always going to get back less than we receive from IP royalties. Also, those who manufacture a product rapidly become the people who truly understand the product and its manufacturing, and thus how to make marginal improvements to it. So even our IP rapidly loses its value. In the case of Red China, it's done an extremely good job of building its scientific and technical base; pretty soon, Europe and the US won't really bring anything to the party.

A couple things. You are claiming IP is the new currency then say the value in the product is the manufacturing product. Which is it? It cant be both. And I think it is pretty obvious with how easy it is to offshore manufacturing of a product that IP is the value.

Doesn an iPad garner a higher cost because of its manufacturing or because its an Apple(IP)?

Secondly. China lacks any kind of meaningful IP law. Without that they wont innovate squat and thus wont be much more than the worlds factory until they do.

 

[Phokus]

In theory, I am deeply skeptical of government industrial policy. Government doesn’t know how to pick winners and losers, it will make mistakes, and the process will get politicized. All this is true. And yet when I look at China and South Korea and also Germany and Japan, I see governments playing a crucial role. They do make mistakes— their versions of Solyndra— but they seem to view them the way venture capitalists would. Their role is to seed many companies, only a few of which will succeed. Once these companies are identified, government helps them compete against big U.S. multi nationals. There used to be a joke about Marxist economists who would say of a deviation from pure communist economics: “It might work in practice, comrade, but it doesn’t work in theory.” That’s what industrial policy looks like these days. The theory doesn’t make sense, but it’s hard to argue with the .

The rightwing is too stupid and too shortsighted to understand this. Almost every great nation was built on various industrial policies. Poor countries that adopted true free trade policies continue to be poor (see latin america and africa, at the behest of neo-liberal free trade organizations like the IMF). Being able to get another country to move their capital to yours and/or prevent outside competition from devouring your own industries while you wait for them to become competitive is what creates a robust environment for job creation and true innovation. Japan applied this theory after WW2 and became an economic superpower. So did South Korea. Ironically, they both learned from the masters (America). We used to practice protectionism from the 1800's through the 1940's and we became a superpower. Most of Europe also followed a protectionist model as well. And of course China today.

The rightwing will be this country's downfall