3rd world USA
I've been reading too many articles lately (Newsweek, Salon, Downside.com, etc) that keep saying there's no end in sight to the economic downturn of the US, and some even say you're headed straight for a 3rd world style economy(Like I mentioned months ago).
I saw a comment on slashdot today that sums most of this :
I'm on record [downside.com] as having predicted the dot-com collapse and named which companies were going to tank and when. It was blindingly obvious if you knew any economic history.
We're still in very bad shape.
*Personal bankruptcies are up, way up. More people will go bankrupt this year than will graduate from college.
*The stock market is still far overpriced, by a factor of 2 to 3, based on historical price/earnings ratios. There isn't going to be a stock market recovery. Look at Japan. The bubble there peaked in 1989 and still hasn't recovered. It was at 39,000 then; it's around 10,000 now, fourteen years later.
*Manufacturing is only 12% of US employment. That number was 16% a decade ago, and around 35-40% half a century ago. Most of the high-paying jobs for low-skill people are in manufacturing. That's where the good working-class jobs went. Any job that involves large numbers of people doing the same thing repeatedly under direct supervision in a fixed location is a prime candidate for automation. Most of those jobs have already been automated. Technology continues to push manufacturing employment down.
*Median income per hour worked in the US peaked in 1973. Yes. 1973. Best year ever for the working class. For thirty years, things have been getting worse. Slowly enough that there haven't been riots.
*30 years ago, housing ate up about a quarter of income. Now, it eats up about half. And not because the housing is better.
*Schooling is far more expensive than it used to be. The decline in the public school system means that people go to great lengths to move to areas with better schools, or put their kids in private schools. This is part of the driver behind housing costs. Higher education is also far more expensive, and less subsidized.
*The "race for the bottom" effect dominates public policy. Jurisdictions compete to offer lower taxes, and even lower wages.
*From a pure economic perspective, workers should be paid just enough to keep them alive and working. That's where we were around 1850 or so, and that's where we're going today. Most of the world lives just above the survival level. The Western world avoided that for much of a century, but now it's coming back.
*Technology won't help. This is a fundamental result of unrestrained capitalism. Increased productivity does not inherently increase wages. In a free market, wages will decline as productivity improves, because the labor pool will become bigger as more people are unemployed. Total buying power doesn't increase unless wages do, so there isn't inherently a market for more stuff. An economy with a big pool of permanently unemployed or underemployed people dragging wages down is economically stable. Most of the third world is stuck in that mode. THe US is headed there.
Anyone have any reasons to counter this? Some optimism wouldn't hurt.