Europe bounces back !!!!

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Registered: 01-25-2010
Europe bounces back !!!!
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Tue, 08-10-2010 - 12:25am
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Avatar for rollmops2009
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Registered: 02-24-2009
Tue, 08-10-2010 - 8:17am

Along the same lines:

OP-ED CONTRIBUTOR
The Economy Needs a Bit of Ingenuity
By EDMUND S. PHELPS
Published: August 6, 2010

THE steps being taken by government officials to help the economy are based on a faulty premise. The diagnosis is that the economy is “constrained” by a deficiency of aggregate demand, the total demand for American goods and services. The officials’ prescription is to stimulate that demand, for as long as it takes, to facilitate the recovery of an otherwise undamaged economy — as if the task were to help an uninjured skater get up after a bad fall.

The prescription will fail because the diagnosis is wrong. There are no symptoms of deficient demand, like deflation, and no signs of anything like a huge liquidity shortage that could cause a deficiency. Rather, our economy is damaged by deep structural faults that no stimulus package will address — our skater has broken some bones and needs real attention.

The good news is that some of the damage done in the past decade will heal. The pessimism that broke out in 2009 is dissipating. The oversupply of houses and office space, which is depressing construction, will wear off. Banks and households are saving quickly enough to retire most of their excessive debt within a decade.

But other problems are not self-healing. In established businesses, short-termism has become rampant. Executives avoid farsighted projects, no matter how promising, out of a concern that lower short-term profits will cause share prices to drop. Mutual fund managers threaten to dump shares of companies that miss quarterly earnings targets. Timid and complacent, our big companies are showing the same tendencies that turned traditional utilities into dinosaurs.

Meanwhile, many of the factors that have long driven American innovation have dried up. Droves of investors, disappointed by their returns, have abandoned the venture capital firms of Silicon Valley. At pharmaceutical companies, computer-driven research is making fewer discoveries than intuitive chemists once did. We cannot simply assume that, when the recession ends, American dynamism will snap back in place.

Many pin their hopes for reviving the economy on gains in worker productivity. But such workplace advances often destroy more jobs than they create. That happened in the Great Depression, when increased worker productivity allowed companies and the economy to expand without creating new jobs.

The decline in American dynamism is not the only problem. It has been accompanied by a decline of what I call inclusion. Not only were low-wage workers largely cut out of the economic gains of the 1990s and 2000s — much of the middle class was, too. In part, this is because the emerging economies around the globe have ended our competitive advantage in manufacturing, and jobs have fled. We can’t compete in those industries any more, and our business sector has not yet found new advantages.

The worst effect of focusing on supposedly deficient demand is that it lulls us into failing to “think structural” in dealing with long-term problems. To achieve a full recovery, we have to understand the framework on which our broad prosperity has always been based.

First, high employment depends on a high level of investment activity — business expenditures on tangibles like offices and equipment, and also training for new or existing employees, and development of new products.

Sustained business investment, in turn, rests on innovation. Business cannot wait for discoveries in science or the rare successes in state-run labs. Without cutting-edge products and business methods, rates of return on a great many investments will sag. Furthermore, innovation creates jobs across the economy, for entrepreneurs, marketers and buyers. State-led technology projects do not.

High business investment also depends on companies having confidence in the future. A company might be afraid to invest in research or product lines if it fears the rest of the economy is not doing the same — or if it fears the government might become hostile to its goals. During the Depression, John Maynard Keynes warned President Franklin D. Roosevelt not to damage business confidence with anti-profit rhetoric — to treat titans of business “not as wolves or tigers, but as domestic animals by nature.”

What, then, is to be done? One reform would be to create a First National Bank of Innovation — a state-sponsored network of merchant banks that invest in and lend to innovative projects. Another would be to improve corporate governance by tying executives’ compensation to long-term performance rather than one-year profits, and by linking fund managers’ pay to skill in picking stocks, not in marketing their funds. Exempting start-ups from corporate income tax for a time would also help.

We also need a program of tax credits for companies for employing low-wage workers. That may seem counterintuitive at a time when the Obama administration is pressing education and high-paying jobs, but we need to create jobs at all levels. Early last year, Singapore began giving such credits — worth several billion dollars — and staved off a recession. Unemployment there is around 3 percent.

A revamp of the economy for greater dynamism and inclusion is essential for prosperity and growth. Rather than continuing to argue over solutions to a problem we do not have — low demand — the country needs to focus on fixing the structural problems that, unresolved, will stymie the economy over the long haul.

Edmund S. Phelps, the director of the Center on Capitalism and Society at Columbia University and winner of the 2006 Nobel Prize in Economics, is the author of “Structural Slumps” and “Rewarding Work.” http://www.nytimes.com/2010/08/07/opinion/07phelps.html?ref=opinion


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Men can only be happy when they do not assume that the object of life is happiness.
– George Orwell
iVillage Member
Registered: 01-25-2010
Tue, 08-10-2010 - 9:55am

yes the R&D factor is very important. One of the reasons for the fall of the Roman empire was the lack of R&D! The technology of that time was on the verge of the industrial revolution. At the Siege of Corinth the first energy weapons were used. There was a fortress in (i believe )Macedonia that had steam powered drawbridges.

The lack of R&D and the lack of health care keep putting intelligent people in a no win situation. That the Avro Arrow a aircraft the was 35 years ahead of it's time constructed by a small Canadian company with far superior technology. But was destroyed by American interference and political stupidity.

Europe does have problems the Italian lack of patents for instance.
But the base stability that allows the individual more opportunity.
The safety net plus the American ideal of plugging at it. In American failure is not necessarily a death blow. We offer higher education even when people fail. They can fail until they succeed.
Great failures President Lincoln,Colonel Sanders,Bill Gates,Steve jobs, Albert Einstein, Hugh Hefner Kelly Johnson. The list goes on and on.
It is my belief the people do not grow at the same rate nor are ready at the same rate. One of America's strength is the ability to fail.

>>>>But other problems are not self-healing. In established businesses, short-termism has become rampant. Executives avoid farsighted projects, no matter how promising, out of a concern that lower short-term profits will cause share prices to drop. Mutual fund managers threaten to dump shares of companies that miss quarterly earnings targets. Timid and complacent, our big companies are showing the same tendencies that turned traditional utilities into dinosaurs.<<<
So very right! The short term grasp for profit has crippled
innovation. Too many small companies are bought up by huge conglomerates to increase portfolio while many inventions are "iceboxed" or left to gather dust.
Item: Thomas A. Edison's electric motor addition to Gatling multibarrelled gun discovered in 1947 by a GE researcher. Dow Corning's Gorilla Glass (http://www.thestreet.com/story/10824552/cornings-gorilla-glass-has-rosy-tone.html) But the plant will be in Japan!!
Too much of the innovation is stifled by the huge conglomerates.

>>>>What, then, is to be done? One reform would be to create a First National Bank of Innovation — a state-sponsored network of merchant banks that invest in and lend to innovative projects. Another would be to improve corporate governance by tying executives’ compensation to long-term performance rather than one-year profits, and by linking fund managers’ pay to skill in picking stocks, not in marketing their funds. Exempting start-ups from corporate income tax for a time would also help.

We also need a program of tax credits for companies for employing low-wage workers. That may seem counterintuitive at a time when the Obama administration is pressing education and high-paying jobs, but we need to create jobs at all levels. Early last year, Singapore began giving such credits — worth several billion dollars — and staved off a recession. Unemployment there is around 3 percent.<<<<
You are correct I have been following the Asian developments and agree. Today's low wage earner is tomorrow's consumer and possible tomorrows millionaire. When I was in La The story of inventive success was part of the folklore.
We need smaller quick moving innovation companies. Yes some companies have divisions that are renown for innovation(Lockheed's Skunk works)
American are held back by not joining the 21st century in giving the safety net That the Europeans have, the long work year lack of comprehensive health care. We have become the dog in the manger. Jealous of anyone that has something we do not.
Singapore has some social and financial advantages. Welfare as we know it does not exist there. people are status conscious as are South Korea. So there is incentive. The disadvantages need help in getting the right employment where they can gain success and status(the forgotten incentive).
Single payer health insurance would take the burden off the employer(in some ways) and help start ups provide for the employees. Ther is no need for the government to reproduce the system already in place as the current insurance carriers ae equipped to handle claims.
For a star-up it puts them on the same footing as the big corporations and allows the worker more flexibility in choosing an employer or starting their own business. It is the small business that is the true economic engine.

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Registered: 02-15-2007
Tue, 08-10-2010 - 1:11pm

iVillage Member
Registered: 08-10-2010
Tue, 08-10-2010 - 7:49pm
Hardly. Greece is only alive today because it was propped up by other European countries while it made massive cuts to it's spending. The same "cut spending" approach is happening in most other countries in Europe as well...except the US, of course, where Obama and the Dems continue to spend us into bankruptcy. The entitlements you speak of are short lived and on the chopping block throughout Europe.
iVillage Member
Registered: 08-10-2010
Tue, 08-10-2010 - 8:04pm

>>> yes the R&D factor is very important. One of the reasons for the fall of the Roman empire was the lack of R&D! The technology of that time was on the verge of the industrial revolution. At the Siege of Corinth the first energy weapons were used. There was a fortress in (i believe )Macedonia that had steam powered drawbridges.

Been watching "Ancient Aliens" on the Discovery Channel?

>>> That the Avro Arrow a aircraft the was 35 years ahead of it's time constructed by a small Canadian company with far superior technology. But was destroyed by American interference and political stupidity.

First of all, Avro Canada was not a "small Canadian Company." Second, The Arrow was not the "super-advanced" aircraft you imagine it to be, and it was the Canadian government who scrapped the project in favor of the Bomarc missile system which was more inline with the Soviet-deterrent strategy employed by the US and NATO.

As for the rest...

iVillage Member
Registered: 01-25-2010
Tue, 08-10-2010 - 10:29pm
Strange that is not happening as the european nations are working to restore stability.

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iVillage Member
Registered: 01-25-2010
Tue, 08-10-2010 - 10:54pm

Very wrong The Arrow was 35 years ahead and were is the Bomarc? Dropped right/ And then the Canadian government spent more on the F101 a far inferior aircraft and more expensive.

Do research:
http://en.wikipedia.org/wiki/Archimedes

http://en.wikipedia.org/wiki/Avro_arrow

Steam power was known:
Main article: History of the steam engine

The history of the steam engine stretches back as far as the first century AD; the first recorded rudimentary steam engine being the aeolipile described by Greek mathematician Hero of Alexandria. In the following centuries, the few engines known about were essentially experimental devices used by inventors to demonstrate the properties of steam. In 1543. Blasco de Garay is reputed to have used a primitive steam machine to move a ship in the port of Barcelona. Later, a rudimentary steam turbine device was described by Taqi al-Din in 1551 and by Giovanni Branca in 1629.

http://en.wikipedia.org/wiki/Steam_power

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iVillage Member
Registered: 08-10-2010
Wed, 08-11-2010 - 12:57am

>>> Very wrong The Arrow was 35 years ahead

That must be why Canada couldn't sell this technological masterpiece to either the US or the British.

>>> and were is the Bomarc? Dropped right/

Well, yeah...because it was designed to target manned bombers and the world stopped throwing rocks and started using ICBMs. You might also have noticed that our military has also upgraded from muskets.

>>> And then the Canadian government spent more on the F101 a far inferior aircraft and more expensive.

Why would the Canadian government spend more money on the F101 when they had the super-duper, technologically advanced CF-105 Arrow sitting in a dusty hanger somewhere? Hmmm...

>>> Steam power was known: The history of the steam engine stretches back as far as the first century AD; the first recorded rudimentary steam engine being the aeolipile described by Greek mathematician Hero of Alexandria. In the following centuries, the few engines known about were essentially experimental devices used by inventors to demonstrate the properties of steam. In 1543. Blasco de Garay is reputed to have used a primitive steam machine to move a ship in the port of Barcelona. Later, a rudimentary steam turbine device was described by Taqi al-Din in 1551 and by Giovanni Branca in 1629.

But...um...you said..."There was a fortress in (i believe )Macedonia that had steam powered drawbridges." Odd these technologically advanced steam-powered drawbridges weren't mentioned in your article.

You also said..."At the Siege of Corinth the first energy weapons were used." The "Siege of Corinth" took place in 1862, so it's pretty likely that "energy" devices were around...like trains, for instance...but 1) as far as I know, only conventional weapons were used at the time...unless you consider muskets and cannons to be "energy weapons"...and 2) the "Siege of Corinth" wasn't a battle, it was a strategic withdrawal.

And maybe the Roman "industrial revolution" was a secret.

iVillage Member
Registered: 08-10-2010
Wed, 08-11-2010 - 1:00am
Of course they're working to restore stability...the alternative is a complete economic collapse. But what they're NOT doing is what you say they're doing...jumping right back into the entitlement mentality that got them in trouble in the first place. Fiscal responsibility is the watchword in Europe these days...and they're pressuring Obama to do the same.
iVillage Member
Registered: 01-25-2010
Wed, 08-11-2010 - 12:53pm

The Romans made the same mistake we are lack of R&D. They thought that they had all the knowledge. Had they been wiser they would have established schools to bring technical education to the Empire. (remember that communication was much more difficult then)
In that time much of the developments happened by accident and that the inventor kept it secret as there was no patent office available.

The Arrow had competition from British designs and most nations are under political pressure to built it here etc. This was also the time of the missile and it's "wonders". The Bomarc was to have had nuclear warheads which really went over oh so well that it caused the collapse of the government.

>>>Why would the Canadian government spend more money on the F101 when they had the super-duper, technologically advanced CF-105 Arrow sitting in a dusty hanger somewhere? Hmmm...<<<<
Because there were Political considerations as well as agreements with the US. The Canadian economy was not ready for antimissile and the rebuilding of the radar sites. Bomarc caisrd a giant waste of money as no one was happy about nuking their own cities as defense against bombers. Later it was found that the "great Bomarc" was also obsolete before it could be deployed.

http://en.wikipedia.org/wiki/CF-105_Arrow

My error it was the siege of Syracuse.

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