America Must Reform Its Economy

[unhappycamper]

America Must Reform Its Economy
die Welt, Germany
By Jan Dams
Translated By Ron Argentati
10 October 2010
Edited by Jessica Boesl

The world is acting crazy once again. The heads of state and finance ministers of the world’s largest nations worked for two years to get a handle on the global financial crisis. Now, as the global economy revives, and Germany is showing faster growth than it has in previous years, that’s where the similarities end. They’re even talking once again about a currency war.

There’s nothing new about the dispute over the fair value of currencies. The United States has been complaining for years that Asian countries enjoy an unfair advantage in exporting, because the Chinese are keeping their currency, the Renminbi (RMB) artificially lower relative to China’s economic strength. That makes Chinese products cheaper than competing American products. At nearly every international trade conference in recent times, the United States has warned the Chinese that it has to change its behavior.

The fact that that isn’t happening quickly enough for the United States and that America is also upset by Germany’s exporting successes has one simple explanation: While America’s economy is growing once again, no jobs are being created. High unemployment is depressing America’s spirits. The old saying, “It’s the economy, stupid!” is a truism that frightens Obama. He and his Democrats will have to cope with bitter losses in the upcoming midterm elections. The war-like rhetoric in this campaign is due largely to that fact.

But the problems go even deeper than that. America’s weakness isn’t primarily due to China’s unfairness; it’s homemade. The decline of the American automobile industry is a good example of that. Broad sectors of American industry are barely competitive globally anymore.

If the United States wants to get out of this mess, it won’t suffice to merely cheapen the dollar relative to other currencies. This country, once famous for its astounding flexibility, has to reform its labor force and must invest in education and infrastructure. Germany has proven it can be a successful industrial power despite high operating costs — so it can be done.

[pampango]

1. Our economic weakness is, indeed, "homemade". Tax cuts for the rich, shredding the safety net,

deregulating markets and the finance industry, weakening our unions, etc. are all things that we have done to ourselves. (I'm not sure that American repubs should be considered part of the "we", but they are technically Americans. :) )

It seems to be easier to blame China, Mexico, India or Hispanic or Muslim immigrants (any "other" will do) than it is to take on our own domestic power structure as Europeans have done (and continue to do - see the streets of France). Maybe it's a matter of frustration that the repubs have been so successful at destroying our economy (and resisting progressive efforts to stop them) that it is deemed easier to shift the attack to an "easier" target - "others". There might even be some support from the "populist" right (teabaggers as an example) who want their country back from some of these same "others".

Europe is economically and socially successful with relatively high (and much more progressive) taxes, an effective social safety net and health care systems, stronger market regulation, much stronger unions, etc. Europeans live in the same world with the same trading partners that we have.

[Scuba]

2. And guess who benefits from inflation?

When the average American is living payday-to-payday (if lucky) while the wealthiest are worth multiple Billions, guess who is benefited most from inflation?

If gas goes to $5, most Americans will suffer greatly. If you have a few billions, you won't notice.

Spend $300 dollar a week on groceries for a family of three. Many will starve. Literally. But those that are currently spending millions on birthday parties won't even notice.



Wall Street give out $144 Billion in bonuses in 2009. Social Security recipients are without a raise, again.