During the course of almost every week, I try and blaze through any number of financial website discussion boards, just to see what the general mood for that particular week happens to be. Over the years I've found it's a great way to keep up with the numerous stocks of the day and the current fad industries.

By now, some of you may be aware that I have serious reservations about the economy, and as I have written on more than one occasion, what the government is saying about the economy just doesn't make sense to me. That's why I've been pretty amazed that so many posters to the discussion boards I've visited seemed to be focused on the coming election instead of the coming economy.

First off let me say that for the most part, I'm a very positive individual. It's just my nature to look for the positive in anything as opposed to the negative. But when it comes to investing, preserving my capital, I can become a bit adversarial.

As sort of a trial balloon, I posted some thoughts in a discussion board on a financial website, with the hope that as the members of this discussion board posted their comments I would be able to get some idea as to the correctness of what I keep seeing and hearing in the popular media about America's current economic state.

Part of what I keep reading and hearing is that outsourcing and economic synergies are creating a business environment that requires fewer American workers and because of these two business dynamics, the American workers that are needed are being hired at a reduced wage.

I have repeatedly seen on the evening news and read in the popular press that exploring the synergies between companies to determine what can and can't be outsourced to India, China, and other countries, is a very good thing for business globally, which is a very good thing for the economy globally.

My thoughts about this are fairly straightforward. The name on the sign at the boarder to my country isn't GLOBAL, it's AMERICA, and while at heart I may be a capitalist, I want my capitalism to be about American business keeping American workers, working. That's what I believe is good for the American economy.

Yet I freely acknowledge that more than likely I'm not seeing things clearly, that I don't understand the grand picture, that I'm not thinking far enough ahead, that there really is a calculated design for the global economic changes now in full swing, a calculated design I'm not bright enough to understand.

I keep asking how all of these synergies between companies and all of this outsourcing to Nepal or wherever, is going to benefit my economy, my American economy. As yet, I have not gotten an answer, a lot of rhetoric, but not an answer.

To me it's pretty simple, if the American consumer is indeed two-thirds of the American economy, then that means that the American worker is two-thirds of the economy as well, and if more and more of that two-thirds is working for less money, and if more and more of that two-thirds has increasing debt levels, and if more and more of the jobs of that two-thirds are being outsourced, then how many of that two-thirds is going to be able to afford to participate in the American economy?

Over the past several months I've gotten the word through Mr. Greenspan that the Federal Reserve believes from an economic perspective, all is well. As the matter of fact, all is so very well the Fed has raised interest rates…twice. I personally am still trying to get a glimpse of what the Fed is seeing.

Of course this being an election year, I can't seem to turn around without the Republicans trying to get me to realize it was those pesky Democrats that created the economic downturn and it's been the Republicans, those stalwart captains of industry, that have been fixing what the Democrats broke.

But if the Republicans have been fixing what was broken, why does unemployment seem little changed from month to month, why the need for interest rate hikes from the Central Bank, and why is the government operating the largest deficit in the history of the country? I have to wonder if the economy was really ever broken?

The Republicans are quick to point out that because of the wonderful job the current administration is doing with the economy, more and more Amarekins are working, the Evil Doers, those that sought to destroy our Amarekin way of life, are either on the run or dead, and thanks to the tax cuts, again given to everyone by the Republicans, American workers have more money to spend.

American workers may or may not have more money to spend, but the wealthiest Americans seem to. As I noted last week, according to a study released by the Congressional Budget Office (CBO), tax filers with an average income of $182,700 and above, the upper 20% of tax filers, had a lowered tax bill by 1.8%, while the tax filers with incomes between $51,500 and $75,600, the majority of tax filers, saw their tax bill increase by 1%.

But when the effective tax rate (the tax rate after allowing for deductions) was examined, the tax decrease for the majority of tax filers was found, or at least sort of found.

When the effective tax rate was examined, the CBO found that taxes for the vast majority of filers, the working folks, had indeed gone down by 4%, as the Republicans have said. But what the CBO report also showed was when the effective tax rate was examined for the top 1% of filers, commonly referred to as the “rich”, the effective tax rate for those folks had dropped by 19%.

So yes the tax cuts may be working, just not as I thought they would.

In all fairness, I would present my take on the Democratic view of the economy, but try as I might, I just can't get it to stay the same long enough to understand what the Democratic view actually is. I've read that their economic plan looks great, with nary a hair out of place, but I'm a bit of skeptic so as far as I'm concerned more than shiny teeth are going to be needed if I'm to believe the No Hair Left Behind bunch has any understanding of the economy, much less a plan for the economy.

What is the real story with the economy and unemployment? Who is going to provide me with enough information to make a reasonable decision about the economy? Are the vast majority of working Americans, those that are two-thirds of our economy, really falling deeper and deeper into debt? What can I do to preserve my capital while at the same time looking for opportunities to make my capital grow?

In my tours around cyberspace, very few folks seem to be asking these questions. I find a lot of bashing of both Republicans and Democrats, but I find almost no suggestions about how to improve America, and the American economy.

Don't fix what isn't broken many people say, and while that of course is the prudent thing to do, if it isn't broken why are both Republicans and Democrats trying to fix it?

Focusing on the coming election creates great fodder, which in turn creates great discussion, which in turn creates a lot of hot air, which is what I believe both the Republicans and the Democrats are blowing when it comes to the economy.

Someday I'm going to need the money I'm saving now, and if past experience is any indicator of future activity, Social Security probably isn't going to be able to make my “golden” years, happy and carefree.

It's the money I save today that is going to pay the bills of tomorrow, and that was the underlying message from last week's thoughts, the thoughts I posted on-line in an attempt to get a different perspective of how the economy was challenging a microcosm of the American wok force.

By and large, most responses missed the underlying message altogether. But the folks that did responded while saying nothing about the economy in general did say they watched their spending and always paid their credit card bills in full every month. Smart folks!

I'm still not sure about the economy, except to say that with each passing day I think it's deteriorating. That as time goes by, the decisions each of us makes today not only about our investment portfolios but our economic portfolios as well, takes on more and more importance.

There comes a time when each person finally understands that no matter how much they want to, they aren't going to live forever, they aren't going to be young forever, and decisions, perhaps unpleasant decisions about the future, have to be made.

The problem with decisions is that while made in the present, they always change the future, a future that some day will find us all.

Wax

I keep asking how all of these synergies between companies and all of this outsourcing to Nepal or wherever, is going to benefit my economy, my American economy. As yet, I have not gotten an answer, a lot of rhetoric, but not an answer.

I have your answer. The benefit to the American economy is in the form of lower prices to the consumer.

To me it's pretty simple, if the American consumer is indeed two-thirds of the American economy, then that means that the American worker is two-thirds of the economy as well, and if more and more of that two-thirds is working for less money, and if more and more of that two-thirds has increasing debt levels, and if more and more of the jobs of that two-thirds are being outsourced, then how many of that two-thirds is going to be able to afford to participate in the American economy?

More than would have been able to were it not for the outsourcing. International trade is a net benefit to the economy as a whole, and directly and materially benefits the consumer. Yes, some producers who cannot compete on an international scale go out of business, and people do lose jobs as a result. The question we have to ask, though, is which is greater? The benefit to the consumer or the harm to the producer? The answer, in my view, is crystal clear - the consumers benefit more than the producers lose.

This is clearly demonstrated in this post I wrote a while back:

http://boards.fool.com/Message.asp?mid=19952803&sort=usernam...

Don't fix what isn't broken many people say, and while that of course is the prudent thing to do, if it isn't broken why are both Republicans and Democrats trying to fix it?

The one-word answer is: Votes.

Even though international trade and outsourcing is beneficial to the economy overall, those people who work in displaced industries are, indeed, harmed. Again, the benefit outweighs the harm, but that doesn't mean that the harm doesn't exist. Politicians can often secure votes by enacting policies that mitigate this harm, even though that from a macroeconomic perspective, said policies are actually counterproductive.

Steel workers will vote for a candidate who promises to put tariffs on imported steel, even though said tariff is actually detrimental to our economy overall.

Regards,

Eldrehad

Hiya wax!

Well for a post under the header "Economy of thought" you surely did use a lot of words! <GGGG>

I've upset some folks hereabouts with my politically angled posts, so I'll do my best to stay away from Party identification in my redneck response.

I think that there might have been a not-too-unsound economic theory behind the idea of a tax cut or three: putting more money into the economy and thus, presumably, creating more jobs. But either the idea wasn't thoroughly understood, or the tax cut got sidetracked (I'm not going to venture an opinion on which I think it is). Either way, the result does not seem to have been the creation of jobs commensurate with the size of the costs of the cuts. In fact, I saw an article a couple of weeks ago that basically tried to figure out the cost per job created and it came out to something like $180,000/job!

I agree with Eldrehad (one of those rare times, it seems) when he points out the benefits of globalization. I have nothing to add to his succinct explanation.

To me it's pretty simple, if the American consumer is indeed two-thirds of the American economy, then that means that the American worker is two-thirds of the economy as well,...

But the hidden assumption here is that the items being consumed are the same as those being produced by the American worker. That, I think, is where the thinking begins to go a bit astray. All conclusions then drawn from those following thoughts are somewhat flawed as well. We don't have to produce what we consume, as long a we produce something of equal (or, hopefully, greater) value.

America's greatest asset is its Free Thinking Society. Because we don't indoctrinate out children into ritualistic behavior and rigid thought patterns, we as a people are far more able to be ingenious and creative than any other society on earth. Our social adaptation abilities are amazing! Just look at the adaptation to women's rights & women in the workplace. We went pretty far as a society in that regard in the last 50 years. I'm not saying its perfected yet, just that we did what few other major population areas have been able to do and did it faster. Look also to the adaptation to the computer age. We rock!

The lynchpin, though, for being able to tap into all that creative energy is an educated populace. That is where we have been falling down on the job. Our creativity combined with education makes us the Service economy to the world. Our very Constitution and its principles allow this society to continue to have that edge, but it won't matter if we don't insist on our children having access to best educational system ever devised, and insist on our children performing well and consistently throughout their formative years in such a system.

The key for America isn't on the factory floor, the key is in the minds of our children.

If we educate our children at least as well as the best of the rest in world, we will always be creative about how and what to produce to keep the dream alive and in reach. If we don't, then I fear the standard of living for most working Americans has already peaked.

Anyway, that's my economy of thought on the issue.

PosFCF

Lots of stuff to think about, Wax.

As for outsourcing, I don't think this is a new thing. For example, televisions and just about all electronics have been outsourced for decades. Ditto with clothing. Just because a call center moves overseas does not change the reality that Americans depend on other countries for more and more stuff. Lower cost will win the day. And you should hope that your companies understand this.

As for the two-thirds consumer and two-thirds worker idea, the other third is business and government which includes a ton of workers, no? So that doesn't quite wash.

Employment gains: there are two government employment surveys: payroll sampling and household survey. Last month the figures were Payroll: +32,000. Household survey: +600,000. This is a huge difference which shows that paying attention to only the lower figure is deceiving. Payroll does not reflect the millions upon millions who make their living at some business off-payroll. The media chose to ignore the larger number for some unknown reason.

In fact, I saw an article a couple of weeks ago that basically tried to figure out the cost per job created and it came out to something like $180,000/job!

We can debate the merits/drawbacks of the latest tax cut if you want to... but I'd like to put that aside for just one moment - and make this point.

Be very, very careful when relying on statistics like the one above.

Simply looking at the size of the tax cut and the number of jobs created can quickly and easily lead to the wrong conclusion. What matters is not how many jobs were created (the nominal number), but how many jobs were created incrementally.

In short, if the economy, say, picked up 100,000 jobs, it could be that were it not for the tax cut, the economy would have lost, say, 500,000 instead - so the number of jobs created by this hypothetical tax cut isn't 100,000, but 600,000.

Again, I'm not trying to argue either in support of or against the past tax cut with this post (though I do have my own opinion on it) - but I do think it behooves all of us to look at these statistics with a critical eye, paying careful attention not to the nominal growth in jobs, or whatever else we're measuring, but to the incremental growth.

Unfortunately measuring the incremental growth in a system as complex as our economy is darn near impossible, but we're better off at least trying to look at it that way than we are simply relying on nominal numbers.

Regards,

Eldrehad

Hey Pos,
I was gonna stay out of this one but a couple of your points dragged me in...

I'm going to modify this statement and relate it to Eldrehad's idea:..items being consumed are the same as those [that were] being produced by the..

To answer both the cheaper and quality issues, I am going to deamonize an American institution again. WalMart is the perfect example of how this is really not true in the long run. First, to convince shoppers that they are always cutting prices, they squeeze the suppliers until they bleed. They have had a realational part in more than a couple of bankruptcies, and they have had a MAJORITY part in forcing companies over-seas. So, WalMart gets to hold the line on prices, but the quality goes way down. Research goodyear tires if you are interested. Yeah, they are sold at WalMart, but they are not the same quality/type you will get at a goodyear retailer(or tire store).
So are the products really cheaper? Well after factor quality and life span in, it is very doubtful.

Now on to your second thought that caught my attention:we don't indoctrinate out children into ritualistic behavior and rigid thought patterns
We don't? I think this most recent generation is becoming extreme proof of the 'Not Me'/'Not My Fault' mindset ever. Look at the number of laws meant to 'protect' us. Look at the number of lawsuits where common sense could have prevented the whole thing. We are indoctrinating an entire generation of victims.

Lastly I will agree with you on the education point. I feel very strongly about the fact that our current system is failing and getting worse...for many reasons. That aspect needs to be fix and our children need to be raised as CHILDREN, not as partial adults with full rights as such.

Buffy (who will now quit ranting...)

Be very, very careful when relying on statistics like the one above.

In what way do you think I'm relying on these (or any) statistics? Mentioning that I read about them is a far cry from indicating dependence in my book. I read a lot of stuff, mention some of it that is interesting.

In short, if the economy, say, picked up 100,000 jobs, it could be that were it not for the tax cut, the economy would have lost, say, 500,000 instead - so the number of jobs created by this hypothetical tax cut isn't 100,000, but 600,000.

Jobs created is still 100,000. In this hypothetical, "jobs not lost" is not the same as jobs created. In this hypothetical, how would you prove the "jobs not lost" number?

I could just as easily hypothecate that if it weren't for the tax cut, 500,000 more jobs would have been created, thus the tax cut was responsible for having lost those jobs.

The problem with both hypotheticals is that the reader is left trying to prove something that didn't happen. (Jobs not lost or jobs not gained).

...but I do think it behooves all of us to look at these statistics with a critical eye, paying careful attention not to the nominal growth in jobs, or whatever else we're measuring, but to the incremental growth.

Well, I agree. Therefore perhaps one can also ask if your definition of "incremental growth" would be satisified if one were to use something like the Participation Rate (Civilian labor force/ Civilian noninstitutional population)? This number is readily supplied by BLS monthly: http://www.bls.gov/news.release/empsit.t01.htm

I think it interesting to note that the Participation rate in 7/03 was 66.8% and in 7/04 was 66.2% which isn't quite the direction one would expect the numbers to have gone in an improving economy. It is also interesting to note that in the same time period the Unemployed rate has dropped from 6.3% in 7/03 to 5.5% in 7/04. So....less civilians are participating in the labor force and the unemployed rate is lower. Mmmmmmmmmmm.

PosFCF

My thoughts about this are fairly straightforward. The name on the sign at the boarder to my country isn't GLOBAL, it's AMERICA, and while at heart I may be a capitalist, I want my capitalism to be about American business keeping American workers, working. That's what I believe is good for the American economy.
Wax

One good way of determining if something makes sense or not is to take it to the extreme. Let's take oil to the extreme. You want to protect American roughnecks from Saudi competition and so you close your doors to imported oil. Your American roughnecks now have all the work and wages they want but at what cost to the rest of the people in America? Gasoline will probably go to $50 or $500 a gallon, hardly anyone will be able to afford cars so GM and Ford shut down and it's back to horse and buggy.

I would recommend reading Basic Economics, A Citizen's Guide to the Economy by Thomas Sowell. If you want to read an earlier authority on the subject, try An Inquiry into the Nature and Causes of The Wealth of Nations by Adam Smith. I have The Modern Library edition of 1937, the year before I was born. It's an interesting read. Smith talks about the negative effects of the Corn Laws, a law that also restricted international commerce "in favour" of British citizens.

Outsourcing and sending jobs abroad does impact American workers, that cannot be denied. What is important to consider is what remedies to use. Trade barriers are not the solution and neither are price controls. In my opinion, the best solution is education so that the American worker can be at the leading edge of industry. To be successful you have to reeducate yourself all life long.

An interesting area to consider is farming. There are very few farm workers left in America. You could just as well say that you will discontinue the use of farm machinery to give farm workers a chance to work. At what cost in lack of food for the rest of America and the world? Farm labor had to be retrained so they could do other useful and well paying jobs. The solution was not to keep them on the farm.

Next time you hear a politician talk about a great sucking sound, don't pay any attention, read another chapter of Sowell's book.

Denny Schlesinger
Caracas - Venezuela
denny@softwaretimes.com

Eldrehad;

The benefit to the American economy is in the form of lower prices to the consumer.

That's what I used to think. But if, as I noted, the American consumer has taken on more debt than they can service, and if the American consumer keeps seeing American jobs moved out of the country, and if the American consumer continues to read, hear, or become, part of America's "underemployed", it's little consolation that the price of a box of rocks is selling for less.

I have long held that nothing happens until something is sold. In the case of outsourcing and business synergies, I have to wonder if demand from the consumer is the driving force, or demand from the stockholders is the driving force?

More than would have been able to were it not for the outsourcing.

Here's my problem with what you said, I think you're assuming that to be the case. While it does make sense that this would be the case, I haven't seen anything published that says that where outsourcing and/or business synergies are in place, the resulting goods or services are selling for less money, or that more people are able to participate in the economy.

The one-word answer is: Votes

You are absolutely right, voting is the answer, and I hope folks take advantage of their right to vote this November.

Wax

Hey Pos;

...you surely did use a lot of words

Yeh, I figured out toward the end that it was taking a lot of words for me to explain one of my thougths, but since I was almost done I thought why not finish.

I've upset some folks hereabouts with my politically angled posts, so I'll do my best to stay away from Party identification in my redneck response.

I seldom get upset over politics, since for the most part I think all politiicans are truth spinners. As to your redneck point of view, well if it works for you, it works for me.

As to the tax cuts and globalization, my personal jury is still out on both issues. I tend to look at things from a distribution of capital perspective. If demand as determined by the marketplace is the driving force behind globalization, then great. But if it's a management decision based on what management perceives the future holds, then I don't think it's a good idea.

I think a case in point are the tax cuts. The government gave everyone a tax cut with the idea being those tax saved dollars would find their way back into the economy and create jobs etc. The reason that didn't happen, aside from the fact they weren't large enough, was there was no demand before the tax cuts. The marketplace was telling the government it didn't need any stimulus, and as usual, the government wasn't listening.

But the hidden assumption here is that the items being consumed are the same as those being produced by the American worker.

I certainly have no idea if things consumed and things produced are the same, just as I have no idea if the jobs associated with globalization are really hurting the American worker. And that was part of the question I was talking thru in my post.

The key for America isn't on the factory floor, the key is in the minds of our children.

I happen to believe the key is on the factory floor AND, in the minds of our children.

Your comment does make wonder though, with all of the politics our children are being exposed to, with all of the globalization and corporate downsizing, with the constant drone from school board officials about going to college, what kind of opportunities are we creating for future generations?

Wax

LFH;

Good point about outsourcing as relates to electronics. But you need to realize that the electronics industry is a deflationary industry, where as say the auto industry isn't.

As for the two-thirds consumer and two-thirds worker idea, the other third is business and government which includes a ton of workers, no? So that doesn't quite wash.

Lower costs may indeed win the day, although at the moment I have my doubts. I also don't think lower costs are the answer, even if the lowered cost is passed on the consumer, the group that makes up two-thirds of our economy, the group that includes those folks that work for the government.

As to the other one-third. I'm going to go back to what I said earlier, that if the marketplace decides, then business should respond. What would be my greates wish, would be that the government had absolutley nothing to do with the process.

Employment gains.

Here's my deal. For the longest time America has been stuck at the same unemployment rate. Every month the government releases the employment numbers and at the same time, revises the numbers from the month prior to the month they are releasing. So who knows what's what as far as the number of jobs. It's the unemployment percentage which never seems to change.

I believe the reason that number is little changed is because the marketplace is still telling the government there is no demand, and despite Mr. Greenspan's best efforts to provoke a response, the marketplace ALWAYS knows best.

Wax

Hi Denny;

I've glanced through both of the books you mentioned in you post, but you need to know I sort of see things from a much different perspective than the majority.

Outsourcing and sending jobs abroad does impact American workers, that cannot be denied. What is important to consider is what remedies to use. Trade barriers are not the solution and neither are price controls. In my opinion, the best solution is education so that the American worker can be at the leading edge of industry. To be successful you have to reeducate yourself all life long.

Great thoughts and ones I happen to agree with. If you get the time you may want to read the following book and reapply your thoughts from the perspective of market demand and the redistribution of available capital, labor being part of available capital. It's jus another way to examine the things I was wondering about.

Wax


Human Action
Ludwig von Mises
First Edition, Yale University Press, 1949. The Scholar's Edition (Auburn, Al: The Mises Institute, 1998. Fourth edition copyright 1996 by Bettina B. Greaves (Irvington: Foundation for Economic Education, 1996).

I haven't seen anything published that says that where outsourcing and/or business synergies are in place, the resulting goods or services are selling for less money, or that more people are able to participate in the economy.
Wax

The Wharton School of Business has written about it not too long ago:

Strategic Management
Why -- and How -- Companies Must Go Global
Globalization is often presented by its foes as some kind of corporate plot, but Richard Parsons, the CEO and chairman of the board of Time Warner, believes it is "ineluctable." As technology advances, welding together distant regions into a world market, companies have little choice but to make a relentless drive for growth. Parsons spoke about factors spurring globalization and consolidation in the media and other industries at a Global Business Forum organized in New York by the Lauder Institute and the Lauder Institute Alumni Association.
http://knowledge.wharton.upenn.edu/article/970.cfm


Finance and Investment
Offshoring Services: Which Are the World's Top Locations -- and Why?
Those who have been following the controversy over "offshoring" U.S. service jobs to low-cost markets like India now have new developments to consider: The takeover this month by U.S. business giants -- IBM and Citigroup -- of two major providers of business process outsourcing (BPO) services in India . These developments seem to validate a new study by consulting firm A.T. Kearney, which ranks India as the world's top location for BPO services, followed by China , Malaysia and the Czech Republic . Experts from Wharton and A.T. Kearney have lots to say about the latest trends in offshore outsourcing.
http://knowledge.wharton.upenn.edu/article/922.cfm

Denny Schlesinger
Caracas - Venezuela
denny@softwaretimes.com

Human Action
Ludwig von Mises
First Edition, Yale University Press, 1949. The Scholar's Edition (Auburn, Al: The Mises Institute, 1998. Fourth edition copyright 1996 by Bettina B. Greaves (Irvington: Foundation for Economic Education, 1996).
Wax

It's available online for reading or downloading as pdf files. I'll certainly will read it. Thanks!

http://www.mises.org/humanaction.asp

Denny Schlesinger
Caracas - Venezuela
denny@softwaretimes.com

But if, as I noted, the American consumer has taken on more debt than they can service, and if the American consumer keeps seeing American jobs moved out of the country, and if the American consumer continues to read, hear, or become, part of America's "underemployed", it's little consolation that the price of a box of rocks is selling for less.

I hear you. If you go back to the post I linked to earlier in this thread the harm to the producers was directly addressed. There is no question that if one is an employee who loses ones job because of either imports or outsourcing, the fact that certain products cost less isn't much of a consolation. For those whose jobs aren't reallocated, though, the lower prices are a clear benefit. I never argued that there weren't losers in this scenario, for there certainly are - only that the winners win more than the losers lose, both here and abroad.

Regards,

Eldrehad

In what way do you think I'm relying on these (or any) statistics? Mentioning that I read about them is a far cry from indicating dependence in my book. I read a lot of stuff, mention some of it that is interesting.

I was just trying to point out some of the ways those kinds of statistics could be misleading. If my post came off as some sort of criticism, I apologize, for that was absolutely not my intention.

The problem with both hypotheticals is that the reader is left trying to prove something that didn't happen. (Jobs not lost or jobs not gained).

Very true... and that's one of the underlying problems with economic study. The economy is so complex a system that it doesn't lend itself to classical scientific experimentation were we establish a control group, change one and only one factor in the experimental group, and then examine both after the change and draw cause and effect conclusions. All I was trying to point out was that if one sees job growth of 100,000 after a policy implementaion it could be that that policy actually created 600,000 jobs - not 100,000. You are absolutely correct in pointing out that this could work in the opposite direction as well.

So....less civilians are participating in the labor force and the unemployed rate is lower. Mmmmmmmmmmm.

I'm not personally very familiar with the participation rate, so this is a question - could this be due to simple demographic changes? For example, increasing numbers of people either reaching retirement age or choosing early retirement?

I'm not saying that all is 'peaches and cream' with our economy... all I was trying to point out was that I don't think saying $108K (or whatever the figure was) per job created is necessarily the appropriate way of looking at the situation.

Regards,

Eldrehad

Poz
So....less civilians are participating in the labor force and the unemployed rate is lower. Mmmmmmmmmmm.

Eldrehad
I'm not personally very familiar with the participation rate, so this is a question - could this be due to simple demographic changes? For example, increasing numbers of people either reaching retirement age or choosing early retirement?

Well, it could be......and no doubt that there are more people retiring every day. However, if one takes a look at the population trend, vs the civilian workforce trend, it seems to me as though the jobs creation isn't keeping up with the increasing population. In other words, if population increases and the number of jobs available stays steady, the participation rate would fall.

I think I read somewhere else that it takes something like an additional 150,000 jobs per month just to keep even with normal population growth. So seeing an average less than that, while it might be touted (by those who wish to do such) as signs of a strong economy, the reality may be that there weren't even enough jobs created to meet normal population growth, let alone make inroads into the pools of the un(and under)employed. Thus the economy would be experiencing net new drag as those folks experiencing economic distress due to employment issues are increased in number.

PosFCF

Denny;

Thanx for the links, I really do appreciate it. While I don't profess to have much of an understanding of economics, I do find it pretty interesting from a layman's perspective.

My past experiences have always been from a micro economic point of view, as that's what works the best for me when it comes to investing. Expanding into the macro world of the economy is a fairly new thing for me, since the box of rocks I mentioned in my post knows more about the topic than I do.

Wax

Eldrehad;

I agree with the points you make here and in the post you linked earlier, just as I agree that the markets should dictate employment events. If, in the judgement of managment, outsourcing is what is required for a company to remain competitive, then by all means I think the company should use that tool as a means to maintain or increase their competitive postion.

What my wonder is, is true market demand that is the driving force behind globalization.

I'll give you an example. I am a contract control systems designer working for a very large multi-national petro-chemical company. Several years ago, the company caught the "globalization" bug, and spent millions of dollars becoming a "global" company.

As part of that strategy, extremely profitable businesses in the US were sold off because from a global perspective they didn't fit the new "global" business model.

Many of the company's workers were layed off, some of course went with the new firms that bought the businesses the company sold off, but many were left high and dry.

In addition, most of the new companies lowered the wages of the newly highered workers, and froze wage increases for two years. Those folks that went with the new companies knew and understood this would be the case before they took the jobs, so on the surface, things were okay.

The problem of lowered wages is it not only hurts the workers, albeit for a short period in this case, but it hurts all of the supporting businesses and those workers, since there would be less money to spend. Sort of the trickle down aspect. In short, the pool of available wealth shrinks.

Life of course does go on. It's now almost five years later, and miracle of miracle, globalization has cost the company untold billions of dollars, only to find that it was great to look at things from a global perspective, but actions must be considered from a local perspective.

In the end, all of the strife and hardship cause by going "global" was of no value because at the end of the day, there was no market "globally", the markets were local.

And that's my issue with outsourcing and gloabalization. If the marketplace demands, then companies must respond. But if there is no marketplace demand, then what is accomplished with outsourcing and globalization?

Denny has provided me with a couple of links to the Wharton School which may provide me with the answer to my question, but for the moment, I'm still wondering.

Wax

PCF;

So....less civilians are participating in the labor force and the unemployed rate is lower. Mmmmmmmmmmm.

I'm thinking this may be right because of America's productivity factor. Just exactly what that is I have no idea, nor do I understand how the number is quantified, but I know I hear about it every month from the Fed.

Wax

In the end, all of the strife and hardship cause by going "global" was of no value because at the end of the day, there was no market "globally", the markets were local.

And that's my issue with outsourcing and gloabalization. If the marketplace demands, then companies must respond. But if there is no marketplace demand, then what is accomplished with outsourcing and globalization?

This sounds to me not so much a globalization issue, but a corporate strategy issue. Companies make strategy blunders all of the time... in this case it happened to be an apparently ill-advised globalization attempt, but in other cases it can be a financial, marketing, or operational blunder as well.

I don't think this example tells us very much about globalization, but does tell us quite a bit about the competence of management at the helm at the time.

Regards,

Eldrehad

Eldrehad;

Perhaps that's true, management did drop the ball. But my point is, how is that you can differentiate between the market demand for globalization, and a company utilizing globalization because everybody else is going that way?

Globalization should be used as a tool, but I think that tool should be used as the marketplace dictates. My sense of what is happening today is that companies are using the tool of globalization first and then trying to find a market for a globalized company.

Wax

But my point is, how is that you can differentiate between the market demand for globalization, and a company utilizing globalization because everybody else is going that way?

That's a very good question, and one for which I have no immediate answer.

Unfortunately, in many cases, I don't think we'll know the answer to that question until we can see the results, and by then it's often too late. There are some things we can look at... like asking if there are real competitive advantages to be had as the result of a specific globalization effort, but it's far from easy.

Globalization should be used as a tool, but I think that tool should be used as the marketplace dictates. My sense of what is happening today is that companies are using the tool of globalization first and then trying to find a market for a globalized company.

It may not be much consolation, but competition will eventually separate those who use globalization as a tool, and do so appropriately, from those who do not. The former will succeed, the latter will have a much harder time of it.

Regards,

Eldrehad

A brilliant summary of the current reality. No one (at least no one I know of) in politics is asking the right questions so no one is ever going to get the right answers. I agree that the economy is deteriorating. Sadly I can't see that changing until the average American looks for something more than a 10 (or even 30) second sound bite on a TV news program.

The crunch WILL come. Maybe not soon (I certainly hope not soon) but it will come. We can't keep spending borrowed money forever. I look at the coming election and despair. But, what can we do except plan ou own futures as best we can.

I'm rambling too much, so enough.

Wax and F'cers,
Congratulations on a well deserved POD. You raised interesting questions with an excellent discussion ensuing as you said “I have serious reservations about the economy.” Me too.

Thanks to all who have added to this thread, I am light years behind in my understanding of economics, the complexity of which has increased. For some time I too wondered what is up (or down) with the new economy (a knowledge- and idea-based economy). In my quest for understanding I started by looking at the history of big business in America, capitalism, and politics and the rising power of corporations. The forces on the economy are many. As this post continues, it is disconnected thoughts on the others have cited.

Wax says: If demand as determined by the marketplace is the driving force behind globalization . . .

A novice in terms of economic jargon, I had to start with trying to define globalization. Googling had an interesting find from several sources, 'globalization' is a buzzword; from the Global Policy Organization “globalization is more than an overstretched "buzz word" and is actually a clear set of ideas, trends, and practices.” http://www.globalpolicy.org/globaliz/define/index.htm

There are those who view globalization as 'world exploitation' such as that which is notorious in parts of the Southern hemisphere. Turning to the link between globalization and inequality, most economists would agree that while globalization is inevitable and most likely key to continued growth, the process of shifting resources to meet new opportunities is costly and takes time.

The concept of globalization has been occurring for centuries, it started with one tribe exchanging goods with another. During the 1990s, privatization was a key driver of globalization, creating more intense competition in domestic markets, which inevitably drove local industries to look beyond their national boundaries for new export markets and lower-cost materials.

A new dimension as a force for globalization is digital technology: computers, modems, the Internet, cell phones. Does anyone know what the 'new financial order in the 21st century' is about? I guess Robert Shiller's book talks of hedging risk and securing our economic future. Title The New Financial Order: Risk in the 21st Century. According to Shiller, “Almost all of our economy will be transformed within just a few decades.” Transformed to what? http://pup.princeton.edu/chapters/i7479.html

Besides advances in communication, improvements in transportation are also part of globalization. Advances in transportation have allowed U.S. corporations to subcontract manufacturing to foreign factories. The indirect influence of globalization on financial markets is also worth considering. Financial markets are the vital connecting mechanism for the whole economy in that they bring those looking for capital in touch with those looking for investment.

Goods, money, and information move great distances quickly. The debate: Globalization increases trends towards internationally integrated markets and global interconnectedness. Positive effects – increased access to world markets, greater competition and freer flow of goods and services, capital and knowledge. However, the negative impacts on society, especially developing nations where increased poverty and lack of access to clean drinking water, education, good health and other basic services of life have increased with globalization. What we have here is pragmatic capitalists pitted against idealists, participants in globalization and those who feel like victums.

A crucial aspect of globalization is the nature and power of multinational corporations. Such companies now account for over 33 per cent of world output, and 66 per cent of world trade, significantly, something like a quarter of world trade occurs within multinational corporations. Car manufacturers illustrate this point. (Gray, J. (1999) False Dawn. The delusions of global capitalism) George Soros has described this book as "a powerful analysis of the deepening instability of global capitalism." Gray is careful to distinguish "global capitalism" from "globalization.” http://tinyurl.com/4sl3w

The super trend is that corporations trump nations. It's not necessarily in the corporation's interest to have all the jobs in one country. It's tough on America. But corporations don't have those issues. So what's the future in 50 years? If corporations trump nations, what happens? Orwellian thinking in reverse.

Regulating globalization is another story. Many agencies have their say on this and are questioning the role of each one involved.

The business world is changing faster and more unpredictably than ever before. Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world, or the process of making this happen, an interconnected marketplace. The interconnected marketplace is access dependent and lifeblood to outsourcing growth, something I look into a bit more in my next post.

One impact has been the democratization of finance. Instead of credit rationing to the favored few, suppliers of funds in the consumer lending market now can measure and manage risk better handing out sub-prime loans to the low income person in the U.S. If the nation can assume a debt unheard of in years gone by, why is not appropriate for the individual? (Sarcasm) Bankcards feed the insatiable appetite of consumers. The indirect influence of globalization on financial markets is also worth considering.

Corporations have not been democratized, they still have features of command and control. Some think we may be seeing the end of command-and-control types of business.

Are huge trade deficits sustainable? Continued strong growth in imports and a pullback in exports in June helped widen the U.S. trade deficit to a record $55.8B. America is all right as long as foreigners continue to want to hold more US assets but vulnerability goes up.

In this matrix called an economy, I wonder if Shiller's thinking on a transformation of economy is in process in the Information Age and is occurring with the Age of Access. Increasing complexity is what I find in a global economy. With the increase in speed for change, it is hard to capture the snapshots along the way guiding investors with a course that is impeded with the zig-zags of globalization.

A New Wrinkle: Sarbanes Oxley Act
“A principal goal of the Sarbanes-Oxley legislation is to alert investors to creative financial engineering by management, and to hold management responsible when such financial engineering impacts the firm's value. The annual cost associated with a 'sourcing' contract is not likely to stay flat over its economic life. Rather, the annual "rent" on outsourced services will likely increase ten percent to twenty percent per year, potentially representing a significant undocumented financial commitment for the reporting firm.” The opportunity for financial "creativity" is more evident in the area of outsourced services contracts - which in some cases can look an awful lot like off-balance sheet financing.

IT and financial professionals are advised to begin the documentation process well before the first compliance deadline. A further application has do with business ethics requirements for a business. Compliance in a foreign country could have uncharted outcomes and costs for a businesss. (Heard on TV, unable to confirm in news, Dell's telephone employees in India took a Holiday yesterday, politics of the country.)

Sarbanes Oxley has significant implications for companies that engage in outsourcing (mandates, 401a). The net effect will unfold over time but you can come to a conclusion that the new rules may impact the competitive landscape of the outsourcing market which is a highly competitive marketplace. America is all right as long as foreigners continue to want to hold more US assets. Outsourcing to other countries has to also address differences in culture, to start with, what is average in performance in their reality. http://www2.cio.com/analyst/report1537.html

Wax asks, “What is the real story with the economy and unemployment?”

Nationality, nation-ness, and nationalism are cultural artifacts that have to be understood in terms of culture. What are the preceding elements that set the conditions for a new form of cultural consciousness.

Think back on the invention of the printing press, capitalism was especially important because of the expansion of the book market across diverse speaking peoples. We seem to be grappling with the impact of the internet and telecom across cultures at warp speed compared to books.

Social construction of reality is an interesting phenomenon, the ongoing mass building of world views. Construction of reality is the knowledge of everyday life. Think how the media hits us with that one. Subjectism” "What I think is all that matters" vs. Objectivism: “I am free of conflict of interest.”

Economists are grappling with reality, corporations are too, governments, including the Fed, like to tinker with 'fix it' interventions - however they determine reality. No wonder we investors are perplexed.

Ro

Mr Wax: Below is a discussion on Comparative Advantage and Trade Barriers that should give you the reason of why "outsourcing" over the long term is good for every one. Enjoy. Madame Butterfly

http://ingrimayne.saintjoe.edu/econ/International/Comparativ...
Comparative Advantage

The reasons why free trade is desirable can be developed by extending the discussion of the Crusoe economy that is commonly used to illustrate production-possibilities frontiers. Suppose that Robinson Crusoe, living on an almost deserted desert isle, can either catch four fish a day or find eight coconuts. One day, he discovers that Friday also lives on the island.

If Friday can either catch six fish a day or find seven coconuts, can Crusoe and Friday profit by specialization and trade? The answer is clearly "yes." Crusoe is the better coconut gatherer, and Friday the better fisherman.

However, suppose that Friday can either catch ten fish or find ten coconuts. Friday is now better than Crusoe in both activities. Can there be mutual benefit from trade in this case?

Or should Friday do all the work and Crusoe none? Or should Friday refuse to trade since he is better in both? It was a major achievement of David Ricardo early in the 19th century to show that in this second Crusoe-Friday story both parties could benefit from trade.

His results contributed to the long reign of relatively free trade in 19th century England, and thus to the prosperity that England enjoyed in this period.

To see that mutually beneficial trade is possible even though Friday is better in all activities, one must look to opportunity costs. Individually, both Friday and Crusoe trade with nature in the production process.

Crusoe can get another fish only by giving up time in which he could find two coconuts, and in getting another coconut he sacrifices one-half of a fish. Thus, a fish costs Crusoe two coconuts and a coconut costs one-half of a fish.

Friday can get another fish by giving up the time during which he can find another coconut, or one-tenth of the day. During this time, he could find one coconut.

For Friday, trading with nature means that one fish costs one coconut and vice versa. Looking at these opportunity costs tells us that Crusoe finds coconuts cheaper and Friday finds fish cheaper.

The table below summarizes these results.

Opportunity Cost of Fish and Coconuts
For Friday: 1 Fish Costs 1 Coconut 1 Coconut Costs 1 Fish
For Crusoe 1 Fish Costs 2 Coconuts 1 Coconut Costs 1/2 Fish

We still have not discovered whether Friday and Crusoe could do better trading with each other rather than with nature. A way to answer this question is to try a few prices. Suppose that one fish was worth one-half a coconut, or one coconut was worth two fish.

With this trading ratio both would find fish cheap and coconuts expensive. Therefore, both would want to sell coconuts and buy fish. Hence at this price no trading would take place.

Suppose that the trading ratio were one fish for 1.8 coconuts (and thus one coconut cost 5/9 fish). With this ratio, Crusoe would find fish cheap--rather than spend two coconuts to catch one, he could spend 1.8 coconuts and buy one. Hence, Crusoe would be willing to sell coconuts.

Friday would find coconuts cheap--rather than give up one fish by gathering his own coconuts, he could sell 5/9th of a fish and get one. Hence, Friday would be willing to sell fish.

Trade will take place because both individuals find that it improves their well-being.

In the above example, trade occurs because of comparative advantage.

Friday is better in everything than Crusoe, but he is "more better" in catching fish and "less better" in finding coconuts. Crusoe is worse than Friday in everything, but he is "less worse" in finding coconuts. Though they both benefit from trade, Friday will maintain a higher standard of living.

The example of Crusoe and Friday also illustrates that exchange is not a zero-sum game, but a positive-sum game. In a zero-sum game, whatever anyone wins comes at someone else's expense.

In poker, for example, if one person wins $100, some other person(s) must have lost $100. If the amount of winnings is added up and the amount of losings is subtracted away, the result will be zero.

The term "zero-sum game" reflects this total.

In contrast, both parties in a voluntary exchange can benefit. Because total winnings exceed any losses, the name "positive-sum" game is appropriate. A negative-sum game, in which winnings will be less than losses, is also possible. War is one example and a bad marriage is another.

A possible reason that few people prior to Adam Smith seem to have recognized this mutually beneficial aspect of exchange may be that in his day much exchange involved bargaining.

In bargaining, the seller tries to get as high a price as he can and the buyer as low a price as possible. If the seller can get $2.50 for a product rather than $2.00, he benefits from the higher price at the expense of the buyer. People do discuss who got the "better of the bargain."

This feature of exchange, which is of vital importance to those involved in a market, can obscure the fact that no exchange will take place unless both parties believe that they benefit from it.

Bargaining determines how big the producer's surplus will be relative to the size of the consumer's surplus, but unless both buyer and seller each have some surplus, no trade will take place.

Crusoe and Friday could be replaced by two nations. The principle of comparative advantage continues to hold, and it implies that the world as a whole will not be operating on its production-possibilities curve--that it will be production inefficient--if each nation is self-sufficient.

This inefficiency can be illustrated by putting the numbers of the second Crusoe-Friday into production-possibilities tables. Suppose that in self sufficiency Crusoe chooses three fish and two coconuts, and Friday chooses five fish and five coconuts.

The total island production is then eight fish and seven coconuts. But with total specialization, with Crusoe producing only coconuts and Friday producing only fish, island production would be ten fish and eight coconuts, which means that under self-sufficiency island resources were used inefficiently.

Or, suppose that originally Crusoe was self-sufficient at one fish and six coconuts, and Friday was self-sufficient at five fish and five coconuts. Island production is six fish and eleven coconuts. In this case, only partial specialization might be desirable. If Friday produces three coconuts and Crusoe produces eight, island production could be eleven coconuts and seven fish, which is a gain of one fish compared to production with no specialization.


PRODUCTION POSSIBILITIES

CRUSOE FRIDAY
fish coconuts fish coconuts

4 0 10 0
3 2 9 1
2 4 7 3
1 6 5 5
0 8 0 10

We finish with a discussion of barriers to trade.

http://ingrimayne.saintjoe.edu/econ/International/Barriers.h...

BARRIER TO TRADE

If the gains from free trade are clear theoretically, why are there tariffs and quotas? One important reason is that the costs of tariffs are defused and hard to see, whereas the benefits are concentrated and easy to see.

A tariff or quota raises the price of a product. This will harm consumers of the product, but will benefit the domestic producers of the product. If the harm done to consumers is spread over a great many people, and if the exact amount of harm done to each is unclear and small, they may do little lobbying to protect themselves. (Remember the rationally ignorant voter.)

If the benefits to producers are clear and concentrated on relatively few, the producers will lobby for protection. Thus, the pressures that political leaders face may not reflect the ratio of total costs and benefits of the action.

However, the fact that there are both winners and losers to any change in tariffs and quotas raises a problem. The nature of this problem can be illustrated with a numerical example.

The table below gives three distributions of four fish and seven coconuts between Crusoe and Friday, and the value Crusoe and Friday put on another coconut or fish. The condition of exchange efficiency indicates that distribution A is not efficient. Friday places much more value on another fish than he places on coconuts, whereas Crusoe considers them of equal value. Both Friday and Crusoe can gain from trade.

THREE DISTRIBUTION OF GOODS
Distribution Situation Value of fish in terms
of coconuts
A Crusoe 3 fish
3 coconuts 1 fish = 1 coconut

Friday 1 fish
4 coconuts 1 fish = 5 coconuts

B Crusoe 2.3 fish
4 coconuts 1 fish = 2 coconut

Friday 1.7 fish
3 coconuts 1 fish = 2 coconut

C Crusoe 3.3 fish
5 coconuts 1 fish = 2 coconut

Friday 0.7 fish
2 coconuts 1 fish = 2 coconut

Distributions B and C are both exchange-efficient. In both distributions, Crusoe and Friday consider fish twice as valuable as coconuts. No rearranging of fish and coconuts can take place without harming one.

Moving from distribution A to distribution B is a move from an inefficient distribution to an efficient one, which might happen with voluntary exchange. In distribution A, Crusoe thinks fish and coconuts have the same value, so he should be willing to give up .7 fish to get another coconut.

In distribution A, Friday thinks fish are five times as valuable as coconuts, so he should be willing to give up one coconut to get .7 fish. After the trade, the law of diminishing marginal utility would change valuations. Crusoe has less fish, so he values another unit of fish more; and he has more coconuts, so he values another unit of coconuts less.

A move from distribution A to distribution C is also a move from an inefficient to an efficient distribution. However, this move would not take place voluntarily.

Crusoe's well-being is improved, but Friday's has decreased. This is the sort of change that occurs when a tariff is removed. (Imposing a tariff involves a move similar to a move from distribution C to distribution A.)

A person claiming that distribution C is better than distribution A implies that the gain to Crusoe is of greater value or importance than the loss to Friday. This seems arbitrary.

To make it seem less arbitrary, some economists have suggested that if the gain to Crusoe is large enough so that he could pay Friday enough to reimburse him for his loss, then the change was desirable even if payment is not made.

This problem of change harming some and helping others is not confined to the issue of tariffs and quotas. Any non-trivial change involving an outward shift in the production-possibilities curve in a complex social system will aid some and harm others.

The development of the automobile harmed those who produced buggies.

The development of the electronic calculator harmed those who produced slide rules and mechanical calculators.

In England between 1811 and 1820, organized bands of craftsmen called "Luddites" protested the threat of new techniques by smashing textile machinery that was displacing them.

The list of examples of changes harming some and helping others is very long. The destructive nature of change was captured in the phrase that Joseph Schumpeter used to describe the most noteworthy aspect of capitalism: "the process of creative destruction."

Because so many changes involve both groups that are harmed and groups that are helped, the concept of economic efficiency is of little use in making policy judgments unless one is willing to make some interpersonal comparisons.

One could argue for tariffs and restraints on trade by acknowledging that a few will be helped and many harmed, and arguing that the well-being of the few should be given more importance than the well-being of the many.

But no one ever publicly argues for protection in this way. Most public arguments for protection are simply wrong because they do not acknowledge that anyone will be hurt. However, there are a few special cases in which an appealing and logically correct argument for protection can be made.

One such argument is the "infant industry" argument. A country may have a comparative advantage in a product once the industry is established, but it may need protection to build up to the point at which it can successfully compete. Though sound on paper, this argument is subject to considerable abuse in practice. It is difficult to forecast which industries will actually be able to compete successfully when mature, and hence many unneeded tariffs may be enacted. Further, once a tariff is in place, it may be difficult to repeal even when it is no longer needed for "infant" protection. No one gives up government favors without a fight.

Two other arguments rely on a division of the world into us-them categories, a division that political borders encourage. People do make these divisions--most people find that news about disasters affecting one's countrymen are more distressing than the same disasters affecting foreigners, even though both are complete strangers. Though economics rarely incorporates these divisions into its analysis, politicians respond to them.

The first of the us-them arguments is a national defense argument. If foreign competition threatens a skill or industry that would be necessary during wartime, the government may decide that protecting the skill or industry is necessary. The second argument notes that though the total harm to transactors will exceed the amount of revenue that a tariff brings to the government as tax revenue, the harm is borne both by domestic buyers and foreign sellers.

Under certain conditions, the foreign sellers may bear enough of the harm so that the loss to the domestic buyers is less than the amount that the government collects. In this case, it may be in the country's (though not in the world's) interest to establish a tariff. However, this type of situation may be relatively uncommon in the real world because it requires that the nation imposing the restrictions buy or sell a great proportion of the item that is restricted.

>>I keep asking how all of these synergies between companies and all of this outsourcing to Nepal or wherever, is going to benefit my economy, my American economy. As yet, I have not gotten an answer, a lot of rhetoric, but not an answer.

Some random observations.

If consumers gets more value, it seems they must be better off. If a TV costs $200 instead of $300, they still have $100 for other purchases. Or even better, saving. Why do we put up with OPEC? Because oil is still cheaper (economically or environmentally) than what it would be to produce/conserve at an equilibrium state without their oil?

Interesting observations about Walmart in one reply. Every other item one finds in the store seems to say "Made in China". If you don't like globalization, don't shop at Walmart. After all, you probably carry more economic clout than political clout! Change the world with your wallet.

Outsourcing may be a temporary phenomenon. With increasing automation (consider self-checkout in retail stores), and with the inherent overhead (culture, time zones, distance, language, extra travel), the cost overseas must be significantly less to be worthwhile. Both trends seem to place an upper cap on the value of common-place jobs.

Politically, a wide difference of standard of living between different parts of the world cannot be a good thing. Morally, the poverty and subsistence living around the world is disturbing. But emotionally, it is scary to trust unfamiliar cultures and seems like a loss of sovereignty.

As one reply mentioned, the focus should be on the educational system.

But emotionally, it is scary to trust unfamiliar cultures and seems like a loss of sovereignty.
jfrich

For a moment transport yourself to the other side. It must be disturbing for a Muslim who expects his women to be covered from head to toe to see women show their belly button and other parts on TV.

What is this war all about? It is about the survival of national life styles including religion, economics and customs. Before the age of the Internet, before the age of jet travel, before the age of global television, each country had a more or less impermeable border with gates that could keep the barbarians out. Those gates are crumbling at an alarming rate. Imagine for a moment that in your community all the front doors are torn off and that anybody can now enter your house at will. Would you be upset or do you like communal life? With the advances in communications the same thing is happening at national levels, those absolutely ghastly comic book characters called The Simpsons now pollute the homes in my country. And there is nothing that less powerful nations can do to defend their borders, their integrity. These vile Simpsons are beamed down from commercial satellites. We have no gates that we can lock against satellites.

The weaker nations fight back any way they can. France bombs MacDonalds because they are offended by the fact that a vile hamburger is upstaging glorious French Cuisine, the best in the world. Islam reinstated the old religious ways as a means of fighting what they perceive as evil customs from the barbarians in the West. Image, a half naked woman on the cover of American Spectator!

This is how it is perceived from the other side.

http://www.softwaretimes.com/files/clash%20of%20civilization...

Denny Schlesinger
Caracas - Venezuela
denny@softwaretimes.com

Ro;

You provided me with some great information, and for that I am very thankful. It is information I will definitely be able to use. I'm sure your post will be referenced a great deal as the globalization and outsourcing discussion/debate moves forward.

Here' a little background. I'm 51 with a paid for house, no debt, two university educated kids, two grand kids, and a great job doing what I truly enjoy. I'm certainly not the best educated person with an AAS degree, but I'm also licensed master craftsman.

My dad on the other hand was degreed from the Naval Academy and retired from the military after 25 years of service as an aviator. He then went to work to get America to the moon.

Over the years I struggled to provide the things for my family just like many Americans do, it's sort of the way things are. You may also have struggled in the early years of your career to provide things for your family.

But as I noted, my options were a bit limited since I had a two year degree where my dad had a four year degree. It was years later that I realized that in spite of his credentials, my dad struggled with all of the same things I struggled with, lunch money, money for athletic shoes, money for extra activities for the kids, money for vacations, money for cars for the kids, money for Christmas stuff, money for college, and money for retirement. And just like my wife, my mom was a stay at home mom.

I think most folks struggle like I did, like my dad did, perhaps like you did. It's just a period that many people have to work through, sort of like puberty I guess.

But what does this have to do with my original post and your wonderful response to it? Application.

Reread all of the posts in this thread remembering back to your time of economic struggle and apply the information all of us have deposited. It's almost impossible. If we can't apply the information, or if the end result provides minimal benefit, then other than a grand social experiment what has been achieved, what good is all of this information?

As I said in an earlier post, if the marketplace dictates then a company must respond. I said that because that would mean there is real competition, which I believe creates real opportunity, not only for the business, but for the employees.

It also tells me there is real demand for the products of the company, and in a competitive environment, there should be real opportunity for the consumer, many of whom are now like I once was, struggling.

Wax

Great post wax, can I invite you to a board titled
Foolish Globalization

http://boards.fool.com/Message.asp?mid=21205693

HOGr

Invest to Live,
Live to Ride

Some thoughts/questions.

1. The economic recovery plan (tax cuts) is a phased in plan over 10 years of which we are only 2 or 3 years into. It should be obvious then that the final planned cuts are not yet in place.

2. There is evidence that reduction in taxes actually increase overall tax revenue so caution should prevail in assuming tax cuts are a net cost to the government.

3. Has total tax revenue increased or decreases in each of the years since the economic recovery plan has been implemented? I don't know.

4. Has non-Defense spending (congressional district pork) increased or decreased in those same years. I don't know.

My point is that the total picture should be considered in trying to come to some conclusions rather than individual bits.

I would agree with a previous post that education is the key to a strong economy. I don't believe that lowering the bar of educational standards thus dumming down America is the answer to this.

Hi Jfrich,

Welcome to the Foolish Collective and to The Motley Fool. You are the 759th person to post on this message board. Congrats too on your first post, we hope to be hearing from you often in the future.

tom