It’s the economy, you stupids!

This Time, It’s Not the Economy

Instapundit notes this NYT article:

Republican candidates do not seem to be getting any traction from the glowing economic statistics with midterm elections just two weeks away.

The economy is virtually nowhere to be found among the campaign ads of embattled Republican incumbents fighting to hold onto their House or Senate seats. Nor is it showing up as a strong weapon in the arsenal of Republican governors defending their jobs from Democrats.

“I don’t know of another election cycle in which the economy was so good, yet the election prospects for the incumbent party looked so bad,” said Frank Luntz, a Republican strategist.

If they aren’t trumpeting this, they’re idiots. (Well, many of them appear to be idiots whether they trumpet this or not. But you know what I mean.)

I’ve been noting that employment numbers, the stock market, and other economic indicators look quite good but get little attention. At first I simply blamed the media, which I still do, but most lately I’ve been confused about why Republicans aren’t making a bigger deal out of the improved economy. Though told that they are and it’s just that no one is listening, I haven’t seen it at all. I also wondered if the media may, still, be partly to blame for ignoring any trumpeting that might be going on, and Captain Ed wonders the same thing.

Though a staunch Conservative, if the GOP gets swept out of office in a few weeks, I won’t be shedding many tears. I have been basically unimpressed with the work done (or not done, as the case often is) over the past few years. Their seeming failure to capitalize on the economic situation just underscores how ineffective they have been.

On the other hand, as I said to a co-worker in conversation the other day, if this is what we get with “my side” in control, how much worse will I think things are when the other side is running things? The cynic in my says that I might not even notice the difference, but I fear that the difference will be, in fact, quite noticeable. And not because it’s an improvement.

Luckily, I’m not nearly as convinced as many seem to be that the Dems are going to chalk up a resounding victory next month.

Comments

  1. I was in a shop a few weeks back buying some parts for my milling machine. I talked to a guy who works for a machine shop. He said the only thing keeping his company in business was the fact that it took the Chinese companies about 6 months to turn around parts. He said that if his company didn’t have their significantly faster turn around times, they’d be out of business. According to this person the quotes the Chinese companies were giving were cheaper than his company could buy the raw materials to make the parts! Yeah, this is a great economy all right. Do you want fries with that?

  2. I can imagine how the Media will about face if the Dems prevail. I can see the MSM saying in six months that the economy is amazing (the Dems will defintely take the credit)!

  3. A effin Men Dfens. I occasionally have to lambaste leftys who prattle about the ‘defense industry’ and remind them that what little manufacturing capacity we have left in this country is in the defense business. Some fool is going to tell me that solid, good-paying, industrial base jobs need to be tossed because war is bad, mmkay? Ess Tee Eff Yewww. As far as I’m concerned, Big Arms Sales are Good for us in many ways – not the least of which that that sucking sound called the trade deficit is tempered quite a bit every time the U.A.E. decided to buy a new batch of F-15s. Then I get told that those jobs (sans their benefits and pensions) would easily be replaced with countless new jobs from this great economy. Right. 3,000 new retail clerks can’t be wrong. Oh, we’ve got jobs allright… we’ve got lots of crap jobs to go around. And when people can’t pay their bills, they just take out another card or loan due to the great interest rates. This is why home ‘ownership’ is so high right now – all those A.R.M’s people took out when they were sold this ‘housing market is the new stock market’ claptrap. One regrettable byproduct of ‘market populism’ is that it has given all Americans the false notion that they are just as smart as your average securities analyst. Right. Hold on to your wallet. V

  4. Actually I think Dfens’ story has a good point – not about the Chinese. There are other competitive factors that can be as important as price. Turnaround time and customization can be more important, so can quality. Large scale manufacturing will never again be the driver of the American economy. I try very hard not to buy PRC products – not easy. The fact that their stuff is so cheap is a result of terrible trade policy.

  5. Waaah waaaah! Someone call the Wahhhmbulance. The Chinese can produce crap cheaper than we can. Its no big secret, and the US has known about it for years. Why would any US company do something so stupid as to waste money by producing product in the US, when they can simply do it far cheaper in China? I do believe thats how capitalism works. Any American bitching about a lack of manufacturing jobs isnt too bright. Want to be competative? Work for peanuts. Want to be smart? Goto school, get educated, and get a good job. Start a buisiness, and so on…

  6. Uh, Skrip, I AM educated. I also know that if we don’t produce anything here, we don’t need no stinkin’ engineers. What are you going to do the next time you need weapons to fight terrorists, order them from Burger King or your good buddies in Communist Red China? It is stupid, though. I mean, how did the North beat the South? Was it better weapons and tactics or superior manufacturing capability? How did we beat the Germans in WW2? How did we beat the Japanese in WW2? Was it not due to our superior manufacturing capability? It’s not conservative to flush our manufacturing industry down the toilet in the name of mythical ‘free trade’. It’s just plain stupid. We’re being sold a bill of goods regarding this being an ‘information economy’ too. Did the industrial revolution make food obsolete? Hell no! It made food production more efficient. The same thing should be true of our computer technology, it should be making our industry more productive so we can compete in the world market. Trillions of dollars of trade deficit say that isn’t happening. I say it’s about damn time our government starts looking out for our interests rather than those of thier Chinese commie friends.

  7. Yes, its stupid because its not economical. Why make American buisiness suffer by wasting money manufacturing here… especially when its cheaper to manufacture elsewhere. As for military industry, thats not leaving our shores anyway. So lets not panic about something that isnt going to happen anyway. Also, you forget… this IS America. If need be, we can retool and fight just like we’ve dont in the past. But, because we are so superior militarily, we wont have too.

  8. It’s just not that easy, Skrip. We aren’t just losing machines that can be quickly replaced. We are losing skilled people that take at best a generation to replace. Worse still is the loss of continuity, which means information is not being passed down from one set of skilled workers to the next. What scares me from my perspective is a lack of people who are aircraft designers. We used to have people who designed airplanes for a living. Some of them were famous like Kelly Johnson and Jack Northrop. Today aerospace companies do not even have a job classification for that skill. Same thing is true of rocket designers. There were many aerodynamic techniques that have been used on airplanes in the past that have been lost on current day jets. There is a reason, for instance, that the F-14 performed so well in range and speed. None of those reasons show up on either the F-22 or F-35. That’s not progress. There were reasons the SR-71 worked so well. How many of those secrets are being incorporated into Mach 3 aircraft right now? None. In the plant I work in we have had times when one or two people have died or retired and subsequently went for 6 months without being able to produce critical sections of aircraft. These were hourly workers we lost, aircraft assembly workers. They knew how many gum wrappers had to go where and what to do first, second, third… We have parts of the airplanes being made right now that have not worked correctly since certain assemblers passed away. This is a wide spread problem in aerospace. 20% of our workforce will be 65 in 2 years. We lose 50% of our new-hires out of college in a year and 80% in two. Engineering graduation rates have been flat to declining for years as have salaries. You don’t just pick that up again some day. Someone should be looking out for our interests. Someone should be thinking, ‘hey, the world isn’t that friendly a place so we should keep certain strategic capabilities.’

  9. Also, you forget… this IS America. If need be, we can retool and fight just like we’ve dont in the past. But, because we are so superior militarily, we wont have too.’ That’s just ridiculous – and the last sentence is just silly naive. Dfens pretty much laid out why above. It’s not about tools, its about skills. And in the long run, there are certain areas of the economy that should not be allowed to be futzed with because of some CEO’s hard on for Tom Friedmanisms. That’s why our domestic food supply has subsidies. Why? Because you can’t eat microchips, no matter how much ketchup you got. This is the problem with modern service economies. Service-based economies over time experience a long term trade deficit as manufacturing heads to third world slums and totalitarian states. A common trait that these economies have are varying levels of higher unemployment and higher wages. This is because as more manufacturing jobs move to developing nations, more jobs are lost – but are not replaced completely (see-underemployment)with wage levels that came with the old jobs. One way some nations deal with this economic slow down is to borrow more (in this case Chinese) money and lower interest rates (sound familiar?). This artificially fixes the problem by creating false wealth. False wealth has a big part in causing affordable housing to disappear – due to lower interest rates allowing more expensive homes to become affordable. After interest rates rise to normal levels it is found that the artificially high property values are incorrect. This is what is referred to as a real estate bubble – something a lot of people are starting to get a taste of as we speak. And on and on. Yeah, I’ll take fries with that shake down. V

  10. What it amounts to is corporate raiding. If I became the CEO of a huge company and never made any capital investments and sold off assets, it wouldn’t be difficult at all to show a profit. I’d just ‘out source’ my manufacturing to China or where ever and act as a money conduit, skimming my profit off the top. It’s an easy, low risk way for an idiot (like me) to look like a great CEO. Anyone would be a fool not to take that route. That’s what happened in the example of the machine shop I gave. All of their machines were 20-30 years old. Of course, the same is true of their suppliers, thus they cannot even get the raw materials for what the Chinese produce a finished part for. The other contributing factor is the way China has artificially depressed the price of their currency. What a surprise that a communist country would do something like that. It’s almost like they have absolute control over their country’s economy or something. And our stupid government just wants us to bend over and take it. Then they can’t figure out why no one supports either party.

  11. Well, you can have a free market economy, or you can retain skills and jobs despite it being economical. That is, of course, the #1 economic challenge today, and I don’t think there’s an easy solution. It’s not the fault of any politician. It’s just the result of the world ‘getting smaller’ due to technology. The good news is Chinese goods are going to become more expensive as China develops, especially if they open up their society more. I wonder who will be the new China then? But what Dfens seems to be asking for makes sense, but is also effectively corporate welfare. It makes some sense to pay extra to retain skills as a contingency. How many billions of your tax dollars do you want to spend on that, though? It’s already quite a lot.

  12. You live in a society where the default answer to every problem is socialism, Nicholas, so then you naturally assume the solution to this problem is socialism. There are more capitalistic solutions. For instance, rather than waiting until we have no manufacturing capability in this country before acting, we could establish tariffs against goods coming from countries that artificially keep their monitary values low. If we truely believed in environmentalism too, we could use tariffs to penalize countries that had poor records on such practices. Beyond that, we could tax the dividends made from stock ownership or the gains from the sale of stock in companies that made a profit without meeting a certain level of reinvestment in capital goods, or we could tax the companies themselves at a higher rate, or do both. There are certainly many more options on the table than government funding of yet another big public works program. If companies were investing in themselves instead of out-sourcing to China all the time engineering salaries would take care of themselves with rising demand, as would the number of engineers graduating from college.

  13. Oh, please. Dont be so dramatic. The US will always have manufacturing jobs and such. And as for skill? Well, why the hell should an aerospace company develop new rockets, or aircraft, or whatever if they arent needed or too expensive? I mean seriously. The same weapons programs which create jobs requiring needed skill are also the same one typically put up on the cutting block. Whether it be new nuclear warheads, F-22A, F-35, and the DD(X). New technology is developed and more skill is accquired. But in order to retain that skill, you need to spend money. Its kinda why, by law, the USN needs to use two major shipyards for large-scale production. Frankly, Im all for the changed Dfens proposed. But in all fairness, this nation is not going to rely primarily on manufacturing. BUT! There will still be manufacturing taking place.

  14. I can’t say you’re wrong on any point you’ve made, Skrip, but let’s consider the F-22 for instance. The program started in the early ’80s and the airplane is just now ‘operational’ (I put that in quotes because it will be a long time before they actually put Precious in harms way). So how long do you think an aircraft designer’s career is going to last? 30-40 years. When it takes 25 or more to get an airplane operational it doesn’t leave a person much time to work their way up through the ranks to become an aircraft designer, much less allow them to learn from one design before attempting another. That’s the direction of my criticism. I’m not saying spend more or less. I’m saying spend smarter and get more. It’s a win for everyone.

  15. Dfens: I’d be interested to hear what economists think about plans like yours, and why protectionism tends to be reduced rather than increased these days. I suspect that your ideas could do more harm than good to the economy. However without trying it I’m not sure anyone knows. Where do you think I live, anyway – the USSR?

  16. I was refering to Western society. Europe, America, Russia, it’s all the same these days, unfortunately.

  17. This is a very interesting topic for me, especially as I am living in an emerging country, which is supposed to join the EU next year. I am working in a foreign own company that did exactely what you have said: they have outsourced almost all the manufacturing capacities abroad, and is continuing to do so. Why? Because they are looking for cheaper and relatively skilled labour force, to replace the very expensive labour force from their country. OK, I might be less skilled, lazier, and therefore three times less effective than my US equivalent. Still, I am paid with only one fifth of what he is paid, although I am considered as having a fair good salary at the local standard. What should do the American company owners in these circomstances? Should they keep the manufacturing there whatever the cost? Maybe in some hi-tech industries where there is need for very skilled, effective, and experienced workers, but not in the consummer goods, or light industry businesses. You can imagine that there is no need for high quality when you are replacing your TV station every three years, and your car every five years, or maybe less. Would you buy a pair of snickers ‘made in USA’ even if it would be three times more expensive than the exactely same pair, but ‘made in Malaesya’. By the way, when buying something is anybody interested to buy something that will last for twenty years? Definitely not. Therefore, you will look for the cheapest item, as you will replace it after six months, anyway. Definitely, we are starting now to feel the same pressure from other countries with lower labour cost, as our wages are slowly raising, and this pressure will increase in the coming years. Sure, on longer term, it is very difficult to predict what is going to happens. I do not think that an economy can survive only from trade, commerce, and services, but in the same time you cannot opose to the free market trend. Maybe what Dfens suggested, to create some kind of incentives for the companies which are investing in US would have some results on long term. Or maybe, we will get to a point where all countries (well, the big majority) will be at quite the same level, and than, the quality will make the difference.

  18. I can’t speak for all industries, and certainly not for all countries, because I simply don’t know enough, but I know what I’d like to see the aerospace company I work for do. I’d like to see them take a different approach to outsourcing. Not end it, but just take a more realistic approach. We have a highly skilled work force, so the way I’d use them is they’d build almost everything on the initial production run of an airplane. They’d set up the production line and work all the bugs out of the manufacturing process. If the airplane sold well and lots of orders started rolling in then I’d start heavily outsourcing the production to make way for the next new aircraft. This kind of approach would play to our technological strengths and properly leverage our expensive, yet highly skilled work force. The way we actually do things doesn’t make any sense at all. We outsource everything from the beginning. We end up getting screwed over by vendors who rape us on every change. Things are going to change. Design is an iterative process. Anyone who tells you otherwise is blowing smoke up your ass. There’s work to go around, and a global economy is a good thing in my opinion as long as we have someone representing our interests negotiating for us. The way the Republicans are going about it (and the Dems aren’t much different) they’re trying to get us into a global version of the savings and loan debacle of the late ’80s again.

  19. It’s an economy of smoke and mirrors. The company I work for has been declining in real value for decades. They haven’t bought anything you could consider an actual capital goods investment in years. Yet our stock price has never been higher. What are people basing that stock price on? It’s nothing more than a pyramid scheme. Stock prices will go up too, as housing declines. Then that bubble will burst. Ya’ gotta’ pay the piper. We cannot go on racking up debt at record levels forever. Any idiot knows that.