[FoRK] Another take on deficits, employment, etc.

Owen Byrne owen at permafrost.net
Sun Mar 21 06:28:46 PST 2004

Geege wrote:

>not to mention the post itself.  no commentary, just a cut/paste.
>i don't even exchange e-mails with jh, so angry does he make me.
>-----Original Message-----
>From: fork-bounces at xent.com [mailto:fork-bounces at xent.com]On Behalf Of
>Owen Byrne
>Sent: Sunday, March 21, 2004 8:30 AM
>Cc: fork at xent.com
>Subject: Re: [FoRK] Another take on deficits, employment, etc.
>Another. I might actually check the references except its another in
>John Hall's huge collection of
>US Good, Everybody Else Bad. Now lets get the facts to fit.
>>An old Japanese rerun
>>Alan Reynolds
>>March 18, 2004
>>When people talked about the U.S. "exporting jobs" jobs a decade ago,
>>they always assumed the jobs had moved to Japan and Germany. Why?
>>Because those countries exported more than they imported, and thus had
>>chronic trade surpluses. They still do. 
>>The 1992 Clinton-Gore campaign book, "Putting People First," somehow
>>imagined that "Japan and Germany "threaten to surpass America in
>>manufacturing by 1996." The Tokyo-based journalist Eamonn Fingleton's
>>subtitled his 1995 book "Blindside" as "Why Japan Is Still on Track to
>>Overtake the U.S. by the Year 2000." Americans were being sold an
>>economic inferiority complex, and many bought it. Or at least they
>>bought the books. 
>>What was really happening? From 1990 to 2000, industrial production
>>increased by 49.5 percent in the United States, 13.4 percent in Germany
>>and 1.5 percent in Japan. By 2003, Japan's industrial production index
>>was still much lower than it was in 1990. Trade surpluses appeared in
>>Japan and Germany only because their economies, and therefore their
>>imports, grew slowly, not because exports grew rapidly. Japan's
>>merchandise exports grew by only 3 percent a year from 1990 to 2001,
>>slower than Europe's 4 percent pace and only half as fast at the 6
>>percent yearly increase in U.S. exports. 
I guess some people must have read Gore & Clinton's campaign book.

>>Manufacturing jobs declined in all three countries, and most others, but
>>industrial job losses were much greater in Japan and Germany. From 1990
>>to 1995, manufacturing jobs fell by 1.6 percent a year in Japan and by
>>4.2 percent a year in Germany, but only 0.6 percent in the United
>>States. From 1995 to 2000, manufacturing jobs fell by 1.9 percent a year
>>in Japan, by 0.8 percent in Germany but only 0.1 percent in the United
>>Neo-Luddites who view productivity gains as bad news should take note
>>that annual increases in manufacturing productivity from 1990 to
>>2001were 3.8 percent in the United States and 2.8 percent in Japan and
>>Germany. The country with by far the largest gains in industrial
>>production and productivity also had by far the least traumatic loss of
>>industrial jobs. That country was not Japan, which probably failed to
>>overtake the United States even in sushi consumption 
>>In the United States, unlike Japan and Germany, the secular trend toward
>>automation of arduous manufacturing tasks was more than made up for by
>>increased employment opportunities in finance, health, education and
>>various professions. From 1990 to 2001 (which includes two recessions),
>>employment rose 1.2 percent a year in the United States, compared with
>>0.3 percent in Japan and 0.1 percent in Germany. 
Bill Clinton was a great man.

>>Most of these facts are easily verified at the Bureau of Labor
>>Statistics website, bls.gov. But in the mid-'90s, as today, those who
>>claimed that U.S. jobs losses were due to trade deficits never bothered
>>to look at facts. Instead they assumed trade deficits meant lost jobs.
>>So they likewise assumed that trade surpluses in Japan and Germany have
>>meant those countries were gaining the jobs we lost. At last count,
>>Germany still had a huge trade surplus -- $153 billion over the past
>>year -- and an unemployment rate of 10.3 percent. 
>>Trade was balanced in the United States in 1981 and 1991. Economies in
>>recession don't need to import much oil, copper, bauxite, high-tech
>>components, etc. The trade deficit increased after those recessions
>>ended. But it would be absurd to claim (as some really do) that such
>>increases in the trade deficit meant we would have had more jobs by
>>staying in recession forever. 
>>Despite the evident nonsense of equating trade deficits with job loss,
>>and surpluses with job gains, that assumption is nonetheless still used
>>by the AFL-CIO and Progressive Policy Institute to estimate or "impute"
>>job losses to trade deficits. It follows that Japan and Germany must
>>still be gaining all those jobs we are supposedly exporting. But nobody
>>is foolish enough to try repeating that claim again. So those afflicted
>>with chronic trade phobia have recycled their faded stories by simply
>>replacing the words "Japan and Germany" with "China and India." 
>>Fingleton's latest effort is an article called "Trading Down" in The
>>American Prospect. Citing fellow curmudgeons Lester Thurow, Pat Choate
>>and Lou Dobbs, Fingleton predicts "a devaluation from hell ... a truly
>>devastating devaluation." Given the author's forecasting record, the
>>dollar naturally started moving up on this non-news. 
Yeah right - like dollar traders read American Prospect.

>>Such efforts to rewrite the old "Japan will overtake us" melodrama lose
>>a lot in translation. Unlike Japan, India has a chronic trade deficit in
>>merchandise, averaging about 3 percent of GDP, so India has to export
>>services to pay for rapidly increasing imports of food and machinery.
>>Diehard "twin deficits" zealots have even more explaining to do. India's
>>budget deficit has ranged from 9 percent to 10 percent of GDP for a
>>number of years, but that doesn't seem to have slowed the economy a bit.
Last year it was India needs to get rid of that welfare state mentality 
that is slowing their economy. Now
it hasn't been slowed a bit.

>>China still has a small trade surplus, but the notion that China has
>>been stealing our manufacturing jobs faces a bigger problem. According
>>to the Asian Development Bank (adb.org), China's industrial employment
>>fell from 109.9 million in 1995 to 83.1 million in 2002 -- a drop of 24
>>percent. Anyone who wonders where U.S. manufacturing jobs have gone need
>>not bother looking for those jobs in China, Japan, Hong Kong or South
>>Korea. All those countries suffered much larger percentage declines in
>>manufacturing jobs than the United States has. Politically inconvenient,
>>perhaps, but true. 
>>Nobody denies that many manufacturing industries went through rough
>>times from July 2000 to June 2003. Yet super-economist Brian Wesbury at
>>gkst.com notes that the manufacturing component of the U.S. industrial
>>production index rose at an impressive 7.1 percent annual rate over the
>>past six months. Six months is not enough time for that big turnaround
>>to have had much impact on employment, but it will. People who keep
>>reminding us that many measures of employment are not yet back up to the
>>very top of the previous peak -- which took nine years to reach -- are
>>making a lot of noise without saying anything. 
Well I would hope so. Every tap is on. Tax cuts, deficit spending, 
devaluation of the dollar. - anything possible
to win the election. The peak is now or just before the election. Then 
after the election, the "compassionate" will
once again disappear from "compassionate conservatism", there will be 
more tax cuts for the rich, and "starve the
beast" will continue  I think the appropriate label for people who think 
- as this guy suggests - that the last 6 months
are the start of a nine year increase in employment - the movie opened
this weekend. Eternal Sunshine of the Spotless Mind. My belief is that 
George is going to impose his middle initial
on the US economy. Right now you're at the middle peak of the W.

And lets not forget that the gov is pushing to get burger-flipping 
classified as a manufacturing job. While the economic statistics
from pre-Bush years are probably accurate - Bill Clinton truly was a 
great man - I have to question any and everything coming
out of the US since then.

"Wesbury's academic background includes a M.B.A. from Northwestern 
University's Kellogg Graduate School of Management and
a B.A. in Economics from the University of Montana."

Wow - super-economist. I lost the ref but its easy to google.

>>Whenever overly excited journalists, politicians and pseudo-economists
>>start telling you the United States should worry more about economic
>>strength in China and India than about economic weakness in Europe,
>>Mexico and Canada, remember to check what they said about Japan and
>>Germany overtaking the U.S. economy a mere decade ago. 
Uh. Ditto. Whenever one of Bush's henchmen tell you not to worry about 
the current economic state, remember
to check what they were saying about the US economy a mere decade ago. 
Things were terrible. Being run into the
ground by a Democrat.


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