More Signs of Economic Recovery

A Parallel Turkey Universe?

from http://www.guy-sports.com/humor/pictures/picture_thanksgiving.htm

Green shoots of economic recovery can be found in many unusual places.  This was brought to my attention by LogisticsTODAY.  They are reporting that UPS (United parcel Service) is raising their rates an average of 4.9% in 2010.  This is not an isolated event.   The airlines started doing this early in 2009.  American Airlines charges $20.00 for each checked bag.  Some airlines even charge for coach seats that provide more leg room.  Homes in my neighborhood had dropped in price byaas much as 50% just two months ago.  From that low point the asking prices have increased by one third or more.

Finally the unemployment situation has improved with the drop in new claims for unemployment benefits to 466,000 per week from 501,000 last week.  That is the first drop below the 500,000 mark since the week of November 1, 2008. This is a 7% drop in new claims.  It won’t be straight line down but it is a significant decline from the high of 674,000 new claims last March 28.

In the area of politics this drop in new claims will be a White House argument that their stimulus strategy has worked.   Republicans will contend that the recovery was the result of private enterprise doing its thing.  Regardless of the cause, more of us will be celebrating a Happy Thanksgiving than was anticipated.  The green shoots are a good thing.

“Cruella De Vil” or Her Sister?

I could not help notice the face of Camilla, Duchess of Cornwall, in a photo in Vancouver, Canada.  She looks miserable.  Perhaps it was because there was a rain and wind but I think it was more than that.

Look at this set of photos and you will see a pained face.  Her smiles are more grimaces than real indications of happiness. When she was young and having an affair with Prince Charles, even before his divorce from Princess Diana, you knew she thought she had found her own paradise. 

OK, maybe she isn’t Cruella but she looks like that character.  Perhaps she does like Dalmatians. 

As for Prince Charles,  he appears to be in his own world.  It is truly astonishing he could not see the beauty, grace and dignity in Princess Diana.

The Lowest Cost Means the Highest Net Income

The average hourly pay rate in the state of Washington is $22.32.  The average hourly pay rate in South Carolina is $17.33.  So Boeing Company has decided to build their new 787 Dreamliner in a North Charleston facility in that Southern state.  Of course there is also an incentive package by South Carolina that sealed the deal.

The lesson learned is that free enterprise always looks for ways to lower its cost of doing business.  The state of Washington does not own Boeing.  There is no pact that requires their allegiance to that state’s population.  Lockheed moved from Los Angeles to Atlanta.  Technicolor has moved its CD and DVD manufacturing facilities that was located in Virginia and California to Mexico.  Many companies have outsourced their manufacturing to other countries. 

Let me put this another way.  Stock holders are not interested in providing welfare.  They are interested in net profit.  This too is part of America Incorporated.  Any questions? 

America Incorporated

The United States is borrowing a page from Red China.  China has adopted a model that includes both free enterprise and government control.  Red China actually is copying the American model that was partially implemented by the United States until President Ronald Reagan said “government is the problem.”  Ronald Reagan was wrong.

Reagan’s impact lasted until the election of Barack Obama.  The dismantling of many laws put in place after the Great Depression has caused the Great Recession.

The economic model that works best is one of both government and private enterprise working in unison to provide for continued moderate growth without creating a super wealthy class and reducing poverty.

Republicans and conservatives will fight the intent of this course because they believe it will destroy the nation.  They are wrong.  The United States is a consumer driven economy that is based upon the purchase of product.  It cannot thrive without employment of most people at salaries that enable that continuing purchasing power.  The public correctly objects to CEOs earning 200% to 300% more than the average wage earner.  

The government’s investment in companies like Fisker Automotive is the kind of step that the Chinese government makes to improve society by employing thousands of people.

Why Not Los Angeles?

Thanks to my father my family moved from Philadelphia to Los Angeles after WWII.  There are many reasons for not bringing your family to Los Angeles.  Most of them are poor arguments. 

Metropolitan Los Angeles spreads across five counties. Traveling north to south it spreads across a distance of about 75 miles and from the beach to inland cities and towns and spreads east about 50 miles.  Many people travel a distance of 30 to 35 miles just to go to work.  For most people a car is necessary for the commute to work.

Homes are relatively expensive.  Even with the downturn in housing prices for a home of 1700 to 2000 square feet will cost at least $350,000.  Those least expensive homes are in lower income neighborhoods.

What makes the city desirable are the following features:

1. Total annual rainfall averages 16 inches.  Snow is a rarity.  Temperature today reached 87ºF/30ºC at my home (October 26, 2009).  Winter temperatures drop below freezing at night for about a week every January.  How far below freezing?  One to three degrees.    

2. The entertainment facilities are second to none.  Live theater is in neighborhood venues, the Hollywood Bowl, L.A. Live, Staples Center, Disney Hall, comedy clubs, etc.

3. Medical facilities include UCLA, City of Hope, Cedars Sinai Hospital, etc.

4. Universities are too numerous to list but include UCLA, USC, California State University has four campuses.

5. Beaches include Santa Monica, Malibu, and Laguna.

6. Amusement parks include Universal City, Disneyland, Knott’s Berry Farm, and Magic Mountain.

7. The largest port in America and the entertainment industry brings lots of job opportunities.

8. There is also the zoo, museums, gardens, and wonderful shopping malls.

What’s wrong with this picture?  The people are too liberal, many races and ethnic groups are intermixed throughout the city.  West Hollywood is an internationally known gay and lesbian community.  You may have to wait an hour and a half to be seated at Miceli’s and parking at the Beverly Center is always a challenge.    

Getting Happy with the Future

America has finally obtained what so many of us has wished and hoped for, the success of countries all over the world.  It’s not just European nations that have become prosperous.  Even China and India have become nations with growing middle class societies that can afford homes, cars, and wide screen television. China has been documented on television in the United States about its growing middle and upper classes.  Fareed Zakaria reports in Newsweek that China “will spend $200 billion on railways in the next two years, much of it for high-speed rail”.  The Los Angeles Times reported on October 21, 2009 that China’s growth is at 8.9% thanks to their stimulus and lending programs. BusinessWeek reported on the growing middle class in Turkey.   

The bad news is that their prosperity impacts our prosperity.  Why? If those other nations prosper they will compete with the United States for the sales of many of the products we export to the rest of the world.  Most other nations have lower labor costs than the United States and that affects our competitiveness.

For the United States to continue its economic dominance will require at least two occurrences. 

First there will have to be a new advance in part of our economy that will be a show stopper.  It will need the next new thing.  It will be something that everyone realizes is a “must have.”  The federal government is trying to motivate this idea with talk of the new “green” environment and the possible development of new energy sources. 

Second, the cost to produce this something new will be accomplished in the United States at a competitive rate with the rest of the world.  That evolution is already happening with the lower trade value of the American dollar.  Americans may not like this outcome because the cost of oil, cars, televisions, and cameras will be higher.  The cost of traveling to another country will be higher.   

Just as buggy whips and newspapers are part of the past, new ideas are part of the future.  Our inventiveness will make Americans happy with the future.