The U.S. economy has certainly improved as trade has gotten more free. You want a simple example? Inflation in America is effectively non-existent.
That is not solely due to free trade, but free trade has a huge impact on it. When goods made more cheaply in foreign countries are sold in the U.S., it means that you pay less for such goods.
Every time you go to the store, free trade benefits you, because you leave that store with more money in your pocket then you would if foreign goods weren’t on sale in that store.
Well, here’s my layman’s explanation for the current U.S. economy:
The vast, overwhelming majority of people employed in the United States are not employed in “dot-com” industries. They weren’t in 1998, and they certainly aren’t now. Most people work at factories, or retail stores, or restaurants, or in public service, or any other number of industries that could care less what’s happening to the nation’s network administrators or C+ programmers. Every day, they lace up their boots or slip on their penny-loafers and produce goods and services that other people want. Right now, as long as “other people” are buying those goods and services, fundamentally the U.S. economy is safe and sound. That’s why unemployment is very low for a recession (which, by generally accepted definitions, we are currently not in), that’s why inflation isn’t even on the radar screen. That’s why people from all over the world are still beating our doors down trying to get in and enjoy our “slowdown” that would be a windfall in most other industrialized (and certainly non-industrialized) nations. Take a little gander at the double digit unemployment rates France has been dealing with for the past decade or so, and you’ll see what I mean.
Now, for everyone with their own little sob story about how tough things are for them or their friends and family: first off, I need specifics. Don’t tell me “things cost more for me now than they did last year.” Tell me exactly what these things are, and exactly how much they cost now and exactly how much they cost last year. Don’t tell me “so and so is a computer guy, and can’t find a job.” Tell me exactly what field he is in, and what city he lives in. National rates of any economic measure, of course, aren’t the same in every single area of the nation. And most importantly, and I can’t stress this enough: if you balk at “layman” explanations, and then complain that the complicated economist explanations are too difficult to understand, then you’re beyond the help of economists and might as well get your info from Dan Rather.
[levity] Boy, kids these days… back in my day, every morning the economy woke us up at four in the morning, made us work for five hours in the salt mines, and then killed us before we had a chance to eat breakfast! [/levity]
I’m not holding my breath for a satisfactory clarification from susanann as she seems to just do drivebys blurting out whatever nonsense is bothering her at that moment. Kind of reminds me of a woman from West Virginia I used to know.
Actually, I’m not a gold bug. But I do think the value of your currency relative to other countries currencies is a good measure of the health of your economy.
Gold has no part in world monetary systems. It is pretty much free to fluctuate. I would say that, in the last 10-15 years, it responds to currency fluctuations more than world events. So, if the US economy tanks, then the US dollar will drop relative to currencies that are perceived to be a safer haven. It will then take more US dollars to purchase an ounce of gold. So, to me in the US, gold will go up. To someone in, say, Switzerland, it might go down as their currency gets stronger.
Sorry for the length of this slightly o/t subject.
Not to start a total hijack, but I’m a certifiable gold bug. I even started a thread a while back to argue for some new form of a gold standard. And I think the euro sucks eggs as an economic idea.
I’m going to duck under my computer now, as I’m sure there’ll be a host of economists and others ready to throw everything but the kitchen sink at me.
But gold is also commodity with its own elasticity and its own varying factors of demand and supply, which differ in different parts of the world (it’s also in theory capable of being leveraged, as the copper moguls did). For the purpose of comparing the health of economies (provided you were dead set on using only one very simple guage), it seems like you’d at least want to use a commodity that was relatively inelastic accross all economies.
It’s also a mistake to put too much emphasis on relative exchange rates (Europe’s obsession about this has always seemed a little odd to me). Not all capital is internationally mobile to the same degree. And neither the foxex market nor the international capital flows are “the” economy, especially not in the U.S.
—And I think the euro sucks eggs as an economic idea.—
Well, you don’t have to be an advocate for the gold standard to think that. Personally, I think the euro is sort of neutral as an economic idea, and is largely a symbolic and political one anyway. It was, however, instituted in a way I didn’t think was so smart: gradually and with all sorts of strange conditions for individual economies to strive to meet before joining.
I am not an economist, so will not throw kitchen sinks at pantom.
I’m unsure about using commodity prices as a measure of economic well being but the exchange rates suggestion of samclem seems to make sense to me.
If it helps anyone the NZ$/US$ rate has been moving quite rapidly recently, from (roughly) NZ$1 = US$0.48 to to NZ$1 = $US0.51 over the last month or so.
So from down here it looks like the US economy is detoriating pretty significantly (relatively speaking of course).
As an aside, do American news reports give daily updates on exchange rates? The New Zealand networks cover the US$ Aussie, Euro, Pound and Yen rates daily.
kiwi:Gold moves inversely to the dollar, usually, and is a good shorthand indicator for when commodity prices are rising. I believe NZ has a commodity based economy, so I think the NZ$ moving up against the US$ would be consistent with that idea. Apos: One of the reasons I think a revival of the gold standard is in order is that everyone keeps trying to keep their currencies from fluctuating too much. All the mucking around by govs in the forex market just screws around with the message that the currencies try to give the economies in question on how they’re doing. There has to be some sort of automatic feedback mechanism for gauging the relative strength of the world’s economies against each other, and it has to be as independent as possible from government interference. If floating exchange rates won’t do it because no one is willing to let them float on their own, then something else needs to be found. My take on the euro, in this context, is that it’s yet another dumb attempt at neutralizing the feedback that floating exchange rates give.
A goild standard makes no sense in any way. Gold is a commodity just like any other commodity. If we are going to choose a commodity as a currency unit it might as well be something we can use, like pork bellies or wheat busshels. Using gold as currency makes no sense and is just not feasable.
Pantom Yes our economy is pretty much dependent on the three F’s (farming forestry and fisheries) for export revenues (although tourism is getting up there these days). I’d never thought of the link between that and gold prices.
Is Gold still seen as a safe bet in times of war? (I base this on Dim memories of an old National Geographic article on gold from the seventies). This could count against using the Gold price as an indicator for US economic performance (as Apos pointed out).
As for going back to the Gold Standard, the only work I’ve ever read on the subject is I M Drummond’s The gold standard and the international monetary system, 1900-1939, Cambridge, CUP (I can’t remember the date of publication). It’s part of their economic history series and was very informative (for a non-economist such as myself). It left me with the impression that the Gold Standard ought not (and probably could not) be reintroduced.
sailor: Actually, the fact that gold has no use other than as jewelry is what makes it perfect for backing up a currency. I hesitate to say any more here because this really should be a separate thread if we’re going to debate this.
kiwi: I guess that does explain it then. Don’t know much about your country other than what I heard from an adventuresome friend of mine who went there on vacation and wound up staying for a year because he was a mainframe computer programmer and they had a desperate need for him when he got there. Said it was beautiful down there.
Re gold as an indicator for U.S. performance: us gold bugs figure that gold is a competing de facto standard world currency against the dollar, so if the U.S. stumbles, gold does well. Its recent performance confirms that for us.
[QUOTE]
*Originally posted by pantom *
**sailor: Actually, the fact that gold has no use other than as jewelry is what makes it perfect for backing up a currency. I hesitate to say any more here because this really should be a separate thread if we’re going to debate this.
[QUOTE]
Actually gold has a lot of uses. Your computer has a fair amount in the electrical contacts. Look at phone and other connectors: that’s gold you are seeing. Industry uses a lot of gold. But, as you say, that’s another different thread.
How bad is the economy? There are a couple of indicators that tell you how the economy is faring:
Unemployment - Its about 6% which is prety high. Typically it has been about 4-5%. Pretty self explanatory - lower is better.
GDP - Gross Domestic Product - which is the amount of stuff being produced. It was negative during most of 2001 which indicates “recession” but its back up to previous levels for 2002.
US dollar vs foreign currancies - I don’t know how its doing and I don’t feel like looking it up. Basically shows other countries confidence in the American economy vs their own.
Inflation - How much more expensive shit is now compared to last year. Still pretty low, mostly because of low interest rates.
That’s kind of the point
:rolleyes:
What makes you think that you more or less entitled to having a particular job because you are white?..or because of your religeon?..or because you are a man or a woman? During the nineties, between the Y2K business and the dot-coms there was a shortage of qualified IT professions. Most of them didn’t seem to have a problem shopping their services around to the highest bidder or jumping ship at the drop of a hat. So after companies have been forced to outsource their services overseas or hire cheaper H1Bs who work harder, racists like you bitch about not being able find six figure IT jobs because of all the “im’grants”.
Look…unless you develop software for Microsoft or Oracle, IT is a supporting service at most companies, just like the accounting department. The Dot-Coms are done, Y2K is over, and there are thousands of recent computer engineering grads who thought they were going to get rich doing IT stuff. Is it any surprise all those IT guys can’t find jobs? Sorry, but that’s just how the market works.
Too bad about that diversity thing too. I too long for the days when it was just white heterosexual men working in all the offices with their crisp white starched shirts and ugly ties. I guess you can go make little crosses out of #2 pencils and go burn them on the desks of immigrants.
Fair.
I have friends near Manchester, NH. One does programming, one is a sysadmin, one is a software tech support Last year, all were employed in the companies north of Boston. Now, all three are laid off and haven’t found anything they’re quialified for in several months.
We live near Hartford, CT. My husband is skilled in templating, fabricating, and installing stone countertops. He also has experience in painting, carpentry, human services, and non-CDl delivery. He’s been out of work and actively looking for almost three weeks. Not only can he not find a job in any field he has experience in, but he cannot find work doing anything else that would pay more than minimum wage.
Let me put it this way: WAL-MART IS NOT HIRING. That should make things fairly clear, I think?
I also want to make a note that that 6% unemployment is not reflective of permanent employment. Many people got seasonal work for the holidays that will be out of a job in January.
I’m not trying to be pedantic, but this is sort of important.
—Unemployment - Its about 6% which is prety high. Typically it has been about 4-5%. Pretty self explanatory - lower is better.—
Why is lower better? Compared to our ancestors, we are all woefully unemployed in terms of hours worked per year, per day, per week. Unemployment is not itself a bad thing. It is often associated with bad things (like reduction of consumption due to loss of income)… but not always. Indeed, unemployment is something to which some people actually aspire.
Now, that doesn’t mean that it’s not a good short-term rule of thumb, but it’s still an important point.
—There has to be some sort of automatic feedback mechanism for gauging the relative strength of the world’s economies against each other—
Why? We are not in a zero-sum competition.
What do you feel is wrong with the U.S.’ float that going on the gold standard would fix, aside from making people who own lots of gold fabulously rich?
I forgot one more:
My dad has 20 years of administrative experience and has decision making capabilities (literally) under fire in his military background. He has fifteen years’ experience im facilities management, ordering, and personnel in various middle-sized businesses from nonprofits for the mentally ill to banks with dozens of branches. After the bank was bought out and replaced all the existing management, he started a two-year job search, including updating his computer skills almost to the point of Microsoft Certification. What’s he doing now? He’s a part-time tutor at the local middle school. It’s all he can find.
As for prices, Only frivolous stuff comes to mind, but bear with me. A McDonald’s Extra Value Meal average price from a couple years ago was $3.00. Now it is over $4.00. My favorite sort of frozen pizza cost $4.00 last year and it’s now $5.00. Ben & Jerry’s ice cream used to cost $2.50 and I’ve seen it up to 4.50. Large Slurpees last year were about .98. Now, the medium size is $1.29.
Of course, DVD players cost $150 last year and this year you can get one for $50 or so.
So I guess the truly frivolous stuff is getting cheaper but the merely tasty is going up at a frightening rate.
Nobody aspires to get eviction notices because they can’t make rent.
Lower is better because it means that people who want to work, can. We are past being picky. Aside from my small business, we have zero income. My husband’s last job was as an independent contractor, so we can’t even get unemployment. Do we go on Welfare until there’s an opening at the gas station down the street? Maybe they’ll let us park the van we’ll be living out of there, too. I hear plenty of talk-radio types complaining about lazy people who won’t get a job, and I suppose they exist, but when you’ve tried everything you can think of with no luck, it’s hard to be optimistic.
