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Brain -> What U.S. Economic Recovery? Five Destructive Myths (6/13/2011 6:29:46 AM)
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It's too bad too many Americans have shit for brains and don't understand this is the wrong time to cut spending if you want to get the economy back on track. 50% of Americans think raising the debt ceiling is not a good idea. To me that means 50% of Americans are economically illiterate - not raising the debt ceiling would make the great depression look like the good old days. The last paragraph where the author concludes the government needs to pass rules so homeowners can negotiate better terms with lenders is something that should have been done a long time ago when they gave the banks all the money. Obama/Bush Republican and Democrats didn't do it at that time because the banks lobbied them not to so the banks could make better profits.
What U.S. Economic Recovery? Five Destructive Myths
By RANA FOROOHAR
Wednesday, June 08, 2011
Let's be clear: the slow growth the U.S. is experiencing is not an Obama-specific problem. Many of the ingredients in it were already baked into the economy and were simply laid bare by the financial crisis. There's no doubt things would have been dramatically worse had the Administration not taken all the action it did in the wake of the crisis.
But at the same time, the growth problem is Obama's. Every President inherits his predecessor's economy; indeed, it's often what gets him the job. It's then up to the new guy to change the numbers as well as the debate. Now it looks as if Obama is losing that debate. The Republicans have pulled off a major (some would say cynical) miracle by convincing the majority of Americans that the way to jump-start the economy is to slash taxes on the wealthy and on cash-hoarding corporations while cutting benefits for millions of Americans. It's fun-house math that can't work; we'll need both tax increases and sensible entitlement cuts to get back on track. Yet surveys show 50% of Americans think that not raising the debt ceiling is a good idea — that you can somehow starve your way to economic growth.
Myth No. 1: This is a temporary blip, and then it's full steam ahead
Myth No. 2: We can buy our way out of all this
Myth No. 3: The private sector will make it all better
Half of Americans say they couldn't come up with $2,000 in 30 days without selling some of their possessions. Meanwhile, companies are flush: American firms generated $1.68 trillion in profit in the last quarter of 2010 alone. But many firms would think twice before putting their next factory or R&D center in the U.S. when they could put it in Brazil, China or India. These emerging-market nations are churning out 70 million new middle-class workers and consumers every year. That's one reason unemployment is high and wages are constrained here at home.
Nobel laureate Michael Spence, author of The Next Convergence, has looked at which American companies created jobs at home from 1990 to 2008, a period of extreme globalization. The results are startling. The companies that did business in global markets, including manufacturers, banks, exporters, energy firms and financial services, contributed almost nothing to overall American job growth. The firms that did contribute were those operating mostly in the U.S. market, immune to global competition — health care companies, government agencies, retailers and hotels. Sadly, jobs in these sectors are lower paid and lower skilled than those that were outsourced. "When I first looked at the data, I was kind of stunned," says Spence, who now advocates a German-style industrial policy to keep jobs in some high-value sectors at home. Clearly, it's a myth that businesses are simply waiting for more economic and regulatory "certainty" to invest back home.
Myth No. 4: We'll pack up and move for new jobs
Myth No. 5: Entrepreneurs are the foundation of the economy
Entrepreneurship is still one of America's great strengths, right? Wrong. Rates of new-business creation have been contracting since the 1980s.
http://www.time.com/time/nation/article/0,8599,2076568-1,00.html
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