GDP
To share some understanding of the GDP, one needs look at its shear size and logically its rate of growth. 2005 Gross National Product came in at 12.4794 trillion dollars. That amounts to slightly more than expected earlier in the year but with a disappointing forth quarter growth of only 1.1%. China meanwhile grew 9.9%. There is a question here, is there not?
Our GDP amounts to several times the money supply; that’s why it is called a product. Many, who should know, loose sight of this fact. Politicians on both sides of the isle profess wisdom but miss the point. The multiple that drives the GDP is productivity. You cannot be productive with your hands tied, without food on the table, without education, without good health or without security. It makes sense, doesn’t it? Let’s ask some questions. It is the GDP, more than anything else that expresses our quality of life.
Are we managing our economy wisely, or are we hobbling it into a stale corner with miss-direction and mistake? We have done a wonderful job of regulating interest rates and controlling inflation and our economy is far ahead of the world in investment banking, risk capital, VC (venture capital) and support of technology, but look what has happened to manufacturing, to jobs and to the trade deficit. Why?
Some people say the economy should be left alone. The self interest of free trade and free choice will hone the supply and demand curves into perfect equilibrium. That might be somewhat true if there were rules of fairness and if there were not disadvantaged participants, so we have laws and we have management. Ours may be the most chaotic system yet with a strength that yet remains more resilient than all the others. We are loosing ground, however. It may be testimonial to the strength of our system, how much ground we have lost and still stay afloat. The problems are serious and to an agrarian economist rather obvious.
Out of WWII there grew a belief that we create world stability and in the long run greater security for ourselves and less cost, by financing development, trade and the recovery of the totalitarian regimes that we defeated. There would be less chance for another war; trading partners rarely wage war with one another. There is no doubt that freedom’s good. But out of the success of the Marshal plan grew a belief that we had a duty to extend that freedom to all who were not. This made sense during the cold war but the edges became blurred. We may have fought inappropriately where that lack of freedom was advantageous to the culture in question. We began to define our style of civil liberties as a universal right, imposing a demand for our own value system on others.
Economically we exported our style of capitalism on the emerging economies of the world. An altruistic goal for free trade, but this was a capital opportunity for big business to exploit cheap labor. An environment of low humanitarian and environmental standards furthered the opportunity for profit. Should have been good, this idea of free trade, but monopoly and multi national corporations went where the product and the labor was cheaper; it drained us at home of our manufacturing, our petroleum and our jobs. The effect on the emerging markets was like colonialism but without the regulation, the education or the health care. The effect for us at home was the loss of vital and strategic manufacturing and oil. I can remember when it was a strategic mandate that the US remain completely oil independent without any import at all. Just the opposite seems now to be the case, and with terrible consequences.
The later, however, may turn out to be a blessing in disguise. The global shortage of petroleum and increased demand with soaring prices will stimulate the technological advance in cleaner, more abundant and cheaper energy. That alone may provide the exploitable cheap commodity that drives another upsurge in productivity. That source may be fusion or solar radiation or something even more exotic. There is no doubt that cheap energy stimulates enterprise on many levels.
Cheap energy is not the only cheap exploitable factor of production. Our extensive farmland, the Interstate Highways after the war, cheap communication, digital information and bandwidth are resources which drive productivity. Politically there seems little insight into the value of free infrastructure. A theory of privatization has lead to monopolization of critical infrastructure. That is not to say that private enterprise cannot do many things better than the bueaurocracies, it can, but in doing so there needs to be safeguards against monopolies cartels and stifling competition and innovation. To often the politician views privatization as a hidden tax, one from which he can seem to be reducing the tax burden of a provided service and shifting the cost to the user.
Certain critical infrastructures need to be freely available to all our citizens. The idea that only those utilizing the really critical things should pay for them seems obviously wrong. Security for instance or the fire department is a service supported by all, schools the same way. No one argues that highways and roads are for all. Unless the fundamental needs of life are met productivity is directed towards personal survival. Well run companies know this and see to it that their employees have adequate pay, health insurance and retirement. The employee is then in a position to be productive. The argument is for cheap and abundant critical infrastructure.
Certain equally public services such as energy, information, connectivity and transportation need to be commoditized to the cheapest possible level and available to all. The economy thrives on a cheap and exploitable resource.
Old sanctioned monopolies that cling to an outmoded paradigm should be allowed to fail, be overtaken by new competition or, less likely, encouraged to evolve. Unfortunately, political expediency, powerful multinational corporations and giant monopolies, rather than rationality, dictate these decisions. Monopolies are supported, dissention is discouraged, and critical technology, employment and wealth moves offshore. Generous contributions ensue and the economy suffers.
We should feel highly compelled to learn as much as possible about the new energy sources, the information economy, modern physics and the schinagins of oil companies, pharmacy companies, hospitals, the phone companies and the insurance industry. Our GNP should not be based on the obscene health care extortion carried out by the collusion of hospitals, pharmaceutical industry and insurance. Nor should we be held hostage by foreign oil. Neither should we allow multinationals to siphon our wealth for their own sheltered gain.
Our GDP amounts to several times the money supply; that’s why it is called a product. Many, who should know, loose sight of this fact. Politicians on both sides of the isle profess wisdom but miss the point. The multiple that drives the GDP is productivity. You cannot be productive with your hands tied, without food on the table, without education, without good health or without security. It makes sense, doesn’t it? Let’s ask some questions. It is the GDP, more than anything else that expresses our quality of life.
Are we managing our economy wisely, or are we hobbling it into a stale corner with miss-direction and mistake? We have done a wonderful job of regulating interest rates and controlling inflation and our economy is far ahead of the world in investment banking, risk capital, VC (venture capital) and support of technology, but look what has happened to manufacturing, to jobs and to the trade deficit. Why?
Some people say the economy should be left alone. The self interest of free trade and free choice will hone the supply and demand curves into perfect equilibrium. That might be somewhat true if there were rules of fairness and if there were not disadvantaged participants, so we have laws and we have management. Ours may be the most chaotic system yet with a strength that yet remains more resilient than all the others. We are loosing ground, however. It may be testimonial to the strength of our system, how much ground we have lost and still stay afloat. The problems are serious and to an agrarian economist rather obvious.
Out of WWII there grew a belief that we create world stability and in the long run greater security for ourselves and less cost, by financing development, trade and the recovery of the totalitarian regimes that we defeated. There would be less chance for another war; trading partners rarely wage war with one another. There is no doubt that freedom’s good. But out of the success of the Marshal plan grew a belief that we had a duty to extend that freedom to all who were not. This made sense during the cold war but the edges became blurred. We may have fought inappropriately where that lack of freedom was advantageous to the culture in question. We began to define our style of civil liberties as a universal right, imposing a demand for our own value system on others.
Economically we exported our style of capitalism on the emerging economies of the world. An altruistic goal for free trade, but this was a capital opportunity for big business to exploit cheap labor. An environment of low humanitarian and environmental standards furthered the opportunity for profit. Should have been good, this idea of free trade, but monopoly and multi national corporations went where the product and the labor was cheaper; it drained us at home of our manufacturing, our petroleum and our jobs. The effect on the emerging markets was like colonialism but without the regulation, the education or the health care. The effect for us at home was the loss of vital and strategic manufacturing and oil. I can remember when it was a strategic mandate that the US remain completely oil independent without any import at all. Just the opposite seems now to be the case, and with terrible consequences.
The later, however, may turn out to be a blessing in disguise. The global shortage of petroleum and increased demand with soaring prices will stimulate the technological advance in cleaner, more abundant and cheaper energy. That alone may provide the exploitable cheap commodity that drives another upsurge in productivity. That source may be fusion or solar radiation or something even more exotic. There is no doubt that cheap energy stimulates enterprise on many levels.
Cheap energy is not the only cheap exploitable factor of production. Our extensive farmland, the Interstate Highways after the war, cheap communication, digital information and bandwidth are resources which drive productivity. Politically there seems little insight into the value of free infrastructure. A theory of privatization has lead to monopolization of critical infrastructure. That is not to say that private enterprise cannot do many things better than the bueaurocracies, it can, but in doing so there needs to be safeguards against monopolies cartels and stifling competition and innovation. To often the politician views privatization as a hidden tax, one from which he can seem to be reducing the tax burden of a provided service and shifting the cost to the user.
Certain critical infrastructures need to be freely available to all our citizens. The idea that only those utilizing the really critical things should pay for them seems obviously wrong. Security for instance or the fire department is a service supported by all, schools the same way. No one argues that highways and roads are for all. Unless the fundamental needs of life are met productivity is directed towards personal survival. Well run companies know this and see to it that their employees have adequate pay, health insurance and retirement. The employee is then in a position to be productive. The argument is for cheap and abundant critical infrastructure.
Certain equally public services such as energy, information, connectivity and transportation need to be commoditized to the cheapest possible level and available to all. The economy thrives on a cheap and exploitable resource.
Old sanctioned monopolies that cling to an outmoded paradigm should be allowed to fail, be overtaken by new competition or, less likely, encouraged to evolve. Unfortunately, political expediency, powerful multinational corporations and giant monopolies, rather than rationality, dictate these decisions. Monopolies are supported, dissention is discouraged, and critical technology, employment and wealth moves offshore. Generous contributions ensue and the economy suffers.
We should feel highly compelled to learn as much as possible about the new energy sources, the information economy, modern physics and the schinagins of oil companies, pharmacy companies, hospitals, the phone companies and the insurance industry. Our GNP should not be based on the obscene health care extortion carried out by the collusion of hospitals, pharmaceutical industry and insurance. Nor should we be held hostage by foreign oil. Neither should we allow multinationals to siphon our wealth for their own sheltered gain.
posted by Clancy Hughes | 1/29/2006 09:58:00 PM
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