Asymmetrical Information

Jane,

Just curious - I've never heard the "We were getting poorer under Clinton" meme before - where does it come from?

Dear Megan,

"... [Bush's] economic policies have had, at best, marginal effect."

Marginal effects become material effects if they can accumulate and compound over time. If someone can consistently tweek the economy 1% over six months, that becomes 2% over 12 months; about 6.1% over 36 months; and about 12.6% over 72 months.

Pres. Bush's efforts have not necessarily been marginal to begin with. He is the CEO of the hugest corporation on earth. He has patiently and suuccessfully changed the flow and distribution of a good chunk of our nation's GNP through his tax and spending changes. In particular, by changing incentives on various kinds of private investments, his fiscal policies can have a leveraged effect on the whole economy.

But Pres. Bush's most important economic policies have actually been his national security policies. His decisions to invade Afghanistan and Iraq, and to fight forcefully against Islamist terrorists, have kept our economy from tanking. (And a strong economy is needed for the War on Terror -- it's positive feedback, a virtuous circle.)

So does Pres. Bush deserve credit? Yes, yes, and yes!

uh...jobs?

uh...jobs?

uh...jobs?

nyc99: American Jobs Archives (Who stole our jobs?)

Problem with the jobs argument: 6% unemployment isn't really that high. If it's improving, rather than getting worse, when the election comes around (as now seems very likely indeed) I find it very hard to believe that Bush is going to lose office over unemployment.

Matthew Goggins wrote (in the other comments thread):

"[Jane wrote] "... [Bush's] economic policies have had, at best, marginal effect."

I respectfully disagree."

To her credit, Megan's being consistent here. She's argued before that Presidents have little influence over the economy, and she's not switching her argument now that the data looks better for Bush.

For me, I'll have to ponder this a bit more. Like Jason McCullough's comment, I think the fact that hours worked dropped is worrying, and might suggest a downward revision of this early estimate later.

Brad DeLong's already posted on his blog that although the consensus estimate for 2004 is ~3.5%, that it's likely that it will be substantially larger or smaller than that; either business investment & employment rebounds as confidence in a robust recovery grows, or consumers start reining in their spending for fear of long-term unemployment.

Let's hope for the rosier picture here.

Hi -

Actually, these sort of growth rates are sustainable, just not forever. If you were to consistently grow at these levels, inflation would rear it's pointy little head after several quarters, as the economy heats up further.

That said, think of this: productivity increases have been much, much stronger in the last several years. Given that productivity is one of the key elements in adding value to production - which ultimately is the supply side of GDP - we are looking at GDP increases over the next two years well in excess of trend growth rates.

So job creation will increase around the spring of next year (lag effects).

John

"6% unemployment isn't really that high. If it's improving, rather than getting worse"

doesn't reflect the 9 million who gave up looking and the former middle class forced into poverty level positions - the current rate of outsourcing indicates additional job losses which ripple through the economy - contiued use of H-1B and L-1a/b Visa labor deprives Americans of jobs - CNN just now reported 14 million jobs being offshored in the next few years

"So job creation will increase around the spring of next year (lag effects)."

In what country? Job increases to date have been offshore. There is no financial or legislated reason to create anything but "face to face" jobs here. Without a change major Corporations will continue to invest in cheap labor economies. India's current economic boom was financed on Wall Street.

Can't discount the 400 billion + in deficit spending. That had to had a little zip to the ol girl.

We need to keep in mind that less than a decade ago 6% unemployment was considered near the minimum "sustainable" unemployment rate (i.e., full employment) and when we went under about 5% it was one reason that some people decided that we were in a bubble economy. So, if bubbles are good for the economy in the long run, demanding that we get back into one, which may be the only way to get unemployment back down to around 4%, is the most noxious kind of partisanship - demanding long run harm for the whole country for advantage in the next election. Also part of the slow jobs recovery may be part of the bubble effect - wages and expectations about wages have to come back down from the peak level of the bubble or those wages have to become supportable before hiring will pick up.

Another 14 million jobs at risk, 10.29.2003 - UC Berkeley study assesses"second wave" of outsourcing U.S. jobs. Who is going to be left to buy anything? The current economic growth is a castle built on sand. The middleclass foundation is crumbling due to shortsighted leadership in business. The Presidency really can't do much to influence any of this. Most politicians, in both parties, have been bought and sold by business already and only vote by perk.

Where are the jobs??

I think a lot of the jobs that have been lost aren't coming back. Due to the internet (thanks Al Gore) it's very easy to outsource jobs overseas. Productivity is up, showing that American industry has adopted practices to allow fewer workers to produce more. These jobs aren't coming back.

I work for a major international chemical company, and our business manager recently addressed the workers at our site. He mentioned the Wal-Mart effect. Wal-Mart has something like $250 billion in sales. They have incredible power over thier suppliers, and the downward price pressure from Wal-Mart has forced many of them to either cut costs or lose out on the biggest consumer goods retailer. The suppliers who win get the Wal-Mart business are the lowest cost suppliers, many of which have moved facilitites overseas, particulary China. Again, I don't think these jobs are coming back. This adds to the "Wal-Mart is Evil" argument, and maybe you can make a case that by driving out regional retailers and by having such influence over industry that Wal-Mart might be too big.

A question: Is outsourcing of jobs bad thing? Jim seems to think so.
I thought it was a rather neutral trade-off. You know, comparative advantage and all that. Low-skill jobs given to those who would work at low wages, while we get exceptionally cheap products here and are left with High-skill, service jobs. Also, does a certain balance have to be maintained? Something like, Muhammad in India weaves t-shirts for John in America, while John writes software that manages the company Muhammad works for.

For some reason, I’ve just remembered some kind of a strike at a factory; maybe it was in a Michael Moore film’ it was a rather older fellow holding a sign reading ‘Build airplanes, not (insert trivial sprocket)’. I may be mistaken, but I’ve always considered protectionism as something to be avoided. Enlighten me.

wow,
many of you sound like a bunch of marxists.
in solidarity...

Clinton’s unemployment rate was above 5% his whole time in office until the capital gains tax was cut.

All Bush needs to win reelection is to have the unemployment rate headed downward. What the rate actually ends up at is immaterial.

Clinton’s unemployment rate was above 5% his whole time in office until the capital gains tax was cut.

All Bush needs to win reelection is to have the unemployment rate headed downward.

What the rate actually ends up at is immaterial.

In the countries that are destinations for outsourcing of skilled jobs...viz India...one would expect demand to drive up wages over time, reducing the level of competitive advange and bringing about an equilibrium.

Except...

If the schools in India (for example) are really, really good, and are constantly bringing along a large supply of new skilled people

Then..

Maybe equilibrium is delayed for a long time.

Just thinking out loud here.

"A question: Is outsourcing of jobs bad thing?"

Not on the surface but when you look deeper it is. There is no trade-off this time. The higher level jobs that can be created can for the most part be outsourced too. If your job doesn't require "face time" with your clients and is done via telephone and computer (no matter how high level) then it can be outsourced.

"CEOs at companies with the largest layoffs, most underfunded pensions and biggest tax breaks were rewarded with bigger paychecks, according to a new report, Executive Excess 2003: CEOs Win, Workers and Taxpayers Lose.

Median CEO pay skyrocketed 44 percent from 2001 to 2002 at the 50 companies with the most announced layoffs in 2001, while overall CEO pay rose only 6 percent. These layoff leaders had median compensation of $5.1 million in 2002, compared with $3.7 million at the 365 large corporations surveyed by Business Week."

Do you want to trust these guys not to outsource any analytical, research, inside sales, marketing, real estate, medical, HR, payroll, benefits, tax prep, accounting, insurance, legal research, tech (only 10% of Forrester's prediction on 3 million jobs), telecom, call centers, etc. jobs? They'll do it in a new york minute because they'll get rewarded BIG TIME for lowering costs and increasing profits. CEOs as a group have received pay increases of 1,884% since 1980 while the average working person has increased only 7%.

When manufacturing was moved offshore higher level jobs were created in the "middleclass cushion." This time the middleclass positions are being outsourced and we all know the next higher economic layer is not going to absorb the impact. The UC Berkeley Study is talking about 11% of the work force, 14 million jobs. The salary average is just under $40K. 8.6 million office support jobs are at the greatest risk. Whether or not all or only some get outsourced wages will be driven down and the fear of unemployment will erode consumer confidence.

The tax bases in Sillicon Valley and Seattle are already diminished and those locales are re-examining their city planning. The cost of "safety nets" like unemployment, Aid to Families with Dependent Children, the criminal justice system will skyrocket. Healthcare costs will increase to cover the cost of unpaid emergency room visits by the uninsured (The number of Americans without health coverage jumped 5.8% in 2002, to 43.6 million, the largest increase in a decade, according to the Census Bureau). You don't think the remaining service jobs at Starbucks and Wal-mart are going to pay all this do you? Of course not so and neither will the upper income brackets. It will be the remaining upper middle class still employed will be shouldering the burden.

Next we could go on to the domino effect on small business, but we won't. It will happen, just ask my dry cleaner, my travel agent, and the restaurants where I used to entertain clients. Why I'm not working is not an outsourcing story, it is a lot more complicated than that and I really can't go into it online. Just leave it at I received multiple pay increases last year and one more this past January one week before I got laid off with a third of our North American operation.

The ideas of globalization and free trade sound great and but in practice they are like everything else. They depend on everyone playing fair or someone, somewhere loses a lot. This time it could be Americans. While a 6% unemployment rate doesn't really sound that bad it is suddeny too simplistic an approach. Who comprises that 6% this time? How much money do they represent? There are 9 million other people who are unemployed and not included in that number. When I complete the unemployment extension in 5 more checks I will no longer be part of that number along with all of the people who got laid off at the same time I did. Beth Shulman's The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans is about today, not tomorrow or next week or next year. Those are the same jobs that people who were in high tax brackets last year will be competing for this year. Hell, service jobs will be at a premium. Hell, some of my "stay solvent" strategies will probably put some people out of work.

Now I really do hope I'm full of sh*t, BUT just in case we're looking at different countries where we could live because if something isn't done to protect the American middleclass it is going to disappear. This will become an ugly, repressive, crime ridden, 2 class country and who would want to try to retire here? I'm all for competition, survival of the fittest, and all the rest of that good stuff, I'm good at it. I just don't want to grow old around a bunch of desperate people living in ghettos.

The url for Executive Excess 2003: CEOs Win, Workers and Taxpayers Lose that got lost is http://www.ufenet.org/press/2003/EE2003.pdf

Jim,

There's no need to be worried about jobs, even high-productivity jobs, going overseas. It's good for us:
http://arbyte.us/blog_archive/2003/10/Globalization.html

Sorry Kyle, I don't buy it. If you're numbers aren't populated with real people your feet don't touch the ground. I can supply you with equally complicated manuals on dot matrix printers.

I'm all about survival of the fittest, and I've spent way too much time reading Rand to support protectionism. As a software developer, it's hard to ignore the globalization that is taking place. However, my fundamental values include conceding to "the best man (or woman) for the job". Then I read this:

"No Americans Need Apply
Daniel Soong, who lost his programming job to Indian offshore companies, is willing to relocate to India. But Indian officials have told him they don't hire Americans."

http://cio.com/archive/090103/people_sidebar_1.html

If they're going to practice protectionism against us, perhaps we should think about coming up with some form of "retaliation". We used to have these fights with Japan over the trade deficit, shouldn't the same apply to a labor trade deficit? Perhaps we should do something on the order of limiting/refusing visas for countries that explictly disallow the hiring of Americans.

Thanks for the url Jimmy

Jim,

Did you actually read what I linked to? There aren't many numbers in it, overall. It's a verbal argument, not a numerical one.

What's so complicated about it? And what does this have to do with dot matrix printers?

P.S., you should be worried about relying too much on anecdotes. The plural of "anecdote" is not "data".

Um, Judson, Jim: there are more US citizens employed today than when Clinton left office. "That's right. There are 1.6 million more Americans working today than at the end of the Clinton administration." From Bill Hobbs:

The number of people working in January, 2001, when George Bush took office: 136.0 million

The number of people employed as of September 2003: 137.6 million
* * *
So, how is it that Democrats can claim millions of jobs lost under President Bush? And how come the unemployment rate is higher now than when Bush took office?
* * *
Simple. The workforce grew.
* * *

Read the whole thing, Bill is a real live journalist, and provides the real live BLS numbers -- he clarifies what the NYTimes (and Krugman) have obscured. Why have the nine dwarves been given a pass in the press with their misrepresentations of the real numbers?

I'll keep it down to earth then. Yes, I read it. The problem with your point of view is it totally disregards the human impact which is real and expensive. You're a bright guy and have obviously spent a great deal of time in academic pursuits. I think you would benefit from doing some volunteer work with the homeless so you could get a broader perspective on what the end results of great ideas can be. Get out and talk to office workers doing mundane tasks over and over and can just barely use the PCs on their desks just so they might be able to put their children through college. They are the largest population at risk and will be so busy scrambling retraining will be totally out of the question.

The time period between the initial "hurt" that must rest on the shoulders of those impacted and the glorious benefits arrival will allow one more generation to be forgotten (how are you going to train baby boomers), another one uneducated (government and business have skated this responsibility), and more fodder for Beth Shulman's The Betrayal of Work Part II.

There are no provisions for the transition and the argument that you have to take a long range view will be too costly this time. There will be no room left in what is left of the middle class to cushion these events.

Economics needs to evolve into a science with a human face to remain a valid planning tool. It is an essential quality that is currently missing. If we don't take care of our own how can we lead anyone else?

The Globe and Mail: Wise up about offshore outsourcing

the robots will take all of our jobs!

no the slant eyed cheap manufacturers of hong kong and china will take all of our jobs

no its the mexicans

tigers (thailand, etc)

indians!

uh, dude, this is old...

just like tom malthus and ned ludd, you lack in imagination (hey, its ok, most people do)

the failure of our economy due to excessive productivity and foreign growth has been predicted daily for the last 300 years...

people lose jobs, industries collapse, towns wither away, all of which are great strengths of the anglo system!

pain is just weakness leaving the body, and you don't get cretivity without destruction.

you can take your pro-stasis policies and shove them up your ***. gloom, doom, and keeping everything exactly how it is is always the worst possible solution

we could have protected the good jobs of route 128 from going to the underpaid and overly cheap orange groves of san francisco, stopped oil companies from moving from pennsylvania and cleveland, etc

all of which would have been mind numbingly stupid moves. Economies change. The market is a way of showing people how they should change. Trying to outlaw this or ignore it leads to decline and real pain.

But as an economically illiterate leftist stasist, you can't grasp this. Begone, you have nothing to contribute to real discussion.

*"6% unemployment isn't really that high."*

Before the bubble Krugman was arguing that around 6% was the best that could be hoped for on a sustainable basis. (Now, of course, he's saying its the worst employment performance "since Hoover")

"doesn't reflect the 9 million who gave up looking"

Nonsense. Just look at the labor market participation rate. It's down a bit from the unsustainable bubble high -- when people were being recruited into jobs by being told they could bring their pets to work, and such -- but still near the all-time high. http://research.stlouisfed.org/fred2/series/CIVPART/12/Max

There's no "9 million who gave up" visible there.

*"So job creation will increase around the spring of next year (lag effects)."*

"In what country?"

If growth keeps going at just 60% of the rate of the last quarter then employment has *got* to zoom upward, in the US right here. The only other option is growth comes to a grinding halt. Which has never, ever happened after a +7%-type quarter coming out of a recession. *Or* with short-term real interest rates being held negative for a prolonged time by the Fed, as they are now.

The FAIR econometric model at Yale is predicting an explosion in hiring in coming months, so much so that it's almost hard to believe -- or maybe it isn't, since it would put job-growth back on the long-term track over the next full year, which actually is quite plausible by historical standards when an economy finally breaks out of a recession.

Steve Antler has the FAIR numbers at http://www.econopundit.com/

They are Dubya-and-Rove's dream come true. And Krugman's nightmare.

BTW, did y'all see Krugman lose his temper and boot the cat for a 20-year record distance today?

"Well, *of course* you'll get some damn growth if you run the biggest budget deficit IN THE HISTORY OF THE PLANET..."
"meooow!"
punt!
http://www.yoders.net/nr/?ffid=5

The deficit this year obviously isn't anyhwere near the biggest one "in the history of the planet" ... far from it, look at Japan right now, the US's Reagan years, not to mention WWII, and countless other examples of many nations.

Prof. K was just venting a bit ... in print. It's fun to imagine the feeling he put into the words. ;-)

I remember the days of "double-digit" unemployment, when a 6% rate was considered by many to be "full employment". Now we find 6% to be too high. That's a good change!

hey or mailto:you@hey.com

"But as an economically illiterate leftist stasist, you can't grasp this. Begone, you have nothing to contribute to real discussion."

the frustrated in life never have real names or email addresses...

I'm outa here anyway...

bye and the best of luck folks

I'm real interested in this "9 million who gave up looking" and would like to know who they are.

How many of them are the career women who have chosen the Mommy Track? How many of them are perfectly happy selling beadwork at the craft fairs? (I know a few of this sort myself) How many are in fact retired? How many of them are sleeping under bridges wrapped in newspaper? (My son knows a few of this sort, he says not to waste your breathe offering any of them employment)

I don't think retraining is a huge hurdle to overcome. It takes only a few full-time years of study, which could be stretched out for someone already working. These kinds of large-scale economic changes are visible in advance. I don't think people who are paying attention will be surprised.

The problem we have is cultural, not economic. (And it's not as severe here as in other countries!) People need to understand that they're responsible for their own employability. They need to face the reality that their job might not be forever, and look for alternatives. If people would take responsibility in this way, we'd be fine. (We shouldn't "take care of our own", they should take care of themselves -- I'm not a paternalist.)

Jim, thanks for the detailed comment. Much appreciated.

On that note, why we have so many people studying english and history instead of science and engineering is a frustrating mystery for me. Doesn't make sense. I don't get it. People are weird.

Yes. There are still people in Southern Illinois who won't take jobs until the coal mines re-open because they're "coal miners." Having, indeed, worked with the homeless, on average about 1/3 have emotional/psychological problems that keep them outside, about 1/3 have chemical dependencies that keep them outside, and the other 1/3 are a mixed bag that includes job loss that puts them outside temporarily. The *huge* percentage of total days/nights of homelessness is found in the first two categories, who are all but unemployable without massive help and re-training. The others mostly need a boost, but many of them are also wildly reluctant to train for anything very different from what they previously did.

Face it. If you don't change jobs every 3-5 years (or sooner) the job will change under you. Get used to it. The 1950's are gone.

"On that note, why we have so many people studying english and history instead of science and engineering is a frustrating mystery for me. Doesn't make sense. I don't get it. People are weird."

Kyle,
We do it so the subliterate don't have to. Please do not forget the Robert Heinlein line that language, history, and mathematics are the three basic foundations of knowledge: When you have mastered those three you can learn anything else on your own at will. One who properly understands language is going to be better at detecting a fallacy and at persuasion than one who does not. One who properly understands history can spot when an error is being replayed. The person who adds knowledge to passion in either field will have both job and livelihood while the timeserver who chooses a major on the basis of preferring "getting a job" over knowledge will often find himself without either. If you want to scorn a particular line of study might I suggest that you take a look at the business majors? There is nothing more pathetic than an unemployed MBA! ^o^

"People need to understand that they're responsible for their own employability. They need to face the reality that their job might not be forever, and look for alternatives. If people would take responsibility in this way, we'd be fine."

Sigh! People are quite aware of this already, ThankYouVeryMuch! In this particular instance it is the moneygrubbers who are being clueless. Ever hear of the phrase "perverse incentives"? What happens to America when your employability dictates that prostitution and drugdealing and casinos are to be preferred over engineering and science because a bunch of mindless suits exported the engineering and science jobs to a nation that won't employ Americans? Of what value will your retraining be then? Or don't you think that in a case such as that America would be a trifle weaker for worshipping a little tin idol called Employability?

"(We shouldn't "take care of our own", they should take care of themselves -- I'm not a paternalist.)"

Funny, that's hardly what Chrysler or Boeing said when they were close to Chapter 11. :P And it's not precisely what American timber vendors or steel mill owners have been saying either. And it's even more amusing when employers moan because "employees don't have any company spirit anymore".

Random fact: *By definition* 50% of all Americans will ALWAYS be below average. If you don't care about them why should they care about you *or* the_ social order that protects _you_? o_O

Random fact: Soldiers do not die for a "standard of living" they die for a flag. And a very important part of dying for a flag is the willingness to take care of our own. But why should they believe in that concept if our merchants do not? And if they stop believing in it then why should they continue to fight and die for America? Because they are being paid to you would say? Be careful, Sir! If that is the only reason they will have then the day will come when they decide that a mountain of iron should not be ruled by a mountain of gold but should rather extend its rule over that very same mountain of gold. And that is if you are lucky and they do not merely decide to leave you naked to your enemies instead. No business cannot exist outside of a nation, and in the end that means that sooner or later we must understand that "taking care of our own" is an invisible part of the ledger.

- S.P.M.

I know I'm coming in late to this discussion, but, Jake said, "Clinton’s unemployment rate was above 5% his whole time in office until the capital gains tax was cut."

For anyone who cares, the rates under Clinton did look like this (this is the average for each year of course):

1993-6.9
1994-6.1
1995-5.6
1996-5.4
1997-4.9
1998-4.5
1999-4.2
2000-4.0

While the cap gains rate may have helped, there's no disputing that it was going down the whole time the guy was in office. Of course, it started its downward spiral in the middle of the year before he took office, and started its upward spiral in the six months or so before he left. But whatever.

I like to joke that I blame the tax cuts on our ongoing recovery. I don't honestly believe that, although I'm quite certain they had a small effect, I think they're better long-term policy than they are any short-term boon. Still, saying it just gives me the giggles, especially in response to all the silly people who claimed that the tax cuts ruined the economy.

I do note that Clinton was re-elected in 1996 when unemployment was at about 5 and a half percent. I think if it's around there by this time next year, Dems will have big trouble hanging the "unemployment" albatross around his neck. Most people implicitely understand the massive damage that this economy went through in the years from 1999 to 2002, with September 11th being the worst of all--not just for its property damage of course, but for the massive damage it did to some important industries, for the clampdown on security at the borders, the harm to free trade, and so on, which cost us countless jobs and hurt confidence in this country for well over a year--and not much of anything any President could have done to alleviate that except express an air of confidence and do things to assure people that we'd be okay.

Tax cuts? Sure, helpful. So's throwing a few buckets of water onto a burning house.

I know I'm coming in late to this discussion, but, Jake said, "Clinton’s unemployment rate was above 5% his whole time in office until the capital gains tax was cut."

For anyone who cares, the rates under Clinton did look like this (this is the average for each year of course):

1993-6.9
1994-6.1
1995-5.6
1996-5.4
1997-4.9
1998-4.5
1999-4.2
2000-4.0

While the cap gains rate may have helped, there's no disputing that it was going down the whole time the guy was in office. Of course, it started its downward spiral in the middle of the year before he took office, and started its upward spiral in the six months or so before he left. But whatever.

I like to joke that I blame the tax cuts on our ongoing recovery. I don't honestly believe that, although I'm quite certain they had a small effect, I think they're better long-term policy than they are any short-term boon. Still, saying it just gives me the giggles, especially in response to all the silly people who claimed that the tax cuts ruined the economy.

I do note that Clinton was re-elected in 1996 when unemployment was at about 5 and a half percent. I think if it's around there by this time next year, Dems will have big trouble hanging the "unemployment" albatross around his neck. Most people implicitely understand the massive damage that this economy went through in the years from 1999 to 2002, with September 11th being the worst of all--not just for its property damage of course, but for the massive damage it did to some important industries, for the clampdown on security at the borders, the harm to free trade, and so on, which cost us countless jobs and hurt confidence in this country for well over a year--and not much of anything any President could have done to alleviate that except express an air of confidence and do things to assure people that we'd be okay.

Tax cuts? Sure, helpful. So's throwing a few buckets of water onto a burning house.

To discover the best way for us to get through the outsourcing of IT, we should first take a look at how the IT industry came into being, how it came to generate a phemonenal level of continuous, sustained improvement in its product offerings while making vendors and workers wealthy, so that we can insure that some other industry will do the same once everyone on the planet and his dog knows how to program.

If you compare the IT industry to nearly every other industry in the United States, one of the first things that you will notice is that the IT industry has been unusually lightly regulated.

And the growth in technological sophistication and cost-effectiveness of that industry's offerings has by far outstripped everything else. This is not a coincidence.

In order to keep our people busy once all the foreigners learn how to write code, we'll have to develop something new and get rich off of it until the foreigners can master that too. We need every industry, present, future, and hypothetical, to be as lightly regulated as IT, so that workers can move into it regardless of the nature of previous training, so that new products can be offered without lengthy requests for permission, and so that consumers, unenthusiastic about buying more of what we've been producing, can finally get their hands on the marvels we've been promised for decades.

Why is it a good thing that Europe is less competitive than the US, and isn't sharing our recovery? I thought trade was win-win, not a zero sum game? If the rest of the world stays mired in recession or very slow growth, it's going to be harder for the US economy to continue to grow, not easier. Just as the US can serve as a consumption engine to help prop up others economies, so Europe and Japan can be consumers for American goods, helping our economy.

I didn't mean it in the sense that it's a good thing that they aren't sharing our recovery; I meant that it's a good thing that we're relatively very competitive -- the continued problems in the French and German economies are evidence that we're competitive, that's all. I'm not one of those economic morons who thinks that we're somehow better off if our economy's rotten, but only half as rotten as everyone else's.

Fair enough. It just seems like absolute measures here are more important than relative ones. If the whole world is doing crappy (as it more or less has been for a few years now), the fact that we're doing better is not really that meaningful. (Unless you're arguing with someone who thinks our current situation is evidence that we should adopt the rest of the world's policies.)

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