MURDER, POLITICS, AND THE END OF THE JAZZ AGE
by Michael Wolraich
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Tales of Globalization: USA and India: a marriage made in... heaven?
By David Seaton on Mon, 11/08/2010 - 4:39pm |"I believe that the relationship between the United States and India will, in fact, be one of the defining partnerships of the 21st Century." President Barack Obama - BBC News
The most dramatic and remarkable improvement in consumption has been of those who were already the richest people in India – that is the top 20 per cent of the urban population. (...) the most dramatic evidence is for the bottom 80 per cent of the rural population – well more than half of India’s total population. For these people, who now number nearly 600 million, per capita consumption has actually declined since 1989-90. In other words, even the official statistics of the government still show that more than half of India has lower consumption per person than more than 10 years ago, after a decade when national income were supposed to be growing at around 6 per cent! International Development Economics Associates
C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent. Nicholas Kristof - New York Times
"The German export successes are not the result of some sort of currency manipulation, but of the increased competitiveness of companies. The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies. There are many reasons for America's problems, but they don't include German export surpluses." German Finance Minister Wolfgang Schäuble - Der Spiegel
For me the quotes above tell a story all by themselves... Writing further comment approaches "gilding the lily". It would be possible to rearrange them in any order and they would always tell the same story. Still, I'll try and riff a little bit on them.
The comparisons between the USA and India are painfully apt: in the USA the top 1% of the population owns 42.7% of the country's wealth and the bottom 80% of the population owns only 7%. In India the top 1% owns 16% of the wealth, while the bottom 80% owns 30% of India' wealth. So we can see the Indians have some catching up to do, because US income distribution is more unequal than India's.
What do the top one percent of India and the USA buy with their wealth?
Probably they buy German cars, washing machines, stoves, etc, for their homes and German capital goods for their factories (the American factories are mostly in places like China and Mexico these days).
Why do the rich buy German stuff?
Because if you can afford it, you want the best and the Germans still make the best. They train their workers so well that despite paying them high wages they are still competitive. They are competitive because of the enormous added value that well trained workers can add to a well engineered product.
Once upon a time you could say the same thing about the USA too.
German finance minister, Wolfgang Schäuble, is cruel but truthful when he says:
The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies.
He might have added that you can't digitize a BMW or a Miele washing machine and download them from The Pirate Bay. The "intelligence economy" is all very well, but brains are equitably distributed around the world, and computers are cheap and easy to assemble by semi-skilled workers... but people who can do the fit and finish of a Porsche are neither equitably distributed nor cheap.
So, yes, I am afraid the president of the United States is correct in saying that India and the United States will define each other in the coming century: India reaching America's level of inequality and the USA perhaps developing an Indian-like caste system.
Cross posted from: http://seaton-newslinks.blogspot.com/
- 2826 reads
Comments
We all know the evil Germany did to the world, General George Patton marching all those boys through the snows of winter! How many know Germany is a country taken over by socialists, government health care is the norm, vacations are mandated for all, benefits are run amok and taxes are collected from the rich, unions are rampant and, most important, guns can't be carried openly everywhere in public! Now they are out exporting America!!!
Why not increase our competitiveness by spreading freedom there? Germans are denied full Second Amendment rights! They also don't have the freedom to dress up like Nazi's like Ohio Republicans for reasons unknown.
I envision precision raids like those of Iraq Shock and Awe, targeting BMW, Mercedes Benz, machinery plants, chemical producers! It would give a competitive edge to US manufacturers and create jobs here, not there. Giving a grateful people gun freedoms, NRA style, and most important, the unhindered right to carry!
by NCD on Mon, 11/08/2010 - 6:02pm
I suspect your first paragraph is a parody of a tea bagger talking.
Nonetheless, since the stereotypes listed are often given by others as well, I think a few corrections should be pointed out.
They don't have "government health care," but they do have mandated insurance, from either public or private choices:
http://en.wikipedia.org/wiki/Universal_health_care#Germany
Guns can be carried openly in publiic if you have a permit:
http://en.wikipedia.org/wiki/Gun_politics_in_Germany#Current_laws
The top income tax rate is 45% for those over €250,730 per year, it goes no higher:
http://en.wikipedia.org/wiki/Taxation_in_Germany#Income_tax_rate_in_2010
The corporate tax rates are not as onerous as some might assume:
http://en.wikipedia.org/wiki/Taxation_in_Germany#Business_taxes
of course they do have that pesky VAT:
http://en.wikipedia.org/wiki/Taxation_in_Germany#Value-added_tax
And they do have a legal neo-Nazi "pro-Hitler" political party:
http://www.independent.co.uk/news/world/europe/germanys-prohitler-party-...
though I doubt they go around dressing up in Nazi uniforms, probably because they don't need to, they claim to be the real thing, not imitators.
by artappraiser on Mon, 11/08/2010 - 6:48pm
Art,
You are reaching for it here. Nobody is without first class health care in Germany.
As to firearms let's look at your Wikipedia link:
I think that is considerably different from the USA and I think the government of Mexico, for one, would be delighted if the USA had something similar.
As to your insinuations that today's Germany is a hotbed of neonazis, read the following:
All in all, I think today's Germany is more successful in dealing with its household demons and its sinful past than the US is.
If you simply don't like Germans that is your problem, but it doesn't change the fact that Germany takes better care of its people than the USA does ours.
by David Seaton on Tue, 11/09/2010 - 6:17am
Thanks for the discussion Art and David.
David backs me up on the lack of the one, most true, most PRECIOUS thing held dearest to Americans-guns, and the right to own as many, carry as many you want to, loaded or unloaded, holstered openly or concealed, anywhere, without gov't permits, registration, training, or any knowledge how to use 'em safely. Thus, I assume you both support the general thrust of my competitiveness proposal to spread our gun freedoms.
by NCD on Tue, 11/09/2010 - 6:16pm
We really need to stop pretending this is all about education or the quality of the workers or productivity and most of all that we have global free trade. Germany is one of the nations that engages in the most protectionist policies especially of its high end manufactoring. I must have read a couple of dozen articles about Germany's import restrictions in the last few years. In case you haven't seen any I did a quick search.
http://www.voxeu.org/index.php?q=node/5753
Notice table #1 which lists the top ten nations with descrimintory trade practices in several categories. Germany, while not the worst protectionist nation, is all over the list. Notice also that the US, while we do have some import restrictions, is not on the top ten list in any category at all.
by oceankat (not verified) on Mon, 11/08/2010 - 6:55pm
Lets see bashing Germany because.....you can't speak Chinese ?
by cmaukonen on Mon, 11/08/2010 - 9:21pm
Get real. I'm not bashing anyone. Just sharing some information that I've been reading for the last few years. I don't have a problem with Germany protecting their vital national industries with import restrictions and other help. If they hadn't their manufactoring would probably have fled to poorer countries with miniscule labor costs just like ours did.
I have a problem with claiming that Germany's success is all due to the high level of education of its workers when the evidence doesn't support that contention.
Do you have anything intelligent to respond to my post or does your intellect end with snark from the sidelines?
by oceankat (not verified) on Mon, 11/08/2010 - 10:06pm
Indeed, one could argue that with Eastern Europe being so close geographically that Germany had an even more pressing reason to protect it's industrial base. But hey, all successful economies resort to protectionism when it makes sense to do so.
by Michael Maiello on Mon, 11/08/2010 - 10:16pm
German apprenticeship programs are not for the faint of heart. They're demanding and set high standards for achievement. That's something missing from American education...everyone expects to get an A just for the effort. Whereas in Germany, one must prove they can perform at a specific level of work. Perfection is expected.
by Beetlejuice on Tue, 11/09/2010 - 9:43am
My neighbor is an auto mechanic. His hobby is overhauling old farm tractors from before the war. It's simply amazing the complexity as well as the simple-minded processes they use to go about and make something a work of art.
by Beetlejuice on Tue, 11/09/2010 - 10:33pm
If it works for them maybe we should try it too.
by David Seaton on Tue, 11/09/2010 - 2:24am
Well, their advice for us sounds awful favorable to current GOP deficit-reduction rhetoric et. al.:
http://www.cbsnews.com/stories/2010/11/08/business/moneywatch/main703472...
Stay tuned, G20 arguments start tomorrow.
P.S. Krugman is no fan. More Krugman German jihad here.
by artappraiser on Tue, 11/09/2010 - 2:50am
I don't think Germany is a special argument for austerity or a Republican talking point, I think it is an argument about keeping a strong industrial base, not being overly dependent on the FIRE economy, about not having a real estate bubble, about training and retraining workers and a whole lot of "grasshpper and ant" arguments and protecting its own first, certainly it is not about cutting public spending. Germany just seems to make sense, while the USA stopped making sense ages ago.
by David Seaton on Tue, 11/09/2010 - 10:46am
I am reminded that that Tom Wright, even though he was a fairly strong Obama supporter (and also used to disagree with you a lot,) used to make some pretty cogent and interesting pro-protectionism arguments,
Examples here
http://www.talkingpointsmemo.com/talk/2008/07/simple-economics.php
and here
http://tpmcafe.talkingpointsmemo.com/talk/blogs/tom_wright/2009/02/prote...
by artappraiser on Tue, 11/09/2010 - 1:09pm
Germans have money, but they save a lot, they hate credit cards... they are the sort of people that save string. The idea of a consumer society is that everybody spends even more than they have... that is not how Germans are, they make stuff, but they have been prosperous for decades and they don't need any new stuff, cause German stuff doesn't ever break.
by David Seaton on Tue, 11/09/2010 - 11:18am
Saving what you have. Buying only when necessary. Making and getting well made stuff to begin with and keeping it in good working order. Man what a concept.
by cmaukonen on Tue, 11/09/2010 - 11:46am
Like I say, this is all the ant and the grasshopper stuff. If you come from the Middle West this sounds simply like my grandmother's generation. It resonates with Americans because we used to be like that... and to top it off the krauts have a welfare state too.
by David Seaton on Tue, 11/09/2010 - 12:47pm
It gets better. I take my car to an auto shop off post run by an American that's lived here all his life...dependent. He hires Germans to do all the work. To make things simple the whole engine compartment is clean as a whistle. Over the years, everytime I take it if, they steam clean it at no extra charge. A clean engine compartment is easier to work in as well as making leaks eaasier to find before they become a serious issue. Same too with electrical work. Once you understand why they do things a certain way, it makes sense and then you notice there's no deviation if you go somewhere a else, say Munich. And if something needs to be done, say a storm blown tree has fallen, they get right to work and clean it up...including the leaves...all in the matter of a few hours. It's a whole different mindset.
by Beetlejuice on Tue, 11/09/2010 - 8:51pm
I have been enjoying the comments about the German approach to mechanics. I once hired a guy to run production in a medical products company--he was German trained as a tool and die maker. Sometimes his rigid approach to things drove me nuts, but he could turn out prototypes on a milling machine that astounded me. He said his original training took four years. A lot of the first year was an exercise--take a 2" square of steel and file it by hand into a perfect sphere. I never forgot that example, I think it speaks to a mindset that is not very well understood by other cultures.
by Oxy Mora on Tue, 11/09/2010 - 9:07pm
Great comment, c maukonen. And a very incisive post, Mr. Seaton.
by anna am on Mon, 11/08/2010 - 9:13pm
Successful -- industrialized countries hold their nationalism higher than their greed. Look at the numbers closely...Countries with high exports into the US have high American investments into those foreign industries. Hidden investments with thousands of untraceable ownerships. Are we all so stupid that we don't realize that corporate America is off-shoring, driving us into submission while they sell their cheap plastic s$#t back to us? The countries that protect their manufacturing base may not be playing "nice" but they are assuring their citizens a nominal standard of living.
by chucktrotter on Tue, 11/09/2010 - 12:59am
Exactly. Well put.
by anna am on Tue, 11/09/2010 - 12:44pm
I wonder if there is a corelation between the perceived Republican ascendence and precious metal prices. Those prices are affected by world demand and gold and silver rise when people are afraid that paper money might become worthless. Both prices have been steadily rising for a couple years but since mid-August the price of silver, for instance, has gone from eighteen dollars an ounce to twenty-eight. A 65% spike.
This might correlate to economic fear spiking around the world as it became clear that the Republicans were gaining power in the biggest economy in the world and so there is less likelihood that things will get better.
by A Guy Called LULU on Tue, 11/09/2010 - 12:31pm
Up another sixty-five cents while I was writing.
http://www.kitco.com/charts/livesilver.html
by A Guy Called LULU on Tue, 11/09/2010 - 12:40pm
That is probably because Zoellick of the World Bank is talking about returning to the gold standard
by David Seaton on Tue, 11/09/2010 - 12:55pm
Of course, it's a conservative classic. Matter of fact, there's been lots of "invest in gold" advertising on right-wing media for quite some time.
But to get into real understanding as opposed to just the classic knee-jerk "put all your savings in gold and sew it into the lining of your coat" scenario, see the links on Donal's "Hyperstagflation" thread:
http://dagblog.com/comment/reply/7433/92243
If you get far enough into the articles, you'll see a distiinction made between inflation of commodity prices vs. "sticky prices".
by artappraiser on Tue, 11/09/2010 - 12:50pm
I like doomster Dimitri Orlov's take on gold. He says that if things get really bad, the last thing you'd want to have is gold because people will simply kill you for it. What you really need when times get bad are friends, lots of friends.
by David Seaton on Tue, 11/09/2010 - 12:58pm
I am aware of the advertiseing in the U.S.A. and it may be happening everywhere. This is a world market and the biggest sales are in other countries.
Don't forget that betting on an outcome, which is what you are doing when you buy a Krugerand or a bar of Englehardt silver, has a very strong predictive track record in many areas of specultion when great numbers of people actually put there money where their mouth is.
by A Guy Called LULU on Tue, 11/09/2010 - 1:53pm
Clarification: Living abroad, you would think that I would have a more "cosmopolitan" view of America and globalization, that I would be in favor of the "flat world", because, what the heck, it would be no skin off my nose if all the jobs were outsourced, would it?
I am not in favor of the present version of globalization, because I am truly afraid that it would destabilize the United States to such a degree that it would put the entire world in danger.
I believe that every American's true "fatherland" is their aspirational view of middle class prosperity and the possibility of upward social mobility for themselves and their children and if these things are threatened too much and for too long there will be hell to pay for America and ultimately the rest of the planet, because of America's military and cultural power.
by David Seaton on Tue, 11/09/2010 - 1:14pm
I tend to think the working class people of the world look to the US as the model to where they want to be. If the model fails then their dreams are broken too. While Europe is a world leader in many things not American, one can see where the American influence has been introduced and accepted equally with their own concepts of work, play and home. We are the model they strive to achieve. If we loose the middle class there will be repercussions felt globally too. We really are one big village that speaks with many different tongues and has many different customs but we're one.
by Beetlejuice on Tue, 11/09/2010 - 10:46pm