View Full Version : Buying American?
Satire...but is it really...??? :confused: :confused:
http://www.youtube.com/watch?v=Vq8wbXAR4ZQ&feature=sdig&et=125%208252932.02
And so it goes...
Richard
Let us suppose we have a community of three people.
One mows lawns. One cleans houses. One grooms dogs.
So the three people have a small economy, mowing each others' lawns, cleaning each others' houses, and grooming each others' dogs.
Each is a pro, and charges handsome fees for their services. They each make a great income.
So why are they all grindingly poor? No one makes anything.
And what is the U.S. doing? We are sending our manufacturing base to China. Now, we're sending our office work to India. We are running a trade deficit every year.
This will continue until U.S. wages match wages elsewhere around the world - unless and until we replace our commitment to free trade with a commitment to fair trade.
By the way - who said fair trade was the best choice? Where did it come from? A fellow named David Ricardo, who retired from stock brokerage to become an amateur economist. Has the world, and hence the value of comparative advantage changed in nearly 2 centuries? I wonder.
armymom1228
02-20-2010, 00:06
This will continue until U.S. wages match wages elsewhere around the world - .
.
So I should be happy with a buck eighty five an hour? Like other 3rd world countries? :munchin
So I should be happy with a buck eighty five an hour? Like other 3rd world countries? :munchin
Happy? No. But, unless policy changes, you might wish to plan for it.
By the way - $1.85 per hour may be a tad optimistic.
armymom1228
02-21-2010, 15:07
Happy? No. But, unless policy changes, you might wish to plan for it.
By the way - $1.85 per hour may be a tad optimistic.
As long as everything else is scaled back I could probably live with it. But do you realy think a landlord is going to scale back from $500/month to $50? I don't think so.
The entire economy would have to be dialed back.
As long as everything else is scaled back I could probably live with it. But do you realy think a landlord is going to scale back from $500/month to $50? I don't think so.
The entire economy would have to be dialed back.
As individual income declines, landlords are likely to be forced to lower rent or face a glut of vacant units.
The Reaper
02-21-2010, 16:17
As far as rents go, let's assume I have a rental house in Fayetteville.
The rental income is $750 per month.
At least once every year or so, something major breaks or needs to be replaced. I replaced the siding a few years ago, then redid the kitchen and bathrooms. That was a big year, probably spent close to $10,000. The interior runs almost $1,000 to have painted. The current tenant wants new carpet, which was replaced three years ago before she moved in. We are holding her off for now. Nevertheless, I can reliably count on at least $1,000 per year in repairs and expenses. It can be as much as ten times that.
Taxes are now up to $856 per year. Insurance is another $200 or so. Neither of those numbers is going to go down.
The house has sat unrented, on occasions past, for as much as six months, during which the power has to be left on and the water. Assume it only takes one month to find a new tenant.
The mortgage payments have to continue, regardless, until the loan is paid off.
In the best case, I might take in $9,000 in rent per year, and owe at least $2,000 or so in fixed expenses, even if it continually rented. That leaves $7,000 to pay the mortgage. No problem.
Average year, house is unrented for a month, same bills, now you have $6,250 to pay the mortgage. Still doable.
Bad year. Six months, no rent. $10,000 to update/repair property, still paying the same property taxes and insurance, plus 1/2 year of mimimum utilities. $4,500 income, less $12,000 in expenses. You lost $7,500 out of pocket, and still have to pay the mortgage.
Cut the rent? I don't think so. Sell it or give it back to the bank.
I am keeping it for the tax deductions, but I am already considering selling the house. If the taxes go up any more, or the real estate market recovers sufficiently, I will probably get rid of it. Too many headaches and too much potential downside.
TR
As individual income declines, landlords are likely to be forced to lower rent or face a glut of vacant units.
How low can you go?
In addition to trying to make a profit property owners have to make enough to pay the bills and TAXES.
Government is not going to cut back - look for government workers to do OK - on the backs of others.
Edited to add - As TR noted
Ret10Echo
02-21-2010, 16:41
How low can you go?
In addition to trying to make a profit property owners have to make enough to pay the bills and TAXES.
Government is not going to cut back - look for government workers to do OK - on the backs of others.
Edited to add - As TR noted
One observation I have made while looking at city and town statistics (as I dream of escaping the D.C. Metro one day). Take a look at towns in areas generally considered to be economically depressed. The number one employer in these areas is usually Government (at some level) followed shortly thereafter by the local hospital. I believe that to be an indicator. Government doesn't "make" anything, so this plays directly into the theme here.
Too bad you can't send THAT to India.
How low can you go?
That is a good question and one many property owners are pondering.
Lower the price, you'll be full with little profit. You keep your prices high, you have more vacancies and you can't met the bills.
It looks like a losing battle to me.
....... The number one employer in these areas is usually Government (at some level) followed shortly thereafter by the local hospital. ...........
What is government in the typical county away from big cities? Just who is a local government employee?
City and County workers downtown in the offices is what most people think of but you also have County Social Serves, Health Services, Fire, Police, Trash, the guys at the land fill, county jail, Public Transport workers to include maintenance, and the big cat in the bird cage - the school system plus many, many more.
Those numbers are very easy to turn out for elections getting who they want in office.
And I'll bet most country and city politicians don't have an exact count of thier employees. They know a chunk of money goes here - another one there - but numbers?
For example the Cumberland County school system states it has 6,952 employees - but does that include the SRO? SROs and crossing guards are from the county sheriff's office. The county has 78 schools.
An interesting note about the school system. It has 53,162 students or 1 employee per every 7.64 students.
Back when my kids started school in 1995 it was around 51,000. It has varied a little each year since then but the number of employees grows each year. The Hoke and Harnett school systems have exploded.
Just think about that number. Almost 7,000 people work for the schools in Cumberland county.
The Reaper
02-21-2010, 18:04
When I was in a county vocational ed high school in the dark ages, the only adults in the 800 student high school were the principal, vice prinicpal, secretary, two janitors, and the six ladies in the cafeteria.
Everyone else taught, to include the coaches, bus coordinator, etc.
I cannot believe that we have less than 1:8 staff student ratio and 1:30 classes.
That is hellaciously bad tooth to tail ratio.
Guess a powerful union helps.:rolleyes:
TR
GratefulCitizen
02-21-2010, 18:25
When I was in a county vocation ed high school in the dark ages, the only adults in the 800 student high school were the principal, vice prinicpal, secretary, two janitors, and the six ladies in the cafeteria.
Everyone else taught, to include the coaches, bus coordinator, etc.
I cannot believe that we have less than 1:8 staff student ratio and 1:30 classes.
That is hellaciously bad tooth to tail ratio.
Guess a powerful union helps.:rolleyes:
TR
Can't remember where I saw the study, it was back in the early '90s.
IIRC, it indicated that a given "school" (elementary w/1 principal, jr. high w/1 principal, etc.) suffered from diseconomies of scale once the student body exceeded 400.
What are the arguments for having schools with more than 400 students?
Guess a powerful union helps.If only some unions learned the difference between power and effectiveness. The L.A. teachers' union is up in arms again.:rolleyes: Source is here (http://www.printthis.clickability.com/pt/cpt?action=cpt&title=LAUSD+Paid+%24200M+on+Unnecessary+Salaries%3 A+Audit+|+NBC+Los+Angeles&expire=&urlID=418377932&fb=Y&url=http%3A%2F%2Fwww.nbclosangeles.com%2Fnews%2Flo cal-beat%2FLAUSD-Paid-200M-on-Unnecessary-Salaries-Audit-81233092.html&partnerID=523232&cid=81233092). Video is there (http://www.nbclosangeles.com/news/local-beat/LAUSD_Audit__Millions_Spent_on_Unnecessary_Salarie s_Los_Angeles.html).LAUSD Paid $200M on Unnecessary Salaries: Audit
By JOEL GROVER and MATT GOLDBERG
Updated 11:09 AM PST, Tue, Jan 12, 2010
A bombshell internal investigation by the LAUSD reveals the school district wasted $200 million of taxpayer money last year on unnecessary salaries.
NBCLA obtained the audit, done by LAUSD's Inspector General.
The audit said there are some 1,700 employees on the district's payroll who shouldn’t be there. These are employees who were hired for temporary jobs, but stayed on after the funding for their jobs expired, and continued to get paid by the district.
"I'd like to know what they're doing? They're getting paid. What are they producing?" said A.J. Duffy, president of United Teachers of L.A.
The internal audit said the district last year employed 1,358 teachers, and another 348 non-teaching employees, whose jobs were "unfunded and expired," costing the District $200-million in 2009 alone. LAUSD's Inspector General said this waste of money has put LAUSD at an “unacceptable high level” of financial risk.
LAUSD Superintendent Ramon Cortines would not speak with NBCLA on camera about the audit's embarrassing findings. But in an emailed statement, Cortines said he was aware of of this problem revealed by the audit, and has already worked "to address this issue."
The superintendent said he agrees with most findings of the audit, but "disagrees with the cost cited in the report" regarding the amount of money.
The revelation that LAUSD is once again wasting a large amount of money comes at a bad time. The district is asking teachers to take a pay cut and accept furloughs.
"My teachers are going to be angry," said Duffy.IMO, A.J. Duffy is the last guy in L.A. who should be talking about holding others accountable.
The on-line edition of the L.A. Times story is here (http://www.latimes.com/news/local/la-me-lausd-fraud14-2010jan14,0,2625113,print.story).L.A. schools paid $200 million more in salaries than budgeted
The payments occurred despite the layoffs of 2,000 teachers and hundreds of other employees. Auditors say they have found no wrongdoing, but officials are puzzled.
By Howard Blume
January 14, 2010
The Los Angeles school district paid $200 million more in salaries than it budgeted last year even as it laid off 2,000 teachers and hundreds of other employees, according to an internal audit.
Auditors so far have unearthed no wrongdoing, but officials are puzzled, concerned and perhaps even a little embarrassed.
"We've been in the process of cleaning it up," said L.A. schools Supt. Ramon C. Cortines, who said his staff is verifying the size of the discrepancy and will, over time, determine how much relates to incomplete accounting and how much to something more serious.
The issue emerged in an audit, completed in December, on the arcane subject of "position control."
It looked at how well the Los Angeles Unified School District keeps track of salaried positions.
Not well, concluded auditors working for the district's inspector general.
"The system is broken," said Inspector General Jerry Thornton.
"We really don't have adequate position control and we don't know where our funding comes from for all these positions," Thornton said.
He added: "There's no suggestion of impropriety or fraud. We didn't see people being paid who aren't working or who aren't there."
Last year, the district listed 76,860 full-time positions, which were supposed to cost $4.7 billion. Instead, the district spent $4.9 billion.
Auditors have yet to identify where the bulk of the difference came from or to whom it went.
In some cases, unfunded or expired positions remained on the payroll. In others, jobs that persisted on the payroll turned out to be vacant. Problems turned up with about 3,000 positions.
The audit results are the latest painful addendum to a payroll debacle that resulted in thousands of employees being under- or overpaid starting in January 2007.
In this instance, the high-tech but poorly configured new payroll system was supposed to catch salary irregularities, but that feature was never installed.
Some of the latest problems emerged as the cash-strapped district was determining which employees to lay off, based on job duties and seniority.
On June 20, 2009, the budget services division identified more than 900 unfunded positions that accounted for about $30 million of unbudgeted money that had been spent.
RE: Schools, non-teaching employees, teachers, and students - remember that well meaning legislation by state and federal legislatures have had a huge synergistic impact on mandated curriculum, personnel requirements, and teacher:student ratios - most notably under the publicly endorsed, federally mandated, and [mostly] locally funded No Child Left Behind legislation and its spin-offs.
As far as teachers go - at my school - early duty personnel opened the school at 0700 (and there were always kids already there waiting); breakfast was from 0700-0800; mandatory tutoring was scheduled 4 days/week for all teachers (minus coaches who were engaged in athletics before or after school) from 0730-0800 and 1530-1600; first bell was at 0810 with mandatory advisory 0815-0830; 7 class-period day from 0835-1520 and teachers had 5 class periods (many schools mandate 6 class periods), one plan period, 30 minute lunch, one department level plan period for cross-curriclar planning/evaluating/curriculum development and parent conferencing; and extra-curricular sponsorship + grade-level week-long class trips (e.g., all Jrs went to DC for a week). And then there were the evening and week-end functions, athletics, plays, concerts, fairs and art exhibitions, field trips, professional training, etc.
And then there are the increasing operaiting costs (e.g., elec, water, maintenance, IT support, etc), materials costs (books, testing, sports equipment, IT, etc), organizational fees (e.g., honor societies, sports league fees, AP/IB, etc), declining tax revenues...usw...
Combine all that with the seemingly inherent ineptitude of large bureaucratic systems commonly found in urban school districts, state and federal education agencies, government and teacher unions, and...:eek:
Personally - I am enjoying having a bit of time to myself for a change - don't miss the bureaucracy...but sure miss the kids and faculty.
It's a bit ;) more complicated than many realize...and so it goes...
Richard's $.02 :munchin
I am keeping it for the tax deductions, but I am already considering selling the house. If the taxes go up any more, or the real estate market recovers sufficiently, I will probably get rid of it. Too many headaches and too much potential downside.
TR
If I may quote from the Dow Theory Letter, Oct 27, 2008, in which the author reminisces about his memories from the 1929 depression:
Question -- What's the best single asset a person can possess today?
Russell opinion -- A stable job. By next year, you'll realize the truth of this comment. Today every major corporation is handing out pink slips. It's beginning to add up.
Question -- When is a house a bargain?
Answer -- The formula I've always used is that when you buy a house it costs you 10% a year of the price to carry that house -- which includes mortgage payment and loss of income, insurance, taxes,, repairs, etc. A house is a bargain when you can buy a house and rent it out and cover all expenses with your rent. In other words, your rent income per year should be 10% of the cost of your house.
That's the way it worked during the Great Depression. My dad, who was a top real estate man, and I would go over hundreds of "breakdowns" and in those days there were any number of deals where you could buy a house in NYC that was only half rented out, and you could make money on that house. The problem was that everyone was scared to part with their money, and nobody wanted to "do deals."
There was one large hotel in Manhattan that my father wanted to buy. The hotel bar alone was covering the cost of buying the hotel. My father went to many financiers trying to borrow the money to buy that hotel. Nobody was willing to put up the money on that fabulous deal. Confidence in the future was zero. If you had any money, you hung on to it like grim death.
Are houses today anywhere near the bargain prices that existed during the Great Depression? I'm afraid the answer is "no, not by a long shot." Can housing decline that far? The answer is in human emotions and confidence, how low will it go? In this market nothing will surprise me.
As houses sell, voluntarily or otherwise, the price can decline until lower rents are viable. If (a very big if) we enter into deflation, then few under 80 would know what it looked like. Governments will, if deflation occurs, have no choice but to reduce costs and taxes. Their alternative would be an ever-growing inventory of houses seized for back taxes.
Personally - I am enjoying having a bit of time to myself for a change - don't miss the bureaucracy...but sure miss the kids and faculty.
Yikes! I'm glad I've stuck to the higher ed. universe. The schedule you mention sounds brutal.
rltipton
02-21-2010, 23:32
Let us suppose we have a community of three people.
One mows lawns. One cleans houses. One grooms dogs.
So the three people have a small economy, mowing each others' lawns, cleaning each others' houses, and grooming each others' dogs.
Each is a pro, and charges handsome fees for their services. They each make a great income.
So why are they all grindingly poor? No one makes anything.
And what is the U.S. doing? We are sending our manufacturing base to China. Now, we're sending our office work to India. We are running a trade deficit every year.
This will continue until U.S. wages match wages elsewhere around the world - unless and until we replace our commitment to free trade with a commitment to fair trade.
By the way - who said fair trade was the best choice? Where did it come from? A fellow named David Ricardo, who retired from stock brokerage to become an amateur economist. Has the world, and hence the value of comparative advantage changed in nearly 2 centuries? I wonder.
Your post brings to mind all the years I remember thinking to myself while downrange, "Wow they are so happy just to receive a pair of crappy plastic shoes," after handing out a couple 55 gallon trashbags full.
Now those people are selling crappy plastic shoes to us for top dollar because we don't make anything comparable that's worth a $#!+ anymore.
I wonder how many generations it will take to bring it back around full circle and Americans are the ones handing out plastic shoes again.
Haw haw sniff :mad:
Y'know, in keeping with the title of this thread I'd just like to mention my last 2 Toyotas were built in Louisiana. My last Jeep was built in Canada, and my last 2 Chevrolets were built in Brazil and Mexico. Which one(s) is/are an "American"? Everything is becoming so homogenously low quality nowdays anyway it really doesn't matter.
So why are they all grindingly poor? No one makes anything.
And what is the U.S. doing? We are sending our manufacturing base to China. Now, we're sending our office work to India. We are running a trade deficit every year.
This will continue until U.S. wages match wages elsewhere around the world - unless and until we replace our commitment to free trade with a commitment to fair trade.
Read a interesting article in The Economist a few weeks(?) back which talked about this, but then asked this question: if this is true, how can Germany and Japan continue to function as primarily export-based economies? They are obviously first world countries which continue to have strong manufacturing bases and reasonable standards of living.
No easy answers, of course, but one of the points was that managers in those countries typically come up through the operations side of the house in comparison to the heavy MBA sales/marketing/finance focus in the US.
I also happened to be reading Paul Howe's "Leadership and Training For The Fight" at the time, which made for an interesting comparison as he has a lot of the same basic concerns/complaints about leadership in the Army. Not making any personal comment on that myself per lack of qualifications.
Read a interesting article in The Economist...Germany and Japan export economies...
Did the article talk about the powerful influence of trade protectionism and nationalism on their purchasing habits?
Richard's $.02 :munchin
craigepo
02-22-2010, 14:20
Wealth is created by producing goods or services, as long as you have something to trade with others, that is what counts, whether a good or service...If the economy produces services that everyone else is willing to pay for, that economy will be wealthy.
Broadsword:
I agree with a few of your points. However, I dont think that an economy based on "services" is feasible. If GDP is a pie, selling services is just a way to slice up the revenue pie. The economy must have something to sell that constitutes the original "pie" in the first place. Your janitor business is not going to do very well if there is no business to clean. Stated differently, at some point the US economy must have the ability to add something of value to the market. Especially in today's global economy.
If the economy produces services that everyone else is willing to pay for, that economy will be wealthy.
Sure. That goes back to David Ricardo's free trade theory, based on comparative advantage.
Here's the problem - it has to be something that the particular economy does well enough that "everyone else is willing to pay for it". There are certainly some things that meet that test in our large, complex economy. The trade deficit suggests, however, that, that we aren't producing as much - whether in commodities, goods, or services - to offset our purchases.
Does the trade deficit matter over a year or two? Arguably not. Perhaps one economy is expanding more rapidly than another. But when the tendency spans decades, one wonders.
Are we really masters of innovation? Then why are China's patents going up as ours decline? LINK (http://www.reuters.com/article/idUSTRE6172PY20100208) Granted, the U.S. is still coming up with a lot of great new ideas, but China is advancing. Dare we be complacent?
And has this made us wealthy? Let's look.
Year Median income
2000 $52,500
2001 $51,356
2002 $50,756
2003 $50,711
2004 $50,535
2005 $51,093
2006 $51,473
2007 $52,163
2008 $50,303
Those numbers don't look like a massive improvement in wealth to me. LINK (http://www.usatoday.com/money/economy/2009-09-10-census-healthcare_N.htm)
On free trade too, why is that a problem? Free trade is how nations create prosperity. How exactly does one define "fair trade?"
Now there's a good issue. You say that "Free trade is how nations create prosperity." Is it?
Keep in mind that China and India protect their markets - and they're growing rapidly. In addition, the U.S. protected its manufacturing during its development. That turned out rather well, didn't it? So - I'm not at all sure that free trade accomplishes the stated end.
When nations engage in trade protectionism, it protects the powerful trade unions, it protects the establishment rich and big business, and it destroys job creation and economic growth because other nations respond with similar trade protection.
There's a bit of a problem with the logic here, don't you think?
Let's suppose for a moment that the above is true.
Who is the number 1 market today? The U.S., right? So if trade were to cease, and we retained that trade here within the U.S., how, exactly, would that hurt us?
What do big business and the establishment rich want? Profits, obviously. And what is a juicy source of profits? Lower labor costs. So if a company can produce a product and pay $2 per day for labor and then transport it to the U.S. and sell it, then profits are greater than if they pay U.S. labor costs.
And unions? Fighting unions is simplicity itself. Open a business in a right-to-work state such as Texas.
Now, let's suppose that global wage arbitrage continues. This means that U.S. workers are all in competition with foreign workers. As free trade continues, this suggests that workers everywhere will wind up with similar wages. From the perspective of someone in India or China, this is very, very good.
However...in the U.S., we have a debt structure in place that presumes the current level of wages or higher. If the wage level remains static or declines, the burden represented by existing debt, both public and private, must surely increase. In that direction lies massive, systemic default. The consequences will not be pretty.
One might also ask the question about military readiness. Unless we can produce all of the components, weapons, and support required by the U.S. military during a protracted conflict, do we have a dangerous vulnerability? If we cannot produce the beans, bullets, and other items needed, then any war has the potential of being a "come as you are" engagement, with us at a severe disadvantage when the stockpiles get low.
Not to worry. I'm sure we can still make a living marketing cheap trinkets to wealthy Chinese tourists. Perhaps they will even flip us a few coins to watch us fight over them.
:munchin
Correct me if I am wrong, but as I remember the US economy at present is a consumer based economy and around 70% of the economy is based on spending. I'll assume the other 30% of the economy is manufacturing of tangible goods.
In my mind that equates to spending more than you earn, and we all know what happens if you spend more than you earn....Bankruptcy.
In the case of China, over many decades we have sold much of the nations wealth to China to generate income. And now much of our income is sent back to China to purchase goods and pay debt.
To me, a consumer based economy is little more than people generating income by moving paper from one bin to another. Wealth is tangible product, it requires labor, it is knowledge, it is resources and it is self sufficiency.
Not sure what you mean here?:confused: Sell our wealth to China? As a nation, we create wealth through producing goods and services, which we trade with other nations. Our debt to China is because our government keeps spending like drunken sailors.
Once upon a time, we produced far more of what we consumed and consumed far more of what we produced. Now a much larger percentage of what we once produced has been sent to China. IMO doing so has generated income, but it has diminished the wealth of the nation.
What I am getting at is if we both run a janitorial service, but you use me as a subcontractor and I get 70 cent of every dollar, that leaves you generating an income of 30 cents per dollar.
In that scenario who is more likely to build their business? Who has more power? Who is more likely to end up on the short end of the stick?
6.8SPC_DUMP
02-23-2010, 00:21
Good 60 Minutes piece on the housing markets IMHO. Link (http://www.brasschecktv.com/page/705.html)
A good amount of the new home sales in 2009 resulted from the following programs expiring April 30, 2010 for most, but deservingly (yet untimely):
Special Rules for Members of the Military, the Foreign Service and the Intelligence Community (http://www.federalhousingtaxcredit.com/)
Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.
Exemption From Tax Credit Recapture Rules
Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.
However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.
Extension of Tax Credit Deadlines
The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by June 30, 2010.
However, for qualified service members who are ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.
Definitions
“Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.
“Official extended duty” means any period of extended duty outside of the United States for at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.
T Jerrel
02-23-2010, 00:33
Now that was one of hte best you tube videos i have ever seen, You the man.
Terry
It isn't like there is a fixed pie of wealth and we are sending large chunks of that pie over to China and thus are less wealthy as a result (if this is what you mean).
The pie is limited by the ability to produce wealth, and I contend that by the amount jobs and manufacturing we have sent to China , and our growing reliance on China as our producer we have limited our ability create wealth.
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/24/AR2010022405168_pf.html
Poll shows concern about American influence waning as China's grows
By John Pomfret and Jon Cohen
Washington Post Staff Writer
Thursday, February 25, 2010; A11
Facing high unemployment and a difficult economy, most Americans think the United States will have a smaller role in the world economy in the coming years, and many believe that while the 20th century may have been the "American Century," the 21st century will belong to China.
These results come from a new Washington Post-ABC News poll conducted during a time of significant tension between Washington and Beijing.
"China's on the rise," said Wayne Nunnery, 56, a retired U.S. Air Force employee from Bexar, Tex., who was one of 1,004 randomly selected adults polled. "I don't worry about a Chinese century, but I do wonder how it's going to be for my three sons."
Asked whether this century would be more of an "American Century" or more of a "Chinese Century," Americans divide evenly in terms of the economy (41 percent say Chinese, 40 percent American) and tilt toward the Chinese in terms of world affairs (43 percent say Chinese, 38 percent American). A slim majority say the United States will play a diminished role in the world's economy this century, and nearly half see the country's position shrinking in world affairs more generally.
The results are consistent with recent polls by Gallup, the Pew Research Center and others that have tracked a significant public concern about China's growing prominence on the world stage, as its economy has expanded into what is arguably the second-biggest in the world. In 2000, for example, when the U.S. economy was booming, 65 percent of Americans polled by Gallup said the United States had the world's strongest economy. By last year, the United States and China ran neck-and-neck on the question.
Analysts say the bubbling anti-China sentiment in the United States could constitute a problem for U.S. policy toward that country if the polls also coincide, as they seem to, with growing support for trade protectionism.
Annetta Jordan, another poll participant, said in a follow-up interview that she has witnessed the shifting economic strength firsthand. Jordan, a mother of two from Sandoval, N.M., was working at a cellular telephone plant in the early 1990s as production and hiring were ramped up. By 1992, the plant had 3,200 workers. "Then this whole China thing started and we were very quickly training Chinese to take our jobs," she said. Now the plant has 100 people left.
"We're transferring our wealth to China," she said. "I see that as a very negative thing. When I was younger, a lot of corporations had a lot of pride and patriotism toward America. But corporations have changed. If we in the U.S. go down, that's okay; they'll just move their offices to Beijing."
Carla Hills, the former U.S. trade representative who negotiated China's entry into the World Trade Organization in the late 1990s, said any shift in American public opinion away from China is a concern.
"I really worry about public opinion in both countries getting ahead of where we want to be," she said. "I worry about the public discourse here that 'it's all China's fault,' and the reverse in China that says we're trying to push China around."
In a poll last year in urban areas of China done by the Lowy Institute, Australia's premier think tank, Chinese respondents picked the United States as the No. 1 threat to China's rise by a factor of two over Japan and India, which were tied for second place.
Despite the mutual wariness, most Americans in the Post-ABC News poll say a diminished U.S. role in the world's economy or affairs would be positive or "neither good nor bad."
For Andrew Kohut, the president of the Pew Research Center, increasing public concerns with China remind him of America's reaction to another rising Asian nation three decades ago: Japan.
"This is déjà vu all over again, to quote Yogi," he said. "When a Japanese company bought Rockefeller Center, Americans went nuts. We asked questions about whether Japan was going to become No. 1 and people said yes. These two sentiments are very similar."
Kohut said he doesn't necessarily agree with the answers.
"Anyone who would say that China has eclipsed the United States hasn't been in a Chinese house," he said. But, he added, an "inflated view of what China is today" could have ramifications.
"When Americans are unhappy with themselves, they are unhappy with others, which can translate into protectionist pressure and security anxieties, both of which make it hard to manage U.S.-China relations," said David M. Lampton, a professor of China studies at the Johns Hopkins School of Advanced International Studies. "People tend to be anxious about big, rapidly changing, nontransparent things -- China is all three."
In recent weeks, U.S. relations with Beijing have taken a nose dive as President Obama met the Tibetan spiritual leader, the Dalai Lama, who is considered a separatist by China, and the administration moved to sell $6.4 billion in weapons to Taiwan. Although both Washington and Beijing have signaled that they don't want the relationship to be damaged, other issues -- most notably trade and a U.S. belief that China's currency needs to rise against the dollar -- could conspire to keep tension high.
Other analysts say the polling may foreshadow something bigger and more complicated than just a potential rise in protectionist sentiment.
"If we face perceptions around the world that China's rise is inexorable and the U.S. is on the decline," said Bonnie S. Glaser, a senior fellow at the Center for Strategic and International Studies, "this will hamper U.S. diplomacy and negatively affect U.S. interests."
This explains why, for example, Asian countries near China routinely raise concerns with U.S. officials about America's commitment to Asia.
"All of us want to hedge against China," said a senior official in the region, "but we need to know that the U.S. government will be here for the long haul.
"But even if you do stick around," he said, "there is no doubt that all of us now factor in how China will react to what America wants."
The Post-ABC News poll was conducted Feb. 4-8 by conventional and cellular telephone. The questions reported here were asked of half-samples of respondents; the results have a margin of sampling error of plus or minus five percentage points.
Polling analyst Jennifer Agiesta contributed to this report.
How does sending jobs overseas limit wealth creation though? The only reason companies will send jobs overseas is so they can create more wealth. For many companies, if they kept jobs domestic, it would drive them out of business.
Sending jobs overseas may help overall corporate earnings. However, wages in the host nation - the U.S. in this instance - will be under downward pressure due to the incremental change in the supply-demand equation. Fewer jobs in the U.S. means less demand. Notice, too, that those lower wages will propagate throughout the domestic economy as every local company - from the grocer to the corner café - experiences lower sales. Furthermore, tax revenue to all levels of government will be pressured lower.
Notice how the company extracts the benefits of the domestic marketplace to their advantage - as is perfectly rational in the current environment.
Now look hard at your next statement.
For many companies, if they kept jobs domestic, it would drive them out of business
So what you're saying, in essence, is that the entire pricing structure for products and services is pressed downward. This validates my contention above that wages as a whole are depressed.
Now - this is fine if we exclude debt and other commitments. It's fine because the price of stuff (products and services) will decline, so will wages, and hence there is a balance.
However - we as a nation, and as individuals, are burdened with debt. In addition, we have commitments such as Social Security and other spending mandates and entitlements. Debt service obligations do not change as the ability to pay declines.
This creates a deflationary environment. Those in debt - and that includes government at all levels - are caught in a vice between existing debt and declining ability to service that debt.
If one has cash or cash equivalents, such deflation represents a generational opportunity to get assets at dirt-cheap prices as debtors are forced to liquidate everything including their houses and wedding rings. But notice that most Americans are not flush with cash.
Free trade will provide lots of cheap stuff, just as it has. Whether that cheap stuff is worth the profound disruption that systemic bankruptcy will bring about is another question, one I think is worthy of deep reflection.