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I am finding that some financial blogs have a far more informative and enlightening perspective of late than political blogs.  Here there is often a mem that Obama and the Democrats can do no wrong and although some financial blogs are more pro-Republican than pro-Democratic, many are neutral politically - with some being simply anti-the current political/financial system.  

I was reading one of these financial blogs today and was struck by a statement buried in commentary about other issues:

Wealth is not created by consumption - it is created by PRODUCTION.

This fits in with what I consider to be another truism:

A nation's wealth is built by ADDING VALUE.  At its most basic third world level this is done by mining ore from the ground, cutting down trees - the 'exploitation' of existing natural resources.  At the next level of development a nation processes the ore it mines into metal, turns tree trunks into lumber and grows crops.  A step up from that metals are turned into products- simple castings or complex machinery, lumber is turned into furniture and other goods and commodity crops are turned into products.

At each stage the VALUE of the end product is greater than the value of the raw ingredients - the labor of the 'processors' is added and the end result is worth more than the sum total of the inputs used to create it.

For some time, the US economy has been based on CONSUMPTION.  Bush summed it up after 9/11 when he urged Americans to go and shop. Even now, our policies are geared to financing CONSUMPTION not production.

Another quote after the fold sums things up well-

Another writer - sorry, the provenance escapes me - compared FDR and the Great Depression to our current re(DE)pression.

FDR borrowed money from Americans to put other Americans to work so they could buy goods made by other Americans and put MOPRE Americans to work.  Today we borrow money from foreigners to pay Americans NOT to work allowing them to continue to buy goods made by FOREIGNERS allowing FOREIGNERS to continue working.

There is a basic truism to this.  We have financed American CONSUMPTION for a few decades by borrowing from foreigners - while shipping more and more American jobs overseas.  Our consumption has been financed by DEBT - both as individuals and as a nation.

We stopped measuring the US economy in terms of PRODUCTION and started talking about CONSUMPTION.

And even though we have attempted to put people to work with some of our spending, the truth is that extended unemployment does NOT pay people to actually DO anything.  We do not have a WPA or CCC where people are paid to do SOMETHING of value - be it build roads, create park trails, construct public buildings or even paint murals for those buildings.  A cousin - out of work for over a year, employed by a local college for 6 months and now out of work again - voiced a not uncommon opinion.  He was thankful for unemployment payments but thought it wasteful that he was being paid extended benefits for 'doing nothing' - he felt that he HAD skills and could be doing something constructive in return for the aid he received.  There was a certain amount of pride at work here but also a rational pragmatism.  

paraphrased he said:

It's ridiculous to keep paying me to do NOTHING when I could be doing SOMETHING.  Government is getting further and further into debt which I'm going to have to pay off later with MY tax money.  This doesn't make sense.

Of note - this person is Republican.  His son - with a college degree - is employed (and happy to be so) as a Fast Food Assistant Manager - the best he could find.   The son is a Democrat.

Despite his politics, my relative has a point.  

He is being paid to continue CONSUMING - albeit at a more subsistence level- instread of being paid to PRODUCE.

More than a few Americans feel this way.  

They WANT to work.  They WANT to PRODUCE.  But they arfe not given the chance.

Everyone in government talks about 'creating jobs' - yet at the same time we continue to EXPORT jobs.

WTF?  I'm not the only one seeing this absurdity.

A decade or two back we retrained laid off factory workers to be computer programmers - even as companies started offshoring their Data Processing Departments to India.   A neighbor was a senior systems analyst on Wall Street - his job - and a hell of a lot more - evaporated a decade ago.

Now the same banks and Wall Street firms that sent DP jobs overseas a decade back are sending whole Accounts Payable, Accounts Receivable and Purchasing Departments overseas.  These are companies that took MILLIONS in TARP funds and 0% loans form government.  JP Morgan administers the new Food Stamps program using support personnel overseas.  It doesn't take a brain surgeon to say - USE AMERICANS to administer TAXPAYER FUNDED PROGRAMS. At a time when a record number of Americans are receiving Food Stamps why aere foreigners being employed to help administer this program?

Our preoccupation with CONSUMPTION makes the specious argument that

Low prices made possible by overseas production benefit Americans and more than offset job losses.

Remember WalMart's 'American Made' meme?  That was long ago replaced by 'Low Prices'.  But 'Low Prices' don't matter if your customers are unemployed.  WalMart sees a spike in sales at 12:01 AM on the first of every month now as new monthly benefits for unemployment and food stamps are activated at the beginning of the month.  People who have literally run out of food, toilet paper and other staples are waiting for that first of the month midnight benefits activation because they are flat out broke at the ned of the month.

A focus on CONSUMPTION is absurd and ecologically absurd on a planet with a growing population and limited resources.    People will CONSUME as much as they can when given unlimited resources - something responsible for the housing crisis.  You had people buying houses larger than they needed or could rationally afford - because banks LET THEM.  Houses were the last thing being made here in the US, a major component of the economy and it was in the interest of many to keep THAT bubble going.  In the long run it burst.

I can't help but think that until we refocus our priorities it will not matter how much we continue to fund CONSUMPTION when the goods being consumed are produced elsewhere.  Such an approach does not create jobs HERE.

But BOTH parties are in favor of 'free trade' - which has not been 'free' and has cost the US many,many middle class jobs.

Some saw this coming - this interview with Charlie Rose in the 90's was prophetic:

http://video.google.com/...

A focus ONLY on CONSUMPTION and the lowest possible labor price to PRODUCE the goods being consumed is destructive.  JOBS are not simply a cost component of production - they are an integral part of a society and hel define it.  How workers are treated, how jobs are viewed, defines a society.

LOW prices matter little, CONSUMPTION drops to zero, if people lack the means to buy goods.  And he way people have the means to buy goods is to PRODUCE goods.

And as for the transition to a 'service economy' - You can not have a 'service' economy if nobody creates the wealth for others  to spend.   That applies equally to Fast Food restaurants and Investment Banks.

Originally posted to xrepub on Wed Sep 28, 2011 at 09:14 PM PDT.

Also republished by In Support of Labor and Unions and Community Spotlight.

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Comment Preferences

  •  If you haven't noticed sufficient criticism (26+ / 0-)

    here of the Obama admin's economic policies, you haven't been looking hard enough.

    I changed by not changing at all, small town predicts my fate, perhaps that's what no one wants to see. -6.38, -4.15

    by James Allen on Wed Sep 28, 2011 at 09:19:16 PM PDT

    •  Criticism of unemployment insurance is off base (32+ / 0-)

      Workers who have been put out of work are paid out of an insurance fund which employers pay into. The insurance money puts food on the table while the worker seeks another job.

      When we have systemic market failures like the Great Depression, and whatever you call what we're in now, the government has to cover the losses in the insurance fund.

      Yes, it would be better if the federal government sent money to the states with high unemployment to keep teachers and government workers employed rather than paying unemployment, but Republicans don't like teachers and education. They want to cut money spent on education. Thus, we see lay offs on the state and local level leading to the feds picking up the tab to pay unemployment insurance.

      This diary isn't completely off base, but it's pretty mixed up on a number of issues.

      look for my eSci diary series Thursday evening. "Forgive them; for they know not what they do."

      by FishOutofWater on Thu Sep 29, 2011 at 05:45:49 AM PDT

      [ Parent ]

      •  Which other issues is it off base on? (8+ / 0-)

        The part about being paid to do nothing is right out of the EIB microphone, but even so if you compare being paid to do nothing with being paid to make something, being paid to make something has to be a bit better, given that so much of what we buy benefits economies other than ours.

        What else is wrong with the diary, in your view?

        Moderation in most things.

        by billmosby on Thu Sep 29, 2011 at 05:58:56 AM PDT

        [ Parent ]

        •  This, in my view, is wrong: (43+ / 0-)
          People will CONSUME as much as they can when given unlimited resources - something responsible for the housing crisis.  You had people buying houses larger than they needed or could rationally afford - because banks LET THEM.

          People buying large houses they couldn't afford is NOT what caused the housing crisis. I am not saying that there aren't some people who may have done that, but the financial market players who were gambling on nothingness, knowingly or unknowingly, are much more at fault.

          •  Great minds... (2+ / 0-)
            Recommended by:
            Mrs M, divineorder

            ;)

            Arrrr, the laws of science be a harsh mistress. -Bender B. Rodriguez

            by democracy inaction on Thu Sep 29, 2011 at 07:26:14 AM PDT

            [ Parent ]

          •  yes - it actually did cause the housing crisis (17+ / 0-)

            through fraud and dishonesty banksters were putting people in houses they KNEW those people couldn't afford.  There is also a large percentage who probably could afford them but the ensuing lesser depression chipped away at those who probably could have kept him.

            Hence the valid criticism that Obama's non existent support of efforts to keep people in their houses and make the banks eat it exacerbated the situation greatly.

            They did this to generate mortgage securities which were then misrepresented to investors.

            But the base of that pyramid of fraud was to sell as large a mortgage as possible to ANYONE.

            big badda boom : GRB 080913

            by squarewheel on Thu Sep 29, 2011 at 07:49:11 AM PDT

            [ Parent ]

            •  I understand what you are saying. (0+ / 0-)

              I felt the diarist was laying the housing crisis blame in the laps of willy nilly consumer people. (my own phrase)

              So the pyramid builders of financial instruments were actually PRODUCING something, which fits in with the theme of the diary, it's just that they were doing it illegally, or at least unethically.

              •  No - but there were willing participants (2+ / 0-)
                Recommended by:
                divineorder, mystery2me

                When you local S&L held you mortgage until payoff there were strict standards and a willingness to work through any difficulties might affect a homeowner.

                Buying our house in the early 90's - waiting for a market pullback from the boom of the late 80's we had to put 20% down, have payments be no more than 36% of our income AND still had to pay points to get down to 8 3/8% interest rates.

                Yet within a few years you had ARM madness, no money down, no income verification and more.

                Banks found out they could package and resell mortgages - offloading the risk of non payment.  Wall Street found ready buyers for insanely complex mortgage backed securities that had varied interest rates, risk assignments and more - instruments so complex that NOBODY understood them.  And I say this having worked on Wall Street in the 80's when CMO's first came out and were barely understood THEN in their simplest form.

                With Wall Street selling tons of Mortgage backed securities there became a huge market for BUYING MORE MORTGAGES.  But the banks had already written mortgages for most 'good risks' - those following old standards.  The UAS was already at its high for home ownership but politicians - Bush surprisingly - started pushing the 'Home Ownership Society'.  Of course with the decline and fall and export of American manufacturing, home building and renovation were the only 'growth' industries left that were occurring in the US - another reason for pushing the housing boom.  The Fed was complicit in the building bubble by keeping interest rates low - looking to juice the economy with housing builds.

                But once you've sold houses to those who could rationally afford them, what do you do?  You sell houses to those who could NOT afford them - who were depending on continual appreciation in prices, you sold BIGGER houses to existing homeowners and you fed the speculators who bought and flipped houses before they were even finished.

                A LOT of people had reasons to push the housing boom - and too many consumers were willing to get in  over their heads, believing that bubble would never burst.  

                Yes, many CONSUMERS willfully and recklessly OVERCONSUMED when it came to housing - they were willing participants in a bubble destined to burst.

            •  And people themselves were of course completely (0+ / 0-)

              innocent and had nothing to do with it.

              •  Most of them yes. (7+ / 0-)

                Most people do not have the sophistication or education to understand large financial instruments. That is why we PAY lawyers to do it for us. Lawyers who are SUPPOSED to have a fiduciary DUTY to protect consumers from fraud and manipulation by unscrupulous lenders.

                People went to banks looking for loans and were told they qualified. For most people that is the end of the story. Who are they to argue? They simply do not have the ability to figure out whether or not the banker is lying to them.  And the bankers were telling them what they wanted to hear: That they could afford their dream home.

                Unfortunately, the lawyers and bankers were mostly in on the con and willfully violated their clients' trust to enrich themselves at the expense of their clients and America as a whole. And the regulators who were charged with preventing this were ordered to not do their duty by a corrupt and criminal *bush administration.

                It was a vast criminal enterprise that our "leaders" simply willfully fail to acknowledge or address to this day.

                We will never solve America's financial crisis until we address and punish the criminality of our banking and regulatory systems.

                •  Wall Street needed people to borrow so they (2+ / 0-)
                  Recommended by:
                  The Nose, divineorder

                  could sell loan packages, and then start selling all those bets on what the packages would do.  And they gained when the CDOs (loan bundles) and CDSs (pseudo-insurance on the securitized loans) failed.  They didn't care if people paid the loans back, all they needed were more borrowers to sell more debt bundles.  Then they came up with SYNTHETIC CDOs and could sell the same loan a thousand times.

                  At the same time, the banks were doing all they could to convince people it was  GOOD IDEA to piss away their equity.  Check this out, on the marketing of HELOCs.  Remember, there was a time getting a second mortgage on your house was considered proof you were a complete loser:

                  A really great tagline appearing here soon! Watch this space!

                  by madhaus on Thu Sep 29, 2011 at 12:08:18 PM PDT

                  [ Parent ]

                •  I agree about culpability of bankers and (1+ / 0-)
                  Recommended by:
                  divineorder

                  regulators. But I've seen how people bought houses with no down payment, opened HELOCs for hundreds of thousands of dollars and simply spent that money. Yeah, ads told them to do it but if there are ads telling them to jump from a bridge will they do it too? A lot of people thought they will get away with it b/c 'houses always appreciate in price' or smth like that. There were, of course, many people who either didn't understand what was going on or felt they had no choice. But I wouldn't put all responsibility on banks.

            •  I was encouraged to borrow 110% (9+ / 0-)

              of what my prospective house cost, circa 2003. And to take out a variable rate loan. "Take a cruise", the broker said.

              However, I wanted to put about 25% down and also to buy down the interest rate (to 6 and something, which looked pretty cheap at the time). I did put the closing costs on the loan, though. Bottom line, I had been renting the place for $600 a month, and then put about $14k down and was buying it for about $300 a month, including property taxes.

              I thought something was up, mainly because the last time I had bought a house prior to that, in about 1992, I had to go hunting for a mortgage. In 03 they seemed to jump out and grab me by the leg, lol. Brokers were everywhere and seemed to be young enough to have been in high school a few years before.

              Then in late 05 I found I didn't need a house anymore due to a marriage and I sold the sucker for about a 65% gain after all costs. Too bad I had only paid $50k for it. It was tiny, but a year or two after I got rid of it it sold for almost $100k. Not sure what it would go for now.

              Moderation in most things.

              by billmosby on Thu Sep 29, 2011 at 08:51:44 AM PDT

              [ Parent ]

          •  You're largely correct Mrs M (7+ / 0-)

            The diarist is mostly wrong.

            Consumption IS the driving force of any economy or, as Adam Smith phrased it, "want." You can "produce" and "add value" until the cows come home, but until someone wants to buy what you are producing -- and has the money to do so -- you got nothin' and there is no functioning economy.

            The damage done to our economy by republican policy and democratic failures was by shifting value upwards through job outsourcing, fraudulent and criminal business practices and taking of value from workers to give it to the elites by lowering wages and benefits from the many and giving the money to the elite few as salary and bonuses.

            By removing jobs, the elites shot themselves in the back and killed America. Without jobs, consumers have no money, without money, they cannot consume, without consumer spending, the producer and manipulator elites have nothing.

            As Henry Ford observed a century ago, he had to pay his workers enough to buy the products the were building or he had no one to buy his products.

            The past thirty years in America has been a vast program of eating and/or selling off our seed corn: The accumulated value of generations of workers. Our "leaders" have been stripping our nation of value to pay for a gluttonous orgy for the benefit of the wealthy. Like locusts, they have stripped America bare and left her barren and mortally wounded.

            The solution? Strong unions, workers' rights, serious, effective regulation of markets to prevent corruption and theft. Pay people fair wages. This will create a strong and broad-based American middle class again. When America has a strong middle class it has economic prosperity.

            Prosperity is not created by the "job creators" it is created by millions of empowered consumers with good-paying jobs and hope for the future.

            By following republican policies, we get nothing but economic and social destruction. The GOAL of republicanism is the destruction of America. Always has been, always will be.

            •  That's what niggled at me while reading (7+ / 0-)

              this diary:  it sounded like an argument against the fact that Demand is what is needed to get the economy going again.

              Isn't Consumption just another word for Demand?

              Government of the people, by the people, for the people, shall not perish from the earth - Abraham Lincoln

              by Gustogirl on Thu Sep 29, 2011 at 10:22:50 AM PDT

              [ Parent ]

              •  Yes, but (3+ / 0-)
                Recommended by:
                Justus, little lion, Mrs M

                Increase demand for cars made in Korea or electronics made in China will not substantially increase jobs in the US, and it will not produce good paying jobs in the US. We'll export more wealth to pay for those things, and export more jobs to make them.

                In a global economy, if you don't produce wealth that you can exchange for the goods you import, than you become poorer. It's the same as if you have $1000 in the bank and no job or other income. You can exchange money from the bank account for food, but only until the money's gone.

                Service jobs don't produce much that can be traded, and (contrary to the diary) neither do infrastructure jobs, as necessary as they are. You can't export highways or sewers to China in exchange for all the stuff we buy from them.

                If my thought-dreams could be seen, they'd probably put my head in a guillotine

                by badger on Thu Sep 29, 2011 at 10:44:32 AM PDT

                [ Parent ]

                •  the counterargumen to the infrastructure slight (1+ / 0-)
                  Recommended by:
                  Mrs M

                  is that infrastructure has the possibility to reduce the costs of inputs to production, making extant industry more competitive and new industry more likely to succeed.  Not saying I disagree with you: new (or newly maintained) infrastructure by itself does nothing, but in the long run, it may help.

                  I think this line of thinking becomes most illuminating when you consider WHAT infrastructure is most likely to be beneficial to other industries.  People usually think roads and bridges, and we need to take care of the ones we have, but  but building new ones was last century.  What about energy development or efficiency development?  What about running tons of fiber and network infrastructure in the ground--make new public highway system the dream of the old "information superhighway" and get it out to everyone?  

                  These things would do wonders for the american economy.  Among other things, energy might free us up to make more, more diverse, and better FOOD, which could be a great US product, domestic and exported.  

              •  'DEMAND" for goods produced elsewhere (0+ / 0-)

                will do NOTHING to help unemployment or the US economy.

                You have missed my main point.

                As long as the focus in on increasing CONSUMPTION - irregardless of where the goods consumed are produced or how they are produced (factor in durability and sustainability for the good of the planet instead of 'throw-away' goods), you do NOTHING to solve the basic problem.

                AMERICAN jobs - and AMERICAN wealth come from PRODUCING GOODS.

                The American balance of trade only worsens as we buy more and more made elsewhere.

                Without PRODUCING goods the ONLY jobs you can create here are low level positions selling the stuff made elsewhere.

        •  I have a quibble (28+ / 0-)

          with, among other things, this:

          People will CONSUME as much as they can when given unlimited resources - something responsible for the housing crisis.  You had people buying houses larger than they needed or could rationally afford - because banks LET THEM.
          That, too, is right out of "the EIB microphone" as you so aptly put it.  This is a non sequitur; that people with unlimited resources will consume is without question but "as much as they can" is empirically false.  Otherwise, the economy would be doing great right now.  If all those wealthy people that got those huge tax tax breaks actually took that money and consumed with it, that money would flow back into the economy, which would be less bleak as a result.

          The statement would be closer to being accurate if it said that "people will consume as much as they need given the resources to do so" adding that many people conflate "want" and "need."

          And while many bought houses bigger than they could rationally afford, few did so with the understanding that they could not rationally afford it.  The banks didn't "let them" do anything, the banks actively sought out anyone they could sucker into signing on the dotted line to keep their Ponzi scheme going of then betting against their ability to pay the mortgage.  It didn't matter to the banks whether or not they could pay for it because they won either way.  The banks misled those people into believing that they could afford it because they don't win at all if there is no mortgage.

          The framing that the problem that caused the housing bubble is all those poor people going out and buying houses they couldn't afford is as right wing as it comes.  It isn't true - empirically - and it cleverly shifts the blame for the mess onto the victims ignoring the perpetrators (except passively, noting that the banks "let" this happen rather than "actively encouraged by means of deception").

          Furthermore, "production" = supply-side in RW parlance.  "Consumption" = demand-side.  But neither can exist without the other.  We can "produce" all we want but if no one is "consuming" what is produced, there is no point in producing it in the first place.  Without "demand" there is no need for "supply."

          They are yin and yang and we've been too focused on the supply-side for entirely too long.  The concept of a federal WPA-style federal jobs program is a good one but not as a replacement for unemployment, as a supplement, giving the unemployed preference in hiring.

          I have other quibbles, more than I have the patience at the moment to spell them out as I've done with this one.

          Arrrr, the laws of science be a harsh mistress. -Bender B. Rodriguez

          by democracy inaction on Thu Sep 29, 2011 at 07:25:02 AM PDT

          [ Parent ]

          •  Thank you. especially for this: (14+ / 0-)
            The framing that the problem that caused the housing bubble is all those poor people going out and buying houses they couldn't afford is as right wing as it comes.  It isn't true - empirically - and it cleverly shifts the blame for the mess onto the victims ignoring the perpetrators (except passively, noting that the banks "let" this happen rather than "actively encouraged by means of deception").
          •  Well said! (9+ / 0-)
            And while many bought houses bigger than they could rationally afford, few did so with the understanding that they could not rationally afford it.  The banks didn't "let them" do anything, the banks actively sought out anyone they could sucker into signing on the dotted line to keep their Ponzi scheme going of then betting against their ability to pay the mortgage.

            We had a bank mortgage officer diary on this site about his son, with an MBA, bringing one of those massive loan agreements to him and they couldn't understand it!

            It was outright fraud on the part of the banks and the Wall Streeters... and their enablers in the White House and congress.

            Phil Gramm's Culpability, Acknowledged

            —By Jonathan Stein
            | Fri Feb. 20, 2009 2:25 PM PST

            Phil Gramm won't be able to wash this stink off of him.

            Time magazine has published a list called "25 People to Blame for the Financial Crisis" and second on the list is our buddy Phil, the man who headed the Senate Banking Committee during the federal government's deregulatory bonanza in the late '90s. Gramm passed or affected two key pieces of legislation that eventually helped create the financial meltdown we are experiencing today. The first of the two was the 1999 Gramm-Leach-Bliley Financial Services Modernization Act, which repealed the Depression-era Glass-Steagall Act and allowed financial institutions to merge like crazy and ignore longtime regulations and limitations. The second was something that Mother Jones uncovered in summer 2008. Here's Time:

             

             [Gramm] also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far.

            Right. As David Corn reported for Mother Jones, Gramm's sly move gave rise to an entire industry of financial products, like credit default swaps, that acted like insurance for the toxic mortgage-backed securities that got passed around Wall Street. Investors who thought they were protected made more and more and worse and worse financial bets, all away from regulatory oversight. Eventually, it caught up with them.

            More...

            http://motherjones.com/...

            Lest we forget... Bush used an 1863 law to nullify the states predatory lending laws!

            Predatory Lenders' Partner in Crime
            By Eliot Spitzer
            Thursday, February 14, 2008

            Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

            Snip!

            In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

            But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

            More...

            http://www.washingtonpost.com/...

            Where I fault Obama in all of this was he ignored economists like Roubini, Krugman, and Stieglitz who recommended that the US:

            1. Form a new version of the HOLC or RTC.

            2. Break up the too big to fail banks and triage the smaller ones and enforce capital requirements.

            Having said that though... the systemic problems at the root cause of this are way beyond the scope of the President...

            Is Capitalism Doomed?
            Nouriel Roubini

            So Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increases inequality and reduces final demand.

            Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China – and soon enough in other advanced economies and emerging markets – are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness. Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.

            To enable market-oriented economies to operate as they should and can, we need to return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of laissez-faire and voodoo economics and the continental European model of deficit-driven welfare states. Both are broken.

            The right balance today requires creating jobs partly through additional fiscal stimulus aimed at productive infrastructure investment. It also requires more progressive taxation; more short-term fiscal stimulus with medium- and long-term fiscal discipline; lender-of-last-resort support by monetary authorities to prevent ruinous runs on banks; reduction of the debt burden for insolvent households and other distressed economic agents; and stricter supervision and regulation of a financial system run amok; breaking up too-big-to-fail banks and oligopolistic trusts.

            More...

            http://www.project-syndicate.org/...

            That Last graph is a real kicker!

            After criticizing Obama I feel I should also give him his due...

            Obama Jobs Plan Prevents 2012 Recession in Survey of Economists

            President Barack Obama’s $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News.

            The legislation, submitted to Congress this month, would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls, the median estimates in the survey of 34 economists showed. The program would also lower the jobless rate by 0.2 percentage point in 2012, economists said.

            Economists in the survey are less optimistic than Treasury Secretary Timothy F. Geithner, who has cited estimates for a 1.5 percent boost to gross domestic product. Even so, the program may bolster Obama’s re-election prospects by lowering a jobless rate that has stayed near 9 percent or more since April 2009.

            Lots more...

            http://www.bloomberg.com/...

            Obama gets it now... just hope it isn't too late.

            •  Short version (2+ / 0-)
              Recommended by:
              Flint, The Nose
              And the way people have the means to buy goods is to PRODUCE goods.

              Seems the diarist has a chicken and egg problem.

              Companies will only increase production when there is increased demand for their product.  How is this going to happen?

              I'm a fucking retard.

              by Helpless on Thu Sep 29, 2011 at 10:11:24 AM PDT

              [ Parent ]

              •  Yes and NO... (5+ / 0-)
                Recommended by:
                Catte Nappe, Hirodog, Justus, MKinTN, The Nose

                Henry Ford realized the problem when he started making cars and he found out none of his employees could not afford them... so he increased their wages!

                So there is your YES... and now your NO...

                Germany had a different approach to unemployment than we have... rather than let companies lay-off workers their government asked the companies to reduce their hours as demand fell off... but paid the companies to keep them working and made up the difference in their salaries.

                This accomplished several things...

                1. Companies kept their manufacturing workforce intact, protecting their industrial capabilities.

                2. Workers kept their skills sharp and they didn't suffer degradation of their skills as American workers have in the case of the long term unemployed... as we now often hear... (witness the unemployed need not apply debate)

                3. Their companies could rebound more quickly when demand increased than American companies could  and at one point their GDP jumped to +6.5PP after the recession.

                4. Workers self esteem wasn't trashed.

                I would argue that very few workers on unemployment like getting paid to do nothing.

                I know I didn't... I wanted to work, I wanted a job, I wanted to continue to take pride in my work and ability to provide for my family.

                I didn't want to worry about having unemployment run out or coping with COBRA's price gouging my savings away.

                •  Didn't companies end up with products they (0+ / 0-)

                  couldn't sell?

                  How could they make a profit that way?  They're losing money on each widget, but making it up with the volume?

                  I heard an NPR piece on Germany that said the program was very unpopular -- that it promoted companies hiring temp part time workers at reduced wages.

                  I'm a fucking retard.

                  by Helpless on Fri Sep 30, 2011 at 09:08:54 AM PDT

                  [ Parent ]

                  •  No... in a word. (0+ / 0-)
                    Germany reports 14.7 percent rise in exports
                    September 15, 2011

                    German exports rose by 14.7 percent in the first half of 2011 compared to the same time period the previous year, driven in part by a healthy increase in the value of goods shipped outside the European Union, official figures showed Thursday.

                    January-June 2011 exports came in at euro525.6 billion ($721.60 billion), up from euro458.3 billion in the first six months of 2010. When adjusted for prices, the rise was 10.1 percent.

                    Second-quarter exports rose an unadjusted 10.8 percent to euro264.7 billion compared to euro238.8 billion in the same quarter last year.

                    Germany, Europe’s largest economy, is the world’s second largest exporter behind China.

                    The Federal Statistical Office said there was particularly strong growth in exports to non-European Union countries, which were up 16.7 percent in the first half of 2011 to euro208.3 billion.

                    More...

                    http://articles.boston.com/...

          •  not to mention (0+ / 0-)

            the emphasis that has been promoted and encouraged to consume and acquire the trappings of wealth by the media.

            I sometimes watch a programs called "Till Debt do us Part".  I believe it originates from Canada.  It involves a counselor/advisor named Gail Vaz -Oxlade who works with couples facing overwhelming debt.  One of the things that strikes me about the program is how many people seem to think that it is necessary, appropriate and doable to live far beyond their means.  It's like they seems to have some delusion that they have to live like the Kardashians on an often reasonable but modest budget.  I know we've probably always had the "keeping up with the Jones'" attitude --  there were probably cave men flaunting the best fur-- but this seems so out of control and out of touch with reality...

            I like that you point out the necessary relationship between production and consumption-- "you can't have one without..." and that you clarified the bank's role in the housing collapse.  I do think that people getting loans share some of the responsibility for taking on a financial burden they just couldn't afford....but only some of it..  After all, if you had a, well, possibly substandard, education and the BANK said you could afford this...who would they be to question.  And, you are right that the Banks didn't "let them" ...they were the very active architects of the meltdown.  Thanks Democracy

        •  The first half is a paean to supply side economics (16+ / 0-)

          for one.  The author excoriates consumption, ie demand, and claims production (supply) is the one true measure of worth and creator of wealth.  Things only have 'worth' in terms of the demand for them.   If no one wants something, it's worth nothing, no matter how much time you spent 'adding value' to it.

          •  CONSUMPTION without PRODUCTION (1+ / 0-)
            Recommended by:
            rcbowman

            means that jobs and wealth go to the places that DO produce.

            China's GDP gains at the expense of US GDOP - OUR balance of trade deficit worsens as US consumers buy goods PRODUCED in CHINA.

            INCREASING CONSUMPTION - paying people to continue current buying habits DOES NOT CREATE JOBS IN THE US.

            AND BOTH parties continue to push 'free trade' and encourage offshoring of jobs.

        •  Keynesian philosophy would say... (0+ / 0-)

          that an unemployed worker should be paid to perform some service for the community. Even if it is digging holes and filling them up again.

          Ultimately, this is what work will evolve to is that we will be paid to do "good works" while the robots do what we used to do.

          --Mr. President, you have to earn my vote every day. Not take it for granted. --

          by chipoliwog on Thu Sep 29, 2011 at 09:03:45 AM PDT

          [ Parent ]

        •  what if you are paid to create toxins? (0+ / 0-)

          obviously..  what you are paid to produce has relevance to the claim that being paid to make somethong has to be a bit better..

          production is a response to a need..  at least until your choice of product.. is the creation of those needs.. ie advertising...

          consumption is what puts the wheels of the economy churning..  and lets the multiplier effect of money in motion work..  does someone wake up in the morning spontaneously needing an ipad?  of course not..  but creating that need and the subsequent consumption of that product.. creates jobs and  wealth...  

          nothing happens..  until consumption occurs...and needs are met...  at least a little...

          Once science, logic and facts are rejected, reasoned discourse is no longer an option; politics is based on power and with-us-or-against-us tribalism.. - PlutocracyFiles

          by Derffie on Thu Sep 29, 2011 at 05:40:25 PM PDT

          [ Parent ]

          •  Heh, I create toxins (0+ / 0-)

            every night in my sleep.

            I understand what you are talking about despite my feeble attempt at humor.

            I'd be happier to be making something for somebody to consume while collecting money than just collecting the money. In fact, I just started collecting Social Security but don't plan to stop working on a website I'm creating just because I have more or less enough income now. I would like the site to be useful to enough people to bring in a bit of income for myself. I used to be an engineer but too-early retirement induced by outside factors pretty much closed the door on that career. My age has closed it on others; so I'm doing the "Colonel Sanders" thing and trying to make my own job at the somewhat advanced age of 62.

            My situation probably influenced what I said about production. I perhaps incorrectly assumed that a lot of people would feel the same way about it.

            Moderation in most things.

            by billmosby on Thu Sep 29, 2011 at 06:21:05 PM PDT

            [ Parent ]

            •  it's a chicken/egg sort of thing (1+ / 0-)
              Recommended by:
              billmosby

              ... when you reduce it to basics...  first you have to be alive...  after that.. it's all negotiable...

              I just find that starting from the basis of  unmet needs..  then meaningful production can be realized...

              as an aside...  I'm in pretty much the same situation as you.. retired from a technical career.   I find that an hour or so of daytrading the market each morning..  works out just fine..  

              and fwiw..   I saw an interesting bit on the news this evening on  a website called  taskrabbit that looked like a way to pick up some easy pocket change...

              Once science, logic and facts are rejected, reasoned discourse is no longer an option; politics is based on power and with-us-or-against-us tribalism.. - PlutocracyFiles

              by Derffie on Thu Sep 29, 2011 at 06:41:54 PM PDT

              [ Parent ]

              •  Thanks for the tip! (0+ / 0-)

                I looked at one other site like that, I'll take a look at this one. I was doing online math and physics tutoring, but after a couple of years of $11 an hour as an independent contractor I decided to try to get something a little better going.

                Sounds like you are good at day trading, I never wanted to trust myself at that. I did have a bunch of good rides in the market in the period 1986-2000, and some since then, though.

                Moderation in most things.

                by billmosby on Thu Sep 29, 2011 at 07:20:01 PM PDT

                [ Parent ]

      •  No, the diary is right on. We shouldn't be paying (1+ / 0-)
        Recommended by:
        ManhattanMan

        people while they're doing nothing other than looking for a job.  There are no jobs, so we can wind up paying them for the rest of their natural lives.  Unemployment recipients can look for jobs at night on line.  They should be doing something for the country that's paying them during the day.

      •  It is madness... (9+ / 0-)

        ...that we have school buildings that are falling down, but we are paying thousands of skilled construction workers to sit at home and do nothing.

        Foreclosure victims can't find records showing which bank filed their mortgage documents -- but we are paying thousands of computer coders to do nothing.

        The Diarist is correct that production is the key. If the private sector is not letting people be productive than the Government must step in. Hire people to build, produce, and maintain things.

        Anything is better than paying money for nothing.

      •  Agree with you on this. Disagree with poster. (1+ / 0-)
        Recommended by:
        Mrs M
      •  Criticism of unemployment is justified (0+ / 0-)

        Employers pay into an insurance fund, true.  But that's money that could be put to better use by the employer.  That's not just stray money laying around, unemployment insurance comes directly out of the bottom line.  Where is the legal or moral justification to force employers at the point of a gun to pay people to not work?

    •  Short term vs. Long Term. (8+ / 0-)

      To solve our short term problems, this Diary is wrong. The solution to the current mess is to stimulate consumption. We need people to get jobs -- even Government make-work jobs -- so they can spend money and get the economy moving again.

      But over the long term, the Diarist is dead-on. 70% of our economy is dependent on consumer spending. Of that 70%, most of it is people spending money they don't really have on stuff they don't really need.

      It is not sustainable. Whenever those consumers get spooked, we'll have another crash.

      In the long run, we need to increase productivity -- so we can make more stuff with less people. We will need a progressive tax system and strong social safety net to make sure that workers get a fair share of productivity gains.

      •  If we're 'making more stuff with less people' (4+ / 0-)

        What will all of those people we no longer need to make things do to survive?  You've laid them off, you're against giving them any sort of aid to survive while they're unemployed.  Do you expect them to just meekly die off?  Or do you maybe think that survival instinct will cause them to attack and kill all of the Galtists who have been hoarding the 'wealth' generated by keeping all of the profits from production and spreading ever less of it around by laying people off?

        Unless you find them something else to do, increased productivity = fewer employed = even worse problem.

        •  Correct (2+ / 0-)
          Recommended by:
          tacet, Dr Erich Bloodaxe RN

          The increased productivity combined with overseas outscourcing has cost this economy millions of jobs net, no question.  

          I'm afraid I see a bleak outllok for an extended period of time. Sometime in the next 5 years some really radical things are going to have to happen, like possibly looking at forced mandatory retirement at age 65 and w/o question either single payer health care or heavily and I mean heavily regulated health insurance.

          Also you're gonna see a lot less kids being born for at least the next decade. In reality we have efficiencied ourselves into an empployment problem.

        •  We need more people employed providing services. (0+ / 0-)

          Fewer making stuff.

        •  That is why... (0+ / 0-)

          ..."We will need a progressive tax system and strong social safety net..."

          Technology will soon (in 15-20 years) enable us to produce nearly everything with almost no labor.

          The economy of the future will have an unemployment rate of 99%. The 1% with jobs will work only a few hours per week. Their job will be to tell the robots and computers what to make.

          The 1% of employed people will have trillion-dollar salaries. Their tax rate will be 99%. Everyone else will get a welfare check.

          This is snark. Mostly. Sort of. Probably not.

          You can see the trend today. GDP is going up...despite the fact that there are fewer people working...

    •  I was going to say (1+ / 0-)
      Recommended by:
      The Nose

      interesting diary except for the fiction that this place is dominated by people who think Obama and the Democrats can do no wrong. One of the reasons I've been here less lately is the prevalent narrative that Obama and the Democrats can do no right.

      Take the "Can't(or)" out of Congress. Support E. Wayne Powell in Va-07. http://www.ewaynepowell.com/

      by anastasia p on Thu Sep 29, 2011 at 12:50:40 PM PDT

      [ Parent ]

  •  Everyone In Tune With American Leadership Knows (4+ / 0-)

    that financial thinking is totally where the action is, compared to political and scientific thinking.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Sep 28, 2011 at 09:22:54 PM PDT

  •  We Socialists have known this for a long long time (20+ / 0-)

    But thanks for the reminder.  Eugene Debs would thank you as would Joe Hill, Michael Harrington, Jack London, Helen Keller,  and a lot of other American socialist heros.

    An idea is not responsible for who happens to be carrying it at the moment. It stands or falls on its own merits.

    by don mikulecky on Wed Sep 28, 2011 at 09:27:58 PM PDT

  •  It's about profits in the end, take apple (22+ / 0-)

    they are one of the worst.  Most PC and consumer electronics makers are pretty bad though.

    Funny fact, open up any computer from any company and you'll find the guts are all made by mostly three companies, foxconn, pegatron, and asus.  So it's all made in Taiwan or China.  Every logic board will have their logo on it.  Then look at the capacitors and ferrite chokes on those boards, also made by the same three companies.  The DVD drive, regardless of who branded it, same thing.  The thermal grease used for it, same thing, the metal heatsinks, same thing.  The harddrive might say "seagate" a US company, but it's also built in China.

    I'm using computers but all electronics are like this.

    What happens is this.  Apple goes and buys chips and chipsets from intel to make their computers.  Now those chips are made and designed by intel in the US, apple then figures out what sort of case they want, and then everything is made and assembled in China as cheaply as possible, and then shipped back to the US to sell to US consumers on credit.

    Here is the funny part though.  While it's true that some products are impossible to make in the US given the wages you have to pay people here and still sell them at a price point people would pay, for computers, not always the case.  Granted it's true for the low margin items, but for crap like iphones, it could be made here, but instead of 60% of it being profit, maybe only 40% or 30% would be.

    You simply have higher profit by making your products in the third world.  And no company that's completely profit oriented is going to bother assembling items in the US and drive CEO and shareholder pay down.

    We're failing because of this.  The only way to stop is if corporate big wigs stopped caring about profits, but that's not going to happen.  Countries are happy to loan us money because if finances our purchasing of products on debt that are made in their nations.

    "Foolproof systems don't take into account the ingenuity of fools."

    by overclocking on Wed Sep 28, 2011 at 09:37:33 PM PDT

    •  If I'm correct (1+ / 0-)
      Recommended by:
      aufklaerer

      most of those three companies manufacture their components in a single business park in Taiwan. If terrorists really wanted to cripple the Western world, all they'd have to is blow up a transformer or two.  

      •  not really (32+ / 0-)

        foxconn has worker camps all over China.  And they are camps.  Locked communities with all food and items inside, workers crammed in dorms, armed security patroling the place and inspecting the living quarters.

        There are engineering camps in a single area, and all of the companies work together, IIRC pegatron is just a branch of ASUS.  Their "name brand" products come out under ASUS (and are good and clobber apple, HP, dell, and the rest of the crap brands) but they don't compete in the US really and manufacture for them under other brands.  But the engineering areas are downtown and nothing like the literal slave labor camps out in rural areas.

        The manufacturing areas are a mess.  Apple in particular demanded so much there was a rash of suicides at one foxconn camp.  And there are clear indications that security murdered a guy that lost an iphone prototype (they claim he jumped out of the window but it looks like he was thrown).  In response to the suicides they put nets around the dorms so you can't kill yourself by jumping off the roof.  Now people are dieing left and right from the chemicals used in making the ipads.

        About the only thing that's not made there are CPUs, which are made by intel at their own fabrication plants in the US and other areas, it's just too complex to manufacture in China, for now though that is changing rapidly.  And those plants are enough of a toxic nightmare than anybody who claims they give one whit about any enviromental issue and is using a computer is so two faced they shouldn't be taken seriously at all.

        Chip fabrication is moving to China as well though.  Currently basically all video cards get chips from either nvidia or ATi (AMD now).  Those are US and Canadian firms but they don't make their own chips, they outsourced that because it was cheaper.  So while nvidia claims to be a US company, and they are, and evga is a US company that sells nvidia graphics cards, the chips production is outsourced as is the memory production, all the component production and then the video card is assembled by foxconn or pegatron, shipped back to the US, evga sticker stamped on it and then sold in the US at a markup.

        Intel is unique in that their chip fabrication tech is better than anybody elses (smaller chips = more per wager = higher profit and at times better performance) so they only manufacture their stuff for a competitive edge.  

        TSMC is taking over chip production and they are a Taiwanese company.  Though they do build fabrication plants off an on in the US.

        People don't know how crazy it is.  Build shit for cents on the dollar in China and sell it for hundreds here.  Most of the Taiwanese and Chinese companies have contracts against selling their direct products here so as not to compete with the Gateways and the Dells.  They sell some stuff, and it's cheaper, with better specs, and more reliable.  But if you go to Asia they sell stuff for a mere fraction of the price because people there can't simply afford it.

        So when apple or dell tell you it's an "American company" they are full of it.  They took an intel CPU that was designed and made here, with an intelchipset that was designed here, and an nvidia GPU that was designed here and fabricated in Taiwan.  They picked a case that looked how they wanted it to, and then had ASUS or Foxconn design the rest, test it, slap it together, with all their own components in a slave labor camp and ship it back here.  Then they sell it to you for what they can get away with.  

        They didn't do jack other than take an intel spec sheet, design a case and email it off to Foxconn. Oh, and then pay Foxconn to cover up the suicides.

        "Foolproof systems don't take into account the ingenuity of fools."

        by overclocking on Thu Sep 29, 2011 at 12:08:40 AM PDT

        [ Parent ]

        •  Very informative comment(s), overclocking! (8+ / 0-)

          I always thought that in order to criticize the status quo (and think of alternatives) you have to know how the current system actually works.

          Your info just affirmed a vague impression I had for a long time (I like to repair/ upgrade my computers/ phones on my own) - they all use the same components, the main difference seems to be design, marketing, and perhaps quality (Apple/ Lenovo seem to test much more rigorous than ASUS, if real-life experiences are any indicator)

          I didn't know it's really only three part-makers/ assemblers, I had imagined an army of independently operating factories all trying to out-bid one another, but I already knew our 'name-brands' are just a shell, designed in order to market the same crap to different groups of users (the now-regular Apple user, for instance - not the techies of the eighties and early nineties - seems to insist on buying a lifestyle, a feeling of belonging to an elite group, with his telephone)

          "Whenever you find yourself on the side of the majority, it's time to pause and reflect." Mark Twain

          by aufklaerer on Thu Sep 29, 2011 at 06:03:17 AM PDT

          [ Parent ]

          •  I do all my own repairs as well (18+ / 0-)

            There is no quality difference I can tell you that right now.  When a company builds a laptop they use whatever intel or AMD chips are out, with the designated chipset.  They can pick the CPU, but everything else is made to spec.

            So when it comes to the logic board, there is no difference for the most part.  Even when it comes to extras, like thunderbolt that apple keeps talking about now, that's an intel product with an intel spec made in china.

            The brand you buy and the model.  All they are doing is changing around the form factor and maybe telling Foxconn to add say another NIC chip on it.

            There are some other companies out there, MSI, GIGABYTE, DFI, but they don't have anywhere near the market share to compete with the big names.  So their products do not make it into an HP or an apple because they simply don't have the ability to give you a bulk discount on cranking out 1 million laptops.

            Even some of the big name consumer electronics do this.  For example Sony outsourced their display panels a while ago, they do still make some of them but odds are Sony did not make that panel in your TV and if you rip it open you'll see Foxconn all over it.  And the PS3 is entirely assembled by ASUS.

            Korean companies actually do things in Korea though.  The thing is just about all of that is made by well, Samsung, and then rebranded as whatever.

            Just make no mistake.  When it comes to a computer or a tablet, or a phone... you're buying a foxconn or an asus or a pegatron.  The only difference is the case it comes in and the company  you deal with for your warranty.

            There are some EXTREMELY rare boutique electronics vendors that buy a mix of parts (ASUS, GIGABYTE, et all make top quality motherboards in different factories that retail for 500-600 bucks just for the logic board alone), cases, and assemble them in the US and do all their testing in the US.  But those PCs are very expensive and fall into the custom gaming realm, the parts are all still from China though.

            When it comes to TVs, again, only a few companies actually make display panels.  

            There is only one consumer electronics area that does not work like this, high end audio.  I'm not talking about that home-theater-in-a-box crap that costs under a grand.  I'm talking true audio that gets up into the thousands of dollars.  That stuff actually is made in the USA and Europe by small boutique vendors in factories in the US and Europe and designed by Americans and Europeans.  Only because it can't be done at the high end any other way, there is no "spec sheet" you can just email over and get a million of them two months later, all that crap has to be hand made.  Though "buy American" has less of a ring to it when people see that 500 buck system in a box, and then see at 2000-40000 (yeah that's 40 grand) hand made US system, they'll buy Chinese.

            Unless this all changes we are truly screwed.  Even the Japanese are starting to wonder if it's wise for Sony to be contracting out so much of it's work to other companies.

            "Foolproof systems don't take into account the ingenuity of fools."

            by overclocking on Thu Sep 29, 2011 at 07:00:09 AM PDT

            [ Parent ]

          •  Most of the products we purchase (2+ / 0-)
            Recommended by:
            aufklaerer, NoMoreLies

            and consider to be "different" are commodities differentiated only by marketing.

        •  The amazing thing for me is the total (12+ / 0-)

          disconnect with the conservatives on this.   They call Obama a communist and a socialist, but support corporate communist policies by using communist countries labor..   Just don't get it!

          •  It's about $$$$ (4+ / 0-)
            Recommended by:
            demnomore, NoMoJoe, mamamedusa, MKinTN

            If you have to pay an American plant worker say 30,000 a year, health benefits, and make the plant safe so he doesn't inhale toxic fumes (make no mistake making consumer electronics is so toxic everybody would stop caring about global warming if they know what went on), and contribute to a 401k that gets expensive.  Or you can have Foxconn do it.  Who pays their people a tiny fraction of that, no health insurance, no safety equipment what so ever, can't be sued, and the people have to buy their food and clothes from Foxconn at the plant they work at (in essence they give the money back to Foxconn to eat).

            It's obvious what's cheaper.  Plus, when something does happen, apple, nokia, nintendo, dell, just shrug and say "we told Foxconn to do something about those suicides, and we are pressing them to make things more humane".

            Well Foxconn did something.

            http://blogs.wsj.com/...

            Installed nets so jumpers fall into the nets.

            Put it this way, just one of Foxconns campuses (the people don't really leave and sleep in dorms) has over 400,000 K people, and that's just one camp.

            "Foolproof systems don't take into account the ingenuity of fools."

            by overclocking on Thu Sep 29, 2011 at 07:07:52 AM PDT

            [ Parent ]

            •  The good news is Foxconn is replacing human (0+ / 0-)

              workers with robots. BTW, Foxconn has factories all over the world.

              "Nothing worth doing is completed in our lifetime; therefore, we are saved by hope. Nothing true or beautiful or good makes complete sense in any immediate context of history; therefore, we are saved by faith...."

              by snackdoodle on Thu Sep 29, 2011 at 07:14:32 AM PDT

              [ Parent ]

        •  You clearly know little about how Apple works (1+ / 0-)
          Recommended by:
          lotlizard

          They have thousands of engineers, some of whom work directly with Intel on the design of hardware.  They have developed many new forms of software that are integrated with the hardware they also design.  Actually, I am told by programmer and engineer friends that software is more a mental construct than a clearly separate item from hardware.  In any case, it's clear you don't know what you are talking about.

          The federal government is basically an insurance company with an army. Paul Krugman

          by Heart of the Rockies on Thu Sep 29, 2011 at 07:17:09 AM PDT

          [ Parent ]

          •  the iphone and ipad are made by foxconn (4+ / 0-)
            Recommended by:
            wsexson, MKinTN, Fossil, NoMoreLies

            refute that one?  And so what, Dell works with intel, ASUS works with intel, everybody works directly with intel.  ASUS even does intels bug testing on several of their chipsets

            And I'm not talking about software development.  That's not a manufacturing job.

            HP works directly with intel as well, they are intels biggest and closest partner out of any of the big computer brands, largely due to itanium in mission critical servers.  HP also develops software, HP UX is a leading UNIX system, one of the big three, HP UX, IBM AIX, and SUN SOLARIS.

            But that doesn't mean that HPs laptops are not intel based and made in China.

            Apple is not special at all, they just convince fools that they are.  They are as bad as the rest of them.

            "Foolproof systems don't take into account the ingenuity of fools."

            by overclocking on Thu Sep 29, 2011 at 07:22:23 AM PDT

            [ Parent ]

            •  I know who does the manufacturing (1+ / 0-)
              Recommended by:
              lotlizard

              You were claiming they used off the shelf Intel chips, which is patently false.  They design most of their hardware/software in house.

              The federal government is basically an insurance company with an army. Paul Krugman

              by Heart of the Rockies on Thu Sep 29, 2011 at 07:38:25 AM PDT

              [ Parent ]

              •  I didn't read his comment the same way you (0+ / 0-)

                apparently did.  I took it to mean intel or amd designed things, had the components built up in fatories mostly located in asia, and that people like dell or hp who build laptops simply take those 'off the shelf' cpus and motherboards and whatnot and slapped them together and tossed their log on the laptop.

                To me, what you are talking about and what he is are both equally valid.

                •  it is off the shelf (2+ / 0-)
                  Recommended by:
                  Fossil, NoMoreLies

                  They use the same core and xeons as everybody else, along with the same chipsets.  There is no difference between the i7 chips in a macbook pro, an HP elite book, or a lenovo, or what I can buy at newegg, it's the same chip.

                  The air mac had a "custom" chip, but everybody else can use that, and they do as well.  The only "unique" intel chip is the Itanium, which anybody can use, but only HP does.

                  Apple does not design intel chips or chipsets, nor do they design the GPUS from AMD or nvidia that they use.  They pick from what intel and others have just like everybody else.

                  The only chip they have any sort of input on is the ARM cpus in their phones and ipad... but it's an ARM spec, anybody can make those and theirs are no different than the ARM chips in other phones.

                  But apple does not design intel CPUs at all.  They simply pick from the CPU and chipset choices that intel makes.  There is no difference between the CPU at microcenter, the CPU in an apple, and the CPU in a dell.

                  "Foolproof systems don't take into account the ingenuity of fools."

                  by overclocking on Thu Sep 29, 2011 at 08:01:15 AM PDT

                  [ Parent ]

              •  no it's true (0+ / 0-)

                apple does not hold an x86 license.  They do not design x86 CPUs at all.  They buy them from intel.  And they are the exact same intel chips everybody has.  They can't even legally design an x86 even if they had the brain power to do it.

                Intel also makes and designs the chipsets for their CPUs.

                Apple decides what intel chipset and what intel chip they want.  They can add say extra features, USB 3.0, or thunderbolt, both which are intel designed, if they want.  But they do not design intel CPUs at all.

                I can buy the same CPUs off the shelf at newegg and HP uses the same CPUs as well.

                "Foolproof systems don't take into account the ingenuity of fools."

                by overclocking on Thu Sep 29, 2011 at 08:05:13 AM PDT

                [ Parent ]

        •  This should be a diary (3+ / 0-)

          This is the kind of thing that should be widely known, don't you think? Far too people are unaware of our system's effects.

        •  Intel Chips are made and designed in Costa Rica (2+ / 0-)
          Recommended by:
          badger, NoMoreLies
          Newest Intel Chip Designed and Manufactured in Costa Rica

          The newest Intel computer chip, known as the Core i7 will be produced and marketed to the rest of the world right here in Costa Rica. The new chip is 40% faster than the previous Core 2 Duo. Moreover, the chip reduces consumption of energy by the computer some 40% and is free of contaminants such as led and halogen. Production of the new chip began at the Intel plant here in San Jose, Costa Rica in October and so far this is the only place in the world where the chip is being produced. Later Intel plans to commence production at plants in Malaysia, the Philipines and China. However, the Costa Rica plant is not just the site for manufacture of the chip, but also played a crucial role in the chip's design. A group of 80 Costa Rican engineers played a role in the development of this revolutionary new chip, which Intel states is the largest technological advance it has achieved in the last ten years. The Core i7 will be offered in three versions priced between $284 and $999. The fastest and priciest version is 3.20 Gigas. The chip will be on the market for desktops in the first three months of 2009 and for laptops in the second half.


          Source 1

          Source 2

          Source 3

          "We are a Plutocracy, we ought to face it. We need, desperately, to find new ways to hear independent voices & points of view" Ramsey Clark, U.S. Attorney General.

          by Mr SeeMore on Thu Sep 29, 2011 at 10:49:32 AM PDT

          [ Parent ]

        •  As an aside, Intel doesn't manufacture in China (0+ / 0-)

          One reason why Intel doesn't manufacture microprossessors in China is because of US export controls. When Intel built the fab in Dalian, China (300mm chipset fab), they explicitly had to get the OK from the US government. They got the OK by claiming that they only manufacture chipsets there, and using an existing generation technology (ie. not the lead fab techonology).

    •  comment of the day (4+ / 0-)
      Recommended by:
      zett, MKinTN, Fossil, sebastianguy99

      It's all about the margin, that's it. You could make the same product and sell it at the same price in the US, but where as once a 15% margin was considered good profit, now it needs to be 50-60-70%. The commenter just nailed half of everything that's wrong with this country.

    •  Tariffs are the way to stop it! (2+ / 0-)
      Recommended by:
      MizC, Fossil

      You're never going to get business to stop caring about profit. They can't that's how capitalism works.  But what we CAN do is stop allowing companies access to the 3rd world labor that they exploit.  Put an import tariff in place, for both goods and services like IT, and then the companies will bring jobs home because it's cheaper.

      As long as we allow global trade policies to continue, the global race to the bottom will continue.

    •  Yup. Consumer economy works great for the top 1% (1+ / 0-)
      Recommended by:
      NoMoreLies

      Your analysis is exactly correct. When Apple sells that IPhone, most of the profit margin goes to Apple. Steve Jobs, some Apple Employees, and some stockholders make out like bandits.  Working class americans lose out because Apple doesn't hire factory workers here in the US. Working class americans buy IPhone in droves, but the money doesn't come back to them.

      In short- that is the problem with the consumer economy. It actually works very well for the elite 1%. It just sucks for the bottom 90%.

  •  Consumption drives production. (24+ / 0-)

    Without someone to buy a product, it is a loss to produce it.

    The great cycle of stuff.

    •  true (2+ / 0-)
      Recommended by:
      MsGrin, Tomtech

      and beside the US and EU there are 5 billion potential NEW consumers outside the two groups of countrys.
      but i have to agree whit the diary.
      beeing the consumer of the world(with credit) is a service,
      no one in the world understands. why does china have to lend money to the US, so the US buys chinas work.
      sounds like a free lunch

    •  Consumption is a pejorative word which (17+ / 0-)

      reflects a certain disregard for the people who are tricked into buying what they can't make or grow for themselves, either because they don't have the talents or because the necessary resources have been declared off-limits by private property rights.

      When the majority of the earth's resources are relegated to the exclusive ownership and use of a few people, then the rest have no option but to subordinate themselves to the guys with the keys.

      Man is a tool using animal.  Most create useful things; some just fiddle.  However, for the creative process to be sustained somebody has to be willing the accept/trade the surplus creativity creates.

      It is psychologically more reassuring to claim that people produce in response to demand, but it isn't logically possible for a person to know WHAT he wants until it's on offer and he's tried it out. Producers live in fear that what they like to do (practice their love) will be rejected and restricting access to indispensable resources (e.g. monsanto seed) helps insure that the "market" will not disappear (even if Michele Obama starts a home-garden movement).

      Economics is based on a bundle of false assumptions designed to validate what people who want to exploit their environment, including other humans, want to do. It is our misfortune that a goodly number of humans have discovered that exploiting their own kind through the practice of human husbandry gives them a thrill. Referring to them as "consumers" justifies this abusive attitude.

      Anyway, producers and users ought to be collapsed into sustainers because what our system of trade and exchange needs is to be sustained.  So, for that matter, does the natural environment.  But, if there have to be two major players, then sustainers need to be paired with the people who just move stuff around and siphon off profit without adding any value. I'm not talking about the transporters here.  I'm talking about the virtual traders who subtract value by claiming ownership of things they neither have nor want.

      http://www.youtube.com/watch?v=MuzZQ8LTE2c

      by hannah on Thu Sep 29, 2011 at 12:08:03 AM PDT

      [ Parent ]

      •  markets (4+ / 0-)
        Recommended by:
        MsGrin, Mrs M, mamamedusa, Tomtech

        One of the driving forces of early modern capitalism was finding and opening new foreign markets in which to sell.  When even the world markets were saturated by the 20th century, capitalists had to invent new and innovative ways of convincing people to buy more junk- this was the birth of modern marketing, where a commercial will tell you nothing about the actual product but rather try to make you 'feel' something.  In turn, new insecurities had to be invented and old ways of satisfying these insecurities, such as real community, had to be destroyed.  This is the "Society of The Spectacle".

        The reason capitalists always need new markets and new consumers is simple: They have to sell something to make money, and the more they sell the more money they make.  No one ever made money by not selling anything.  Therefore even if nothing is actually needed to be produced, a new demand has to be invented, just so profit margins can stay up.  

        Obviously, infinite growth is impossible on a finite planet, so the whole thing has to come crashing down sooner or later- that time seems to be happening right now.  When the resources start running out, they turn to debt to fuel demand; but now that spigot has also closed, especially after the government went massively into debt 2-3 years ago to fuel another few months of profit.  Now there's nothing left to fuel growth.  This is probably a good thing.

        •  Well, there's actually lots of real (7+ / 0-)

          demand for food, clothing and shelter.  But, because large segments of the global population have had their access to information, education and currency restricted, their needs/demands remain unsatisfied.
          Meanwhile, the natural resources to which people used to have access have also been restricted via physical confrontations and sales to outside interests.

          We can blame immaterial concepts like globalization and privatization and sophisticated finance, or we can blame people who have no qualms about exploiting the labor of their own kind and letting them die off in the prime of life without giving it a second thought.

          Humans have this marvelous capacity for doing harm to others and calling it self-mutilation. When the injury is unwelcome and defined as a crime, we call it "blaming the victim."  When the victim, having a choice between a rock and a hard place, opts for the lesser of two negatives, that assent serves to cancel out the abuse entirely--a subminimum wage, if it's agreed to, is what the laborer deserves.  That's what conservatives mean by "personal responsibility." Whatever the situation, the person has only himself to blame, even as nothing is anyone else's fault.

          If you get run over, it's your fault and, if I run you over, it's your fault, because you were in the road. People are responsible for what happens to them, but not for what they do.
          How to account for it?  When Jesus said, "they know not what they do," He may have been stating the literal truth.

          http://www.youtube.com/watch?v=MuzZQ8LTE2c

          by hannah on Thu Sep 29, 2011 at 07:45:48 AM PDT

          [ Parent ]

          •  can't blame people (1+ / 0-)
            Recommended by:
            Tomtech

            people never change.  Blaming people is just giving up.  Or inviting pogroms.

          •  I find the John Prine mashup you used offensive. (1+ / 0-)
            Recommended by:
            Tomtech

            This appears to come from some radical right wing shop, and has at least 5 images of President Obama interspersed among the terrorists and Hitlers, it has two photos of Hillary Clinton, and one of Hillary and Chelsea Clinton, and the implication is obvious.

            I took the time to look at the on-stage version, and it was, effectively, an anti-GWB, anti-Iraq war song.  This mashup winds up being very anti-Obama and Hillary, among others, clearly not the intent of the artist, in my opinion.

            Republicans are like alligators. All mouth and no ears.

            by Ohiodem1 on Thu Sep 29, 2011 at 08:43:06 AM PDT

            [ Parent ]

            •  Don't shortshrift the Clinton's (3+ / 0-)
              Recommended by:
              zett, Tomtech, sebastianguy99

              blame when it comes to our current problems.

              •  Which problem is that? The budget surplus (0+ / 0-)

                they left behind or all the jobs that they created when Bill was in office (22 million), or no wars left behind, or was it the Iraq war (oh, wrong Clinton, that was George W. Clinton, I guess) or the TARP bailout, oh, drat, that was George W. Clinton again?

                Republicans are like alligators. All mouth and no ears.

                by Ohiodem1 on Thu Sep 29, 2011 at 03:31:30 PM PDT

                [ Parent ]

                •  End of welfare, NAFTA, Telecommunications (0+ / 0-)

                  Act, Securities Modernizatoin Act, etc.  All very long-reaching changes that have helped out immensely to put us where we are.

                  Nice try.  Being president during a tech bubble had its advantages.  Bush had the housing bubble.  What's Obama got?  Nothing.  Find a  bubble for him and he'll "make" jobs too.

        •  Sure they do (2+ / 0-)
          Recommended by:
          Tomtech, NoMoreLies
          No one ever made money by not selling anything.
          People can rent things without selling them, and then there's the lending of money at interest, and then there are all the gamblers out there making money through smart or just plain lucky bets.

          Oh, and don't forget the outright thieves who just steal the money.

          Al Qeada is a faith-based initiative.

          by drewfromct on Thu Sep 29, 2011 at 08:59:26 AM PDT

          [ Parent ]

          •  Renting is selling... (1+ / 0-)
            Recommended by:
            Tomtech

            the commodity is temporary use.  It's still a commodity.
            Lending is selling funding.
            My point is that, aside from theft which isn't really supposed to be a systemic force, capitalists make money by selling more stuff and taking a little profit off each one.

            •  There's an overlap (3+ / 0-)
              Recommended by:
              hannah, Tomtech, NoMoreLies

              Lending is the renting of money, which, yes, is the selling of the temporary use of money. But lending is also a form of gambling, in that the lender is essentially betting whether or not the loan will be repaid.

              capitalists make money by selling more stuff and taking a little profit off each one.
              It seems more to me as though what you describe is what simple, honest businesspeople do, while a true capitalist makes a big profit while selling little or nothing at all.

              The classic example is a ticket scalper, who strategically hoards something in demand and jacks up the price while adding no value whatsoever to the product in question. AFAIAC, the guys trading in mortgage  derivatives and commodity speculation are nothing more than glorified ticket scalpers. Parasites like these need to be taxed out of business so that the money they skim of society can be redirected toward better uses.

              Al Qeada is a faith-based initiative.

              by drewfromct on Thu Sep 29, 2011 at 09:57:44 AM PDT

              [ Parent ]

              •  The difference is only in scale and technique (1+ / 0-)
                Recommended by:
                drewfromct

                An honest businessman will be driven out of business by a scoundrel who has no scruples.  If one way of doing something makes a higher profit, he will attract more investors.  Basic standards of ethics are an ineffective check on this; it merely causes the most skillful and ruthless sociopaths to rise to the top.

                There is a slight difference between being a businessperson who sells real goods and being a banker or investor.  In Marxist terms it would be that a businessperson turns money into commodities and commodities into a greater amount of money than they started with.  A 'true capitalist' simply cuts out the middle step.  If it's more efficient, it WILL happen in anything resembling a market economy.

                Even government regulation in ineffective; the more cunning capitalists will simply invent new ways to engage in bribery get any regulations overturned sooner or later.

      •  Consume IS an ugly word. (2+ / 0-)
        Recommended by:
        hannah, Tomtech

        Consumer, consumption, etc. defines the situation in a way that's not helpful. It is way over-used.

        "Here's another nice mess you've gotten me into." - Oliver Hardy

        by native on Thu Sep 29, 2011 at 09:41:03 AM PDT

        [ Parent ]

  •  Production is nothing by itself. (12+ / 0-)

    Else we could produce a billion pairs of size 70-waist pants and what's that?

    Cyndi Lauper's "Time After Time" was one of the last great melodies in music history before all possible good melodies apparently got exhausted in the late 80s.

    by dov12348 on Wed Sep 28, 2011 at 11:19:56 PM PDT

  •  It's kind of a meaningless distinction. (3+ / 0-)
    Recommended by:
    sewaneepat, Mrs M, PsychoSavannah

    Heck, you could make the case that privileging production reduces us to mere wage slaves, while consumption at least holds out the possibility of a more pleasant life.

    The Rent Is Too Damn High Party feels that if you want to marry a shoe, I'll marry you. --Jimmy McMillan

    by Rich in PA on Thu Sep 29, 2011 at 03:46:23 AM PDT

  •  So you are a supply side economics supporter, (8+ / 0-)

    rather than a Keynesian (demand side)?

    You can't scare me, I'm sticking to the Union - Woody Guthrie

    by sewaneepat on Thu Sep 29, 2011 at 04:05:53 AM PDT

  •  Production without consumption is (14+ / 0-)

    worthless.  You have to have a buyer for what you produce or you don't earn any money.  

    Unemployment benefits are paying people to consume.  It help money flow through the system.  It also helps them keep the stuff they already have (in some ways).

    After the Republicans burn down the world, they will prove the Democrats did it.

    by jimraff on Thu Sep 29, 2011 at 04:36:49 AM PDT

    •  Yep, Soviet Union did that. Ended up producing (1+ / 0-)
      Recommended by:
      zett

      piles of junk sitting in warehouses. But the diary has a point. There is consumption and there is investment (e.g. in infrastructure). The latter has been ignored in favor of consumption.

  •  What about health care consumption? (3+ / 0-)
    Recommended by:
    Superpole, Mrs M, cocinero

    Just curious, really.

    I hear people on both sides talking about how awful it would be if our health care spending went higher than 20 percent of our GDP and I wonder why.

    HC seems like a strong industry that is located across the country, in most communities. In fact, it is often the largest employer in the towns and cities in which it's located.

    Most of it can't be outsourced and it uses high technologiy as well as more mundane supplies at a rapacious rate.

    It requires an educated workforce.

    Why is it bad for the health care industry to grow?

    Ideology is an excuse to ignore common sense.

    by Bush Bites on Thu Sep 29, 2011 at 05:39:01 AM PDT

    •  Agreed; I'd Rather See the Health Care (0+ / 0-)

      industry grow than the financial sector-- pre crash it got up to what was it? 26% of GDP?

      We can see where that got us.

      "I don't feel the change yet". Velma Hart

      by Superpole on Thu Sep 29, 2011 at 05:47:31 AM PDT

      [ Parent ]

      •  Except the growth is non-productive (2+ / 0-)
        Recommended by:
        NoMoreLies, Superpole

        Much of the 'growth' happens in insurance and administrative functions - 'overhead'.  That does not create real wealth.  Real wealth is adding VALUE - creating goods or performing a needed and valuable service.   Fixing a broken bone adds 'value' - filling out paperwork to deal with that is simply an overhead cost associated with the service that produced the real value.

         

    •  Because it is a non-value-add service (2+ / 0-)
      Recommended by:
      MsGrin, soros

      Understanding this is key to understanding economics (at least Austrian economics of which I am a subscriber).

      The last thing any person wants to spend money on is health care (or any other non-value-add industry). Sitting on your couch, would you rather use a marginal piece of money to (a) go see a movie (b) buy part of a new nice car or (c) fix some health care issue.

      The only reason people would pick (c) is if they are sick. What they really want is either (a) or (b). The more of (c) we do as a society, the less of (a) or (b) we get to do. As health care expands to be an ever greater percentage of our economy, it crowds out all the other activities and lowers people's net standard of living. If health care expands from 10 to 20 percent of the economy, everyone just took an (90%/80% - 1) = 12.5% hit to their standard of living (i.e. a depression).

      The same goes for all other non-value-add activity, which includes most of what the government actually does.

      Remember, it's not like we don't value the services the government provides, but we have to get them as cost effectively as possible and be ruthless about cutting activity that doesn't have a good cost/benefit. Increases in the size of government spending with respect to the size of the economy are generally bad for this reason.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Thu Sep 29, 2011 at 06:38:08 AM PDT

      [ Parent ]

      •  I'd say that saving someone's life adds value, (3+ / 0-)
        Recommended by:
        Mrs M, jeopardydd, cocinero

        therefore healthcare is a value-added service.  

        If you save someone's life or health, you have preserved their ability to add value.

        •  It isn't (0+ / 0-)

          If 99% of our economy is devoted to saving people's lives, we only have 1% to do other things. Better than spending money saving people's lives is not needing to save people's lives in the first place.

          The more spent on health care, the less spent on other things, a net loss of living standards.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Sep 29, 2011 at 07:31:12 AM PDT

          [ Parent ]

          •  99% (0+ / 0-)

            where are you getting your numbers?

            •  It's a hypothetical (0+ / 0-)

              To illustrate the absurdity of the notion that having a big health care sector is a good thing.

              (-5.50,-6.67): Left Libertarian
              Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

              by Sparhawk on Thu Sep 29, 2011 at 08:06:31 AM PDT

              [ Parent ]

              •  it's a worthless hypothetical (2+ / 0-)
                Recommended by:
                nightsweat, cocinero

                there are NO goods or services for which it would be a good thing to have 99% of our economy focused on that one thing.

                so this sheds no light on health care in particular.

                •  Health care... (2+ / 0-)
                  Recommended by:
                  soros, NoMoreLies

                  ...it would be best if no one got sick and 0% of our economy was health care. If your health care sector is big, it means lots of people are sick. Bad.

                  Street sweeping, most defense, insurance, etc etc the same. The more of this stuff you need and are spending money on, the worse off you are.

                  All of these activities are "necessary", but the optimal amount of them is always zero. They are non-value-add activities.

                  The bigger any of these areas are in terms of your total economy, the worse off you are.

                  (-5.50,-6.67): Left Libertarian
                  Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                  by Sparhawk on Thu Sep 29, 2011 at 08:51:15 AM PDT

                  [ Parent ]

                  •  just because (3+ / 0-)
                    Recommended by:
                    andgarden, cocinero, bryduck

                    it's bad if people are sick, that does not mean that there no value added to curing them.

                    you are very, very confused. you are using the lack of sickness as the baseline, where the real baseline is people being sick.

                    •  No, you are confused (0+ / 0-)

                      Cutting non-value-add activity and reducing the need for it as much as possible is a net win for society (the losses by purveyors of that service are more than balanced by the gains by the rest of us).

                      (-5.50,-6.67): Left Libertarian
                      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                      by Sparhawk on Thu Sep 29, 2011 at 09:31:32 AM PDT

                      [ Parent ]

                      •  health care (2+ / 0-)
                        Recommended by:
                        cocinero, SwedishJewfish

                        IS "reducing the need for more of it"

                        a ton of our healthcare costs go for reducing the need for even more. antibiotics may keep you from having a foot amputated, for example.

                        you are not stating the issue accurately.

                        without health care, people get sick and die, reducing output. there is value added from it in a purely productive way (even if you want to ignore the suffering it prevents).

      •  How is (c) different from (a)? (0+ / 0-)

        Both health care and going to see a movie can make us feel better. Isn't making us feel better adding value to our lives?

        Buying a car (b) may make us feel better, or it may not when faced with the operating and maintenance costs (including the opportunity costs of dealing with an automobile). Does another car in the garage add value? Couldn't other alternatives add as much or more value (convenient mass transit, sidewalks, bike lanes, etc.)? Don't those government-provided transportation services, including roads, add value?

        •  Re (0+ / 0-)
          Both health care and going to see a movie can make us feel better. Isn't making us feel better adding value to our lives?

          All other things being equal, you will never voluntarily spend money on health care. It is always an unwelcome expense. Scaling it up to a national level, health care is still merely an unwelcome expense. All other things being equal, you would rather not build another hospital if you can avoid doing so.

          You will voluntarily go to a movie. Creation of more movies adds to the national wealth. All other things being equal, another movie existing makes all of us richer.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Sep 29, 2011 at 10:19:39 AM PDT

          [ Parent ]

      •  Say WHAT? Healthcare not value added??? (0+ / 0-)

        You mean, you'd rather buy a big screen TV than fix your heart blockage that's about to kill you? Of course healthcare is value added. People pay dearly for healthcare. If people are willing to pay for it, then it is something of value. If you provide something of value, then you are a value-adder.

        The point about lower standard of living is also bunk.  If healthcare allows somebody to keep their asthma or diabetes in check such that they could lead an active life- I would say healthcare is improving their standard of living.  What good is a Mercedes Benz and an XBox if you are too sick to get out of bed?

        •  Re (0+ / 0-)

          You would rather not have the heart blockage at all. The heart blockage represents an economic loss. The heart blockage prevents you from spending money on things you want to buy.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Sep 29, 2011 at 06:14:44 PM PDT

          [ Parent ]

          •  So if it's something you need instead of want (0+ / 0-)

            then it doesn't count as value-added? Is that your point? We need food and shelter. So food and shelter are not value added products now? How did you come by this arbitrary distinction?

            BTW, the legions of doctors and dentists catering to foreign patients in Thailand and India tell you you are flat out wrong. These people are making lots of money catering to medical tourists. They provide a service, loads of americans are flocking there to pay for that service. Sounds like Value added to me.

            Of course, our billion dollar pharmaceutical industry tells you you are wrong also. Big Pharma is raking in dough year after year. No value added? Says who?

    •  Growth is robbing us (7+ / 0-)

      I recently had an illustrative experience.  I have been getting a yearly blood work up, which involves going to a lab and getting a couple of test tubes drawn and then analyzed.  Usually it costs from about 75 dollars to maybe a little over a hundred.

      Recently I got a bill for 1600 for the same service.  I called a variety of administrative personnel, including the CEO of the healthcare system.  It turns out that they are cost shifting, to support the economics within the hospital system.  It has nothing to do with the value of the actual service.  

      When costs mushroom out of all proportion, which they do when there is no real scrutiny, oversight or accountability to anyone but a profit oriented board of shareholders that operate out of sight and unaccountably.  The insurance industry appears to support ratcheting up higher costs because there are interlocking self interested boards of directors and shareholders.  This is an incestuous system.  

      That is growth more or less along the lines of a cancer on society.  It is not free enterprise and can't be until there is more structured accountability somehow.  

      hope that the idiots who have no constructive and creative solutions but only look to tear down will not win the day.

      by Stuart Heady on Thu Sep 29, 2011 at 07:10:57 AM PDT

      [ Parent ]

      •  Much unneeded 'work' adds to cost (1+ / 0-)
        Recommended by:
        NoMoreLies

        Many doctors take routine chest X-rays not because they are needed or even serve as a screening but because they have their own X-ray equipment and can charge more than it cost them to take the X-ray.  It is a profit center.

        Blood work gets marked up ridiculously as well because insurance will pay the costs.  You also have MORE - often unneeded tests - for the same reason.

    •  Because we would rather keep people healthy (5+ / 0-)
      Recommended by:
      Sparhawk, cocinero, zett, wsexson, NoMoreLies

      in the first place, rather than 'fix them' after they get 'broken'?

      We want the health care spending of the country to shrink, because it's cheaper to simply keep people healthy in the first place.  Healthier people use fewer more expensive treatment services and more cheaper preventative services.

      If we address the root causes, we keep everyone healthier, which not only makes them more productive, but happier.

      Regulate pollution producers, rather than treating all of the people who get sick from the pollution, for instance.

    •  Perhaps because other countries (3+ / 0-)

      that deliver a similar quality of health care AND more of it as those countries don't deny health care to a large portion of their populations do it with 9 to 12% of their GDP.  

  •  Focus on Production (13+ / 0-)

    Is another way of saying "supply side economics".  We have been shoveling money at producers for decades, only to see them produce elsewhere to sell here.  It hasn't worked.

    Now, if you credit the notion that we need to focus on adding value, what better way to do that than to develop and deploy new technologies here?  That happens to be a policy of the Obama Administration (that Republicans are trying to shut down in favor of more shoveling money to the same old foreign producers).

    I see little illumination in your diary.

  •  This diary doesn't consider services (6+ / 0-)

    When you consider services (which includes healthcare, education, policing, firefighting, entertainment, banking), the only way to reconcile economic output is by consumption.

    While I appreciate what the diarist is attempting, the focus is too narrow.

    Critical Thinking: The Other National Deficit.

    by cultjake on Thu Sep 29, 2011 at 05:41:28 AM PDT

    •  Yes! (3+ / 0-)
      Recommended by:
      zett, cultjake, The Nose

      The diarist seems to suggest that producing goods is what's needed, and services don't count. A lot of people have more goods (stuff) than they really need. People can be employed providing services, and the cut in service jobs, especially those provided by state and local governments, is a big part of the current unemployment.

      There's also a need for people to fix the stuff we already have, whether it's bridges and school buildings or individual home repair, including retrofitting for energy efficiency.

      •  Goods and services both count (1+ / 0-)
        Recommended by:
        soros

        But government spending does not, nor does "recurring" spend like health care, auto insurance, etc. The only thing that actually gets you out of the hole is production of goods and services of external economic value that the rest of the world is willing to pay for at the price you produce it.

        If you're a small ski resort town, a bigger hospital to serve your residents doesn't help your economy. But expanding the ski resort does.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Thu Sep 29, 2011 at 09:37:52 AM PDT

        [ Parent ]

        •  Government spending is as good as private. (1+ / 0-)
          Recommended by:
          The Nose

          What difference does it make whether the expanded ski resort is financed by private sources or by the city through a bond issue?

          Government-funded amenities like parks and museums do add value.

          •  Re (0+ / 0-)
            What difference does it make whether the expanded ski resort is financed by private sources or by the city through a bond issue?

            It doesn't matter, except that the city has essentially become a private corporation at that point. This may or may not be a good idea, for a very small community there may be pros and cons. For bigger communities with diverse economies it probably does not work.

            The important thing is that the area sells something of value to outside the area. Internal government services and hospitals don't drive that dynamic, that's my point.

            Government-funded amenities like parks and museums do add value.

            Oh, I generally agree, but you have to be careful. Things that add value are generally things that people are willing to pay for freely. For example, why can the museum not function purely off of user fees? If it constantly needs government funding, does it really add value, considering it can't find enough paying customers to support its operations?

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Thu Sep 29, 2011 at 10:48:10 AM PDT

            [ Parent ]

            •  Government-funded amenities add value (0+ / 0-)

              to communities. Cody, WY and West Yellowstone, MT certainly derive a lot of benefit from Yellowstone Nat'l Park. Plus all the motels, gas stations, and eateries that benefit from tourists who travel around the country visiting national parks.

              Even more important is the government-funded infrastructure that makes commerce possible.

              “There is nobody in this country who got rich on his own. Nobody,” Warren said.  “You built a factory out there? Good for you. But I want to be clear: You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate.
              - Elizabeth Warren
            •  The museum doesn't function purely off of user fee (1+ / 0-)
              Recommended by:
              cocinero

              because its  mission is not to make money. Believe it or not, not everything exists to make money. The museum's job is to educate the public. Charging an admission fee reduces the number of visitors, and thus contradicts the mission of the museum.

              •  So... (0+ / 0-)

                ...the museum cannot get visitors willing to pay to go. Nor can it get enough private philanthropic funding to survive. Apparently there is no one who thinks the museum is worth enough to actually put some money into it.

                However, the government has decided that it is wiser than the people and specifies that there is a need for the museum despite the fact that the museum would never be supportable on its own. So a lot of people who have no use for the museum (in fact, most people, since the museum can't attract paying customers or philanthropic money) now have to pay for it anyway.

                I am not necessarily saying I oppose all government run museums, but you can see the issues here.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Thu Sep 29, 2011 at 04:43:48 PM PDT

                [ Parent ]

    •  You cannot have a PURE SERVICE ECONOMY (2+ / 0-)
      Recommended by:
      NoMoreLies, rcbowman

      At some point someone has to create 'original' value - produce  something.

      If I'm on a desert Island with a group of others how will that economy work?

      Person 1 has only one skill - they give massages

      Person 2 can cook food (but not obtain it)

      Person 3 can teach you anything you want to learn

      Person 4 can obtain food and potable water

      Person 5 can obtain wood for fires

      Without Persons 4 and 5 the skills of 1,2 and 3 matter little - and there is no meaningful commerce.  Everyone would starve and freeze without 4 and 5 - and those people have to be willing to accept the services offered by 1 and 3 which might arguably have little value to 4 and 5 (2, 4 and 5 have mutually supporting skills even if  2 is simply providing a 'service' - though one can argue they are 'producing' edible food')

  •  Community spotlight? (5+ / 0-)

    Um, OK.

    Ok, so I read the polls.

    by andgarden on Thu Sep 29, 2011 at 05:48:25 AM PDT

    •  I'm actually really embarrassed by the names (0+ / 0-)

      I see in the tip jar, at least the ones I recognize.  You can argue that you're recommending a diary for the 'discussion' and not because you agree with it, but you don't 'tip it' for the discussion.  People got played.

      •  Actually, I think the rec is worse (2+ / 0-)
        Recommended by:
        cultjake, cocinero

        because it means you think other people should see it. Historically the tip jar was developed in part to allow people to tip when they didn't want to rec.

        People should take their recs more seriously.

        A person who passed Macroeconomics 101 should be able to see the problem with the diary based on the title alone.

        Serious FAIL by the rescue rangers.

        Ok, so I read the polls.

        by andgarden on Thu Sep 29, 2011 at 08:09:52 AM PDT

        [ Parent ]

  •  We need to revamp the GNP - how about GNH? (4+ / 0-)
    Recommended by:
    MsGrin, Mrs M, J M F, zett

    Gross National Happiness Index? Sounds crazy but it's built on the idea that we have the right to life, liberty and the pursuit of happiness (not the pursuit of wealth).

    I recently wrote about it and other indexes that we could use. Links are available in the main diary:

    There are many different methods to chose from and all of them remove corporations as the center of attention though they don't ignore economic growth all together. They place it in balance with other items:
    (snip)
    Gross national happiness – The Centre for Bhutanese Studies in Bhutan is working on a complex set of subjective and objective indicators to measure 'national happiness' in various domains (living standards, health, education, eco-system diversity and resilience, cultural vitality and diversity, time use and balance, good governance, community vitality and psychological well-being). This set of indicators would be used to assess progress towards gross national happiness, which they have already identified as being the nation's priority, above GDP.
    (snip)

    I have to admit that of all these models, the one that resonates with me the most is the Gross National Happiness or GNH index. Here in the US, there is a movement to inform more people of this index and to remind folks that in our own Constitution we are guaranteed three rights - Life, Liberty, and the Pursuit of Happiness. We have a Constitutional Mandate to offer Congress - they should measure the very thing that we pursue, Happiness. The Seattle City Council has already adopted the Happiness Initiative.

  •  When the price of labor drops then employees ..... (4+ / 0-)

    are simply treading water when the price of goods drops.  Then, when consumption increases, the wealthy get weathier while the employees are lucky to tread water.

  •  you have some really good points ... but (5+ / 0-)
    Recommended by:
    MsGrin, Mrs M, Deep Texan, zett, Marie

    There are some really excellent points in your diary but I think your focus on production is misplaced.

    The essential problem is not consumption per se, but excess consumption fueled by debt.

    People take on debt because the cost of money is low (low interest rates). It is a bit like how a pusher provides low priced smack to get someone hooked on heroin. The culprits here are 2; one was/is the Fed/Bush for keeping rates low and the second is China which has forced rates lower by lending back to to the US the money it made from selling stuff to the US (and accumulated because it artificially suppressed its exchange rate).

    Ultra low interest rates fuel the mis allocation of capital (not a good thing in a capitalist economy).

    Production itself is not a savior. Most "production" these days is done by robots/machines. Just look at how few people are required to make a car. It is not production that is important, but the employment of labor, in some "gainful capacity" that is important. "Gainful capacity" meaning doing something that "adds value".

    One could easily argue that the military does not add value, that health care insurance workers, and that even loggers do not add value. In fact many of the problems in the US economy are due to those that are employed, not actually adding value (the military and the health insurance industries being but two obvious examples.

    Moving forward, consumption does need to be restrained to be within "limits" (sustainable), money needs to recirculated (taxed from those with much), and "gainful employment" options need to be developed.

    BUT this will take time (a 25 years debt bubble is not fixed in a weekend). But also as you so accurately point out (re the guy who is on unemployment and realizes the waste of talent) current policies are not working because the fundamental changes required are not being made. As a result the hole just keeps getting deeper.

    "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

    by taonow on Thu Sep 29, 2011 at 06:26:04 AM PDT

    •  The real problem is trade imbalance (0+ / 0-)

      Consumer debt per se, is not necesarily a problem. Trade imbalance, on the other hand is an unsustainable situation. Prolonged trade imbalance necessarily means our country will be poorer and the countries selling to us will be richer.

    •  CONSUMPTION of goods PRODUCED ELSEWHERE (0+ / 0-)

      is my focus.

      even if robots are producing goods, if that production is occurring HERE in the US, you need people top set up and program those robots, to BUILD those robots... those jobs are created HERE.

      If you are consuming goods produced in China it matters little to AMericans how those goods are produced - they are not being produced HERE, value is not added here, wealth is not created HERE.

      Loggers, miners etc add 'value' at the fundamental level.  They take natural resources out of the ground and make them available for use.

      The military does NOT add value in the sense that a soldier is 'overhead' to a society, they have to be paid out of productive enterprises to protect that society - unless of course you are using the military to conquer raw materials you as a nation do not possess - and even that can ten be far from cost effective to society, the value of the resources acquired - or the protection gained being less than the cost of maintaining that military.

      Healthcare that does something - treats a patient - fixes a problem or prevents one is productive but is still a service that cannot be paid for without some other service that is needed or wealth created from production or adding value somewhere.

      •  thoughts (0+ / 0-)

        1. 1/2 of the trade deficit is imported oil! This oil is then used quite inefficiently in the American economy - auto fuel efficiency is horrible when compared to say Europe. The trade deficit is a huge problem but it would be a lot closer to balanced if the US cut its oil use - a relatively easy thing to do - if the will was there. The conversion would also create jobs - a win - win

        2. The US spends 1/2 the world's defense budget. Clearly excessive. The other problem is that a lot of remaining US manufacturing ability is devoted to defense production - tanks, missiles, aircraft, ships.

        3. I was more concerned with health care "insurance".  Unlike a modern economy with a single payer system the US loses at least 20-30% efficiency by using "for profit" health insurance - a wealth destroyer.

        4. Loggers only create value in an economic system that is ecologically non-sustainable. A tree only is only counted as having value when it is cut down. All the "production" done for free by nature has no value. Clearly the "accounting" in our economic system is screwed up. (I say this as an accountant who has always been concerned with the distorted decisions we make in our society because we are not measuring true costs and benefits correctly - this of course also plays into the main points of the diary.)

        "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

        by taonow on Fri Sep 30, 2011 at 04:16:42 AM PDT

        [ Parent ]

  •  So we need a new program (6+ / 0-)

    where unemployed persons have a chance to work directly for the government on improvements to parks, public buildings, and infrastructure.  Like the CCC and NRA of FDR's time.  

    This improves infrastructure, deploys resources to public buildings and parks, and puts money in the hands of workers who then can afford to consume, creating more demand for products, creating jobs in the private sector.

    I support public employee's unions.

    by Tracker on Thu Sep 29, 2011 at 06:30:03 AM PDT

    •  Yup (1+ / 0-)
      Recommended by:
      Mrs M

      and instead, we get the House Republicans insisting that we hold FEMA budget hostage until an equal amount is slashed from the budget elsewhere.

      Certainly, people at the top of the food chain do not need to be bailed out from natural disasters (they can pay for it themselves), so why have a program like that on the books?

      'Give away to the rich and punish the poor for the extravagance.....crazy' --LaFeminista

      by MsGrin on Thu Sep 29, 2011 at 06:57:34 AM PDT

      [ Parent ]

    •  OT, but (0+ / 0-)

      OT, but how many times do we go to the well that is the wisdom and policies of FDR's New Deal?  

      He is speaking to us from the grave.  

      I also thank the one who rearranged deck chairs on the Titanic so those on board ship could get a better view of the iceberg.

      by NyteByrd1954 on Thu Sep 29, 2011 at 07:37:36 AM PDT

      [ Parent ]

  •  Happiness (4+ / 0-)
    Recommended by:
    MsGrin, jeopardydd, spacejam, cocinero

    " in our own Constitution we are guaranteed three rights - Life, Liberty, and the Pursuit of Happiness"

    1) That phrase is from the Declaration of Independence and is nowhere in the Constitution, nor is it otherwise enshrined in law.

    2) The right is, in any case, to the pursuit, not the attainment.

  •  Production , consumption and trade are (6+ / 0-)

    all part of the equation and when in balance they work well.  We are completely out of balance.  70% Consumption is a recipe for constant economic turmoil and debt.  

  •  Is consumerism ultimately sustainable? (6+ / 0-)

    To a great extent, our whole economy is a one trick pony.

    This seems to have arisen out of the post WWII condition.  The great need was to keep industrial mobilization from collapsing back into the pre-war, Depression status.  

    Madison Avenue was created, with the incorporation of such people as Edward Bernays, the nephew of Sigmund Freud and the Founding Father of PR.  The problem was to persuade very thrifty minded returning GIS and their brides to stop pinching pennies and start spending.  

    This flowered into the economy of the 50s and 60s.  Now the primary purpose of the whole sphere of economic activity is to repeat the 50s, based on consumerism.  

    The smart question, which apparently bankers are other financial leaders are not asking, is about the future sustainability of a consumption based economy.  

    Can the exploitation of developing countries countinue if middle classes arise in places like India and China, as well as in Central and South America?  

    Going through a garage to clear out stuff that had been stored since the 60s, it became obvious to me that the prosperity of the mid twentieth century period was based largely on cheap oil.  Consider that around 1972 the price of a gallon of gas was around twenty cents.  

    As someone who has been trying to figure out how to get rid of stuff, some of which was inherited from parents, the problem can be found in the garages of America and in the storage facilities sprouting up across the landscape.  

    Can an economy based on making stuff, selling and marketing stuff, storing stuff, transporting, warehousing, reselling and reselling and reseling it really be sustainable?

    hope that the idiots who have no constructive and creative solutions but only look to tear down will not win the day.

    by Stuart Heady on Thu Sep 29, 2011 at 06:59:05 AM PDT

    •  Modeled After A Cancer (2+ / 0-)
      Recommended by:
      zett, xrepub

      Especially when that mining-making-marketing-buying-discarding cycle is coupled with the never ending corporate need to extract more more more from every cycle.  It's a dead end game where the host (our planet) finally dies.

      Our corporate overlords have been in a game of extracting more more more blood from a dying dog for decades.  The relatively pathetic damage wrought by the savings and loan scandal was trumped by the Enron/Worldcom scandal, then both were made to look insignificant by the financial collapse brought on by the real estate boom.  And the monster is looking for it's next feast, and in the process, will identify and cherry pick those non-discretionary spending targets where the consumer will give up his last dime.  Water, fuel, food, health care, transportation.  Even the ads for autos are ignoring the discretionary spending of the middle class, half of them are for $60,000 + cars now.

  •  Production without consumption (10+ / 0-)

    of the product is what is also known as "excess capacity" and leads to what some folks known for economic analysis have called "a crisis of overproduction" which leads to deflation and depression.

    The "value" of a product is ONLY and COMPLETELY what someone will pay for it, and nothing else. If your widget is made from spun gold, crafted by the finest artisans, at a cost of millions of dollars... and no one will buy it... what is it "worth"?

    Nothing.

    Shoveling money at producers leads to stagnation, because absent some entity forcing them to invest in hiring and new productive hard capital (machinery and physical plant), they will NOT invest that money unless they can realize a profit margin that will satisfy their investors.

    No consumption = no demand. No demand = no reason to produce. No reason to produce means that investment in production is wasted.

    Keynes and Marx were right, the Austrians and other Supply Siders were WRONG and remain wrong.

    The only way to ensure a free press is to own one

    by RedDan on Thu Sep 29, 2011 at 07:01:50 AM PDT

  •  Focus has been on INFLATION (2+ / 0-)
    Recommended by:
    spacejam, zett

    Not consumption so much.

    To keep prices low we've been outsourcing and signing free trade deals.

    That way companies could continue to keep salaries low in the US. Housing you can't oursource and health care you can't outsource so we have some inflation there in the past.

    I totally disagree with you on this:

    Here there is often a mem that Obama and the Democrats can do no wrong and although some financial blogs are more pro-Republican than pro-Democratic, many are neutral politically - with some being simply anti-the current political/financial system.  

    But a lot of what you say it true about outsourcing.

    You look at what is going on right now in the US and the world at large and I can't see a way we get out of this unless we start being more protectionist.

    I mean a global union movement would help to level the playing field as well as global environmental standards or higher cost for energy which would mean that production would have to be localized more due to shipping costs.

    But if you look the US is rich in raw materials but the production of those raw materials does not really benefit the individual that much, most are shipped overseas for processing. We could slap a huge tarriff on exports of raw materials?

    I agree though that the reliance on consumption and credit was a band aid.

    Back in the 80's when the unions were broken was the starting gun to the race to the bottom for the US middle class. We are now nearing the finish line.

    I personally think there is nothing wrong with the US economy that repealing Taft Hartley and a trade war with China couldn't cure.

  •  I'd like to see a diary (5+ / 0-)

    addressing whether and economy can be based on GROWTH, at least as it is currently understood.  Production and consumption are two sides of the same coin.  But a growth economy doesn't take into account the finite resources on earth - or at least it hasn't up to this point.  An economy based on growth has allowed the population of earth to rise to unsustainable levels, along with the expectation of a "middle class lifestyle" for all.  I don't know what a truly sustainable economic model would look like, but production and consumption in balance would be a necessary part of that; the expectation of endless growth would not.

    •  you can have (0+ / 0-)

      growth indefinitely if you also have technological progress.

      but in the last few years, you are seeing what an economy looks like that doesn't grow...is that really what you want?

      •  Really? Indefinitely? (2+ / 0-)
        Recommended by:
        PsychoSavannah, Marie

        I'm not convinced that technology is going to save us.  A lot of the "growth" in the last couple of decades has been artificial, not the result of technological progress. Wealth was created just by moving money around and extending credit, selling debt, and increasing consumer debt to give the false impression of growth.  What we're seeing now is what happens when reality catches up with what has been passing for growth. Also consider that many jobs have been eliminated forever by technology.

      •  You may be looking at an (2+ / 0-)
        Recommended by:
        Badjuh, NoMoreLies

        historical artifact over the past century or so and not some fundamental truth about life on planet earth.  Take oil out of the equation and a fallacy begins to emerge.  Add the environmental destruction that burning up all that oil and coal is producing and any notion of indefinite human economic growth begins to fade.  

        •  i agree (0+ / 0-)

          that "infinite" growth is impossible, as is "infinite" anything. eventually all stars will die and the universe will be cold and dead.

          but that's really not the point. you can get more production from the same resources with technology. there's a reason why the same plot of farmed land can feed many more people today than before, orders of magnitude more.

          growth is a far, far better option than the alternative - a lack of growth.

          and yes, it needs to be done in as "conservationist" a manner as possible. that's why we need things like governmental regulations, etc.

          •  That "orders of magnitude more" (0+ / 0-)

            in farm production from technology is mostly based on oil.  Petrochemicals and machinery made by and powered by oil.

            •  no it's not (0+ / 0-)

              it's also based on advances in things like land use knowledge, irrigation, modifying cops (both the old fashioned way of breeding them, and genetic modification), etc.

              and yes, we get power from oil now. it wasn't always so - we've used animal power and steam power int he past, for example. we have non-oil means of generating power available now, and that should become more prevalent in the future.

              •  Didn't say that the field of (0+ / 0-)

                agriculture (no pun intended) hasn't advanced in the past few thousand years.  Only that your "orders of magnitude more" really is all about oil.  As seemed clear enough to me in "The Ominvore's Delemma," oil has generally retarded improvements in agriculture.  

                •  it really is not (0+ / 0-)

                  all about oil.

                  simple crop-rotation greatly increased the amount of crops that could be grown on a plot of land.

                  and as I mentioned, there are many others (including changing the crops through breeding and genetic modification), etc.

                  hell, even the invention of the plow did a lot.

                  and once again, crop yields increased due to technology before oil and will continue to do so after oil.

                  •  Your point is what? (1+ / 0-)
                    Recommended by:
                    NoMoreLies

                    That crop rotation, animal and plant breeding, and the plow are technological advances that increased crop yields by "orders of magnitude more?"  Hell, GMOs don't even increase yields.  

                    Real farmers have long known most of what you cite as technological improvements and have long been feeding their communities.  Much of that has been replaced by agri-business and that's based on oil.  Higher yields and fewer workers.  Meanwhile, the world population has multiplied exponentially.  If non-oil food production technology is going to appear and feed the estimated ten billion humans, it better appear quickly because the oil dependent agriculture is killing the planet.      

      •  Indefinite growth impossible (2+ / 0-)
        Recommended by:
        Badjuh, NoMoreLies

        in a closed environment with limited resources.

        The earth's population as it stands =cannot all live the equivalent of a US middle class existence under current conditions.

        Food and fuel alone are inadequate.

    •  Value added (4+ / 0-)

      The question is whether value really is added. If we take into account all the environmental costs, etc., has value really been added, or is it a zero-sum game?

      Just like we feel that we live in great comfort nowadays, but at the same time there are so many new stresses that were not there before.

      I believe that there has been progress, but I think we are still quite far from the ideal of human development.

  •  You are 100% correct (0+ / 0-)

    America got lost - we now want to make money - not make things.

    Well, the way to make money is to make things - without adding value, there can be no growth and eventually, there will be no money.....just debt.

    The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government. - Thomas Jefferson

    by ctexrep on Thu Sep 29, 2011 at 07:16:25 AM PDT

    •  people (1+ / 0-)
      Recommended by:
      Dr Erich Bloodaxe RN

      always wanted to make money.

      this is not new, and people need to stop acting as if the economy is a morality play and that services are bad and buying things is bad.

      that actually leads to a lot of suffering for the average person because it gets us this austerity crap.

      •  I think you are missing the point (2+ / 0-)
        Recommended by:
        xrepub, NoMoreLies

        or maybe I am.

        My take is you need to produce something to create or add value - from that, a service sector can flourish - but how do you generate or create wealth from services only?  IMHO, you can't - sure there are those at the top (like in the US 2011) who will always have $$$ - but by not producing and adding value, you leave behind a huge segment of the population.

        Our problems are world population explosion.

        Terrible trade agreements.

        No global standard for emissions.

        Someoe needs o have the political will to enact regulations that say if you want to sell in AMerica - at least 70% must be made or components made in America.

        We will piss off a lot of countries - so what?  They have a sweet deal right now.

        It's time the US Government started taking care of it citizens first - not their special interests - and not foreign Governments.

        The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government. - Thomas Jefferson

        by ctexrep on Thu Sep 29, 2011 at 08:15:31 AM PDT

        [ Parent ]

  •  When we went from citizens to consumers (1+ / 0-)
    Recommended by:
    PsychoSavannah

    is when this country really started going to hell in a handbasket.

    I must be dreaming...

    by murphy on Thu Sep 29, 2011 at 07:26:56 AM PDT

    •  I don't see a dichotomy here (1+ / 0-)
      Recommended by:
      sewaneepat

      How does being a citizen preclude being a consumer, unless one becomes so obsessed with the latter that one loses interest in being the former?

      I.e. there may be a dichotomy, but not a necessary one.

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Thu Sep 29, 2011 at 09:06:16 AM PDT

      [ Parent ]

      •  Citizenship took second place (0+ / 0-)

        We were told, in an emergency, go shop !

        In a thousand different ways citizens are discouraged from participation in the political process.

        "Just shut up and buy stuff" is the message.

        No explanation of where you're supposed to get the money if you have no job and no prospects.

        This is the country delivered to us on a silver platter by Reagan and his worshippers.

        B.S., I say.

        I am not now, nor will I EVER be a "consumer" dammit-- I am a CITIZEN and I want my rights. No just for me, but for all Americans.

        I must be dreaming...

        by murphy on Thu Sep 29, 2011 at 09:40:16 AM PDT

        [ Parent ]

        •  Point is you can be both (0+ / 0-)

          It's up to you, and only you, even if not everyone realizes this.

          "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

          by kovie on Thu Sep 29, 2011 at 02:28:43 PM PDT

          [ Parent ]

          •  The emphasis is on consumption, not participation (0+ / 0-)

            in the political process.

            Just look at what is going on in state after state to discourage prospective voters from even registering, let alone voting.

            Yeah, you can be both.

            Good luck on that in the environment imposed on us by the Teapublicans and their buddies.

            I must be dreaming...

            by murphy on Thu Sep 29, 2011 at 04:15:26 PM PDT

            [ Parent ]

  •  hmm (5+ / 0-)
    "Wealth is not created by consumption - it is created by PRODUCTION."

    so what you are trying to say is that it's not the demand side that matters, but instead it's the "supply-side" that matters.

    where have I heard this before?

    and no, that's not correct.

    •  Missng the point (1+ / 0-)
      Recommended by:
      rcbowman

      when the PRODUCTION occurs in one place and the CONSUMPTION occurs elsewhere, the PRODUCER benefits

      The US is CONSUMING on credit creating wealth in the PRODUCING nations.   We are only getting further and further in debt, and losing more and more jobs.  

      Expanding CONSUMPTION  here for goods made elsewhere does nothing to grow the US economy.  Too much government spending does no more than keep people on life support - paying for food and shelter with more and more borrowed money.

      All we are doing is loading up our children and grandchildren with more and more debt to pay for short term help that is doing nothing to change the fundamental situation.

      And even CONSUMPTION is failing as people have less and less to spend on necessities.  THAT can only change with MORE EMPLOYMENT and that employment needs to be in value producing jobs that build wealth for individuals and the nation

       

  •  Scratching my head over the first part of this (10+ / 0-)

    diary.

    Demand drives an economy.  You may want something whether a service or a good, so someone else who wants the money you got for providing services or creating goods will do it or create it.  A masseuse isn't going to just give out free massages for fun, they do it because they want money from the people receiving the massages.  So they can turn around and 'consume' other goods in return.

    In fact, the more durable a given good, the fewer that will ever be sold.  People 'consume' food every day, it's the most ephemeral of goods in terms of durability.  Food is about a basic a driver of an economy as you can get.  If suddenly we all had no need to eat, no one would bother to raise food.  It is exactly the consumption that drives the economy.  If we have no need or use for bobonium, no one is going to mine it.  

    You don't simply create something and it magically is 'valuable'.  Someone has to want it for it to have value.  If you spend 5 hours working on something, it's as valuable as what people wanting it are willing to pay.   Likewise if you spend 500 hours working on it, it's still only worth what people are willing to pay.  Just because you 'exploited' a resource and altered it somehow does not inherently 'add value'.  It is precisely the desire to 'consume', to possess, to purchase, to use that something that adds value.

    Honestly, I don't see how this got onto the recc list.  That first half is simply supply-sidism.

    Who cares how many widgets you made?  The real question is how many widgets people actually need.  That is be the driver of economic activity.

    •  I think the diarist gets part of it right (5+ / 0-)

      E.g. that to the extent that there is demand here, much of it is for cheap overseas goods, and that even much of our services have been offshored. Obviously, artificially ramping up production and bringing back service jobs without a sustainable demand for them isn't going to do any good, but when and if we do get demand back up, we should also get production and service back in the US. I.e. we need to stimulate demand for US-made and done stuff, and approach stimulus from both the demand and supply sides.

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Thu Sep 29, 2011 at 09:04:39 AM PDT

      [ Parent ]

      •  YES (0+ / 0-)

        If all you are doing is maintaing the CONSUMPTION levels for goods made elsewhere you are doing NOTHING to improve the fundamental situation - a lack of jobs and a lack of wealth creation HERE.

      •  Well, that's why I specifically said 'the first (0+ / 0-)

        part'.  Later on some cogent points are made, and I do agree strongly that we need domestic production, and it has to go hand in hand with government protection of that production to make it economically feasible.  The anarchists were ahead of their time when they were protesting the WTO...

    •  I recc'd in hopes of generating the dialogue that (0+ / 0-)

      is now here - including your excellent comments.

  •  I am not quite grasping (6+ / 0-)

    I am not quite grasping the concept of "production equals value".

    For example:  I have a warehouse of widgets that I cannot sell.

    What that means is I have a warehouse of widgets that cost me money and not made me money.  As long as those widgets stay in the warehouse, they will be costing me money in the form of warehouse maintenance, utility bills, possible employment costs, etc.  

    I cannot see the concept.  

    I also thank the one who rearranged deck chairs on the Titanic so those on board ship could get a better view of the iceberg.

    by NyteByrd1954 on Thu Sep 29, 2011 at 07:43:23 AM PDT

  •  Consumption economy = argument for middle class (5+ / 0-)

    I think this diary is a bit off base.   A consumption based economy is a very strong argument for a strong middle class.  How many times have Republicans derisively said "I've never seen a poor person create any jobs".   But that's assuming that the ability to produce a product is the only thing that matters in creating jobs.  

    But that's backwards - you can't create jobs if you don't have a market for your products to begin with.  It doesn't matter how great Apple is at building gadgets if there's no one that can afford them.   It's the consumers that create demand for a product and therefore give producers incentive to create products in the first place.  

    That's all that's meant by a "consumption driven economy" - it doesn't have to be a bad word.   It's one of the best arguments for having a strong middle class that even conservatives can understand.  What's happening now with Republican policies is that the middle class is disappearing, thus causing tremendous damage to the health of the economy by reducing the purchasing power of the majority population, therefore lowering demand for products and therefore making it more difficult for the "job producers" that the Republicans love to idolize to sell their product.

    •  Too Bad Consumption Does Not Give Back (2+ / 0-)
      Recommended by:
      xrepub, NoMoreLies

      I cant even 'consume' a new pair of socks without sending the benefits overseas in a massive trade deficit.  Who benefits from me 'consuming' a $1000 flat screen TV?  Some low paid retail and warehouse workers, possibly some well paid stevedores and teamsters to deliver, but those are under the gun also.  The industrial workers who actually 'produce' the product are not even in the equation.  The highest benefit goes to the bank if I use a credit card and carry the debt (and sorry US economy, that ain't EVER going to happen for ANY discretionary purchase)

      So we're all supposed to 'consume' perpetually for the benefit of bankers and offshore production workers?

      •  The idea that industrial workers (0+ / 0-)

        are more valuable than other kinds of labor is plainly absurd. (Frankly, it's contrary to the evidence). You insult everyone who doesn't work on a factory line by implying otherwise.

        Ok, so I read the polls.

        by andgarden on Thu Sep 29, 2011 at 09:04:28 AM PDT

        [ Parent ]

        •  Wow, That Was A Stretch (1+ / 0-)
          Recommended by:
          NoMoreLies

          I re-read it but couldn't see that.  If there was a way to throw the retail and distribution workers off of a cliff and replace them with 12 year old Phillipino orphans earning $3 a week in scrip and living in an industrial sewer, it would have been done already.  I want the entire labor chain for what I buy to be domestic as much as I want things like the profits of Jamaican bauxite mines to stay in Jamaica.

        •  It's about CREATING VALUE (1+ / 0-)
          Recommended by:
          NoMoreLies

          PRODUCING GOODS - and even services - but doing so HERE

          If all you do is CONSUME goods and services originating elsewhere (who read your latest Xray - a radiologist in India, Who answered that customer service call?  Who runs your company's DP operations - and where?), you do NOT create wealth HERE.

          And - wake up - the US Middle Class originated with good paying production jobs in factories.  Before that the US middle class consisted of a handful of artisans, tradesmen and merchants.  

          And likek it or not there are NOT enough substitutes for those jobs that provide comparable pay and benefits.  

          Wake up - we're also shipping comp sci., programming, accounting , service center and all kinds of other jobs overseas as well.

      •  If we had not stopped in our demand for (1+ / 0-)
        Recommended by:
        JohnnySacks

        US made goods, then they would still be produced here. But we started putting all our eggs in the production (supply) side of the equation. Instead we should go out of our way to buy American products. Buy a Chevy, not a Toyota (even though the Toyota is made here, the profits go to Japan) and if we all bought Chevys, Fords and Chryslers, then the workers at the Toyota plant could get jobs at the expanded GM, Ford and Chrysler plants.

        You can't scare me, I'm sticking to the Union - Woody Guthrie

        by sewaneepat on Thu Sep 29, 2011 at 12:10:31 PM PDT

        [ Parent ]

        •  How to Prevent Repeat of 70s/80s? (0+ / 0-)

          I'd rather some sort of 'fair' trade to avoid a repeat of the 70s and 80s of the big 3.  They produced utter crap at best when fuel prices went through the roof.  Germany, France, Italy, all had auto industries, some crap, some good, but their workforce, environment, social protections were on par with the US.  Even Japanese workers had a good standard of living while they were killing the big 3 on quality and mileage.  The US auto industry failure was borne not out of worker cost, but complete management and engineering incompetence/ignorance and without competition, the Pinto and Vega would have burdened us even longer.

          Four models - the engineering resources of two of the largest companies in the world focusing on over decades:  Accord, Civic, Camry, Corolla  - Perpetually synonymous with quality and durability.  Vs. Citation, Celebrity, Lumina, Corsica, Beretta... etc.  for GM, model after model, burn 'em and dump 'em.  Repeat for Ford and Chrysler.

          •  That is certainly true about US cars in the past; (0+ / 0-)

            however now they make some of the best cars. Hopefully, their management has learned.

            It is very hard to buy only  US made goods in lots of areas, which is why I used automobiles for an example. Another place to start is food, especially sea food. You have to look at labels to make sure you are not buying Chinese products, but there are US sources available.

            You can't scare me, I'm sticking to the Union - Woody Guthrie

            by sewaneepat on Fri Sep 30, 2011 at 11:31:42 AM PDT

            [ Parent ]

      •  You should maybe choose to 'consume' different (0+ / 0-)

        things.  For the last few years, most of my consumption has been domestic.  My largest purchase in that time 'benefited' the Amish craftsman who made what I purchased.

        And there are certainly US made clothes available.  Try www.unionlabel.com or www.allamericanclothing.com or quite a few others.  You seem to be saying you choose to spend your money on things that increase the trade deficit while saying you're being forced to.

  •  It's too bad (0+ / 0-)

    that you started off with a criticism of the Democrats. That alone will distract too many readers from the very important message you have in your diary.

    "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

    by gjohnsit on Thu Sep 29, 2011 at 08:11:36 AM PDT

  •  A lot of its value comes from nature. (5+ / 0-)
    Recommended by:
    cocinero, zett, Marie, sewaneepat, NoMoreLies

    Robert Costanza and a team of ecological economists found in a classic paper (from 1997) that the services provided to us by nature are worth three times the world's GDP:

    http://www.uvm.edu/...

    We might do well to heed what ecological economists have been saying for a long time - that neither production nor consumption work at all without a balance with the ecosystems upon which the economy depends.

    E.F. Schumacher's The Wealth of Nature in which he looks at our current economic, ecological, and geological predicaments together using Schumacher's insights.

    contraposition.org - thoughts on energy, the environment, and society.

    by barath on Thu Sep 29, 2011 at 08:12:28 AM PDT

  •  Sustainable economies... (0+ / 0-)

    that are eco-friendly, have little to do with sustaining consumption.

  •  You Couldn't Be More WRONG!!! (5+ / 0-)

    The economy is driven by demand, as Keynes proved 75 years ago.  Consumption is the primary component of demand - 70% of GDP in the U.S.

    The main reason our recovery has been so weak is that consumer demand has been so low.

    Your points are just based on classical economics which has been totally debunked.

    •  No point in making anything if no one will buy it. (0+ / 0-)

      American factories made the finest buggy whips in the world in 1900, and by 1910, when the US transitioned to cars, partially in an effort to combat the 25 pounds of horse dung left behind in the streets of our cities by draft animals, no one was making buggy whips because no one needed or wanted them any longer.  The buggy whip makers were displaced by new technology, and were structurally unemployed.

      People who 10 years ago who were engaged in the manufacture of glass picture tubes, are now unemployed because the technological worm has turned, and they too, are structurally unemployed.  They need re-training in fields where people want to buy the commodity they will become engaged in.

      Republicans are like alligators. All mouth and no ears.

      by Ohiodem1 on Thu Sep 29, 2011 at 08:49:12 AM PDT

      [ Parent ]

      •  Strange digression into structural unemployment (1+ / 0-)
        Recommended by:
        Ohiodem1

        Surely you don't think that has much to do with our unemployment problem now, right?

        Ok, so I read the polls.

        by andgarden on Thu Sep 29, 2011 at 08:53:28 AM PDT

        [ Parent ]

        •  Not off topic at all. Just pointing out that (2+ / 0-)
          Recommended by:
          andgarden, sewaneepat

          production without demand is pointless, and showed two samples of demand going somewhere else.  In Chillicothe, Ohio, a picture tube manufacturing site closed 2 or 3 years ago because the demand for their products went to zero.   It would have made absolutely no sense to continue production, which is the premise of the diary, in the absense of of any demand for the product.  Maybe the factory should have been re-tooled for flat screen production, but it is quite likely that the work force had neither the skills, and the company did not posess the technology to make that transition.

          Republicans are like alligators. All mouth and no ears.

          by Ohiodem1 on Thu Sep 29, 2011 at 08:58:05 AM PDT

          [ Parent ]

        •  Quite a bit of our unemployment is structural (0+ / 0-)

          that's why we need to, as a nation, support retraining efforts.

          Republicans are like alligators. All mouth and no ears.

          by Ohiodem1 on Thu Sep 29, 2011 at 09:04:37 AM PDT

          [ Parent ]

          •  I don't think so (1+ / 0-)
            Recommended by:
            wsexson

            Paul Krugman makes a strong case that it's a "fake problem."

            Ok, so I read the polls.

            by andgarden on Thu Sep 29, 2011 at 09:06:38 AM PDT

            [ Parent ]

            •  Paul Krugman, despite his sainted status as a (0+ / 0-)

              Nobel winner isn't always right.  From the article you source:

              Who are these wise heads I’m talking about? The most widely quoted figure is Narayana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, who has attracted a lot of attention by insisting that dealing with high unemployment isn’t a Fed responsibility: “Firms have jobs, but can’t find appropriate workers. The workers want to work, but can’t find appropriate jobs,” he asserts, concluding that “It is hard to see how the Fed can do much to cure this problem.”
               Emphaisi mine.

              Maybe those workers are structurally unemployed, or the structure of our economy has changed because those workers jobs have been outsourced to a low wage nation, or insourced to American prison labor, and the structure is that American manufacturers have decided to locate those jobs to locations where they don't have to pay American salaries and benefits, so that's another structural element of our economy.  There is no demand for labor that seeks a fair or living wage.

              Republicans are like alligators. All mouth and no ears.

              by Ohiodem1 on Thu Sep 29, 2011 at 09:57:05 AM PDT

              [ Parent ]

              •  And this suddenly came to the fore in 2008? (0+ / 0-)

                That I find very hard to swallow. It would be very strange to discover structural unemployment in the midst of an unrelated crisis.

                Ok, so I read the polls.

                by andgarden on Thu Sep 29, 2011 at 10:03:32 AM PDT

                [ Parent ]

                •  No, there has been structural unemployment since (0+ / 0-)

                  new technololgies started pushing out old ones.  It's still happening today.  Old fashioned incandescent light bulbs are on the way out, pushed by lower energy and better environmental types.  Most of the people who used to make light bulbs in the USA have seen all of that production move elsewhere as manufacturers push for low wages.  Those folks have an element of structural unemployment.

                  When was the last time you used a floppy disk?  A CRT monitor?  Hard drives and the people who make them are on the way out, as we now have whole computers that use the cloud and off-site digital storage, and only have flash membor on board. When was the last time you saw a hard drive on a tablet computer.  Granted, many of these jobs are displacing workers in China, Malaysia, India, Korea, etc., but the reality is that time and technology march on, and create structural unemployment in its wake, whether you are willing to admit or not.  Out.

                  Republicans are like alligators. All mouth and no ears.

                  by Ohiodem1 on Thu Sep 29, 2011 at 07:09:48 PM PDT

                  [ Parent ]

                •  FWIW, here is another article about a form (0+ / 0-)

                  of structural unemployment due to changes in technology.

                  http://www.dailykos.com/...

                  It happens all the time.

                  Republicans are like alligators. All mouth and no ears.

                  by Ohiodem1 on Fri Sep 30, 2011 at 10:06:28 PM PDT

                  [ Parent ]

    •  I disagree (0+ / 0-)

      The problem in America is both, production and consumption.

      Anything or anyway a product can be outsourced is or attempting to be.  

      The republican CEO is looking to anyway to outsource your job. The republican CEO is looking to pay the America worker zero if he or she could pull it off.

      The quality of jobs in America has gone down. You have republicans against teachers or waitresses for making to much.

      The republican essentially supports a modern version of "slave labor".  The American worker doesn't have a job because it's being outsourced, and the American worker is having their pay cut. One is production and the other is consumption.

      For years I've had republicans pushing for America to primary be a service based economy. That's all consumption. Not working.

  •  So lets PRODUCE (3+ / 0-)
    Recommended by:
    i dont get it, cocinero, Marie

    Agreed, let's not only CONSUME....Let's Produce...and cut down more trees, and mine away every mountain, and exploit every bit of nature! Are you f ...ing kidding me!

    •  Those trees are being cut down and shipped (2+ / 0-)
      Recommended by:
      NoMoreLies, rcbowman

      overseas.  Coal is being mined here and shipped to China.  How oblivious are you?

      The sad reality is that the WEALTH being created is being created by high value added production ELSEWHERE while Americans get further and further in debt to finance a CONSUMPTION driven lifestyle that CONSUMES GOODS MADE ELSEWHERE.

      American CONSUMPTION of goods PRODUCED elsewhere does not add jobs here or build the US economy.

      And - newsflash - trees are being cut down all over the world, ore mined all over the world to PRODUCE the throwaway CRAP Americans CONSUME.

      You once HAD a good furniture industry in NC using sustainable wood harvested in the US providing jobs for loggers harvesting second growth wood - Cherry grows well on old PA sites for one and jobs making that furniture in NC factories.  

      Now you get cheap furniture made overseas using trees often logged illegally in Indonesia or where ever and shipped to China or wherever

      Foundries and other metalworking industries in the US are on the verge of extinction - in part because the playing field is NOT level.  Here in the US pollution controls and worker protection have driven these factories and jobs out of the US because elsewhere - like China or India - these do not exist - 'free trade' that is WORSE for the planet.  

      Americans are not CONSUMING LESS' bad stuff' - in fact they are at times consuming MORE because it is cheaper (because it is made elsewhere).  The brake drums and brake discs on your care are no longer cut and refinished when you have a brake job done on your car - those items are REPLACED (with others made elsewhere).  

      We are CONSUMING more and more stuff PRODUCED ELSEWHERE that is LESS durable and not repairable - more throwaway stuff - bought on credit creating jobs overseas not here and leaving the planet WORSE off.

  •  Demand Demand Demand (5+ / 0-)

    Yes financial blogs do have an agenda I know because I've read quite a few.  Production otherwise known as supply is nothing without consumption otherwise known demand.  Case in point GM continued to produce gas guzzling SUV's in the face of higher and higher oil prices while Toyota produced 40 mile per gallon hybrids.  As gasoline hit over $4 a gallon demand or consumption for SUV's dropped to such levels they could not even give them away.  At the same time demand or consumption for Toyota's hybrids skyrocketed leading to a shortage in production or supply.  As a result Toyota became the no. 1 car company in the world!

    This diary reminds me of a conversation I had with a conservative talk show host.  In that exchange I said it was demand (consumption) that drove the real world economy and that that demand (consumption) was created by the working middleclass buying products and services.  The host argued that it was supply (production) that drove the economy.  If as this diarist and the talk show host claim that supply (production) is the driving force in the economy then all we have to do to fix things is produce an infinite supply of goods irrelevant of the demand for them.

    In truth our economy, thanks to living in denial of the limits of oil supplies, is now riding the tide of oil prices.  Any recovery is stopped dead in it's tracks when gasoline hits above $4 a gallon.  Every fifty cent rise in the price of gas takes 70 billion dollars of demand (consumption) out of our economy which in turn affects supply (production).  What does this mean well unless there are several discoveries of cheap oil fields the size of the Ghawar field in Saudi Arabia or a viable alternative energy source is found the present state of the economy is going to continue.

    DEMAND (Consumption) is the driving economic force in this world.  The SUPPLY (Production) side argument is a defense of keeping tax rates low for the wealthy and corporations and for cutting all the programs that benefit the middleclass.  Yes one can produce all kinds of charts and stats to support the supply side but behind all that evidence one will always find demand as the driving force.

  •  from an economist (11+ / 0-)

    I'm an academic economist.  This diary is very confused and I'm surprised it has gotten so many reccs.

    Value isn't created solely by production.  Value is created in the mutual exchange between a producer and a consumer -- the producer makes something (a good, a service, an intermediate good, etc), and a consumer (which can be a business, a person, etc) consumes it.  The time, effort and cost the producer put in to making the good are worth less to him than the price the consumer is willing to pay.  And the converse is true as well -- the price the producer is willing to accept is less than the value the consumer puts on the good.  This is value creation.  And the point is it's dual system -- econ 101 students learn the idea of duality, that prices represent the interaction between production and consumption, and you can't think about them separately.

    In short, the diarist is completely wrong saying production is the only way to create value.

    Perhaps what the diarist is trying to say is the US tends to be on the consumption side of this system more than it's on the production side -- hence our large trade deficits.  It is true other countries, particularly China and Japan, focus on producing and exporting, rather than consuming domestically.  I'm not sure if the diarist is promoting barriers to trade, but those won't necessarily help spur efficient production (look at the barriers to trade in sugar, for example, which have simply enriched a  few connected fat cats).  Perhaps the diarist wants to promote greater savings, which means less consumption -- the problem is the economy is in such bad shape that less consumption will absolutely send us into a depression.  Other commenters have correctly pointed out that consumer demand is over 70% of GDP.  Perhaps the diarist wants to promote production subsidies in key industries (something that China and Japan do quite actively).  This might make sense, but as the Solyndra fiasco shows, subsidies are problematic too.

    Here's the rub -- there's no easy answer, and the diarist doesn't understand the basic economic system.  The diary is wrong in so many places.

    Hope this very basic explanation is helpful to some people.

    •  Basic economics (1+ / 0-)
      Recommended by:
      CrissieP

      Quite a few years ago I took Econ 101 (and also Econ 102) and remember a bit of what I was taught. It is clear that the diarist is not an economist. I recommended the diary not because it dealt with basic economic principles correctly, but because it seems to me to raise some questions that are worth considering, to wit: is it ethical to purchase consumer goods that are priced as low as they are because producers are employing and exploiting the the lowest-cost labor that they can find; how much increased production can the environment tolerate; are the US trade deficits sustainable etc.

      I am in favor of increased government spending, shoring up our infrastructure, focusing on job creation instead of debt reduction etc. in the short run; however, it seems to me that there are some longer term issues that need to be addressed. How does government be proactive about some of these issues, while dealing with short-term solutions?

  •  You can't produce what people won't or can't buy (1+ / 0-)
    Recommended by:
    Dr Erich Bloodaxe RN

    and "consume". I mean, you can, but it makes no sense to do so. Production is driven by consumption-based demand, not by the sunny hope that increased availability due to increased production will somehow spur demand. And banks won't lend money to companies who want to increase production without the demand to back it up. That's a major reason for why banks are sitting on their vast (taxpayer-backed) cash holdings, or speculating with it.

    The way to get production back to healthy levels is by stimulating demand, and the way to do that is to, yes, borrow money (which is how it's always been done since capitalism was invented) to fund massive (needed) projects, like rebuilding and expanding our transportation and education infrastructure.

    Apologies to Mr. Kinsella, but it's not "If you build it, they will come", but "If they come, you will build it". We need to get America back to a cornfield.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Thu Sep 29, 2011 at 08:58:29 AM PDT

  •  One word sums up the real problem: (2+ / 0-)
    Recommended by:
    i dont get it, Marie

    Robots.
    What if we had robots producing everything we need, everything we want, and a bunch of crap we don't need or want but for some reason thought would be a good idea to produce.

    Who then needs a "job", and to do what?

    We don't have robots, we have Chinese and other 3rd world sweat-shops.  Whether this is moral or sustainable is a separate question.  But, for right now, there are no jobs because there is nothing to do (other than big gubmint stuff like infrastructure and space exploration).

    So, in a world of robots, who need to work and why?

    •  We already do have robots ... which is a big (0+ / 0-)

      part of the reason -- along with "cheap foreign labor" -- that there are far fewer jobs than the number of people who want to work.

      If you haven't been inside a modern automobile factory, for example, you'd be shocked at how few people there actually are making the cars.  And I'm talking about a couple of years ago, when the economy was booming and people were buying lots of new cars.

      Robots -- aka "automation" -- is dressed up as the term "productivity," as in, "Increases in U.S. worker productivity, more than China's currency, responsible for loss of U.S. jobs."

      We must drive the special interests out of politics.… There can be no effective control of corporations while their political activity remains. To put an end to it will neither be a short not an easy task, but it can be done. -- Teddy Roosevelt

      by NoMoJoe on Thu Sep 29, 2011 at 09:31:43 AM PDT

      [ Parent ]

  •  The point: Rebalance consumption vs. production (2+ / 0-)
    Recommended by:
    zett, xrepub

    This is a good post.  Those arguing that production is nothing without consumption are technically right, but it is not the point.  In otherwords, the point is not whether we should EITHER produce OR consume... which is a false choice.

    The point is that we need to rebalance the consumption/production ratio in America, marginally increasing production in relation to consumption.  China focuses now upon production successfully, and consumption is a smaller share of their GDP.  Germany, ditto but not quite as extensive as China.  The U.S., when it was growing, had production as a larger share of GDP.

    Think of it in national accounting terms.  GDP is made up of four factors: (1) consumption, (2) investment (plant/equipment), (3) government spending (4) net exports (the extent by which exports exceed imports).  For the U.S., consumption has been about 70% of GDP which I argue is too high.  For Germany, consumption is about 62-65% of GDP, which I argue is about right... because the balance is the investment side which is production.

    This is not an argument against consumption, but an argument to produce more in relation to consumption.  

    Basically, if we stop offshoring manufacturing, and begin reshoring it, then we will produce more of what we consume.  Our trade policies caused this problem because we offshored our industries, imported more than we exported (trade deficit), and consumed using credit cards rather than earnings.

  •  What happens when robots make everything? (0+ / 0-)

    How will the economy function? Do you plan to just let all the people who are unemployed starve to death? This is the future; we have to come up with a new model of the economy, and we should do it now.

  •  Take the next step (2+ / 0-)
    Recommended by:
    martinjedlicka, zett

    from the economic to the philosophic and you could say that the problem is an excess of MATERIALISM generally, that this constant focus on stuff is spiritually and ecologically impoverishing us, and that the more stuff we have the unhappier we are, beyond having life's necessities and sufficient time for study, reflection and play. The things you value most; children, nature, ideas, love, cooking, exercise, orgasms, none of it costs much at all. The consumerism of the last 30 years, especially, looks to me like a death spiral for this civilization.

    •  I think you hit the nail on the head (2+ / 0-)
      Recommended by:
      zett, sewaneepat

      I didn't understand this diary on the face of it, since production and consumption are just the two necessary halves of one process.  

      According to the economic law of comparative advantages , it makes complete sense that China, with its advantage of cheap labor, would produce while America, with its advantage of (temporary) free capital, would consume.  But the diarist does not examine WHAT is being produced and consumed.

      America still produces food.  Lots of it actually. We produce fuels, and we could produce much more renewable energy.  As for re-industrialization, that train left the station decades ago.  I don't think the solution is the repatriation of polluting salad shooter factories, or even steel mills and drywall plants for that matter.  If we reorganized our consumerist priorities, a localized service economy would be so much more than 'fast food restaurants and investment banks'.

      If we step back from a life measured in acquisitions and looked away from shopping centers toward our own communities, the sum total of social happiness would increase, and that's a tally that I have never seen discussed in any Econ textbook.

      An investment in knowledge pays the best interest. -Benjamin Franklin

      by martinjedlicka on Thu Sep 29, 2011 at 10:19:06 AM PDT

      [ Parent ]

  •  producing value is a good theme (3+ / 0-)
    Recommended by:
    zett, cocinero, NoMoreLies

    particularly when it comes to producing for the common good, invest in infrastructure, education, energy efficient houses, high-speed train, new electrical grid etc

    Also, I like to mention that usually the contrast to the US consumption are the export nations China and Germany. And export nations are not fair either to the world economy. We need balanced trade. And China needs to step up is consumption-based element of its economy. And this is happening at a rapid speed. And Germany cannot produce for all of Europe as the unemployment and social unrest grow in the rest of Europe. Neither China nor Germany contribute much to a balanced trade. And the US with its imports to feed its consumption is part of this imbalanced system.

  •  Consumption needs to be part of a healty economy (1+ / 0-)
    Recommended by:
    cocinero

    And the fact that the US is a strong consumption based economy has also made it the place where the iPhone and iPads are invented and quickly succeed in the market. So, consumption really has its good sides, but it needs to be balanced with export and general investments to support future economic growth.

  •  Excellent Analysis (0+ / 0-)

    I remember when I lived in Belgium in the late '60's.  Europe at that time had implemented a VAT or Value Added  Tax.  I understood what it meant in a practical sense.  It raised needed taxes for the government.  I also remember that each tevelision was taxed annualy like a car. Regarding cars, the larger, more luxurious and expensive cars were taxed/licensed at a much higher rate (renewed each year).  I understood that to be progressive.  No one complained.  The social contract required/requires taxes.  The VAT may be instrinsically regressive but it could be structured to exempt the lower end products.

    •  Upon closer reading (1+ / 0-)
      Recommended by:
      cocinero

      I do see that there is blame placed by the Diarist on many actors in this sad drama who do not deserve that blame.  I cannot accept that home buyers are/were responsible for the financial collapse of the US economy.  We citizens in the US are essetnially powerless.  The forces that exploit and suck every poor and middle class person's every dollar control the US economy.  We are used and abused far more than our friends in Europe, with fees and charges on everything from cable TV to cell phones to utilities so outlandish that they are usory.  I call that immoral.  Though I know the free market itself may be seen as amoral.

  •  I can sympathize (1+ / 0-)
    Recommended by:
    zett

    Centuries of faulty economic thinking have led to a false dichotomy.  A dichotomy that has become so ingrained, even those trying to break out of the mold of old ideas and grasp new truth are forced, by themselves and their peers, to couch that truth in terms of this dichotomy.  This false dichotomy is that production is economically something different than consumption.  

    In fact, every act of production consumes, whether the raw materials that make up the new product, or the labor that goes into its creation.  And every act of consumption produces.  Everything from eating, to playing video games, to any other thing you might convince yourself is purely consumptive has a real outcome, and it is this outcome that we value individually.  When you eat, you do so because it maintains your strength, and helps insure that you'll be around tomorrow.  When you entertain yourself, you relieve stress and engender feelings in yourself and attitudes that others may find valuable.  For every act of consuming, there is a reason for it occurring, and that reason is the product of that act.

    But there is a real distinction that the old false dichotomy is attempting to capture, though it draws a line in black and white where there can be only gray.  This is the extent to which the product of an act of consumption is subsequently traded away.  If you have a job, then a portion of the product of the food you eat and the entertainment you enjoy, your maintained strength and stable mentality, is traded to your employer in the work you do for him.  It is this portion that the category of "production" is attempting to represent.  And it is the portion that is not traded, but kept forever that represents consumption.

    Activities we typically think of as "production" are simply acts of consumption who's product is largely or entirely traded away.  And likewise, activities we typically think of as "consumption" are simply acts of production who's product is largely or entirely kept, and not traded.  Trade is the definitive property when it comes to economics.  And it is important to keep in mind that the existence of trade indicates that there is already a moral failure.  It means that there are people out there who don't already have what the need/want.  Happiness is not maximized, the individual autonomy of every person is not being respected, and there are people who are not virtuous, for the truly virtuous have need and want for nothing more than their continued virtuosity.  

    Thus, by claiming we should be producing more, you are really advocating that people should trade away more of what they produce.  In the case of some people, that is certainly true, but in the case of most, it is certainly not.  The whole point of human existence is to maximize the good, however you define good, and the real empirical way you know that's happening is that trade becomes less important, and even less frequent, unless we intervene to create false needs and incentives.

    It is these false needs and incentives that distort and undermine the economy and humanity now.  We are forced to trade so that we can engage in those acts of production whose product we can keep for ourselves.  And so we are forced to use up resources we otherwise would not have, so that we have some excess to trade so that we can continue to produce those things that we do not trade and do not wish to trade away.  It is those acts of production, those whose product is kept and never intended to be traded that are morally good.  It is those products that maximize happiness, and respect individual autonomy, and grow virtue.  Products that are intended to be traded are a moral evil until after they are traded.  They represent a waste of effort and resources until they find their way into an act of production whose outcome is never traded away.

    And so, encouraging or promoting production, as it is understood by mainstream economists, is always a moral evil, though perhaps a necessary one.  While encouraging consumption, as it is understood by mainstream economists, is always a moral good, insofar as those acts of consumption can be sustained.  Production is only morally tolerable insofar as it makes consumption sustainable.  And the problem we have now is that our consumption is unsustainable, and our current abilities to produce cannot make them sustainable.  We are running up against that instability, which itself is really nothing more than a shortage of cheap, easily transportable energy.  Once this issue is resolved, there is little economic or ecological evidence that our levels of consumption are unsustainable.  We would be able to produce more than enough food, shelter and clothing to accommodate every person on the planet several times over, as soon as we have a source of power that is as energy dense, plentiful and transportable as petrochemicals.

    And in terms of our current economy, encouraging consumption only exacerbates the current unsustainability of our consumption.  And this is a good thing because it increases the incentives in production to resolve the source of that problem, and work around it.

    From such crooked wood as that which man is made of, nothing straight can be fashioned. -Immanuel Kant

    by Nellebracht on Thu Sep 29, 2011 at 11:00:30 AM PDT

  •  * snaps outta lurk mode * (1+ / 0-)
    Recommended by:
    NoMoreLies

    it's long been the view from a broad environmental / ecological perspective that an economy predicated on buying crap serves us poorly and cannot stand over time.

    i'm heartened to see that the financial press, even if perhaps accidentally, is coming around to a saner view of things.

    keep your eyes on the sky. put a dollar in the kitty. don't the moon look pretty. --becker&fagen

    by homo neurotic on Thu Sep 29, 2011 at 11:13:49 AM PDT

  •  We are a nation of consumers. It's what we do. (0+ / 0-)

    I think, in essence, I agree with you, but it's going to be one hell of a transition. Consuming is fundamentally what we as a nation believe in. It's our right to consume whatever we want, and we excercise that right whenever we can. If Joe Blow wants a new T.V., even if the one he has is working just fine, he'll do what he can to get it, and his personal credit might take a hit in the process. Most of our nation's health problems are as a result of consumption, which is itself the result of a need for gratification. Obesity, heart disease, alcoholism, lung cancers due to smoking, all could rightly be called "consumer-related diseases". In addition to, and as a result of all the consuming we do, we also produce a shit-ton of waste and pollution. It's killing us, literally. But we like it all the same.

    What you are suggesting is a radical shift in self perception, how we as a society view ourselves, our nation, our planet, and perhaps even our beliefs.

    I'm with you, and I would like that. But as Sienfeld once said, "Good luck with all that". It's one heck of a tough row to hoe.

    I'm a Maddow Democrat.

    by sowsearsoup on Thu Sep 29, 2011 at 11:20:13 AM PDT

  •  We have a problem no matter how we turn (1+ / 0-)
    Recommended by:
    Justus

    WE need to produce to earn a living.
    WE need to have others buy what we produce to earn a living.
    WE have a system in place that mimics a real environment including parasites, bloodsuckers and vultures.
    WE are degrading our environment in seeking resources to produce for others to consume.
    WE are increasing the food supply using unsustainable methods and altered food products leading to huge population increases that will bump up against either a slow or rapid end of the ability to do this agriculture.
    WE have been trained or it is natural (depends on your arc of thinking) for us to consume as much as we can get our paws onto. I call this the '100 pair of shoes' syndrome
    We live in a world that has finite resources and finite ability to absorb without significant change all of our shenanigns......

    Is what is happening right now really the result of charging ahead following our drives into a deadend (literally)? Can we change ourselves and gain control of those drives that many have enshrined as holy? We are in desperate straits economically right now and the answers are so complex and untried I am not sure that intellectually we can determine the true way to go.

    My answer is to reduce consumption. To live simpler. To walk when I can , ride bike or buses when I can and do things like live in an un-air-conditioned house, lower my heat to 65 in winter, blah, blah.. But these are only short term low impact efforts if there are too few restraining themselves. Shorter work weeks would mean less money  but also less consuming and more full employment. But then who wins the monopoly game then and who kicks the 'Joneses' asses by restraint. Where do we redirect the need to compete and outshine others?

    WE need better ideas.

    Fear is the Mind Killer

    by boophus on Thu Sep 29, 2011 at 11:23:51 AM PDT

  •  You sound like the Pope telling Berlusconi... (0+ / 0-)

    ,,,ti cean up his act. Feel the headwinds?

    Practically speaking, for some amount of time, a national economy with a larger global economy can be based on Pornography - Production and Consumption.

    I think you need to segregate market Value from human Values. There's no problem with exporting jobs if the returns are shared across what would have been the domestic Job Holders.

    We do not all share the same values nor is there a common set of values at the basis of our laws, economy, or jobs.

    If it's economically viable to leave 25% of Americans behind and out of the new global wealth souces for teh US, does that make it OK?

    So far, it is OK legally and for both parties and no one is suggesting otherwise.

    Handle that first. With a common set of Principles,  we have no economic boundaries.

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Thu Sep 29, 2011 at 11:38:44 AM PDT

  •  Allow me to take your logic one step farther; (1+ / 0-)
    Recommended by:
    rcbowman

    There cannot be production without demand (i.e. consumption) obviously, since there must be a consumer to keep you in business.  So our recovery DOES depend on consumption... but it relies on somebody else consuming what we make, otherwise we are just back to selling to ourselves.

    We should be seeking ways to increase our manufacturing and increase exports.  Because the key to wealth is making something that somebody else buys.

    Gentlemen, you can't fight in here! This is the War Room!

    by bigtimecynic on Thu Sep 29, 2011 at 12:09:57 PM PDT

  •  This thing is STILL in the Community SL? (0+ / 0-)

    :TAP: :TAP: Is this site working?

    Ok, so I read the polls.

    by andgarden on Thu Sep 29, 2011 at 12:56:50 PM PDT

  •  consumption, production (0+ / 0-)

    whatever.  We can no longer base our economies on whatever one calls resource extraction.

  •  A basic simplification of a complex problem (2+ / 0-)
    Recommended by:
    Dr Erich Bloodaxe RN, NoMoreLies

    Yes, we need more production but we also need more demand in our economy to create increased median wages and low unemployment. Personally I believe we should encourage our farmers across the nation to grow industrial hemp as a primary rotation crop to kick start our green economy.
    Hemp revitalizes played out soils, discourages weed growth, conditions the soil and prevents soil erosion over it's relatively short 100 day growth cycle. Hemp requires almost no fertilizers or pesticides and requires less water than average crops. Hemp grows in marginal soils which could open millions more acres to food production. Every part of the hemp plant is useful with over 25,000 documented uses and a total biomass that has an incredibly high 85% cellulose by weight. An average acre of hemp yields around 3.5 tons of total biomass up to 3 times a year. An acre of hemp produces more usable high quality paper pulp than 4 acres of old growth forest and requires far less caustic chemicals to process into paper products that can be recycle more times than softwood paper pulp.
    A major shift to a green economy would require thousands of new local community factories to separate the hemp plant into long strong bast fibers, short fiber pulp and seeds. The long fibers could be made into cordage and rope, a variety of fabrics, building materials, strengthening agent for concrete or composite plastics, to name only a few. The cellulose can be converted into both methane gas to fuel electrical generation or ethanol for liquid fuels. An acre of hemp can produce between 30 and 100 gallons of ethanol depending upon the conversion process used. An acre of hemp produces nearly a ton of seeds which yields around 15 gallons of hemp seed oil that has a variety of uses including heating oil and biodiesel. If we put just 6% of our lands into industrial hemp we could produce biomass to supply 100% of our total energy needs and create millions of living wage jobs and thousands of new business opportunities here in our domestic economy. Industrial hemp can kick start America into a totally new green economy.      

    Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

    by RMForbes on Thu Sep 29, 2011 at 01:56:38 PM PDT

  •  Many missing my focus (0+ / 0-)

    As a nation we are focused primarily on CONSUMPTION - economic policy is focused on promoting and growing CONSUMPTION - without paying any attention on wHAT is being consumed and WHERE it is PRODUCED.

    CONSUMING throwaway crap is not good for the planet.  

    Paying people to support CONSUMPTION does not create jobs here in the US if the goods they consume are PRODUCED elsewhere.

    Paying people to support continued CONSUMPTION - without any PRODUCTION of anything in return is spending on credit.   This only increases national debt - the burden on taxpayers all and worsens our national situation while creating wealth in other nations.

    •  Typically, the focus is provided at the beginning (0+ / 0-)

      of a piece of writing.  The author outlines his or her central thesis, then goes on to expand upon that thesis in greater depth.

      I 'consume', but a lot less 'throwaway crap' than I used to.  My daily consumption is food, shelter (amortized over the lifetime of the home, though), energy and water.  My less frequent consumption runs to transportation, clothing, education.  Pretty much everything else, I go out of my way to  buy A) domestically produced and B) high quality, high durability goods.  I pay more initially, but I support local economies and end up paying less over time simply because the goods I use LAST.

      Yes, we certainly need domestic production, but we have to have the demand for that production.  And that means people 'consuming' what is produced.  Personally, given what you say is your focus, I would have simply axed the entire top half of the diary, and just written the second half.

  •  There's a term for production-based economy (0+ / 0-)

    it's called Supply Side Economics, and it's the tripe that the Republicans have been pushing since before Reagan.

    Agreed there are many problems with our economy, but I personally believe most are due to insufficient (and often nonexistent) regulation of corporations, particularly in the banking and investment sectors, coupled with (and caused by) far too much influence from those sectors on elections and elected officials.

    New favorite put-down: S/he's as dumb as a flock of Sarah Palins

    by sleipner on Thu Sep 29, 2011 at 05:36:21 PM PDT

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