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Old 03-30-2010, 12:58 AM   #21
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I don't always understand the charts and graphs, but it seems clear which way the US economy is headed. You can't borrow your way out of debt. You can't police the world. You can't give everyone a free lunch. Something has to give. Rampant inflation? Collapse of the dollar? World financial collapse? All the above? None of the above? Other? Who knows. Still, something bad is going to happen. If not in my lifetime, for certain in my kids' lifetimes. Just a matter of time. You can't fool mother nature. Wish I knew what to do to get ready for the bad stuff.
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Old 03-30-2010, 06:40 AM   #22
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Get religion and pray that people wake up and embrace common sense
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Old 03-30-2010, 07:28 AM   #23
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Yours is the relevant point. The U.S. isn't a nation in absolute decline, our economy is still growing. It's in relative decline. But so what? It matters, of course, in a geo-political sense. But that is not what people are afraid of. People have this erroneous assumption that the world economy is a zero sum game. That if China and India become more wealthy, than we must become less wealthy in absolute terms. It's not true. And Alan's post makes it abundantly clear. The citizens of the United Kingdom aren't impoverished. And yet their country has been in relative decline for a century.
I think that is a great thing to stress.

Personally, I look forward to the other nations "catching up" more economically. We can enjoy more global travel. We can invest globally. Most US companies sell internationally.

I don't even mind a slight lowering of US living standards as a result. We've been top dog with most of the economic benefits for a very long time. We have a very long way to "decline" relatively before it really represents hardship for the US.

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Old 03-30-2010, 10:13 AM   #24
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You can't borrow your way out of debt.
While this seems logical, the critical question is would the U.S. economy be on a better or worse trajectory had we balanced the budget in 2009? And would our debt burden, relative to our possibly lower national income, be greater or lesser as a result.
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Old 04-02-2010, 11:41 AM   #25
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The debt approaching GDP is a first for recent times. I know it is just a number. Even Britain is down around 50% this time.
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Old 04-02-2010, 12:44 PM   #26
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People have this erroneous assumption that the world economy is a zero sum game. That if China and India become more wealthy, than we must become less wealthy in absolute terms. It's not true.
Good point, but maybe 'not true' is overstating it. I think it is just one possible outcome. A super-simplistic example, numbers picked just to illustrate the point:

Lets assign an index of "100" for the standard of living of the median US citizen, and "10" as the standard of living of the median China citizen. Sum is "110" units.

Ten years later, maybe China has increased its index to "30", but due to the 'flat world' effect, the US index has fallen to "90". Sum is "120", it represents improvement overall from "110", so it is not a zero-sum game, but the US still had a decrease in its index in this hypothetical illustration.

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Old 04-02-2010, 04:15 PM   #27
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Good point, but maybe 'not true' is overstating it. I think it is just one possible outcome. A super-simplistic example, numbers picked just to illustrate the point:

Lets assign an index of "100" for the standard of living of the median US citizen, and "10" as the standard of living of the median China citizen. Sum is "110" units.

Ten years later, maybe China has increased its index to "30", but due to the 'flat world' effect, the US index has fallen to "90". Sum is "120", it represents improvement overall from "110", so it is not a zero-sum game, but the US still had a decrease in its index in this hypothetical illustration.

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Sure. Anything is possible. But the scenario you laid out assumes our economy shrinks in real terms . . . and yet our economy continues to grow.
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Old 04-02-2010, 04:29 PM   #28
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Sure. Anything is possible. But the scenario you laid out assumes our economy shrinks in real terms . . . and yet our economy continues to grow.
Not necessarily a conflict with my overly-simple example, I don't think. If the population grows by a factor greater than the standard of living factor, you could still have economic growth (I assume you mean GDP here). I'm thinking over a decade or more here.

Now that I typed that, I'm not sure there really needs to be such a direct correlation between GDP and standard of living (although typically and historically there is). Taking a more micro-view, couldn't this be similar to a business that increases sales, but had to cut profit margins to do it? Don't they effectively have a larger 'GDP', but maybe a lower standard of living (profits)?

Maybe that is a bad analogy, I dunno.

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Old 04-03-2010, 12:23 PM   #29
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Not necessarily a conflict with my overly-simple example,
Agreed. It is certainly true that GDP can grow at less than the population growth . . . which still reflects a shrinking economy, if not a shrinking GDP. Another possibility is if imports decrease and exports increase, the standard of living declines for a given level of GDP. That is certainly a possibility considering our trade imbalances. Growth in income inequality could also lead to a declining standard of living for the majority with a vastly improving situation for a minority.

But I guess what I'm trying to get at isn't whether it is possible. These scenarios, and certainly far worse scenarios are possible. What I'm trying to understand is why we should think them likely?

My strong view is that people really do assume economics is a zero sum game. If someone is rich, it is because they exploited someone who is poor. If China is becoming wealthy, it must be at our expense. Certainly their are instances where that is true. I just think its more the exception than the rule.
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Old 04-03-2010, 12:53 PM   #30
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Old 04-03-2010, 01:56 PM   #31
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Sadly, I look at the decline of our country's work ethic. I'm seeing an increase in folks not wanting to work. Seeing more and more employees working the FMLA system, or bragging about working for the goverment (really on unemployment) or just showing up and doing the bare minimum - just enough to keep their job. We've had recent job offers declined by college grads because the job sounds like too much work. Recently a terminated employee bragged that they can live off unemployment (thinks it will be extended indefinitely) and will now have free healthcare. Please tell me that we are not becoming a "handout" society.
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Old 04-03-2010, 02:27 PM   #32
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Recently a terminated employee bragged that they can live off unemployment (thinks it will be extended indefinitely) and will now have free healthcare. Please tell me that we are not becoming a "handout" society.
It will raise the bar but it will never destroy the desire to get ahead.
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Old 04-03-2010, 03:46 PM   #33
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Sadly, I look at the decline of our country's work ethic.
Yup, early retirees and wannabees really need to crack the whip on those other slackers.
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Old 04-03-2010, 04:57 PM   #34
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Yup, early retirees and wannabees really need to crack the whip on those other slackers.
Ditto
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Old 04-03-2010, 05:08 PM   #35
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Sadly, I look at the decline of our country's work ethic. I'm seeing an increase in folks not wanting to work.
You've been spending too much time on ER.org.

Ha
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Old 04-03-2010, 08:02 PM   #36
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I'm seeing an increase in folks not wanting to work.
Nobody WANTS to work. That's the point of ER anyways, stop working. People work because they have to, it facilitates getting paid, and with your money you can buy things, like food.
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Old 04-04-2010, 06:53 AM   #37
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Nobody WANTS to work. That's the point of ER anyways, stop working. People work because they have to, it facilitates getting paid, and with your money you can buy things, like food.
Disagree! Lots of people like to work, contribute, generate, produce, and share. It's not work, it's job. As in working is ok but the job sucks.
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Old 04-04-2010, 11:55 AM   #38
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It will raise the bar but it will never destroy the desire to get ahead.
I dunno... I hear that it's possible to exist (maybe even live) "on the dole" in Australia, and IIRC their government provides healthcare for all without running a deficit.

I could be wrong. That country might be a financial train wreck too.

But if this Utopia is indeed fact then I'm not sure what would inspire me to strive to get ahead...
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Old 04-04-2010, 12:33 PM   #39
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Recently a terminated employee bragged that they can live off unemployment (thinks it will be extended indefinitely) and will now have free healthcare. Please tell me that we are not becoming a "handout" society.
Be sure to check in with him in 18-24 months to see how that's going for him.
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Old 04-05-2010, 11:41 AM   #40
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I dunno... I hear that it's possible to exist (maybe even live) "on the dole" in Australia, and IIRC their government provides healthcare for all without running a deficit.

I could be wrong. That country might be a financial train wreck too.

But if this Utopia is indeed fact then I'm not sure what would inspire me to strive to get ahead...
It is also possible in Canada to exist on social programs, and this interferes with the entry level job market. There are some families that are third generation welfare recipients. But the bar is set pretty low.

OTOH, what about the 67 year-old seeking employment in the US because she is afraid she has breast cancer and wants to get a job before it is confirmed.
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