"Nothing is Made in the USA anymore!"--oh, really? Don't let evidence get in the way of a good Protectionist argument...

 

Carpe Diem



Is US manufacturing in decline?..."Nothing is made in America anymore!" If you look at the graph above, you will see that we have dips in manufacturing output but the historical trend suggests that manufacturing in the US is relatively healthy. SAY WHAT?  But China makes everything, right? I suggest you go on over to the source of this graph and read what Carpe Diem has to say--a short, concise explanation is provide there...I have an additional observation.

Look at the early to mid-1990's.  This is the era of the implementation of NAFTA and the rise of China as a manufacturer, otherwise known as "Doom and Gloom" to trade protectionists.  Notice what happens to the slope of the lines for BOTH the US and China. Both are increasing at an increasing rate--getting steeper.

Granted China's trend line is steeper, but they were starting from a lower base number.  The only anomaly is that in 2010 we took a dip and China did not. I have to assume when our recovery ramps up, our trend line will also head up. 

What do I see out of this?  Manufacturing does not appear to be a "zero-sum game"---their gain does not have to be our loss.  As discussed at Carpe Diem, we are not manufacuting the low tech, low skill, low wage paying stuff we see at Wal-mart but higher tech, higher skilled, knowlege-based, higher wage paying goods/services.  Isn't that what really should matter?

(The source of Prof. Perry's blog entry is this article in the Boston Globe)

Forget the Super Bowl---Farmers are making an Allocative Efficiency decision that will affect the snacks you are eating right now!

Well, not RIGHT NOW, but in the near future...

WSJ: Cotton Farmers Jump on Rising Crop Prices

—The amount of land in the U.S. dedicated to planting cotton this spring is expected to surge 14%, according to a closely watched forecaster.

The National Cotton Council of America, an industry group, said on Saturday it estimates farmers will plant 12.5 million acres of cotton. As a result, the fall harvest is pegged at 19.2 million bales, an increase of 900,000 from the 2010 harvest. The amount of cotton in one bale is enough for about 1,200 T-shirts, according to the council.

Farmers are making an "Allocative Efficiency" decision to produce more cotton than---(fill in the blank).  Assuming there is not that amount of idle acerage, to produce more cotton is going to necessarily mean less of something else. This is illustrated in the graph below.

 The bundle of Cotton and Food produced is going to move from Cotton* and Food* to Cotton 1 and Food 1.  The opportunity cost for the farmer is somewhat minimal---the land, equipment and know-how to produce cotton is about the same as corn, wheat, soybean, etc.  They are looking for the most revenue per acre and cotton is the choice commodity at this time. 

Where the real opportunity cost is incurred in the domestic and international food supply.  We can't eat cotton, so domestic food production will be impacted in some negative way...Won't it??

Graphic--Carbon Emissions by Nation AND Per Capita---VERY different results...

In one easy chart: The problem of US Aid to Egypt, and I suspect other authoritarian governments "friendly" to the US.

Public Sector Aid means money that flows through the recipient government, in this case Egypt, for projects administered by the Egyptian governmnent to help people in a variety of ways. If the government is as corrupt as the people believe, then I would suspect the ACTUAL amount of US aid money that reaches the intended recipients is probably about the same that goes to Private Aid groups (i.e. NGO's). I will leave it to your imagination to figure out where the rest goes...(Note: I don't know where the other 1% is--I suspect it is a rounding error)...

Dilberts view on the Unemployment Report that came out today...Most concise I have seen thus far..



Mainland = Wimps When Compared to the Chicago Public School System. Why?

Midwest buckles under major winter storm

""In Chicago, airlines canceled more than 2,200 flights at O'Hare International Airport, and 400 flights at Midway International Airport. Public schools closed for the first time in 12 years and almost 80,000 ComEd customers in northern Illinois were without power.""

Nostradamus was not an Economist, but he could have been---Inflation is a Self-fulfilling Prophecy...

Inflation is not a problem in the US...now.  The question amongst economists is what is the root cause of current inflationary trends around the world.  Is it demand driven because of scarcity of resources? Are price increases in one area off-set by price decreases somewhere else in the economy, rendering the overall effect neutral? Or is it "too much money chasing too few goods", the classic explanation of inflation?  My opinion is it is a combination of the first and second reasons, with the first one taking precedent.  I have read too many articles lately about the world-wide demand for resources to not give it credence.  Here is another one excerpted below. What do you think?

WSJ: Companies Stock Up as Commodities Prices Rise

""Companies contending with rising commodity prices are stockpiling rubber tires, cotton clothing and other goods, a maneuver that is aimed at insulating them from inflation but also could contribute to it.""

""Purchases made more because of perceived inflationary pressures than a response to demand are important because they signal that inflation expectations are climbing. Economists often focus on inflation expectations, because they can spur people to speed up their purchases, in turn driving prices higher.""

"The price increase then becomes a self-fulfilling prophecy," said Zach Pandl, an economist at Nomura Securities. Once the cycle ends, prices can collapse, he said.""