"Protesting is kind of a national sport in France" NOT in NY City!

NYTimes announces that French Strikes Disrupt Air and Rail Travel

Union officials claimed a nationwide turnout of more than 3.5 million people, an increase of 20 percent from the previous strike on Sept. 23, while the French interior ministry put the figure closer to 1.23 million, up from just under a million in the last strike. In Paris, the police counted 89,000 protesters, up from 75,000 previously.

While NYTimes is silent on the actual demands of the protesters, mentioning only the coming into law of a 2-year increase of the retirement age, a certain labor lawyer, Mr. Vergne, is quoted with saying,

It is hard to know; Protesting is kind of a national sport in France.

NYTimes keeps betting on this slogan to provoke the Pavlovian reflex in the American public. Let's hear the vox populi.



mickeyrad
Centerville Iowa

Enough! Enough of the rich people gambling & losing money & then expecting working people to pay for it.

French working people are standing up for all the working people of the world. The strike should stand until the oligarchs who run France surrender.

Working people deserve the fruits of their labor. 99% of all income should go to working people. Let the rich eat cake.


Babeouf
Ireland

Oh dear threats that the economy will collapse if the French workers do not accept to work until they drop. Apparently the heirs of the Bourgeoisie still haven't noticed that social passivity on a massive scale doesn't stop Capitalist economies from periodically collapsing. And yet this process has being going on for hundreds of years. One infamous German academic even suggested that such a propensity to failure was built in to the Capitalist process itself. Still I'm sure its only a matter of time before the economic recession in the USA is blamed on the American workers inability to live on a bowl of rice a day.


Diana
New York

I suspect that even here--even among the well-educated and well-read--we will see lots of union bashing.

Since Reagan busted the Air Traffic Control unions, we've heard continual, well-orchestrated, wildly successful messaging sent down from on-high by the corporatists through their various propaganda outlets--that workers, especially professionals like teachers and nurses--are greedy incompetents and the essential cause of our economic troubles.

Of course it's the messagers themselves--the money-obsessed blowhards who thrill at the thought of cheap labor and revel in entitlements (i.e., tax breaks and deregulation)--that have brought this country to its knees.

This is the moment we should be EXPANDING the labor movement and boycotting, marching and picketing, before--as Babeouf says--we will be living on a bowl of rice a day. The corporatists would simply love that ending.


Chris
Peoria, AZ

I admire the French!

They are not like ignorant Americans who sit by idly while Big Money and their tools in government want to cut middle class benefits before letting unfordable tax cuts for Big Money expire and reducing the budget of the huge bloated Military Industrial Complex.


N
NYC

I couldn't agree with mickyeyrad more. With pensions all but gone in the US, people who've worked all their lives find themselves on the brink of disaster. Why shouldn't workers be handsomely rewarded for their hard work over many years, even if they are paid well and have benefits through either the workplace or the state? Why should only the managers and executives be able to live easily and comfortably when they've completed their working years?


John F
London

The French unions have simply got to accept that the way of life they demand is not affordable. The country cannot afford to pay full pensions to employees who work thirty-five hours per week, retire at sixty and live until ninety. It is literally unsustainable.

If they are not able to accept this, then they will bring their economy down. That's all there is to it.

[Yeah, right! Keep that London of yours in the 19th century, John! Babeouf has seen the light, perhaps because he's Irish? Just kidding!]


A Credit and Bankruptcy Scholar
New York, New York

An occasional strike is the price of equality. If Americans had the courage and organization to do what the French are doing, then Americans would still have defined benefit pensions, job security, limited work hours, fully paid healthcare, and affordable education.

But too many Americans have become used to being slaves to those with more money than themselves. They've lost their self respect and dignity, and as a result, they're losing their jobs, their homes, and their life savings.


Bob Bell
Mount Pleasant, S.C.

A couple posts to this story are attempting to make this another example of how the rich in society are continually taking advantage of the downtrodden masses for their selfish benefit. That may be true, but the reality of what is going on in Western Europe is a far different reality: the masses are trying to prevent any degree of responsible behavior by their elected officials and beginning to live within their means.

Many European economies are in difficulty for a simple reason: the costs of social services are rising at a greater rate than the ability of that nation's population to grow revenues, either because the many services they receive are simply out of proportion with income or because economic or demographic factors are contributing to slower historic growth rates. It is happening in Greece, Italy, Spain, Portugal and several other EU nations where the population is aging and the birth rate is dropping.

No one likes to take less, but the citizens of these social democracies will have to. The only other option is for them to continue spending beyond their means, exacerbating their problem and engaging in more and more counter productive strikes and disruptions of services to the masses.

Oh, by the way, the same fate is awaiting our citizenry; we just haven't woken up to it but continue to ask our elected officials to borrow trillions from the Chinese every year to support our deficits and pass the due bill on to our children. We often blame the Western European nations for their reliance on benefits and "socialism." We don't have the common sense or economic IQ to realize we are exactly like them; but we feel superior hiding behind the myth that, somehow, American debt and selfishness is superior to that from Europe.

[Bob nailed it, he must unknowingly work for the capitalists, if he's not one of them.]


Jemmy
new york city

I hope the protests grow even larger and shift into a general strike. Why should the working class pay for the mistakes of the global capitalist class? It doesn't make any sense, especially if the majority of the population is against such reforms! It is called democracy and the government, which protects the interests of the bourgeoisie, cannot impose something that the majority of the people disagree with, especially when they had not part in creating the global capitalist meltdown in the first place!

Hopefully workers here will stop waxing poetic about "ONE NATION" and actually decide to mobilize in a meaningful way against such reforms.

Capitalism is unsustainable in every way possible. Do we really think that markets can forever grow and GDP will always be able to continually rise? Workers have become more productive while wages have become stagnant in this country, hence the consumer debt that sky rocketed in order to sustain the facade of a growing standard of living. Well now my generation is having to deal with the careless actions of my predecessors and we are growing angry and educated about this stuff!


The Frog
France

The issues are indeed bigger than the pensions. The pensions are simply the focus of angers for what is widely considered as a growing "social unfairness". Austerity is one thing, but it is difficult to convey the message of rising the age of pensions when the government and senators are playing with different rules. Senators, who are currently voting on the pension law, can obtain a 2000 USD lifetime pension starting after 5 years of activity... versus 40-42 years of activity for an average citizen. Meanwhile, new major tax cuts for the biggest national fortunes are being offered, hampering further the national income and becoming a symbol of the above-mentioned unfairness.

The points above are examples merely highlighting why the government austerity policy became at best unreadable, at worst incoherent to the public eye. The unwillingness to openly negotiate with the unions has triggered considerable tensions and the results are seen these days in the street and in the polls.



Romeo Charlie
LA, California

How ironic. The Republicans are probably smiling gleefully at the French government. Taking away money from the nanny state to give to the rich is precisely what the leadership is doing in France. This is the Republican masterful playbook. It is shameful the French leadership has mismanaged the French pension fund and are using the financial crises to fool people into thinking the pension fund is squeezed for money. Who is responsible for the projections?

The prime culprit is the European Central Bank. The folks here who create policy know a good thing: stay away from the decisions they make and keep the blame on the French citizen.



Cindy
Baltimore, Md.

I think that all Western governments, European and US, would do well to start the austerity at the top. Everyone understands that this economic crisis occurred because of excesses of the corporate rich, especially the banking industry, and that is where the austerity starts. As long as governments refuse to implement substantial taxes on the wealthy to pay down the deficit, average people should fight hard against this attack on social programs.


Diogenes the Dawg
N. Padre Island, Tx.

This French dilemma will soon be coming to a municipality near you. City and state budgets all over America are going broke paying for police, fire, teacher and civil service pensions. These pensions need to be eliminated and the affected work force transfered to the Social Security system like the other 99% of the populace. This would have the added social benefit of giving these folks more of a motive/incentive to care about what happens to the rest of us as well.


Mary
NYC

Viva la France! If I could join them, I would. Why aren't Americans taking to the streets? If not now, when?


The Frog
France

A few additional figures for those who might be inclined to believe the strikes and protests going on can be dismissed as ridiculous and French have nothing to complain about.

The 60 year age for pension is the *minimum* age and valid only if you have worked for 40 years fully. Which means... no break for kids, no unemployment, no long studies, no accident. For anything mentioned above, you'll have to retire later, up to 65 year old (soon 67). If you have worked less than 40 years, your pension will be severely reduced.

But a few questions are asked when it comes to rising the age of pensions, especially when:
- seniors (55y+) have enormous difficulties finding a job. Their employment rate is 38%
- juniors (15-25y) either struggle to obtain a job or make long studies. Their employment rate is 32%

It is a common joke to say that the death rate in some companies is higher than the retirement rate. Why ? Because senior people are often laid off before they have a chance to retire, and then finish their career unemployed. Statistically, few reach the age of retirement while still active.

The over-simplistic accounting argument “work longer to pay for the pension” stops being valid when so many seniors are unemployed and are therefore getting money from the country instead of producing value. The problem is more complex than simple math.


Lynn in DC
DC

Cradle-to-grave protection is no longer sustainable when there aren't enough workers to finance that lifestyle. Where do the unions think the money is going to come from to pay retirement benefits to Boomers? The answers are cut pension benefits, increase the retirement age OR perhaps receive no pension at all if the system becomes bankrupt. Do the unions propose viable alternatives? Strikes seem childish and useless in this day and age.


Jacob10583
Zurich

Bob Bell is 100% correct. There really isn't anything for me to add.

Yes, blame for the financial collapse lies primarily at the feet of banks, unscrupulous fund managers, and traders, but that doesn't change the fact the we in the West have been outliving our means. The bankers are simply a symptom of greater societal problems. We have increased our social services, our commercial standard of living, while our marginal productivity has decreased. Simply put, we are consuming value faster than we can produce it. It doesn't help that our economies rely on banking, services, and "tech" with little actual societal value (i.e. facebook).



sharon57
New York

It's refreshing to finally read about workers who are as mad as hell and they're not going to take it anymore! Here in the good ol' USA organized labor has been running scared ever since President Corporate Shill Reagan was able to break the air traffic controllers union with relative ease. Corporate Shill Reagan emboldened his corporate masters in letting them stick it to their workers with his "trickle down" philosophy in redistributing wealth to all of his rich cronies leaving the middle class with next to nothing. American workers have never recovered from the Reagan debacle.

Maybe the French can dust off the old guillotine and reserve it for corporate crooks. Off with their heads! Vive la France!


Marcus
NYC

First my sincere congratulations to the French working class people for their courage to fight for their interests and refusal to swallow the corporatist plutocratic propaganda that most Americans swill like drunkards.

From an economist's perspective, I find bob Bell's and Jacob10583's comments to be reminiscent of the typical false argument that is put forth by Republicans and monopolizes the US media’s focus during any discussion about responsible government spending. This propaganda suggests a false choice between cutting social benefits/ entitlements that benefit the middle class and poor or fiscal ruin.

In fact, however, it is not spending on social benefits that is bankrupting the US but our runaway health care costs, pork barrel spending at the bequest of corporate special interests, and our absurd spending on our militaristic empire necessary to be the world’s policemen.

The wars in Iraq and Afghanistan are currently expected to cost near $2 Trillion - that’s 2000 Billions - and Bush and the military originally sold us on the war by saying it would cost only about $80 billion or less because the oil would pay for the war and the reconstruction of the region. This type of propaganda – and the diminished intellect of the American citizenry which is too uninformed to detect and reject it – even when it is obvious after the fact - is what is bankrupting the US - not spending on social security or other entitlements.

And also a word on entitlements, - social security is not a “gift” afforded to citizens as it is typically characterized by the American media - it is something we are entitled to like any other property we pay for because citizens have paid for this entitlement through the social security taxes we pay from our paychecks.



Nick
Boston

"Late Monday, the [French] Senate, the upper house of the legislature, voted to raise the age of retirement with a full pension to 67 from 65" (NYTimes, 10/12/10).

Why stop at age 67? What about rounding up to 70!?!

This is absurd: the upper-middle class + wealthy top 5% can checkout + luxuriate on the backs of the majority French workers (what remains of the middle class) who will have to work longer before retiring themselves!

Let's call this what it really is: serfdom.


Talleyrand
Basel, Switzerland

Bravo to the French. Yes, the capitalists and freemarketeers would really love it if workers would just shut up and do as they are told, the invisible hand, so the neo-liberals, is only for people making a ton of money. Forget it. Every single revolution in history has had to do with the haves having a lot on the backs of the have nots.

The last recession is a perfect example. The governments are all saying "we have to tighten our belts". But not everyone. My monthly costs went up by about 300 euros in the past 18 months. Why does my landlord NOT have to tighten HIS belt???


Hetty Green
NYC

Imagine what might happen if we had mass strikes in the US? (That's right -- everyone arrested, no change.....)

Vive la France...


Adil
NY, NY

I love the French people. period.

here is another example of lies and lies: the rich took 2.5 trillions from SS... and suddenly, the SS cannot pay its promises so poor must take the hit :)

of course, the media writes for the rich because they are funded by the rich.. fortunately, at least French people are not as stupid as rest of world.

here is next thing that rich can try: make sure the marriages are world class mistakes as it happens in India/Pakistan.. then the kids produced will be absolutely like machine and will obey all orders.. but hey,,,, would you really like world full of such machines?


rei vilo
France

As Former President General de Gaulle put it, "How could you govern a country with more different kinds of cheese than days in a year?"

Now, the strikes involve primarily civil servants "les fonctionnaires" who want to clash with their employer, i.e.. the State. They don't care about the non-State sector and free business companies.

The strikes also include a specific class of age, close to retirement, which was aged 15-25 on May 1968. This generation has eaten what their parents built after WWII, has saved nothing during their working lite-time and now wants the next generation to pay for them.

Last but not least, France has only one political party able to govern, Sarkozy's UMP. the Socialist Party has nothing to propose and remains silent. The far-left dreams with anarchy and Revolution, hence the enrollment of kids and teens.

France is that close to a violent surge from free-enterprise employees against civil servants, from younger generations against the 68 generation.

Who said that "France [was] the only working communist country"? What's the wrong word: "working" or "communist"?

I'm French and I live in France: shall I plan to emigrate?



Erka
Paris

Yet the NYT forget to mention that Eric Woerth, the minister in charge of the so called "reform" (a step backward to the 70', btw) is involved in numerous illegal funding activity of the presidential party UMP. Plus, in addition, a unbelievable conflict of interest. After being both the finance manager of Sarkozy's party and the state treasury minister for 2 years he just resigned from his party appointment. Now every week or so a new revelation about how he helped, thanks to his position as minister, hiding tax evasion fraud from billionaires (including the one his wife used to work for) that happen to be also big donors to Sarkozy's party that he was working for is being published.
The government call the activity of bringing up to light such dirty connections "a reminder of the 30's propaganda" and paradoxically tries to hide the scandal under far-right rhetoric against illegal aliens and Romanians. The entire population is definitely fed-up with this bunch of corrupted rightist politicians and their clique of heirs and billionaires, and really wants to send a clear message. The "reform" is just the cherry atop of it, since Woerth keeps referring to his "noble" sense of equity and his "honest" face (true!) to argue against valuable arguments raised by the Unions...



JD
Kansas City, MO

The comment from John F., London:
"The French unions have simply got to accept that the way of life they demand is not affordable. The country cannot afford to pay full pensions to employees who work thirty-five hours per week, retire at sixty and live until ninety. It is literally unsustainable."
What would people living before or around the French Revolution would have said about this? Well, we cannot afford to change, because it would mean that average citizen will have a little better life at the expense of luxuries enjoyed by the aristocracy. Then they will not work hard and economy would suffer. Hmm.


D.Strohl
France

May be it is useful to know that almost all European countries have retirement age limits at 65 or 67. This was also the case in France till 1982 or 83 when the Socialists under President Mitterrand lowered it from 65 years to 60, in order to fulfill a campaign promise made by Mitterrand himself. A presidential election is due in 2012; the Socialists and their allies hope to win this election thanks to their promise (delivered solemnly to the "peuple de France" by Ségolène Royal, former presidential candidate who lost against Pres. Sarkozy in the 2007 election) to turn back to 60 if they win. As the French saying goes : "Ceci explique cela" (this explains that). What they miss to do right now is to explain how they will finance the system - other than increasing taxes, their favorite and usually sole remedy. Of course, the new taxes will be aimed at "les riches" ! But as usual, the middle classes would foot the potential bills.
PS: May be it is also useful to know that under Mitterrand's 14 years tenure (1981-1995), there were four devaluations of the French currency ("franc" at the time), i.e. 1981, 82, 83 and 86. I still have a vivid recollection of these feats :). They were the starting point of the huge state deficit spiral which still goes on.


The Frog
France

A few more facts and figures from frogland...

the posts painting the protesters as "insiders", from corporations having huge benefits or civil servants are at best inaccurate. We are talking 1.2 to 3.5 million protesters in the streets during today's protests. That would be a quite significant number of insiders.

Today is the fourth of the protests that happened both during week days and during week-ends, bringing very different populations in the street, some who couldn't do it during a work day for obvious reasons.

Lastly, about French people living above their means... France is listed in 2010 as the third country hosting the biggest number of millionaires after the USA and Japan.

Now one might wonder: is the bottom-line problem connected to the lack of wealth, or about the repartition of wealth ? It's a question of perspective and picking the facts suiting one’s argument.


Mason
New York City

I lived in France for almost three years. I am very critical of the "French way" when it's misguided, arrogant, or both (it can be both). But I applaud the French in this nationwide action, because if they give in now it's just the beginning of unbridled capitalism and GOP-like prescriptions for "sustained growth and prosperity" -- privatized Social Security, limited or zilch mass transit, delayed repairs to infrastructure, the rationing of health care (you purchase a plan for your child but can't afford one for yourself). Those are prescriptions for a utilitarian country, a third-world country, and the French want no part of it. Aux barricades!


David Sassoon
Paris France

I am an ex-pat living here and part of this crazy system in France. Those who know me know all too well that I am very critical of many aspects of life here. However, I do not worry about my health insurance nor the quality of the schools and the municipal services. Paris has outstanding public transport which still works even during this strike. But neither the government nor the 'people' are uniquely right or wrong in this story. The pension scheme is simply being adjusted for a longer life span. But it is also true that social funds are tight, in part due to an immense abuse by 'the people' and a refusal of the very rich to chip in a bit more. I have witnessed more people 'play the system' for maximizing the money they get instead of using the social safety nets only when needed but France also loses some of the very rich who relocate to other countries to avoid the higher taxes.

I do not agree with the protests and personally think that advancing the retirement age by 2 or 3 years is not such a tragedy. But on the other hand, you must acknowledge the contrast to what is going on in the USA. France is a country in which over 60% of the people vote and politics is still a fact-filled and tedious discussion that cannot even fit into a Tea party 30 second sound bite.


A.G.
Oslo, Norway

It is false to presume that students, workers on strike have a reasoned rational for their actions. It is more likely that the massive strikes reflect a culture of discontent, whether directed at banks, corporate chiefs or government cronies.

At the end of the day, the strikes will only harm the French, students, workers, parents, kids, and those that are hoping to retire one day.
The economic reality today is that more people have to work, longer and harder if they want to retire early, with a comfortable or even a basic pension.



WagesofSloth
Florida

It seems that the democracies face at least two problems, which seem somewhat intertwined. The thrill of spending someone else's money, whether through bailouts and preferential tax treatment, entitlement spending, or deficit spending with no plan to be repaid during the lifetime of the borrower is at the heart of the issue.

Corporations that are rewarded with preferential tax treatment, both for stockholders and investors, need to understand that they can not have what they want, insofar as a system in which when the going is smooth, and profits are ripe, they can decide to lavish upon themselves riches, and call it just rewards. They would justifiably have that option, were it not for the fact that they promote regulation to their benefit, and occasionally societies detriment, whether through barriers to entry of competition, or differential tax treatment, etc., and also, when the going gets rough, they want to be bailed out either through favorable interest rate policy, government backed loans, or wholesale rescue from the public purse. If corporations wish to have a social safety net provided by the government, they need to pay for it, just like everyone else. If corporations want lower taxes, then they need to accept lower levels of services, just like everyone else. If corporations don't want foreign competition, (whether from domestic companies, or those people who speak differently) they need to deal with the higher cost imposed by workers/consumers wanting similar protection and barriers to entry from competition.

If workers want to retire at 60, receive cradle to the grave medical care, have guarantees as far as minimum levels of income through the dole, etc., they should be prepared to pay for those things, just like everyone else. That means if one plans to spend nearly on third life not working, the ability to consume almost all income is no longer feasible. One can not count on someone else to pay for a life of indolence, whether that is through taxing someone else, be it rich, middle class, businesses, or even taxing future generations through massive national debts and high rates of inflation to make prior borrowings less painful. There is no reason that someone can't spend the last 20 to 30 years of life not working, but they need accept an appreciably lower standing of living during the first 50 to 60 years, via some combination of increased output and decreased consumption.

Future generations are not "suckers," simply because they lacked the wit to be born first, and lost the ability to vote against being saddled with massive amounts of debts, and a degraded environment, both politically and physically. The idea that those who come after should have the pleasure of paying for the levels of government spending that current generations want, but aren't willing to purchase with their own output is morally reprehensible, and practically difficult. It is not inconceivable that citizens of a country, when faced with high levels of spending on debt service that the current workers did not create, along with expensive social programs from which current workers are not likely to see benefits, with high tax rates that go for spending designed to benefit people who currently live a life of indolence will revolt and say no more. While those workers would definitely be hurt by a default of their governments obligations, they would basically be placed in a position so unenviable that they have little to no stake in the system, certainly not enough to put forth the required effort to make certain that other people are comfortable. They have little incentive, not to use a 3rd grade metaphor, of taking their ball (productive labor) and going home until the rules of the game have been changed.

The second problem relates to the fact that the world is no longer Europe, America and their colonies (my deepest apologies to Japan and Korea). The global workforce is connected enough, at least by information, so that Chinese people want Buicks, South Africans like Ipods, and basically the majority of the human race wants more than subsistence farming, poor water quality, repressive government, and so forth. These individuals aren't mental defectives, and if they can make their living standards closer to those enjoyed by the West, eventually higher, they see no reason not to pursue this goal. Every job "outsourced" is "sourced" somewhere else. If 20 dollars/euros a day is a pittance in one country, it seems rather more generous elsewhere. Thanks to a global economy, it isn't inconceivable to see global living standards approach a much higher level in the aggregate, but a lower level in some of the more advanced economies.

That isn't a bad thing, but it does mean that global flows of labor should be higher, to match increased ease in global flows of capital. Take away capital's mobility advantage. Level the field, increase the standard of living for humanity, and only spend what one earns.


Bruna
San Francisco

First it is important to note that there are several "classes" of pensioners. There are the unions that operate in nationalized or quasi-nationalized companies like EDF, SNCF and Gaz de France. These unions have negotiated fantastic benefits for themselves (much like some the US public service unions). For example, SNCF ticket takers retire at 50. This was a function of the long ago coal-powered trains and has no bearing on today's condition but they still retire at 50. Would it be so disastrous for them to retire at 55?

But on the other side are those who work in the private sector whose pensions are not as generous and who retire at a later age.

Then there is a third class of young professionals who work only on temporary contracts - meaning they are temp workers and enjoy few of these benefits. The reason why there are so many temp workers is a factor of the economic burden on an employee that these workers are striking to protect for themselves even if it exclude others.

So the "strikes" you see are the "insiders" with generous benefits who want to protect them. Those you don't see striking will not enjoy these benefits.

So those of you who are seeing some glorious workers' paradise you'd better look again.



Chris
Phoenix

France probably cannot realistically afford to keep a retirement age of 60 any more. However, the financiers who destroyed our world economy have not paid one iota for their actions. The People are right to be angry. Too bad France can't bring back the guillotine for the slime who let greed drive them to make idiotic decisions. If they could bring it back I vote we extradite some of our Wall Street barons to France and 'let them eat cake'.

[Why is it that folks from NY City seem most receptive to what's going on in France? Also, isn't NYCity the place of NYTimes?]

Change or Perish

Change or Perish
By ROGER COHEN

LONDON — Before leggings, when there were letters, before texts and tweets, when there was time, before speed cameras, when you could speed, before graffiti management companies, when cities had souls, we managed just the same.

Before homogenization, when there was mystery, before aggregation, when the original had value, before digital, when there was vinyl, before Made in China, when there was Mao, before stress management, when there was romance, we had the impression we were doing all right.

Before apps, when there were attention spans, before “I’ve got five bars,” when bars were for boozing, before ring-tone selection, when the phone rang, before high-net-worth individuals, when love was all you needed, before hype, when there was Hendrix, we got by just the same.

Before social media, when we were social, before thumb-typing, when a thumb hitched a ride, before de-friending, when a friend was for life, before online conduct, when you conducted yourself, before “content,” when we told stories, we did get by all the same.

Before non-state actors, when states commanded, before the Bangalore back office, when jobs stayed put, before globalization, when wars were cold, we did manage O.K., it seemed.

Before celebrities, when there were stars, before Google maps, when compasses were internal, before umbilical online-ism, when we off-lined our lives, before virtual flirtation, when legs touched, we felt we managed all the same.

Before identity theft, when nobody could steal you, before global positioning systems, when we were lost, before 24/7 monitoring and alerts by text and e-mail, when there was idleness, before spin doctors, when there was character, before e-readers, when pages were turned, we did get by just the same.

Before organic, when carrots weren’t categorized, before derivatives, when your mortgage was local, before global warming, when we feared nuclear winters, before “save the planet,” when we lived in our corners, before the Greens, when we faced the Reds, it seemed we did somehow manage just the same.

Or did we? Before iPads and “Search,” in the era of print, before portable devices, when there were diaries, before the weather channel, when forecasts were farcical, before movies-on-demand, when movies were demanding, before chains and brands, in the time of the samizdat, before curved shower curtain rods, when they were straight, before productivity gains, when Britain produced things, and so did Ohio, did we really and honestly get by just the same?

Before January cherries, when fruit had seasons, before global sushi, when you ate what you got, before deep-fried Mars bars, when fish were what fried, before New World wine, when wine was tannic, before fast food and slow food, when food just was, before plate-size cookies, when greed was contained, before fusion, in scattered division, before the obesity onslaught, in our ordinariness, could we — could we — have gotten by all the same?

Before dystopia, when utopia beckoned, before rap, in Zappa’s time, before attention deficit disorders, when people turned on, before the new Prohibition, when lunches were liquid, before Lady Gaga, when we dug the Dead, before “join the conversation,” when things were disjointed, before Facebook, when there was Camelot, before reality shows, when things were real, yes, I believe we got by just the same.

Before “I’ll call you back,” when people made dates, before algorithms, when there was aimlessness, before attitude, when there was apathy, before YouTube, when there was you and me, before Gore-Tex, in the damp, before sweat-resistant fabric, when sweat was sexy, before high-tech sneakers, as we walked the walk, before remotes, in the era of distance, I’m sure we managed just the same.

Before “carbon neutral,” when carbon copied, before synching, when we lived unprompted, before multiplatform, when pen met paper, before profiling, when there was privacy, before cloud computing, when life was earthy, before a billion bits of distraction, when there were lulls, before “silent cars,” when there was silence, before virtual community, in a world with borders, before cut-and-paste, to the tap of the Selectra, before the megabyte, in disorder, before information overload, when streets were for wandering, before “sustainable,” in the heretofore, before CCTV, in invisibility, before networks, in the galaxy of strangeness, my impression, unless I’m wrong, is that we got by quite O.K.

Before I forget, while there is time, for the years pass and we don’t get younger, before the wiring accelerates, while I can pause, let me summon it back, that fragment from somewhere, that phrase that goes: “The bourgeoisie cannot exist without constantly revolutionizing the instruments of production ... and with them the whole relations of society.”

Yes, that was Marx, when he was right, before he went wrong, when he observed, before he imagined, with terrible consequences for the 20th century.

And if back in that century — back when exactly? — in the time before the tremendous technological leap, in the time of mists and drabness and dreams, if back then, without passwords, we managed just the same, even in black and white, and certainly not in hi-def, or even 3-D, how strange to think we had to change everything or we would not be managing at all.

_____________________________________

Norm
Hopewell, NJ

Before political correctness and tolerance, when we were allowed to speak what we believed. Before "your truth is not my truth," when we had shared values -- a culture. Before the deprecation of marriage, when the promulgation of our culture depended on successful families. Before individual self-fulfillment was the highest good, when we would make choices considering the good of the whole.


Barbara J
Germany

Before modern sewage systems brought us reliably clean water, we did not get by just the same. Before antibiotics, we did not get by just the same. Before open-heart surgery (dependent on antibiotics), some of us did not manage just the same. Before the work of Jonas Salk, some of us did not manage just the same.

Before the death of Mao, some of our extended family did not get by just the same. Before the work of Norman Borlaug, some of our neighbors' extended families did not get by just the same. Before accessibility laws and the technology that enabled wheelchair users to get through doorways and use public transportation independently, some of us did not get by the same.

I'm not sure, Mr. Cohen, what your point was, but some other readers may have fun adding to this short list, or have already posted their own.


notafool
Michigan

Before it was "cool" or "hip" to be rude and aggressive.

Before it was "hot" to flaunt ones "attributes" for the world.

Before it was boge to show compassion.

Before it was "necessary" to invade other countries for Oil.

Before we had an all volenteer army, when the whole country was involved in the fight.

Before "support the troops ment more than a flag magnet on the back of one's car.

Before hate and lies were on Fox news 24/7.

Before facts didn't matter.

Before our government was sold lock stock and barrel by the supreme court.

Before the supreme court elected a president.

My question : What comes AFTER? Will the USA survive as a democracy?


EGarcia
New Jersey

This prose poem is just brilliant, making my jaw drop as I read. A lot of people talk about these losses of a slower, more thoughtful life, but we all seem to just go along. Except for the random friend who has actually turned off the TV; or the even rarer friend who doesn't even have a computer but goes to the library to use one; or the techno grouch friend who has the simplest cell phone money can find because you really only need to make calls. More of my friends have signed off forever from Facebook and eschew Twitter because, after all, what is the point? To put a layer of technology and distance and isolation between you and real in-the-flesh people?

I make a major exception for Kindle because I have never read so much since I bought one eighteen months ago, and the form of a Kindle rather than the form of book is so much easier to carry around. I should also mention the great added value of instant access to the Oxford dictionary, and of being able to refresh my memory during the reading of a long book about which character is which by just a simple 'search'. So, yes, some things are more convenient, but not necessary: I could still use a real dictionary, finding other interesting words as I flip through to find the word I want,and could take notes about characters, with a real pen on a real piece of paper.


D Scott
Castine, ME

From the perspective of my 70th year, my first, and certainly unoriginal, thought is that every generation has said much the same of the generation before. But then...

On second thought, maybe this time it really is different. This time, the brush of technology is so broad and has bristles so long and sharp, that it reaches into every nook and cranny of our lives, making avoidance, or at least a respite from it, something that we have to work ever harder to obtain.

This article is a "keeper", to be kept on the desktop (wood or electronic!). Cohen has done much more than just compare the old times and new times; he has provided an important checklist of things that we might choose to ignore or turn off when we feel crushed by the need to "keep up"; when we desperately need a quiet rock on which to center ourselves. This is the time to go for a walk in the woods, preferably with a small child, and see and feel, through those unpolluted eyes and ears, the pure and essential roots of our being and relationships.

Early Fraud vs. Current Foreclosures

Johndrake07
NYC

Senator Grayson has put it, from Ground Zero of the Foreclosure Fraud State:

"So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple 'technical problem' with foreclosure processes. This is not true. What is happening is fraud to cover up fraud... The banks didn't keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents. There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts... The liability here for the major banks is potentially enormous, and can lead to a systemic risk."

Fraud in the financial industry is being covered up and abetted by the Fed, Fannie and Freddie, as well as the Foreclosure Mill legal firms involved in the documentation fraud. Add in the graft and corruption payola to the Senators and Congressman who have voted to keep the process from discovery and maintain the status quo - the whole thing reeks of criminal activity. All for greed and profits.

If Obama signs the bill that would ease the foreclosure process and in effect squash the investigation by legalizing the criminal activity, he should be impeached. If he sits on the bill until after the election, he should be impeached.

His post-2012 election defeat revolving door job into the financial industry is in jeopardy…methinks Goldman Sachs has just painted over his name on the office door waiting for him.

Will he side with the common folk being robbed. Or the elites doing the robbing. This bill HR-3803 will be the litmus test…

dumb media-people

Jumper
South Carolina

In 1969, the U.S. Supreme Court upheld the right of the Federal Communications Commission (FCC) to enforce the Fairness Doctrine.

Reagan appointed FCC Chairman, Mark Fowler, abolished the Fairness Doctrine in 1987. Congress tried to protect the Fairness Doctrine before Fowler's abolishment but it was vetoed by Ronald Reagan. Congress tried to re-instate it in 1991. Bush I threatened to veto it.

In 2000, the Personal Attack rule and the Political Editorial rule were abolished by the FCC - again - under Republican administration.

Two attempts were made re-instate the Fairness Doctrine in 2005, when Republicans held control. In both cases, under Republican Majority control, it was referred to committee and died.

Starting in 2008, several Democratic Senators and U.S. Representatives
have encouraged the FCC to reinstate the Fairness Doctrine - to no avail.

Former President Bill Clinton has stated support for the reinstatement.
In 2009 an interview during Februray, he stated, "Well, you either ought to have the Fairness Doctrine or we ought to have more balance on the other side, because essentially there's always been a lot of big money to support the right wing talk shows."

In "Broadcasting and Cable," in 2009, Bill Clinton cited, "...blatant drumbeat" against the stimulus program from conservative talk radio, saying it doesn't reflect economic reality.

Why hasn't the FCC reinstated the Fairness Doctrine under the Obama administration? The FCC abolished it and can reinstate it. The current Chairman, Julius Genachowski has a background that gives him insight to why this is necessary. Congressman Clyburn's daughter is a FCC commissioner. Certainly they together know the damage that's being done by the big money interests heavily funding the apparatus to spread the big-money lies ... with no effective response.

An effective, representative Democracy cannot be sustained with a public intentionally kept ignorant. That's what's happened since the big money interests have dominated the media with no requirement to present a balanced view.

Perhaps one problem can be seen in the Democratic leadership. In late 2008, now Senate Majority whip, Democrat Dick Durbin, said he felt this is all blown out of proportion.

President Obama, then a Senator, in June, 2008, said, through his press secretary, that he, "Does not support reimposing the Fairness Doctrine on broadcasters ... he considers the debate to be a distraction from the conversation we should be having about opening the airwaves to as many diverse viewpoints as possible ..."

The AP has reported that as President, President Obama had no intention of reimposing the doctrine.

The current House bill, HR 226, Broadcaster Freedom Act of 2009, was written to block reinstatement of the Fairness Doctrine. The U.S. Senate added blocking the Fairness Doctrine as an amendment to The District of Columbia House Voting Rights Act of 2009, by a vote of 87-11. It is on permanent hold because of other issues.

The AP stated the House bill 226 was, "... In part a response to conservative radio talk show hosts who feared Democrats would try to revive the policy to ensure liberal opinions got equal time..."

The Wall Street Journal and The Washington Times have opposed the Doctrine's revival. They contended Democrats only wanted it back because of the success of conservative talk radio.

Bush II FCC commissioners, raised the straw man distraction of stating that the Fairness Doctrine could be extended to the Internet and Cable. Gosh, guess it didn't occur to them to write legislation exempting Internet bloggers.

It should be extended to cable. The mistake President Obama made as a senator was to think that because diverse sources existed Americans would seek out opposing points to view to make themselves well-informed. How many Americans couldn't name the current Vice-President?

The reality is that in political commentary, the attack and counter-attack must be presented side-by-side or only one side ever gets heard - as we see with Murdoch's endless stream of paid liars.

If the Fairness Doctrine was not a concern to the big-money conservatives that their propaganda and lies would be exposed, they wouldn't be attacking it's reinstatement.

The Fairness Doctrine served the U.S. well from 1949 through 1987. Again, a representative democracy cannot work if only lies, untruths and the propaganda of the ultra-wealthy is the only information filling voters' heads.

____________________________

"The Fairness Doctrine had two basic elements: It required broadcasters to devote some of their airtime to discussing controversial matters of public interest, and to air contrasting views regarding those matters. Stations were given wide latitude as to how to provide contrasting views: It could be done through news segments, public affairs shows, or editorials. The doctrine did not require equal time for opposing views but required that contrasting viewpoints be presented."

KRUGMAN - Levin Bill - CHINA

duduong
CT, USA

Mr. Krugman's arguments are standard Keynesian and consistent with the mainstream US economic doctrines since the 60's, when the US became a deficit nation. But if we go a little further back to the mid 40's, when the US was THE surplus nation of the world, what was the US' position on this issue? During the Bretton Woods negotiation, the chief representative of the UK (the major deficit nation of the day) was none other than Mr. Keynes himself. His main proposals are 1) to set up a new global currency supervised by an independent world central bank and 2) to have a pre-set mechanism for currencies of surplus nations appreciate and those of deficit nations depreciate. The US' response was NO and NO! This happened at the height of WWII, so guess which side prevailed. Dollar became the global reserve currency, and all others were pegged to it for the next three decades, until Nixon unilaterally trashed Bretton Woods. More precisely, he trashed the second part, which prevented the US from printing unlimited amount of money as its deficits got worse. The dollar remains the global reserve currency, however.

Now, however evil the Chinese de facto peg to the dollar is nowadays, it is only so to half the degree as the US was under FDR (coincidentally one of Mr. Krugman's heroes) because China is at least not forcing the rest of the world to accept Yuan as the reserve currency.

Now, dollar remains the global reserve currency and the Fed gets to print and has indeed been printing unlimited amount of it. Chinese labor and products get traded for this worthless piece of IOU and, guess what, there is no real global currency for the Chinese to convert it to, thanks to the foresight of FDR. Two plus trillions of them have to be put back into treasuries and wait for the eventual depreciation. Believe it or not, the evil Chinese, instead of accepting this depreciation, actually have the temerity to emulate the US and print a large amount of their own money in a futile attempt to delay the day of reckoning. This is the true crime of China. All the talks about jobs are just smoke and mirrors because however much the Yuan appreciate, the overall US trade deficits will not drop. They will simply shift to cheaper countries like India, Pakistan, Indonesia, Vietnam, you name it.

Although there is a real offense made by China, the urgency to dwell on the issue now comes from other considerations, notably the easy scapegoating by Obama administration about the deficits before the election and the geopolitical benefit of weakening China while strengthening its neighbors. The Chinese leadership knows this, so I doubt that they will welcome the American liberators with flowers as Mr. Krugman claims. If the US persists in this attempt, a trade war is not far off.


HandMadeinUS
Florida

Lesson learned here. Americans earn 4 times the wages than Chinese workers and Americans are unemployed because of it. No magic tricks, jawboning or diplomacy will change that, and China will continue to bank money every year, America will continue to lose jobs and run deficits.

I am a 6th generation American working for a Chinese company, calling on USA businesses nationwide. American companies cannot compete with pricing on my products, my customers want the cheapest prices, no matter my products are Chinese made. My company also receives alot of investment and grants from the Chinese government for marketing and R&D. In effect, I work for the Chinese government.

The real problem,(wage disparity),will continue to haunt this country for many years, until the imbalance corrects. So, America needs to quit China bashing and whining, and be real Americans and work hard. Do like the Chinese now do. Lace up your shoes, keep your head down and go to work everyday developing new ideas and products. Crying that our problems are created by others, will doom us for sure.


Tom Renda
Washington

Samuleson made a similar argument on Monday in the Washington Post. There, he noted that China's share of worldwide exports has risen from 6% in 2006 to 10% in 2010.

Well, inasmuch as China has a third of the world's population, what principled reason is there why its share of exports (and hence share of jobs) should not rise to 33%?

If our answer to that question is nothing more than "because it hurts us" then I would not expect much sympathy from the Chinese anytime soon.


schrodinger
Northern California

Rather than a trade war we should be thinking about a glacier. Slowly, surely, over a period of 3 to 5 years, we should erode China's trade surplus with ever increasing tariffs. The tariffs should not favor specific industries, but should be be broad based and applied to everything made in China.

We should ignore Chinese retaliation against US exports. We can always balance our trade at zero, and we should make that quite clear to the Chinese.


Katy H
UK

I once visited Cheyenne and being in a touristy mood, loaded up on western wear at a local outfitter. imagine my surprise when I got it all home and all of it, every ranch shirt, every longhorn belt buckle I proposed to gift as an "American" present, turned out to be made in China.

Currency is one thing but if China gets more expensive, Lee, Wrangler and Levi will simply go to Vietnam, Bangladesh, the Philippines or Morocco.

They won't come back sadly. Is this inevitable though? Spanish company ragtrade co Inditex (Zara) seems to do well on world domination by manufacturing in Spain.

Your problem lies with the mindset of the CEOs of US companies, the domination that their cheap labour is payed in, isn't important. Any respite would be temporary at best.

Anyway. If you want to play chicken, devalue the $ (even more) and China will overheat or be forced to adjust the peg.


John MacCormak
Athens, Georgia

Krugman writes: "...taking on China is one of the few policy options for tackling unemployment available to the Obama administration, given Republican obstructionism on everything else."

Or so it would appear. Washington and Krugman do indeed seem to feel that they are out of chips. Odd that they should see things that way, of course, given that there is plenty of work to do to solve the real problem, the lack of competitiveness of the US economy, itself a consequence of the US turning itself into a financial theme park over the past thirty years, featuring real estate bubbles, stock bubbles, bond bubbles, insurance bubbles, deficit bubbles, credit card bubbles. Why, there's enough variety in this Bubble Trouble theme park to make Walt Disney envious.

What has been exasperating me over the past two years has been the way that politicians and pundits have been making excuses for America's problems. Do they really think people are stupid enough to believe that printing money, borrowing, and fiddling with currencies and interest rates are going to solve our serious economic problems? They won't. In fact, the "show-me-the-money" obsession is a distraction that is making things worse. It also reveals that, far from having learned from the mistake of redefining productive economic activity as a series of fiscal and monetary moves and regulations, officials are intent on continuing down the same path banal path, and pundits like Krugman are in the bleachers cheering - no, egging - them on.

The myriad market irregularities we see today are a consequence, not a cause of the global crisis. And culprit number one for the break down of the markets is the US, which has been promoting inflationary devaluation of its currency since the end of the post-war boom in the 1970s. Industrial activity as a contribution to US GDP has gone from being around 30% to around 15% over the past three decades; during the same period, financial activities have swollen from around 15% to 30%.

Krugman is also disingenuous (and perhaps less polite words could be used to describe his attitude) in brushing off inflation. He himself in a recent column noted with absolute glee that the US was able to erase most of its WWII through inflation. And you don't need a PhD in economics to see that currency debasement is the only way that governments have out their current debt bubble trouble.

Moreover, he ignores the relevant, current, real-world experience of Greece. Months ago Krugman wrote that Greece will inevitably sink into a deflationary hole because it can't (unlike the US - did I hear the phrase "currency manipulation"?) print or devalue its own currency. In the real world, however, Greece is sliding slowly into a deep recession featuring high unemployment, severe slowdowns in commerce and production, and, yes, high inflation. It's hard to see why Krugman thinks there is no inflationary risk. It's so hard to see, in fact, that he probably does see it. He wants inflation as a way of writing off bad debt.

What Krugman doesn't like to say is that currency debasement and other inflationary policies are a destruction of the wealth of creditors, and people on fixed incomes, and a giveaway to debt-holders. But then, he wouldn't want to mention that, would he? But that's capitalism: when you've got a bubble, it means that there is more "wealth" on people's books - in the form of bank deposits, houses, gold, you name it - than society consumes. One way or another, the books will be balanced. The only question is, will money lose its value or assets?

On another level, I also find distasteful, racist, and dangerous Krugman's continued attempts to talk up some Chinese peril. Krugman reproduces in a sanitized form the old American racist stereotypes of the Chinese as inscrutable, devious, cold, and calculating fiends who are selfishly destroying the US economy. The US, on the other hand, is seen as the good guys who just want to pitch in and help "the global economy" recover. The truth is that the US wrote the book on currency manipulation.

Krugman should stop blaming the Chinese and take a look at the man in the mirror.


AJD
New York

It's interesting that this column appears only two days after a very insightful op-ed by Stephen Roach, yet Paul Krugman doesn't even so much as acknowledge the existence of Roach's column, or of the one by two former trade negotiators that appeared several weeks ago.

Both op-eds rather deftly refuted Krugman's constant refrain that a) China manipulates its currency to subsidize its exports; b) This is the direct cause of the loss of America's manufacturing capacity; c) We must level sanctions against China and force it to revalue its currency; d) We must also sink the dollar; and e) Once this happens, it will bring about a renaissance of American manufacturing and an avalanche of new jobs.

We already tried this tactic with Japan and Germany back in 1985 with the Plaza Accord, and what did it get us? To this day, we still run trade deficits with both countries, even though their currencies are now stronger than the dollar! The Washington Post even reported that German companies have been making all kinds of money selling their products to the Chinese, even though at the time, the euro was trading at $1.30 to the dollar!

The Chinese didn't come over here and steal our manufacturing sector; rather, they simply took advantage of our own stupid and shortsighted economic policies, policies whereby the government essentially bent over backwards to encourage companies to increase their profits by shipping manufacturing and, increasingly, R&D to countries with cheaper labor.

A number of economists have countered the dangerous ideas being put forth by people like Krugman and various members of Congress, showing that even a dramatic revaluation of the renminbi would in fact result in little job creation here in the United States. The manufacturers that have moved their factories there would simply move them to cheaper countries like Bangladesh, India and Vietnam.

Another thing is that if we couldn't get goods from China, then where would we get them? We don't have the manufacturing capacity here to make things like flat-screen TVs, iPhones and other products. If they become too expensive, then the companies that make them (including many American companies) and the retailers that sell them will lose money and, in many cases, go out of business or get gobbled up by foreign competitors. How would Krugman like to see Apple acquired by China's Lenovo, hmm? That's why two retailing lobbies -- the Retail Industry Leaders Association and the National Retail Federation -- have both come out against this bill.

If we want to revive manufacturing in this country, then rather than blaming the Chinese for our problems, we should take a cue from the Germans and get into manufacturing value-added goods, high-value goods that sell regardless of currency exchange rates on the basis of their QUALITY, not just their PRICE.

A big reason why have such a huge trade deficit with China is because our products suck, not because they're too expensive.


watchingchina
Shanghai

With appropriate apologies to my American friends who might think I'm hogging this board, I would like to make one final observation.

Does anyone remember Richard Nixon or John Connally? Do Americans recall when Nixon's administration unilaterally took the US off the gold standard?

The end arrived in 1971 when the French Government, fearful of the considerably weakened position of the US dollar and concerned for its currency reserves, demanded to have all its dollars converted into gold - as guaranteed by the system.

Instead, the US defaulted on the Bretton Woods Agreement, and on the fixed currency regime itself, and unilaterally terminated convertibility of dollars to gold. Of course, the entire international currency system collapsed. This US default not only left the rest of the world very angry, but holding huge amounts of US currency that now had no fixed value.

The world's economies now had no choice but to continue to use their dollars as the reserve currency. Everyone who wanted to trade, had to buy US dollars. The result was that the US was able to sell as many bonds and print as many dollars as it wanted - in fact, to be able to inflate itself out of debt and pass the inflationary pain to the rest of the world.

The European countries complained bitterly to the US about their losses and the resulting currency fluctuations they had to deal with. Does anyone recall then Treasury Secretary Connally’s famous statement? “It’s our currency, but it’s YOUR problem.”

That 1971 decision left the US free to inflate their money supply and fuel more credit bubbles, but it plunged the world into a decade of ruinous inflation, reaching 20% or more in many countries and interest rates reaching 25% even in stable countries like Canada. The inflation led to, and was ended only by, the severe worldwide contraction of the early 1980s - when oil fell from US$40 to US$10 a barrel.

The severe recession in the 1980s was a direct result of the US default ten years earlier, and was a necessary consequence for a worldwide realignment of currencies and economies. That recession was very severe in many countries, devastating entire sectors of economies - energy, for one - and created enormous hardships and economic losses.

In Western Canada, the center of that country's petroleum industry, the contraction hit so hard and so quickly that house prices dropped by 50% in only 3 months, and those prices did not recover their 1984 levels until the year 2000.

All of that worldwide inflation, all the worldwide recessionary pain, were from the same root cause - the US overextending itself, excessive liquidity fueled by easy credit, and then passing the pain to the rest of the world. The US has repeatedly and severely damaged the world's economies by its financial irresponsibility. It is usually the same - overextension of credit, living beyond their means, creating and bursting financial bubbles, that has done it.

It’s exactly the same picture today. Don’t blame China or anyone else.

If I may, (and with the kind permission of the editors) here are a few links to articles that may clear up some misconceptions.

http://www.bearcanada.com/fae/ifc/ifc.html

The Structure of the US Economy Today:

On the supply side, 70% of the US economy today is services - banks, insurance and investment, legal, accounting, consulting, and more usual items like tourism and pizza.

A huge part of the US service sector is financial services - in other words, perhaps half of the US economy consists not of production but simply of bookkeeping entries. That's a poor recipe for a healthy economy.

Only about 10% of the US economy is manufacturing, and most of that is arms and weapons, aircraft, autos and machinery, petroleum and food products. There are almost no consumer goods made in the US. Simply put, the US doesn't make anything anymore.

And on the demand side, 70% of the US economy depends on consumer demand - on people shopping and spending money. Only about 20% is from corporate investment.

Some of this consumer demand will be spent on services, but much (or most) will go to consumer goods. So when Americans go to the mall to shop, what will they buy? Stinger missiles? A new Boeing 737? In fact, virtually all the goods in US shops are imported.

China is irrelevant in this picture. If it isn’t China, it will be someone else. If a country no longer manufactures anything, consumption goods must be imported, and that will always result in a huge trade deficit. It cannot be any other way.

The last time the US had a small trade surplus was in 1975, just after it reneged on the Bretton Woods Agreement, destroying the international financial agreements that had persisted since the Second World War.

By that time, the expansion of credit had begun to fuel the new consumer-led economy and the trade deficits began to emerge - and have continued ever since. And these trade deficits are not only with China. During the past 35 years, the US has consistently had trade deficits with more than 60 countries.

Worse, the US economy is fueled to an exaggerated extent by credit. Americans save no money but spend today's money and next year's. Consumer demand is therefore exaggerated and artificial, and the US (both government and consumers) is living beyond its means. It is borrowing from the future to spend today.

In simple terms, the US consistently buys more than it sells. It means that the world, including China, produces many things that the US wants to buy, but the US is consistently producing fewer goods that the rest of the world wants to buy.

This is the source of the trade deficits. It has nothing to do with the value of the Chinese RMB. In the almost 35 intervening years every country's currency has been up and down, often many times, but the US trade deficits (with all countries) have persisted through all of that.

The US cannot increase its exports unless it sells more arms and weapons, or commercial aircraft. It can try to increase exports of services, but that isn't so easy as the Americans thought. You can export some professional services like consulting and insurance, and tourism is a useful export. But you cannot export restaurants and dry cleaning. The scope for US exports is quite limited.

The US Credit Binge

The US economy is fuelled to an excessive extent by credit, especially consumer credit, and the US savings rate has been at zero or negative for quite some time. Americans are spending not only today's money, but also tomorrow's and next year's. Borrowing money for investment can be wise; borrowing for consumption will lead to disaster.

During the recent subprime financial disaster, Americans were using their homes like ATMs. As their houses increased in value, Americans increased the mortgages on those homes - and spent the money. As the values rose again, the process was repeated. Housing prices collapsed, the housing bubble burst, and more than 25% of all Americans owe the bank more money than the value of the house; many owe twice the value of their homes.

One of the fundamental problems with the US economy is that both the government and its population are living beyond their means, borrowing money for consumption, spending tomorrow's money today with little apparent thought of how to repay. With so much of the US economy fueled by credit, the US is not only living beyond its means, but its 'standard of living' is artificially high; my personal guess is 30% too high. This cannot likely be sustained; a major correction is inevitable.

The US wants other countries to adopt their model - stop saving, push consumer spending, overflow with liquidity, use consumer credit to a much greater degree. If this were to happen, the trade deficits might decrease, but Canadians, Japanese and Chinese will not do that.

Since the US is the only country that follows this model, the best solution is that they increase savings, reduce liquidity and consumer credit to dampen demand, and live within their means. But that's not likely to happen because it will mean an economic contraction and significantly reduced living standard.



Fred Li
Taiwan

During the past couple of years, the writings of Professor Krugman often puzzled me. Is this the same Krugman who taught me so much with his earlier books, like, “Peddling Prosperity”? Holding large amount of foreign reserve is a sign of an economy’s inability to utilize her assets, isn’t it? Buying a lot of US treasury bonds is a way of giving a loan to the seller, isn’t it? The borrower can use the loan in different ways, like building green technology, improving the crumbling infrastructure, but should not be used in blowing up a real estate bubble. Right? The loan provider, in this case, cannot dictate to the borrower for what the loan is to be used. Right?

Krugman’s accusation that China restricted foreign investment is ludicrous. China is the destination one of the largest FDI in the world! Is China hurting US employment? One period that had unemployment figures, comparable to today, was during the early 1980’s, before China began to export at all. In subsequent years, China began to export more and more and correspondingly the US boomed! How about jobs? There was a time when New England had a major textile industry that shriveled away. Jobs of those textile workers were taken by foreigners, Japanese first, Asian tigers next, and China following. It was the Japanese who took away US jobs not the Chinese. The jobs are now leaving China for places like Vietnam, Sri Lanka. They will not go back to New England! The irresponsible Wall Street types playing with “financial innovation” caused the financial crisis, which led to the current high unemployment. Wasn’t it? The whole world, including significantly the developing countries, paid for that bit of Anglo-Saxon shenanigan and we are, by and large, out of it by now. The US is not even in recession; the corporations are making record profits but they are just not hiring. One may argue that the US workers are improving on productivity so much that not so many is needed. If you look beyond the US, Germany is booming! Their unemployment rate dropped significantly. Newly rich Asians want to buy BMWs and Porsches, not Ford. Appreciation of the RMB will reduce the trade imbalance! Will it? During 2007 to 2008, RMB did appreciate over 20% and the trade imbalance worsened.

Is the US government too passive in facing up to China? It is true that whatever you think the Obama government doesn’t have many cards to play against China short of going to war. The US is in two wars right now already! It is also true the government can’t do much on anything else either, not on further stimulus, not on immigration, not on renewable energy. It is mired in the quagmire of political polarization of historical proportion!

Third Party

Tom Friedman opines in New York Times that the US needs a Third Party, which he finds rising. People talk.


Robert
Washington, DC

Yes we need a third party, for sure!

However, a 3rd party will NOT solve our problems. America is destined to Roman era decline, only at light speed! Before we can begin to solve problems we must first understand the problems.

Problem #1 = Democracy. Too many people with too many unfounded opinions, too many vested interests, too many defacto legally created monopolies, with too many dreams, goals and aspirations all willing to step on the backs of others to achieve their goals!

Problem #2 = Economics. Poor resource distribution. Income and expenses are totally out of kilter! Economics as a science is sophisticated dogma at best, and as conjured-up in America, fails to paint a true and accurate picture of our economic world, resource base, wealth creation opportunities and wealth distribution.

Problem #3 - America has zero ability to compete globally. We are destined to become a nation of burger flippers.

Problem #4 - Mediocre legal and judicial system that enforces our totally dysfunctional system. Restrictive practices in the professions, trades etc. all intended to benefit a few at the expense of the many.

Problem #5 - Every new law is designed to carve out a niche of protected activity for some special interest sector of society!

Problem #6 - A huge population of know nothings. Even those with top educations often know little to nothing! An educational system from kindergarten up to graduate school that deserves nothing but shame!

Problem #7 - A body politic that is second to none in terms of personal selfishness, foolishness and short sightedness!

Problem #8 - A military hegemon that has few true friends on the planet that has created the conditions for about 5 billion people, or barbarians in Roman speak, to one day crash down our gates and enslave the American population. From the vantage point of God's accounting ledgers, one would say, and deservedly so!

So, with all of these problems there is only one real solution. Only one possible way to right these wrongs. Only one possible way to harness the once mighty American industrial machine. This way is NOT found in voting nor democracy nor elections, nor congress, legislators, governors, judges or county clerks...

One fears that those who so strongly urged George Washington to claim a crown, to forgo democracy, who foresaw the folly of democracies will be proven unquestionably correct!

You want real leadership then our answers lie in benevolent dictatorships! Many will recognize this leader as a Philosopher King. Ronald Dworkin once gave us the idea of the all knowing, timeless intellectual giant that could pounder the rubrics of our time and lead us to just and fair results.

For those fearful of the yoke they will shout DICTATORSHIP or DICTATORSHIP of the proletariat! How much would our lives really change? China developed state backed capitalism? It is time for peaceful revolution. Americans are cows. They can be lead to the bolt gun with easy credit!

Philosopher King? Yes who would make a good Philosopher King?

Robert
Washington, DC


Projunior
Tulsa, OK

"I’ve just spent a week in Silicon Valley, talking with technologists from Apple, Twitter, LinkedIn, Intel, Cisco and SRI..."

The level of disgust goes beyond the two party system. It extends to the boardrooms of corporate America. The executives who run American companies no longer care about this country or its workers. If their bonuses can be made bigger by laying off people, outsourcing jobs, and closing factories, then that's exactly what they'll do. These CEO's have long since stopped identifying the future of their companies with the future of America.

Stop your schoolgirl gushing over the wizards of Silicon Valley. Those people care not one whit about America. Don't believe me? How about asking John Chambers, CEO of Cisco, about this remark of his:

"What we're trying to do is outline an entire strategy of becoming a Chinese company."

These same companies claim, and you gullibly swallow hook, line, and sinker, the ludicrous proposition that America doesn't produce enough math and engineering students. Microsoft, IBM, HP wring their hands and say they are forced to shift jobs to India and China. They have no choice but to lobby Congress for more H1-B foreign workers. And you, Mr. Friedman, repeat this canard ad nauseum in column after column. But the reality is quite different as Hal Salzman, professor of public policy at the E.J. Bloustein School and the J.J. Heldrich Center for Workforce Development at Rutgers University, stated in The Times on September 14:

"Moreover, there is neither a shortage of U.S. students who are world-class in their educational performance nor of college graduates with science and engineering degrees. The U.S. can claim the lion’s share of the world’s highest performing (domestic) science students and continues to graduate more than two times the number of scientists and engineers than are hired each year."

See? American companies and their clueless media marionettes are selling out America. They are chewing up and spitting out the middle class.

Yes, we are fed up with Washington? But we are scared stiff about the creeping corporatocracy that the media (they are Big Business too!) so glibly ignores. As Jeff Faux of the Economic Policy Institute so rightly points out:

"But I think for most politicians economic theory conveniently rationalized their support of the interests of corporate CEOs over their workers. Remember, over the last 30 years, the share of campaign contributions representing big business has grown dramatically -- as has the number of ex-administration officials and members of Congress who go to work for corporations as employees, consultants, and lobbyists."


Robert Henry Eller
Milan, Italy

If wishes were fishes.

Sorry, Mr. Friedman. But it only costs corporate America and other special interests about $5 billion annually to but the entire Federal Government. In a $14 trillion economy, that's chump change (and guess who the chumps are?).

The same small group of political financiers can easily up their budget to either compromise any third (or fourth) party, or simply bury it with increased support for their current stooges. No problem.

It doesn't matter whether we have one party (as we do now) or five. The only thing that matters is if most voters learn to vote their own interests, and we find a way to ensure that elected officials actually work for those who voted for them. Assuming we still have a one-person-one-vote democracy.

What we need is a non-corporate media, and a buy-proof government. Not easy. But that would be a revolution.


KM
Pasadena, CA

The analogy to Roman history is false. The cause of the Roman decline
was the elimination of the peasant farmer on the Italian peninsula and
the incorporation of these small farmers' land into the large estates
of the rich. These small farmers had been where Rome had drawn its
legions, which were unparalleled for a period of four hundred years (200BC to 200AD)--as Gibbons notes, the legions of the 3rd and 4th century were no match for those of two hundred years earlier.

The analogy to the current American situation is obvious. The peasant farmers were the equivalent of today's middle class, which is under unrelenting attack from the wealthy. Contrary to Friedman's complaints about the "far left" and corporate taxation, the primary diversion of corporate funds from innovation and investment is through the huge sums paid to corporate officers and continual demands for increased returns for capital through rising share prices and dividends. This has lead to an unprecedented accumulation of income to the nation's top one percent--24% of the nation's income. This group, having grabbed such a large share, wants more--and the only way that can come about is through further evisceration of the middle class.

Friedman should know that the longest sustained prosperity in this country's history was in the post-war era, when government programs were designed to enlarge and enrich the middle class (GI Bill, FHA, etc). Now, the three largest middle class expenditures, education, health care and housing, have gone through the roof. The economic downturn has
removed many from the middle class and made the remainder fearful of
arguing for any increase in their compensation.

The secret to America's economic revival is programs that revitalize
the middle class. It is no accident that northern European economies are doing better than ours, as they have strong policies to protect
the middle class (and one can be a manual worker in those countries and still be in the middle class). Friedman's complaints about the American economic system primarily reflect the capture of the political system by those with high incomes and a desire to maintain them--after all, nearly all of the contributions to political candidates comes from the top 1%. This is the "other election" that each Congressman/Senator must win every week (ten to twenty thousand dollars a week (or more!) for those in competitive races, which is now a large fraction of the Congress).
Until sufficient money is returned to the middle class for their labors the US will suffer from underconsumption and diminished economic returns for labor. Businesses aren't hiring because there aren't people to buy their goods.



Patrice Ayme
High Mountains Somewhere

The real infrastructure stimulus of Obama was 50 billion dollars spread over two years (the rest compensated for the collapse of state spending and the like). That's all.

By comparison, that was exactly the size of the French infrastructure stimulus spent in 2009 alone.

By a further, and more illuminating comparison the bank bonuses were 150 billion dollars in the USA in 2009 alone. Those bonuses were made possible, in several ways, only by general taxpayers.

So who is been made into a laughing stock by Obama?

The USA two party system is one party removed from dictatorship. Why should it be an institution? All European democracies have at least three parties (the UK), and sometimes much more. The two existing parties in the USA are two aspects of the same plutocratic party. Obama has been governing like what passes for a moderate republican nowadays, somewhere right of Nixon. So it is during collapse: yesterday's abyss is today's moderation.