Re: Bush Seeks Ways to Create Jobs, and Fast

["Gary Santos" <garysantos@xxxxxxxxxxxx>]

Rainesco,

I don't know how much profits come from exports but I do know that a
substantial part of imports are from US multinationals in China and the like
exporting back to the US. Part of the current account deficit is
"self-funding". This part of the equation is never mentioned when
criticizing the fact of the current account deficit. The pundits are either
strongly critical for or against as if to be a pundit is to be a mercenary
(which they probably are). The sorry thing is the issue becomes muddled.

In my view, the pronounced increased productivity is not imaginary although
the veracity of such a statement depends on how one wishes to understand it.
Less jobs are available, jobs are permanently lost -- both true. But, those
workers left behind are indeed more productive in the manufacturing and
service sectors either because of technology and the simplification of work
or because they are slaved to work harder and longer hours. A cheating of
the term "increased productivity"? Whatever but the bottom line is that
there is an increase in absolute productivity per headcount.

I forwarded to David's list a paper by Catherine Mann of IIE. The picture
she paints in the IT area is a possibility and, if the vision is correct,
what has and is transpiring because of what was inevitable when "development
by export" strategies were adopted by Asia and especially when China opened,
what we are experiencing now are transition pains into what may or may not
be a better world. Some equilibrium will be reached -- eventually and
definitely with much displacement. Mann seems to think that it is just
around the corner insofar as IT is concerned. And, we shall soon see, over
the next few months with job creation numbers, if she is correct.

Is growth real? Yes, it terms of absolute quantitative measures. No, because
it is financed by debt both national and personal and we still don't know if
this will be followed through naturally be the economy with value adding
activity and employment. By the latest measure, December's measly 1,000 jobs
created, the "grand plan" does not seem to be working.

But, having said that, does anyone have a better plan? To go into fiscal
balance would by definition bring a 5% decline in GDP. To ask the same of
consumers would, by one account I read, mean a 15% decline in GDP. And, this
is not to mention the situation in Iraq where for the price of hundreds of
billions some control over the price and availability of power was bought.
The situation is simply crazy.

Or, maybe it is not the last deal, I was thinking positively several weeks
ago with a post to this group. Maybe beyond all the pain being suffered with
lives and families going into ruin (about 10% of the population), around the
corner lies some nirvana drawn up by some neocon visionary. To this day, no
one seems to recognize that the Euro's rise will have a positive effect on
disposable income in the Euro area. China will certainly benefit as will, to
a much lesser extent, the other East Asian countries. And, maybe, then,
employment in the US will pick-up. Maybe, I was thinking, this may be a
stupid, lousy plan but what if it works? All the pain will eventually go
away and US, at least 96-97%% of them, will be able to work 2 hours and eat
well while others will have to work 12.

Please send your link to the chart. It didn't show up in your email.


----- Original Message -----
From: <rainesco@xxxxxxxxxxxxx>
To: "Gary Santos" <garysantos@xxxxxxxxxxxx>; "David Chiang"
<chiang.d@xxxxxxxxxxxxxxxx>; <rainesco@xxxxxxxxxxxxx>; "Qasim KZ"
<qasim@xxxxxxxxxxxxxxxxx>; "william engdahl" <engdahl@xxxxxxxxxxx>; "Abe
Killian" <destro@xxxxxxxxxxxxxx>; "Peter Kirsch" <pjk1298@xxxxxxxxx>; "Henry
C.K. Liu" <hliu@xxxxxxxxxxxxxx>; "Peter Myers" <myers@xxxxxxxxxxxxxxx>;
"Gavin Oughton" <amband@xxxxxxxxxxx>; "Peter Wakefield Sault"
<xxxx@xxxxxxxxxxxxxxx>; "Israel Shamir" <shamir@xxxxxxx>;
<Philev@xxxxxxxxxx>; "Wolfram Graetz,Architect" <Wolfram@xxxxxxxxxxx>;
<cpds@xxxxxxxxxxxxxxxxxxxxx>; <arno@xxxxxxxxxxx>
Sent: Saturday, January 10, 2004 8:53 PM
Subject: Re: Bush Seeks Ways to Create Jobs, and Fast


> Question.  How much of the corporate profits are coming from foreign
sales, and non-related investements or one-off events?
>
> It should also be noted that unemployment figures don't include the
college graduates who see no jobs and either go on to graduate school hoping
things will be better in the future or move back home and work out of their
bedrooms (e.g., contract work).  We do know that companies (and even
government entities) are sending more jobs off-shore. Miserable employment
opportunities also helps military enlistment numbers (the "Jessica effect").
>
> The increased productivity hypothesis is flawed anyway.
>
> Is Growth Real?
> http://www.nathannewman.org/log/archives/001386.shtml
>
> Now, the fact that growth is way up shouldn't be a surprising. Between
massive government debt and personal debt being cashed out in tax cuts and
home equity loans, it would be a shock if there wasn't some boost to the GDP
growth numbers. Whether it's sustainable is the big question.
>
> But with so little job growth accompanying the GDP numbers, it does make
you ask what's going on.
>
> And one answer is that the GDP statistics may be partially bogus.
>
> Most folks recognize that you have to adjust GDP numbers for inflation,
but they don't know that the government applies more than Consumer Price
Index adjustments. One key game they play is trying to account for "quality"
inflation (also called "hedonic pricing") as well as dollar inflation-- for
example, the idea that the same dollar buys more computer power than it did
a few years ago. But this has some perverse effects.
>
> Check out this chart: [[go to page]]
>
>
> -----Original Message-----
> From: Gary Santos <garysantos@xxxxxxxxxxxx>
> Sent: Jan 10, 2004 3:13 PM
> To: David  Chiang <chiang.d@xxxxxxxxxxxxxxxx>, rainesco@xxxxxxxxxxxxx,
> Qasim KZ <qasim@xxxxxxxxxxxxxxxxx>,
> william engdahl <engdahl@xxxxxxxxxxx>,
> Abe Killian <destro@xxxxxxxxxxxxxx>,
> Peter Kirsch <pjk1298@xxxxxxxxx>,
> "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>,
> Peter Myers <myers@xxxxxxxxxxxxxxx>,
> Gavin Oughton <amband@xxxxxxxxxxx>,
> Peter Wakefield Sault <xxxx@xxxxxxxxxxxxxxx>,
> Israel Shamir <shamir@xxxxxxx>, Philev@xxxxxxxxxx,
> "Wolfram Graetz, Architect" <Wolfram@xxxxxxxxxxx>,
> cpds@xxxxxxxxxxxxxxxxxxxxx, arno@xxxxxxxxxxx
> Subject: Bush Seeks Ways to Create Jobs, and Fast
>
> NY Times
>
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>                     Topics
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>                  Bush, George W
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> Bush Seeks Ways to Create Jobs, and Fast
> By EDMUND L. ANDREWS
>
> Published: January 10, 2004
>
>
> ASHINGTON, Jan. 9 - The stage had been set to celebrate the revival of
jobs.
>
> With a phalanx of women entrepreneurs at his side and a billboard covered
> with the word "Jobs!" behind him, President Bush proclaimed his confidence
> about the economy here on Friday. But he made only passing reference to
the
> latest news about employment.
>
> The reason was clear: Friday's report on unemployment in December was much
> weaker than either the administration or most independent economists had
> predicted. Job creation was virtually nil, and the unemployment rate
> declined only because the labor force shrank by 309,000 workers. Many of
> those were people who had simply become too discouraged to keep looking
for
> work.
>
> The problem confronting Mr. Bush is that there is little he can do between
> now and the elections except wait and hope that the employment picture
> improves. And the administration is not likely to get much more help from
> the Federal Reserve, which has already reduced short-term interest rates
to
> just 1 percent.
>
> "In terms of big levers to pull, they don't have anything," said Pierre
> Ellis, a senior economist at Decision Economics, a forecasting company.
>
> It is entirely possible that the job trend will abruptly improve over the
> next several months. Businesses are more optimistic and more willing to
> invest in expansion than they have been in years, and that should
translate
> into more jobs at some point.
>
> President Bush may also have an ace in the hole. Last year's tax cuts are
> expected to produce another big bulge of tax refunds and lower tax bills
> between now and June - about $40 billion in extra cash flow to households,
> according to economists at Goldman Sachs and Macroeconomic Advisers.
>
> "It's not a good idea to give excessive weight to any particular
statistic,"
> said N. Gregory Mankiw, chairman of the White House Council of Economic
> Advisers. "If you look at the pattern, most of the economic news has been
> good rather than bad."
>
> Both the White House and the Fed are confronted by a recovery unlike any
> other in modern history. Economic growth has been soaring for months,
> corporate profits have shot up and the stock market has regained much of
its
> old ebullience.
>
> Yet job creation has been slower than in almost any previous recovery, and
> wage growth has slowed to a crawl. That appears to reflect another big new
> element that lies entirely outside the president's control: the enormous
> increases in productivity, which have made it possible for companies to
> squeeze more output from each worker.
>
> "The evidence is powerful that we can have 4 or 5 percent growth without
> hiring much," said John Makin, a senior economist at the American
Enterprise
> Institute. Mr. Makin has long been among the more pessimistic economic
> forecasters, but the employment and wage data on Friday came in far worse
> than even he had expected. "I was stunned, quite frankly," he said.
>
> It is not unusual for presidents to undertake actions to straighten out
the
> economy and then do little but hope and pray they work - and in time.
Jimmy
> Carter appointed Paul A. Volcker as chairman of the Fed, and he increased
> interest rates to stem inflation. The first President Bush reluctantly
> raised taxes to deal with a ballooning budget deficit. In each case, those
> actions helped the economy recover, but not in time to earn Mr. Carter or
> Mr. Bush a second term.
>
> Administration officials know that the crucial issue in an election season
> is jobs. And President Bush's track record, a net loss of more than two
> million jobs since he took office, remains one of his biggest political
> weaknesses.
>
> Not surprisingly, Mr. Bush's Democratic opponents jumped on the jobs
number
> as another opportunity to attack his record.
>
> "President Bush has all but declared 'Mission Accomplished' on an economy
> that is still not generating jobs," said Gen. Wesley K. Clark. Howard
Dean,
> who has distanced himself from former President Bill Clinton through much
of
> his campaign, said Mr. Bush had generated only 1,000 jobs in December
while
> the economy added about 1,000 jobs every three hours during Mr. Clinton's
> administration.
>
> "What further proof do we need that George Bush's economic policies are a
> failure for working Americans?" Mr. Dean said in a statement issued after
> the new employment data was released.
>
> Unable to do much more to stimulate the economy, administration officials
> have stepped up their arguments that the three tax cuts over the last
three
> years have made the economic slowdown and job losses shorter and smaller
> than they might otherwise have been.
>
> "Without the passage of the president's plans, by the second quarter in
> 2003, the unemployment rate would have been nearly one percentage point
> higher," Treasury Secretary John W. Snow said earlier this week. "As many
as
> 1.5 million fewer Americans would be working, and real G.D.P. would have
> been as much as 2 percent lower."
>
> It is impossible to prove or disprove such contentions, but they are
> unlikely to comfort voters in big industrial states where hundreds of
> thousands of manufacturing jobs have been lost over the last three years.
>
> Administration officials also appear to have stepped up efforts to show
> their concern, sometimes by criticizing "unfair trade practices" by China
> and other countries and occasionally by offering help in prominent cases.
>
> On Thursday, for example, the Export-Import Bank announced a new agreement
> to lend $35 million to Malden Mills, a textile company in Massachusetts
> whose owners have been trying to pull it out of bankruptcy court.
>
> However well intentioned, such moves amount to little more than window
> dressing. "If they want to do something for public relations, they might
> have some kind of job hiring incentive," Mr. Ellis of Decision Economics
> said. "But it could not possibly be something of a magnitude that would
> affect this economy."
>
>
>
>