Discussion on America's future

[Nuclear Raunch]

Even though prices have increased substantially wages in America have remained stagnant for about 30 years. Back when wages were still rising a family of 4 could easily live comfortably with a single workers income. Stagnant incomes and increasing prices drove the standard of living lower and lower until a new "fad" swept the nation. Dual income families. With the increasing popularity of dual income families Americans were once again able to enjoy the standard of living that we had enjoyed previously.

The question up for debate is this, what happens in the next 30 years? Do we lower our standard of living, do wages start increasing again, do prices flatten out, or is there another factor that needs to be considered?

[The Beatles]

Considering you're far ahead of most other countries in income/wages (either because you're wealthier or because you pay less to social services) it's hardly dangerous.

There are two scenarios to the economic end of America's Empire. Either it will be slow, and the Empire will slowly disengage from the American economy bit by bit; or it will be sudden and will drag the rest of the Empire with it.

The timeline, or whether it will occur, is rather difficult to predict, so I won't do so. In other words, I can't answer your question except that you probably have nothing to worry about on a 30-year timeframe.

[Freenhult]

I'd assume that in the next few decades, manufactures will realize that going to Mexico, or China is alot cheaper, but the quality of the product is less. IE, It lasts a whole lot shorter, it breaks easier, it looks shoty. So I'd say that more jobs will come back to the US, and the quality of living will continue to increase further.

People aren't going to drop standards, especially me. Atleast, people this generation, because we are so materialistic. Plus, who doesn't truly want more?

IMHO, I'd say that wages will increase due to Democratic influences, and that overall the middle class will suffer because of it in the short term. (Until it gets going and all)

[The Beatles]

I've found the quality of Chinese and Taiwanese wares to be far superior to your average American or European product. :/

[bjornredtail]

I have never seen a Chineese product that is superior to a compariable American product. However, this in part be beacuse US manufactureing, inconvianced by the fact that they cannot dump toxic waste into the neaest air/waterway, haveing to pay thier workers something that is close to a living wage and keep them from getting killed/seriously injured on the job, typically manufactures more expencive types of product that require more skilled laborers.

Chineese firms also have the advantage of a currency that is being intentionally artifically ajusted to thier favor and the use of pattented inventions created elseware without annoying royalities to inventors (thouth the US patent system makes us all want to do that). Given such disreguard for various treaties and trade agreements, the WTO's members or at least the US should appily a tarrif to Chineese goods to counteract these (and other) unfair advantages over forign competators. Perhaps the income from such a tarrif could be used to buy back the debt owed by the Fedral Government, particularlly that held by forign investors.

In any case, manufactureing in the US is increceingly limited to relativley small nitches as a result of forign compitition. This will prove very problematic when WWIII cuts us off from various other nations we currently depend on for trade leaveing the United States without the facilities for the production of entire classes of goods.

[The Beatles]

Making any such move would be rather frowned-upon by the Chinese government. In other words, it would block any such move: the US probably doesn't even dare to suggest anything like that in private. Because China currently has huge dollar reserves, and selling even a small portion of those would frighten investors and jumpstart a mad downward spiral of the dollar.

[Gen. Volkov]

Thing is bjorn, if there's a WW3, we aren't going to have to worry about being cut off from the rest of the world, because about 2 hours into it, it's quite likely none of us will be here. It takes about 15 minutes for the ICBM's to cross the oceans and hit their targets, the other 1 hour and 45 mins will be deciding when to use them. That will likely be decided for us, when we detect some other country launching their missiles.

If, by the off chance, WW3 is a conventional war, America has enough spare industrial capacity to pick up the slack. Not only in terms of factories, which are currently either sitting vacant or seeing minimal use, but in terms of manpower. Our current economy really has very little to do with how a war economy would be set up. Not that I really think the rest of the world would want to be cut off from us. As I've mentioned before, we are the largest trading partner with alot of the world. And a very important partner to the rest of them. Losing us as market for their goods would be much more disastrous for them than it would be for us.

Beatles, China is the third largest debt holder for America by a fairly significant margin. 200 billion is still alot of money, but selling off a small part of it would be pretty small in comparison to the huge transfers of money that go back and forth from and to the US on any given business day. Besides, China wouldn't even want to risk a mad downward sprial of the dollar. That would make their dollar reserves worthless. Not to mention that the US dollar is the most stable currency in the world, and even today, nearly all other currencies are measured in comparison to it's worth.

[The Beatles]

I'll just reply to the third. That most other currencies are measured in comparison to it -- I don't know what you mean. The IMF and World Bank use the US dollar as a reference currency, but that means sod all, it's just the legacy of the failed Bretton Woods system. The number of currencies pegged to it is about 10-20: about the number that were pegged to the pound sterling until the 70s, and you can see how strong that made the sterling. </sarcasm>

They have huge dollar reserves not because they have any intrinsic value, the dollar floats like any other currency. They have that as a bargaining chip against the rest of the world, basically. If they ever decide to use it, don't you fear they could. It's like nukes... nobody likes to use them, but they're a pretty powerful deterrent. Not to mention that if they sell quick enough, it would mean they wouldn't incur too significant losses -- otherwise why have the reserves in the first place?

The only thing the US could do if something like that happened would be to madly buy up dollars by taking out loans from other countries. In effect, such a stopgap measure would amount to a big transference of money to China at the expense of going even further into debt -- I just don't see that happening. The dollar would die and there may or may not be a world recession -- it just depends on how much dollar there is out there. When the pound was devalued, there was no recession because the dollar had already displaced it (due to WWI, and to a lesser extent WWII) as the dominant currency.

[Nuclear Raunch]

Beatles: I'm not necessarily saying that America as a world power collapses, I'm thinking more in terms of how Joe American's life changes.

Freen: I'm sure they're already well aware of the quality control for each and every plant they have, and have been since the first quarter after each was operational. Assume you were a cutthroat corporate executive and for whatever reason you decided that the quality of product being manufactured at a particular Pakistani plant wasn't high enough for you. Would you

A: Just live with it
B: Make their quality control a little bit stricter at a cost of say 5% of production capacity, especially with the knowledge that depending on the situation you may be able to get back that 5% with some line upgrades.
C: Move the plant to a country with a higher tax base, stricter environmental controls, double the wages, and make your quality control a bit stricter.

A maybe, B maybe, C never.

Why do you think the middle class will suffer in the short term, and why do you think Democratic control of government will increase wages?

Beatles: I've actually found German products to be the best made of anything I've used, with Taiwanese and Chinese being wayyyy at the other end of the spectrum.

Bjorn: Good point, probably explains why the quality of developing countries' products tend to be inferior.

Volkov: About your empty factory theory, I'm not so sure we could count on those. The empty factories are completely empty. In order for them to be usable they need to have processing equipment (AKA lines) installed and have the power capacity to run them, and I won't even get into any of the manpower issues. The lines are mostly manufactured oversees and it takes several months to a matter of years for many of these to be built. The power transmission equipment gets shipped out with the rest of the processing equipment when a company moves a plant overseas, and again your looking at several months for any large breakers, cabinets, switchgear, MCC's, etc to be built. Assuming we can still get foreign countries to continue producing equipment for us (somewhat likely since it's typically made by US allies) they need materials to make that. Guess who's been buying up all that up for years now? Our friends the Chinese. We need metals of all forms, with an emphasis on copper, steel, and aluminum, all conveniently processed in China (although we do mine it here).
In 1999 the US produced 1.5X as much aluminum as China, by 2003 China was producing just over 2X as much as us.

Copper smelting in the US has decreased 50% from 1999-2003, China's increased 50% in the same period.

Copper refining has decreased in the US by about 30% while China has increased their refining by about 65%

US production of steel has dropped off slightly, while China's more than doubled from 1999-2004.

I still think if China wanted to knock us off the number 1 spot the best way to do so would be to send our economy in a tailspin. Sure it hurts them in the short term, but in the long term it's easier than trying to do it with a military. Aside from the messy occupations, revolts, etc, another huge disadvantage is that if they do it with their military they completely lose us as a trading partner, if they do it to us economically they still have us as a customer, we just arn't gonna be as big a customer as we once were. Remember, over the long term the pen is still mightier than the sword. Meh, I'll stop my rant on how we're getting set up.

[The Beatles]

You mean the coin is mightier than the sword... or pen...

[windhound]

I've just sort of skimmed the thread, but a couple of things

-I doubt very seriously that the US military could not intercept anything airborn, especially if they had 15 min to do it
-Manufacturing in China is cheap because their workers arnt paid squat. Regardless, a good portion of the products they churn out are of very good quality. Just look around your desk. My logitech mouse has 'made in china' on its sticker, as does my gameboy advance and 4th gen ipod. Even my Dremel was made in mexico. But none of these things were designed where they were built
-The purpose of big business is to turn as big of a profit as possible. If you dont have to pay your workers as much, much less not have to worry about their health and safety, of course corporate people are going to outsource
-We're slowly running out of things to mine, and the environmentalists stop/slow businesses from getting at other sources. Mining and refining raw material doesn't mean much. Most of china is rural and mountainous, it doesnt surprise me they're using their land. Its also been fairly common news of chinese mines collapsing and taking a decent amount of people with them.. but people in china seem to be more replaceable (not racist or anything, just an observation)

Well somebody told us Wall Street fell
But we were so poor that we couldn't tell
Cotton was short and the weeds were tall
But Mr. Roosevelt's a gonna save us all
-Song Of The South

http://www.rhapsody.com/alabama/greatesthitsvol2 track 8
The avg. Joes of the US vary from north to south, east to west. A drop in the economy affects everyone differently, its very hard to appy a blanket statement.

I was reading through a national geographic from '04 during my lunchbreak, only three odd years old now, it was talking about the mass migrations out of central US, the farmlands, grasslands. The young people dont want to stay or just cant find jobs, leaving the mean age of people at around 60. Many towns were closing their schools because they didnt have any kids. So there's towns out there now that simply wont be there in a generation or less. Given massive corporate farms will still farm the land...

Some of the northern US isnt doing all that well either, as most of it was industrial, which has now faded out. Old, rusting factories and warehouses everywhere.
(btw, unless a few million is dropped into them most of those old factories arnt putting out another product ever again.. restoration is way expensive)

I'm going to assume most of you have heard of Duke University, well the town its in was built on tobacco. Which is no longer about, so there's many many empty warehouses. Duke is Durham's main source of income now, as people come (literally) worldwide to its hospital and research facilities. Oddly, the city of Durham seems to hate Duke

Change happens
But not all at once nor all in one area

[Freenhult]

Well, right now in Michigan, we have the worst Unemployment in the country. So what does the Dem congress do? They raise Min. Wage. Guess what happened? More people lost jobs. The middle class is taking a beating here, and I'm seeing it first hand. I can't get a job, my friends can't get jobs, my friends parents can't get jobs. Why? Because businesses had to fire people to stay in the black because of a dollar a year increase from 5.15 to 7 something in 2 years.

[Gen. Volkov]

-I doubt very seriously that the US military could not intercept anything airborn, especially if they had 15 min to do it

It's damn near impossible to intercept an ICBM, which is what I am talking about. The Patriot missile system has a 20% success rate, at best. And that's for short, in atmosphere stuff. We have an anti-ICBM missile, but it's got a success rate even lousier than the Patriots rate. And the missiles it's trying to hit are exoatmospheric, which is very different from an in atmosphere ballistic missile. ICBM's on re-entry follow a very near vertical trajectory, as the parabola is very steep.. Shorter ranged stuff follows a much shallower curve into their impact site, because the parabola of their trajectory is alot shallower.

Nuke: I know there are issues with getting the factories set back up. But given a war footing, I think it could be done in a timely enough manner to prevent any major disruptions. Remember WW2? We had the same situation then, with alot of factories sitting vacant, only due to no one being able to hire workers. The unemployment rate was running 30%, so alot of factories were sitting there idle, or vacant. Businesses then, like now, wanted to lose as little money as possible, so the stuff inside many factories was stripped out and sold. It wasn't as bad as it is today, but it only took them a year to get up to full capacity back then. And that spare capacity is still there. The factories can be repopened, or new ones can be built. I gaurantee the workforce is there. A large chunk of the population is working minimum wage, and would jump at the chance for a high paying factory job. As for raw materials, we still have plenty. We have huge copper deposits, as well as iron and nickel. The refining is cheaper in China, so it's done there, but all the materials are here. And once again, there are underused refinining facilities all over the US, except it's almost as cheap to do it here as in China, so alot of the refining of raw materials is still done in the US. That's due to automation and making it very very efficient. We still have steel production facilities here, they are just seeing minimal use, as alot of that sort of stuff has been sent to China. There's plenty of readily available spare production capacity in this country. And even more that wouldn't take alot to get set up again. That huge industrial capacity we had in WW2 didn't just desert us. We still have most of the advantages we possessed back then. It's just that we aren't in a war, so we are shipping stuff overseas, and importing most of our goods. That doesn't mean we CAN'T go back, it just means that we would need a big spark to get us to want to do so.

I'm not revisiting the whole thing about how we could be knocked off our #1 position. It could be done, but in doing so China would suffer horribly economically, and it wouldn't be impossible for the US to recover from that sort of economic disaster. In fact, I bet that's the last thing they want to do, because our allies would help us recover. Since the most likely scenario is the collapse of the dollar, and that would affect everyone, not just the US, the rest of the world would be eager to help, so that the US didn't just cancel it's debts. Add to that the huge reduction of the buying power of the dollar, and the US is forced to start producing and refining everything on it's own again. This means that when we are back on our feet, we once again have an industrial economy, in direct competition with China. And you really think China wants to be competing with the American industrial machine working at full bore? I don't think the Chinese are trying to set us up. You are being needlessly paranoid.

Beatles: The dollar is the world currency. There is nothing that has replaced it yet, and more transactions are done in dollars around the world than happen in the US. About half the number of bills the US Treasury produces end up in circulation in other countries. There are a number of currencies pegged to the dollar, and most currencies are measured in relationship to the dollar, i.e. the Euro is worth 1.5 times as much as the dollar, the pound is worth 2.2 times as much. That done in both Europe and America. The four major currencies listed in German newspapers are the Euro, the deustchmark, the dollar and the pound. The other three are measured in terms of how many dollars they are worth. It's also one of the strongest currencies in the world. Few other countries currencies are worth as much as the dollar. If the dollar died (and the US with it) we'd prolly experience a world wide depression. If something ever replaces the dollar as the dominant currency, then the chinese might kill the dollar, but they wouldn't risk it now.

[The Beatles]

You missed my point. The fact that currencies are published in relation to the dollar isn't an economic indicator of the dollar -- just a legacy of the (failed) Bretton Woods system, which tried to peg dollar to gold. About 10-20 currencies are actually pegged to the dollar.

If the dollar collapsed it wouldn't take the world with it. It would hurt those countries the US invests in heavily -- such as the UK or Israel -- and would leave countries like Russia or the Arab states (not Iraq/Afghanistan obviously) pretty intact.

[edit] Also, exchange rates are pretty useless data -- historical accidents. The pound sterling is high, but is that any indicator of anything but history? All modern currencies are exchangeable and thus intrinsically worthless. (FYI the dollar rose in the 90s and has been dropping since then.)

[Gen. Volkov]

I see what you mean about the Bretton Woods thing.

The US does invest in Russia heavily though. Mostly to get them to get rid of their decaying fleet of ships and their old decaying nuclear weapons, but US companies are also investing in their oil wells and various other natural resource collection points.

Who do you think buys oil from the Arab states? (The only thing keeping those countries afloat economically) That's right, the US and countries with large US investments. The entire world is now majorly interconnected. In more ways than just communications. If we collapse, the rest of the world is coming along for the ride. Even if specific countries have little US involvment, at least five countries they are involved with in a big way DO. The only exceptions to this, and really minimally so, are international pariahs like North Korea. But North Korea is involved with China, and China is involved with the US in a big way. As is Japan, who is sending aid, and trading with North Korea to keep it stable. And Japan is also heavily involved with the US. South Korea has economic ties with North Korea, and thye have a US military presence for crying out loud! No one would be competely isolated if the US tanked. Heck, just look at the Great Depression. There was a cascade of countries going in the tank. Not sure who started it, but the US going in the tank was involved. The Great Depression is called that because it was both very widespread, as in most of the world, and very deep, as in countries unemployment rates started ar 20% and went up.