Prior to entering your class I would have classified myself as one of the "potential voters" who might have been swayed by this discussion of the "high" amount of unemployed people. I probably would have mentioned these statistics around the dinner table in a normative fashion declaring something needs to be done in order to change the downward spiral that our nation is in. However the "180 degree moment" has essentially opened my eyes to the small fact that I know nothing or very little, in relation to all that is out there and in order to stay objective one must be open to different sides of an issue and keep an open mind. Not taking a position on an issue until thoroughly understanding both sides of it is the best way to handle ones opinion.

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Now to discuss the manufacturing part of the article. I personally believe that making other countries that could greatly use some form of business to stimulate their own economy is great. I mean if we can have the labor done over there for so much cheaper, which would lower whatever companies are using that labor force product costs. Well then there would be greater supply of that good, and the prices for that good would go down and stimulate competition in that area of the market which is excellent for the economy but even better for us the consumers. Because face it who doesn't want cheaper toilet paper, i mean we don't even think about where something like that is made. So I'm all for companies looking for the most efficient ways to lower resource cost in production. I know the average citiizen would say that it takes away from American jobs but really that just means we are freeing up our own market system and we can allocate those workers to a better service, good, or technology all the while benefiting us the consumers.

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Another example that we talked about in class was foreign trade. The majority of Americans incorrecrly think we need to keep our jobs in America and that when we buy products fom countries such as China we are helping other countries and hurting our own. From my personal studies in macroeconomics, I understand this to be wrong. When we pay other countries in US dollars they must pay us back by investing in our jobs. This theory on opposites is fascinating to me and I feel there is a major contradiction with the realities of the economy and the opinions of the American people.

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Thanks for commenting.

Of course, you are correct that past performance is no guarantee of future success (I sound like a Merrill Lynch stock fund advisor!).

I'm not concerned as much as you are about our deficit spending. Our national debt as a percentage of GDP is a very respectable 66% of GDP, lower than many European countries and Japan. Of course, the impending baby boom retirement will seriously challenge our nation's ability to pay both retirement and medical benefits. I'm an optimist in these matters as I study history and see how we always solve these challenges.

Capital spending will continue to rise as it has done every year, as companies know there is no better way to improve productivity. I predict our "structural unemployment" pools will become larger as the rate of innovation and change will accelerate as you have seen it accelerate over the last 10 years. Today's worker needs to be flexible, a life long learner, and have very good interpersonal skills. The days of a 30 year career doing the same job are all but gone!

Take care!

Steve

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Great content and discussions as usual. I just wanted to comment on structural unemployment. You said:

"Structurally unemployed workers are also a by-product of a successful, market-based economy as workers are only temporarily unemployed, for the long-run benefit of the economy, as new automated technologies are replacing manual labor, and/or trade agreements are implemented allowing a country’s citizens to purchase less expensive, but still high-quality imported products."

While I generally agree, I also hesitate to say that it is temporary. I think in the U.S. we have come to expect that new opportunities will present themselves. However, I'm wondering if all the defecit spending will lead to a new era that either lacks capital investment or we see lower levels of capital investment. This could create a structural unemployment scenario that may not be short term in nature.

Thanks for making me think about this stuff…more than I already do.

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Thanks for visiting and replying!

An economic nerd like me with nothing better to do loves when you visit and post!

I'll have some new econ topic posts in the future. Thanks for keeping in touch. You guys are both true economic superstars!

Best Regards,

Mr. L

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Just wanted to let you know that I was reading your blog this morning.

I, can personally verify the point made about arguing economics with family members!!

The reference from Hazlitt's book is good. It is difficult for any of us to see the long term value or benefit of $135/barrel oil and $5.00/gal gas but I'm sure that there is a golden nugget buried in there someplace.

Have a good day.

Dad

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Just kidding! Economics is just one "lens" for looking at the world's problems… it does not have all the answers, and what's "good" to an economist can certainly be bad to someone else, and it is important that we recognize that.

I just started reading the excellent book "Economics in One Lesson" by Henry Hazlitt this morning, and he states the following assertion, which I tend to agree with:

"The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups".

I think Hazlitt's point is that economics does not always offer a one-off solution to the world's problems. Bad economists may take our "ceteris paribus" assumptions and try to apply them in a world where "ceteris paribus" does not exist. A good economist, which is hopefully what we're becoming in our AP and IB classes, will be able to evaluate the impact the actions of governments, individuals, and firms' decision have on all of society, not only the a particular group.

Thanks for the comments, guys, and thanks for joining this blog community! – Mr. Welker

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I might be biased because I am (was!) a student of yours, but your explanation only makes sense and can't really be refuted- its pretty cool seeing it on this site since we learned it all year. I hope that more people figure out we actually have a pretty low unemployment rate and the goal should just be to avoid cyclical unemployment (the baaaad kind)! Structural and frictional are actually not so bad. So go, U.S.. Martha would be proud.

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