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| What if the American economic slowdown is permanent?; Is America in decline and an example of a world economic power in decay? | |
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| Tweet Topic Started: Mar 10 2013, 01:34 AM (388 Views) | |
| Pat | Mar 10 2013, 01:34 AM Post #1 |
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Fire & Ice Senior Diplomat
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I read this in the local rag from Pahrump, Nv., the place that Mike settled down. Southern Nevada has been hard hit and slow in any recovery. And so naturally questions arise whether America has settled into a malaise and our best days are behind us. I think we could have another burst if we truly embrace being the green energy and exportable energy capital of the world. We have the potential but need the will. As an industrial might, I doubt America will every reach it's former glory, most of that activity is handled in cheaper labor markets. One thing is for certain, we need a highly educated and industrious population if we are to compete and win on the world scene. Competition and those currently enjoying robust economic growth are not going to sit pat and lets us take their gravy away. We will have to win it the old fashioned way through competition. But we do have the ace in the whole, cheaper energy. In addition, government is not the answer either in our individual lives or the nations prosperity. What if the American economic slowdown is permanent? Posted on08 March 2013. By Bob McCracken – “Nye County History” For the past 15 years or so, I’ve had the vague sense that the American civilization wasn’t doing as well as it once had. It seemed our previous vigor was on the wane; there wasn’t as much of that old “can-do” spirit that made us what we were. Our once-vivacious optimism about life’s possibilities, symbolized most of all by going to the moon in 1969, often seemed in short supply. Yet, despite these feelings, I couldn’t put my finger on the cause of this supposed waning of our pizzazz. What was behind it? Was it even real? Perhaps it was all my imagination. Something Paul Krugman, Nobel Prize-winning economist, mentioned in passing in a recent column in the New York Times helped put me on the track of perhaps understanding these feelings I had been having. Krugman noted a recent report by Robert J. Gordon, an economist at Northwestern University, that focused on faltering innovation in America. I tracked it down (www.cept.org). What Gordon had to say fit perfectly with my understanding of what makes human societies tick. Technology, defined as the means by which a people attain the necessities of life — energy, food and fiber, shelter and transportation — determines how they live. More than anything else, the machines and the knowledge used to create products needed for maintaining a way of life determine the basic character and wealth of a society. The more developed the technology, the greater the wealth and complexity of a society. In his report, Gordon writes that prior to 1750, there was “virtually no economic growth” in America. Since then, there have been what he calls three industrial revolutions, all based on invention of new technologies, that propelled America to its existing wealth and dominant status in the world today. The first revolution lasted from 1750 to 1830 and was based on the inventions of the steam engine, cotton-spinning, and railroads. The second occurred between 1870 to 1900 with the invention of electricity, the internal combustion engine, and indoor plumbing. It took 100 years for the inventions of the second revolution and their byproducts, electric-powered homes and factories, highways, automobiles, flush toilets, etc., to be fully integrated into American life. The fastest period of growth of wealth in American history was during the middle part of the twentieth century and it transformed American life. The third wave of innovation was associated with the development of the computer and information technology after 1970 and, though important, it has not had nearly the economic impact of the first two waves. Though not an innovation, I would add a fourth factor to Gordon’s list of elements that helped grow and transform American society: the acquisition and distribution of enormous quantities of cheap land. Between 1800 and 1900, America increased its land holdings by more than 400 percent, and much of that newly acquired land was put into the hands of communities and average men and women. Unfortunately for America’s future economic growth, as Gordon sees it, no conceivable new technology exists on the horizon that might rival the first three periods of invention in stimulating economic growth, especially the second. And nobody’s making any new land. As a consequence, whereas in the past, the American economy typically grew 3 to 4 percent per year, in the future it likely will grow no more than 1 percent a year, if that. Gordon presents some interesting but troubling figures. In England, it took 500 years, from 1300 to 1800, for the standard of living to double, and it doubled again in the next 100 years. In the U.S., the rate of economic doubling peaked at 28 years between 1929 and 1957, with yearly per capita income going from $8,000 to $16,000. It doubled again in the next 31 years up to 1988, from $16,000 to $32,000. Sadly, per capita growth in the American economy was only 1.8 percent per year between 1987 and 2007, and the top 1 percent of the population got the better part of that. Gordon believes the growth rate of per capita income will slow even more and take 93 years to double between 2007 and 2100. I suggest that the slowing economic growth in America is what lies behind my own and many others’ sense of the nation’s malaise, some would say decline. Of course, no comparable slowing of China’s, among others, economy is expected — a lot of flush toilets and roads to install there. As if such predicted long-term reduced growth rate weren’t troubling enough, Gordon also suggests the U.S. economy will be fighting a half-dozen “daunting headwinds,” as he calls them, in the years ahead that will likely further negatively impact future economic growth. Economic headwinds include retirement of large numbers of baby boomers; declining rates of higher education attainment; rising rates of income inequality; outsourcing and use of inexpensive foreign labor; increasing economic impacts of global warming; and high household and government debt. Predicting the future of a large and complex society such as America is risky business and one can easily miss the mark. Nevertheless, Gordon has suggested that the “rapid progress made over the past 250 years could well be a unique episode in human history rather than a guarantee of endless advance at the same rate.” It may be that we Americans alive today have lived during a period of unprecedented growth in human prosperity that is likely not sustainable. Nature offers no guarantees such growth will continue. Certainly the vigorous growth rate of prosperity from 1929 to 1988 has not continued over the last couple of decades, presuming Gordon’s figures are correct. If this slowdown does continue indefinitely, I suggest we can expect increased pessimism, negativity, and fractiousness in America’s political, social, and economic life. If the pie isn’t going to get bigger every year, as most of us have come to expect — and borrowed heavily as growth slowed, thinking the good times would soon return — I suspect American life will become more quarrelsome and crime-ridden, with considerable finger-pointing. I suspect the recent decline in the rate of economic growth and its consequent impact on people’s wealth is what substantially underlies the deplorable and counterproductive behavior of so many of our political leaders these days. Closer to home, if Gordon is right, one wonders what effect his predicted economic slowdown might have on the future of Las Vegas. Vegas, after all, came to flower during a time of unprecedented economic growth in America. If America’s rate of growth does indeed slow for the foreseeable future, will tourism be affected? Moreover, if slow U.S. economic growth becomes the norm in the decades ahead, how much more unwise and foolish will so many of Nevada’s leaders seem for their efforts in blocking the development of Yucca Mountain and other possible important nuclear research and technology efforts in Nye County and southern Nevada? We may need those jobs more than ever. If the American economy does enter an era of long-term “permanent” slow growth, if not outright decline, how much more difficult will it become to finance multi-billion-dollar infrastructure, including nuclear power plants, Yucca Mountain, and big-time energy research projects, once our leaders wise up to the outsized economic, social, and environmental benefits at stake? |
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| Brewster | Mar 10 2013, 02:12 AM Post #2 |
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Fire & Ice Senior Diplomat
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You realize of course that all four of the "revolutions" your article mentions were largely driven by government action? (1) electricity, the internal combustion engine, and indoor plumbing. (2) electric-powered homes and factories, highways, automobiles, flush toilets, etc. (3) the computer and information technology after 1970 (4) the acquisition and distribution of enormous quantities of cheap land. Yup, all heavily assisted by government. (In both Canada and the US). Edited by Brewster, Mar 10 2013, 02:21 AM.
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| Banandangees | Mar 10 2013, 03:36 AM Post #3 |
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Fire & Ice Senior Diplomat
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All created and/or invented in the private sector, financed with the help of the tax payer with government taking credit then stolen and duplicated by the even greater ultra socialist regime of China. |
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| Brewster | Mar 10 2013, 03:43 AM Post #4 |
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Fire & Ice Senior Diplomat
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Talk about revising history! |
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| Sea Dog | Mar 10 2013, 10:33 PM Post #5 |
Fire & Ice Senior Diplomat
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America and Canada were built on natural resources stolen from the native peoples. When these low cost or free items, forests, oil, fishes, abundant cheap farmland, began to disappear, then North America was on a more equal footing with Europe etc. This is why the glory days are over, never to return! |
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| Neutral | Mar 10 2013, 10:36 PM Post #6 |
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Fire & Ice Senior Diplomat
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| Deleted User | Mar 10 2013, 11:26 PM Post #7 |
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All world powers decline sooner or later. There is no reason to expect the US to be any different. China is likely the replacement. It is possible that the US may end up as one the shortest lived ones. It really was not a significant power until WW2. That is about 70 years. The British, French, Roman, Spanish, etc all lasted far longer than that. the Soviet Union was short lived. |
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| Neutral | Mar 10 2013, 11:35 PM Post #8 |
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Fire & Ice Senior Diplomat
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China has problems too, big problems. |
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| Pat | Mar 10 2013, 11:38 PM Post #9 |
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Fire & Ice Senior Diplomat
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Yes, the rural electrification program and the programs to bring sanitary waste and clean drinking water are a couple of government ran programs. Which dovetail into prosperity but are not a driving force. Government's can be efficient in the area of infrastructure, the coop form of mass production is best served for large infrastructure endeavors because they add scale to and cooperation to the process. And this /these are the areas the cooperative power of the citizens can best be utilized efficiently. A government can arrange financing that no one bank can handle on that large of a scale. And take another example, the land to grow industry. A government can arrange the use of public lands and tax rates to entice capital into large scale economic activity. For instance when North Carolina cities began giving land and cheap taxes to lure industry to industrial parks and that nudged existing manufacturers into expansion. If done right, government can provide a focused public education system of schools, trade schools and colleges that focus development and skill training that is unique to the industries being attracted. We could gain this coop advantage with a government that is probably a fraction the size it is. And government being far less efficient at social welfare programs, could be turned over to private interests that would be more cost affective and competent in delivering focused services and solving problems. Let business and private/corporate interests drive the economy. Eliminate dumb regulations that thwart business and instead, focus regulations where they create or maintain a legal and level playing field. I doubt i will ever live to see such a society. Maybe not in ten lifetimes. |
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| Thumper | Mar 10 2013, 11:44 PM Post #10 |
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Fire & Ice Senior Diplomat
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When the voting non producers out number the voting producers, the down turn will accelerate until we are a third world country. It is enviable. Revise the Constitution NOW! |
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