Podcast 265

China Wins! Weekend updates start with the news that China has overtaken the US as the largest economy in the world. Except it’s not true. According to the IMF, using one measurement of economic magnitude, China has overtaken the US. Of course the US media jumps all over this story despite the fact that the measurement called PPP is controversial for many reasons. In fact China’s economy is considerably smaller and poorer than the US. However, it should be pointed out, when your neighbor is saying ‘things are better now’; if the US continues to have sub par growth (par in this case would be a normal dynamic growth of 4% or more for the same length of time as the recession), China will eventually overtake us. All the more reason to advocate growth policies focused on production, rather than trying to stimulate consumption. Protesters, variously reported as protesting the Ferguson Grand Jury decision and advocating for a higher minimum wage, blocked I35W just outside of the downtown Minneapolis. (Editor’s Note: The confusion in reporting got me talking about minimum wage, but the effect is the same. I don’t understand how making people angry because they sit in traffic for an hour makes them amenable to the cause, whatever that is.) The kinds of people who make more money are the people who develop time and productivity saving innovations, and figure out how to market them. Increasing wages by fiat won’t make anyone’s life better in the long run. Moreover, it’s possible in the short run, some fast food and service industries that employ human beings will automate most of these processes and actually improve service and the quality of their product. Low and middle skilled labor in the next twenty five years will face some grim employment challenges. Protesting this sea-change in the production and labor equation, is spitting into the wind. Black Friday sales are down, provoking all kinds of discussion about ‘what it means for the economy and retailers’. Probably nothing, either way. But, it does provoke a discussion about why some retailers are going out of business, and it isn’t because they’re not offering discounts. Its because they’re not retooling properly for the new consumers who don’t want to wait until the day after Thanksgiving for the best deals, and they want better service. Some stories from the consumer front prove this thesis. For example, a new study says people care more about the WIFI connection than they do the bed, when it comes to choosing a travel hotel. Did the North Koreans really hack Sony Pictures. Not so fast. Investigators now think it was a disgruntled employee. But the real story is how much these Hollywood types are making … but you won’t see any minimum wage protesters on the Sony studio complex. Meanwhile, more TV viewers are streaming their favorite shows, and its happening with radio too as people listen to podcasts and services like Pandora, over the internet. Finally, that all meat diet you’re on may actually be better for your heart than the gluten free bagel diet. New studies show its the carbs that kill your heart. Sponsored by Ryan Plumbing and Heating of Saint Paul, and by Depotstar

Comments

Lynne Welter
Reply

You’re talking about minimum wage issues and the various skill/income levels. The real problem that is tipping the economy out of whack is the disparity between this and the corporate/media/political/professional/investor classes of employment who are earning 6 figure to million dollar salaries. No civilization in history has survived huge income imbalances. Is this current economy any different? Can we buck the centuries-old historical trend? Let’s see…we have Hillary Clinton who charges no less than $300,000 (her economy rate) for a 20
minute speech. No wonder her Democratic masses are demonstrating for a higher minimum wage. Lawyers, psychologists, consultants are typically $150 to $200/hr. Physician salaries and hospital costs are off the charts. Corporate managers don’t retire with a pension and a gold watch anymore. They get millions. And don’t even get me started about the salaries Hollywood commands for the garbage they regularly put out. You see, the tables have been turned. The political class championing for the underclass since the 60’s is now the upperclass…but they still have to have their underclass. Are they doing anything to level out the economic playing field, falling in line with their philosophy? No. Now they are finally the fat cats and they are playing the same old game. The rich get richer and the poor get poorer. No different from the days of feudalism. Is this current situation a natural result of capitalism? Is no economic system on the entire planet for centuries immune to this basic human fallacy? I don’t know, but not everybody is an inventor, entrepreneur, or organization managerial genius. And the sooner somebody comes up with an economic system that reconciles these differences, the better off the world will be. All I am doing is pointing out the problem and at least that’s a starting point.

Bob Davis
Reply

There’s no proof ‘income disparity’ is what’s tipping ‘the economy’ out of balance. There are certainly theories, but the theories (Piketty et al) are problematic. I’m not even sure what ‘out of balance’ means in this case. Are you going to decide who earns what?

Lynne Welter
Reply

I am not in favor of statist-owned corporations any more than I am in favor of corporate owned corporations. I am for worker-owned corporations and I’m not talking stock options. Oh for the century-old days of small-town America, perhaps, where capitalism and competition thrived in the beginning. However, unfortunately, even that has led to the current situation of corporate behemoths. Once again, a product of the human fallacy for influence, power and greed. I believe CEO’s should be part of the mainline workforce of the company and vice versa. It’s a rotating position and it’s cooperative vs competitive. People support and help each other with positive and equally recognized suggestions to keep the organism/ entity thrive and stay alive instead of using, backstabbing, and climbing all over each other to rise to the head of the pack to control everybody else. Am I nuts? I don’t think so. Is anyone going to take offense at more positive suggestions and help upon what are trying to accomplish even as they are favorably recognized for their efforts? Every one of us…every single one of us…has their strengths and weaknesses and the only way this world is going to work, corporate or otherwise, is if people start helping each other instead of using each other.

Bob Davis
Reply

I don’t think you know what you’re in favor of. But I will leave your comment as an example of so called ‘conservative’ solutions to problems.

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