America Does Not Produce Nothing

Our economy is 80% non-manufacturing.

This week the Institute of Supply Management (ISM) released their September 2009 Non-Manufacturing Report on Business indicating for the first time that this business sector was expanding for the first time since January 2008.

Great! After last week’s dismal economic data (jobs bad) this should be good news.

But I am wary about accepting this news of economic expansion.

It could be that this report is based on a questionnaire sent to businesses, and if the responders did what I used to do – have your secretary or administrative assistant fill it out – it is not as accurate as it could be.

Or it could be that they missed the mark last month reporting things are less bad when quantitative data told us things got a little worse (August Chicago Fed’s CFNAI Index).

However, this ISM non-manufacturing report arrives almost a full month before quantitative data appears and to discard it without analysis is not wise.

What is non-manufacturing?

All industries were broken into sectors and defined by the North American Industry Classification System (NAICS). And the government has adopted this system for its reporting. (for a 2700 Kb pdf file detailing exact definitions of each NAICS sector use this hyperlink)

When analysts research data, they can tie man hours to output quantities to costs across the various government agencies through this coding system.

Everything other than sectors 31 through 33 is non-manufacturing. There is no problem with definitions as ISM uses this same system.

Non-Manufacturing is considered 80% of GDP in the USA.

USA and France share the distinction of having the lowest manufacturing percentage of GDP.

A little side track to the topic of America not making anything. Only 9% of private sector jobs are in manufacturing. Just to keep this topic real, you need to understand how powerful this 9% of America is.

USA’s manufacturing output is significant when compared to the top 10 manufacturing countries.

One of the reasons people believe the USA produces nothing is that they continue to hear about the balance of trade deficit (not to mention that it is difficult to find “made in the USA” labels at your favorite retailer).

The BEA released this week the August 2009 trade balance data (exports and imports) which implied a slight reduction in the trade gap of a few percent or approximately $1 billion.

This $1 billion could have been either $2 billion or zero, as airplane exports were off a billion from last month and oil imports were off a billion from last month.

The major sources of this $30 billion trade gap is shown in the graph below.

The consumer is the source of the trade gap. If the consumer returns to its past patterns – the huge trade gap returns. While many might cheer the reduction in the trade gap, it is also telling you that no recovery is occurring.

Sorry for the digression into manufacturing, but it is important to realize America does make things. The issue is the worrying rate of decline of this industry and its labor force which is creating depressionary labor conditions. I believe is induced by government regulation and inappropriate actions in creating an incubator for jobs creation.

Too bad there is not a Nobel Prize for job creation.

Back to the ISM Non-Manufacturing Survey

As non-manufacturing is 80% of our economy – a critical look at what this ISM non-manufacturing survey is implying is warranted.

This report is getting a lot more bells and whistles which in my way of thinking only obfuscates the primary question – is non-manufacturing seeing economic growth?

If this ISM report was on manufacturing, backlog would be an important question, and I would use it to understand whether there was growth. But what is backlog in retail? Customers at the cash register?? Or health care – an increase in time you wait in the waiting room? Or real estate – an increase in the number of potential buyers?

The employment issue is old news as we received preliminary jobs data last week for September – and indeed employment declined.

The other issues such as inventory and prices are important, but not for understanding if the economy is picking up.

The only category which directly asks this is “new orders”.

In my opinion, this subjective questionnaire data is telling me a lot more people think things are the same. From a quantitative basis, I see little difference between June 2009 and September 2009 except the spread between higher to lower has increased from 3 points to 4 points. On a subjective survey where your answer can be based on your boss yelling at you in the morning – this is insignificant.

According to the ISM, the sectors picking up new orders were Utilities; Construction; Retail Trade; Transportation & Warehousing; Health Care & Social Assistance; Wholesale Trade; and Educational Services. Eight sectors reporting contraction were Arts, Entertainment & Recreation; Mining; Real Estate, Rental & Leasing; Management of Companies & Support Services; Other Services; Information; Public Administration; and Professional, Scientific & Technical Services.

What should stand out is that retail and wholesale trade thinks things are getting better. Based on last months performance, I would wait and see if this comes to pass as we KNOW auto sales crashed and burned (yes this is retail sales).

But wait, we did get some September 2009 retail numbers this week in the form of same store retail sales.

Because of the many seasonal variations, the only way to compare same store retail sales is to compare YoY (September 2008 to September 2009). In this sector MoM comparisons are meaningless.

YoY comparisons are finally inside of the New Normal and for the first time in over a year we see a positive YoY comparison in September 2009 – a 0.4% rise in same store retail sales (excluding WalMart which reports quarterly).

The population grew 1%, but wholesale product prices and fuel prices are down YoY (some retailers report fuel sales inside of their results). Expensive stores still down, but discounters up. I am neutral on this news as I sense there is no real change in consumer buying patterns.

So if I have to use a microscope to understand if there was an increase in retail sales – let’s just say there is no change

It also needs to be considered that a large portion of non-manufacturing is not included in GDP (such as financial services and existing home real estate). Literally all of manufacturing IS included in GDP.

I would dismiss the reported increase in the ISM Non-Manufacturing outlook. It is a pretty report with little substance this month which can be used to predict the economic future.

Long Term Bull, Short Term Bull

The overall economic fundamentals are not good. But do not confuse my economic negativity for investing negativity.

Steven Hansen, the investor, is engaged.

You invest from understanding the REAL fundamentals. They do not need to be sugar coated or hyped. The economy is what it is.

I am a vastly different investor than I was in 2006. The investing world has changed. I am significantly more risk conscious, and my investing horizons are short. I limit my exposure to my capital - more stops, more options, more diligence.

I also realize that when business rationalizes (resizes) to the new normal, overall they should be able to be nearly as profitable as their 2007 levels – with some exceptions in certain sectors. The marketplace overall has not contracted more than a few percent - but it has shifted. The most nimble businesses will reap the spoils.

I doubt many business plans are based on a future with a “V” recovery.

You should not infer that the best place to invest is equities. My thinking is we are in a state of flux which brings uncertainty, risk and opportunity. I would be careful purchasing illiquid investments for now as they are harder to change if your guess on the future is wrong..

Nobody is predicting the correct future. Some will get the main trend right, but will be wrong on describing the effects.

Data analysis must be real if we have any chance to guide our investing strategy. But the biggest danger of all is sitting on the sidelines – the consumer price effect from the continuing devaluation of our currency will shortly have you deep in a hole.

Too many of our consumer products are manufactured in currencies strengthening against the dollar.

Additional Economic Data This Week

The unemployment data for this week was included in my article Keeping Unemployment Numbers Real. In this article I described a different (and boring to most people) way to analyze unemployment data using population as an alternative to the indefinable workforce size.

The Fed released their August 2009 statistical release on consumer credit which surprisingly did not show an increase in outstanding consumer credit in the month of cash-for-clunkers – instead showing an annualized decline of almost 6%.

I predicted cash-for-clunkers would boost consumer credit – and I happily admit I was wrong. The consumer is wisely rationalizing its debt, and it is another confirmation we are in for a “U” recovery at best.

The aforementioned data is seasonally adjusted (SA). The non-SA data does show a slight increase as August is traditionally a high spending month. Expect a drop in the non-SA data in September.

Slipping under the radar this week was wholesale trade figures for August 2009. The headline read wholesale sales were up 1%. Tragically, it was all due to the rise in prices of oil products. If I back that out, wholesale sales are flat. Wholesale trade continues to shed inventories.

The rate of new mortgage applications increased this week to the lower end of the range they have been in since April. The four week moving average of all mortgage loan application volume (which includes refinancing) increased 4.2% WoW. The average interest rate for 30-year fixed-rate mortgage decreased 5 basis points to 4.89%.

Filing for Bankruptcy: Edge Petroleum (EPEX) Questex Media Group (not listed) True Temper Sports (not listed) Accuride (ACW)

Bank failures this week:

Economic Forecasts Published this Past Week

The Economic Cycle Research Institute (ECRI) released their Weekly Leading Index which again gained slightly on its all-time high.

Lakshman Achuthan, Managing Director at ECRI added:

With WLI (Weekly Leading Index) growth rocketing to a new record high, the economic recovery will prove to be far more resilient in coming months than most believe possible. The risk of a double dip (recession) is very low.

Hat tip to Steve at MEMETICS & MARKETING™ for editing support.

Disclosures: long MMFs, GLD, IOO, EWZ, EWY, EWA, EWC, EWM, EWS, THD, FXI, PIN, UUP, Physical Gold - as well as numerous puts and calls which comprise less than 3% of my portfolio.

Comments

[Dave Wrixon:]

But the dollar is grossly overvalued and the intrinsic value of US economic output is actually much lower than the figures suggest. If China were to revalue its currency by 40% which is about what most economist would suggest is appropriate, it would just about catch up the US overnight. Of course that would have an impact on exports, but exports are not the be and end all of the Chinese economy and such a stiff revaluation would have limited impact on competitiveness over the medium term because Chinese workers are paid so very much less than their American counterparts. Indeed such a revaluation would imply even more capital inflows into China resulting in not only more capacity but huge productivity gains. But the story does not end there. Without increases in interest rates the dollar is vulnerable against vast swaths of other currencies. Of course higher interest rates would start to reverse chronic declines in capital investment, but the immediate impact would be further contraction of uncompetitive existing production.

Oct 11 06:21 AM

[TradingHelp...:]

I agree with you that the US does produce goods, and some high quality goods.

The issue is that the US is number one in relative decline.

The economic balance of power is moving to Asia and the past year's banking sector chaos has accelerated that trend.

Oct 11 06:28 AM

[luv2makemonies:]

People often complaints about the lack of goods produced in USA and almost everything is made in China... Well with state of our economy and high employment maybe people just can't afford to pay that extra buck for the US made goods, a vicious economic cycle here!

Oct 11 06:45 AM

[chap08:]

Dave Wrixon said "Without increases in interest rates the dollar is vulnerable against vast swaths of other currencies. Of course higher interest rates would start to reverse chronic declines in capital investment...".

Dave, you are right about the dollar but wrong about the implications. You are from England. Your head of the BOE described the pound's recent falls as "helpful". The reason he said that is because Britain, like the US, has a structural trade deficit. Did he raise interest rates to protect the pound? Did he say he was going to fight the fall in value? No, he said it was "helpful". Bernanke is of the same mind. He won't say it in public in case there is a concerted run on the dollar but he thinks the same way. He thinks a fall in the dollar would be helpful and he certainly isn't going to raise interest rates to protect it.

As for capital investment, increased rates would do nothing to help. You seem to be one of those who believe in the myth that low savings rates in America have led to low investment. They haven't. Look at all the investment in housing. Look at all the investment in Treasuries. There has always been the money there to support investment. The problem has been a lack of good investment opportunities. That's been due to a profoundly sick economy and that, in part, is due to an overvalued dollar. The same is true for Britain and the British pound.

Oct 11 08:10 AM

[apppro:]

Usually a double negative as in the author’s title would mean the opposite of what he implies, but unfortunately in this case he is right: The USA does not make ANYthing like we use to. We have become a lazy and want it all for nothing Nation. Just look at my blog I made about my trip to Bethlehem, PA this past Memorial Day Weekend – 05/25/09

apppro.net/index_files...

The main point was that from a Nation of builders and entrepreneurs, all we could do with all those vast steel factories was put up a GAMBLING CASINO. But now that I think about it, that casino represents a whole lot more then I had originally thought.

While the Chinese were building factories and infrastructure to supply us with all the cheap crap our addictive society needed, all we could do was to export paper ponzi schemes based on the short-term financial GAMBLING we had devised. EASY MONEY from short-term profits based on short-term trading comprised by short-term thinkers.

It all goes back to that: SHORT-TERM OPTION TRADERS/TRAITORS. Until we get rid of the short-term thinking we have become addicted to, nothing will improve. The ‘Fast Money/Survivor’ mentality must come to an end, and the best way is to make it less economically attractive.

Revised Tax Rules:
1. Capital gains under <6 months - 55% tax on capital gains
2. Capital gains 6 > 12 months - 45% tax on capital gains
3. Capital gains 1 > 2 years - 35% tax on capital gains
4. Capital gains 2 > 5 years - 18% tax on capital gains
5. Capital gains 5+ years - 5% tax on capital gains
6. Most critical of all — Institute a capital gains tax of 55% on ALL short sales not directly tied to a long buy by a licensed hedge fund. I'm tired of paying for the pure shorts 3rd vacation home.

Oct 11 08:21 AM

[apppro:]

And I forgot to mention that until we take ALL that wasted money used to support those meaningless options & derivatives traders/traitors.. that build nothing and make nothing, and put ALL that money into the creation of viable businesses; well until then we are destined to a Japanese style lost decade. (Boy do I hate that term. Yeah like Toyota, Sony, etc. are 'lost' companies!)

Oct 11 08:28 AM

[urbanexus:]

Thanks for some excellent perspective and insight.

Oct 11 09:03 AM

[derryl:]

Steve,
I routinely quote your statistics showing that the US is still the world's largest manufacturer by a wide margin. Before reading you I too thought US mfg was declining due to the declining employment in that sector. But I had been overlooking the extreme increase in US productivity, where mechanization and smart operations generate vastly more output with less labor input. So thank you for correcting my misunderstanding of the mfg employment numbers, and the mfg as a percentage of GDP numbers.

US labor lives in a high cost structure economy so workers cannot afford to work cheap like emerging market workers who live in bunkhouses and eat rice and beans twice a day. This means that in a globalized trading economy US manufacturers have to minimize their use of labor and/or abandon low value-added manufaturing. Both of these stategies permanently reduce the need for US labor, unless new high value-added industries are developed to absorb the displaced workers.

Everyone is hoping that greentech will be the savior of US employment but I'm not so sure. So far most greentech is not competitive with old tech, unless greentech is heavily subsidized. On the other hand, China has been doing well with its mercantilist currency pegging policy, keeping the yuan low while it builds up its industrial infrastructure. Maybe some US greentech subsidies as part of a US industrial policy designed to restore US mfg employment is not such a bad "socialist" idea after all.

Over the past 25 years of globalization US spending has been maintained by steadily increasing public and private debt. Eventually this has to be repaid. The private debt was used to create employment building all those mortgaged houses and strip malls, but that has run its course and can't continue.

The public debt, part of which was used to provide incomes to structurally unemployed US former workers, will be paid for with higher taxes for Americans who are still working. This is a kind of national subsidy of joblessness. I think it would be better to subsidize these people having jobs in greentech and other industries rather than pay them to stay home. I don't think "industrial strategy" should be a dirty word.

Oct 11 10:19 AM

[Tack:]

No, "greentech" is a terrible idea because it inefficiently diverts resources to economically-deficient, but politically-correct, uses, while the U.S. huge economic competitive advantages in coal, natural gas and nuclear power are squandered. While this folly ensues, the rest of the world increases its economic advantage by sensibly making use of the cheapest energy resources available, so that valuable capital can be directed toward other productive enterpise.


On Oct 11 10:19 AM derryl wrote:

> Steve,
> I routinely quote your statistics showing that the US is still the
> world's largest manufacturer by a wide margin. Before reading you
> I too thought US mfg was declining due to the declining employment
> in that sector. But I had been overlooking the extreme increase in
> US productivity, where mechanization and smart operations generate
> vastly more output with less labor input. So thank you for correcting
> my misunderstanding of the mfg employment numbers, and the mfg as
> a percentage of GDP numbers.
>
> US labor lives in a high cost structure economy so workers cannot
> afford to work cheap like emerging market workers who live in bunkhouses
> and eat rice and beans twice a day. This means that in a globalized
> trading economy US manufacturers have to minimize their use of labor
> and/or abandon low value-added manufaturing. Both of these stategies
> permanently reduce the need for US labor, unless new high value-added
> industries are developed to absorb the displaced workers.
>
> Everyone is hoping that greentech will be the savior of US employment
> but I'm not so sure. So far most greentech is not competitive with
> old tech, unless greentech is heavily subsidized. On the other hand,
> China has been doing well with its mercantilist currency pegging
> policy, keeping the yuan low while it builds up its industrial infrastructure.
> Maybe some US greentech subsidies as part of a US industrial policy
> designed to restore US mfg employment is not such a bad "socialist"
> idea after all.
>
> Over the past 25 years of globalization US spending has been maintained
> by steadily increasing public and private debt. Eventually this has
> to be repaid. The private debt was used to create employment building
> all those mortgaged houses and strip malls, but that has run its
> course and can't continue.
>
> The public debt, part of which was used to provide incomes to structurally
> unemployed US former workers, will be paid for with higher taxes
> for Americans who are still working. This is a kind of national subsidy
> of joblessness. I think it would be better to subsidize these people
> having jobs in greentech and other industries rather than pay them
> to stay home. I don't think "industrial strategy" should be a dirty
> word.

Oct 11 11:52 AM

[ThomasJWill...:]

So what your are saying is that you believed the report when it was terrible...but now everyone has started to lie and just make things up. Lacks a little common sense don't ya think?!

Oct 11 12:06 PM

[The Geoffster:]

The U.S. makes millions of worthless parasites sucking off the productive 53% of federal income tax payers.

Oct 11 12:21 PM

[Liz:]

Britain tried raising interest rates in 1992 to protect a falling pound sterling, with disastrous results (Read: severe recession following shortly thereafter.)


On Oct 11 08:10 AM chap08 wrote:

> Dave Wrixon said "Without increases in interest rates the dollar
> is vulnerable against vast swaths of other currencies. Of course
> higher interest rates would start to reverse chronic declines in
> capital investment...".
>
> Dave, you are right about the dollar but wrong about the implications.
> You are from England. Your head of the BOE described the pound's
> recent falls as "helpful". The reason he said that is because Britain,
> like the US, has a structural trade deficit. Did he raise interest
> rates to protect the pound? Did he say he was going to fight the
> fall in value? No, he said it was "helpful". Bernanke is of the same
> mind. He won't say it in public in case there is a concerted run
> on the dollar but he thinks the same way. He thinks a fall in the
> dollar would be helpful and he certainly isn't going to raise interest
> rates to protect it.
>

Oct 11 12:24 PM

[Liz:]

Thank God Thomas Edison didn't listen to you back in the late 1800's (We'd still be lighting our homes with candles and whale oil!)

The polluting technologies of the past have had their day. It's time for America to be innovative once again and develop new, "green", and more energy-efficient technologies.

(Oh, and P.S.: China is investing heavily in "green" technology. Even they have come to realize that saving energy saves resources -- and ultimately, money.)


On Oct 11 11:52 AM Tack wrote:

> No, "greentech" is a terrible idea because it inefficiently diverts
> resources to economically-deficient, but politically-correct, uses,
> while the U.S. huge economic competitive advantages in coal, natural
> gas and nuclear power are squandered. While this folly ensues, the
> rest of the world increases its economic advantage by sensibly making
> use of the cheapest energy resources available, so that valuable
> capital can be directed toward other productive enterpise.

Oct 11 12:30 PM

[Tack:]

Sorry, while I'm all for R&D in new technologies --energy and others-- I am not for a dictated instantaneous conversion to power sources that cannot hope to supply the U.S. and world's current requirements. The refusal of the U.S. to develop and use transitional resources, like oil, coal and gas, just ensures that the country will suffer a cost disadvantage as it attempts to violate the laws of economics. Ironically, such a politically-, rather than economically-, chosen course actually deprives resources from new technology development because excessive capital is used trying to supply energy that could be supplied much more economically --and cleanly, I might add, especially in cases of gas and nuclear-- by available sources, ones in which the U.S., in fact, has commanding superiority.


The whole rush to "green" is politically inspired, but not economically rational.

On Oct 11 12:30 PM Liz wrote:

> Thank God Thomas Edison didn't listen to you back in the late 1800's
> (We'd still be lighting our homes with candles and whale oil!)<br/>
>
> The polluting technologies of the past have had their day. It's time
> for America to be innovative once again and develop new, "green",
> and more energy-efficient technologies.
>
> (Oh, and P.S.: China is investing heavily in "green" technology.
> Even they have come to realize that saving energy saves resources
> -- and ultimately, money.)

Oct 11 12:45 PM

[Steve0:]

"Only 9% of private sector jobs are in manufacturing."

Imagine if Americans would be willing to pay a little more for their goods and raise the private sector manufacturing Jobs to 15%. The trade deficit could be statistically reduced and we would add jobs for the very people one of the previous post refer to as parasites. (he probably drives a Lexus) Buy New Balance tennis shoes, buy Vizio TV's, buy American made cars. Keep the manufacturing jobs in the US. In 5 years will the US be 10th in the manufacturing pie diagram? We can turn this around but not if we keep buying billions of foreign goods.

Oct 11 11:02 PM

[untrusting ...:]

Derryl,
A) First, US healthcare reform is infinitely more productive and important than greentech.

Consider that US healthcare costs about 17% of GDP, has among the worst outcomes/results in the developed world, and has 20+% of the population with no health insurance. When you take all of this into account the US has a healthcare cost disadvantage of at least 4-10x any other developed country in the world. How can US business and consumers compete with this millstone around their necks. Answer - they can't. It should be obvious that by the far the best thing the US could do to improve the country is to reform healthcare. The problem, as always, is our corrupt politicans, our lobbyists, and our self-serving oligarchs who are only interested in personal wealth accumulation regardless of the cost to anyone else.

As an example, PBS has been running stories, documentaries, etc. for at least the last year on healthcare. One recent in-depth story compared the Netherlands healthcare system to the US system. Some of the highlights were:
1) Netherlands healthcare cost is about 7% of GDP.
2) Insurance is mandatory for everyone. They have a basic, intermediate, gold standard insurance plans.
3) Apparently they just adopted the national plan in 2006 and it is 100% run by private health insurance companies.
4) Nobody can be denied coverage regardless of pre-existing conditions, illness, etc.
5) Cost mentioned was about $160/month for an individual (basic)
6) Insurance companies, individuals, health professionals, government, etc. were all part of the documentary and the consensus was that basically they were all happy with the approach and all working together to "optimize" the system/benefits.

In short, if the US were to simply reform healthcare in some rational manner .... the savings and benefits would far outweight anything else they could possibly do.

B) Second .. the US military spends more than all the rest of the countries in the world put together on military expenditures. Surely, no rational person can justify this level of military expenditures in comparison to the rest of the world.

Thus if the US really wanted to do something that would make a difference, they would focus on the two big things that matter the most. Greentech and other initiatives may have a very minor place, but they pale in comparison to the really big things like healthcare and the military. By far the next most important initiative after these two is interest on government debt.


On Oct 11 10:19 AM derryl wrote:

> Steve,
> I routinely quote your statistics showing that the US is still the
> world's largest manufacturer by a wide margin. Before reading you
> I too thought US mfg was declining due to the declining employment
> in that sector. But I had been overlooking the extreme increase in
> US productivity, where mechanization and smart operations generate
> vastly more output with less labor input. So thank you for correcting
> my misunderstanding of the mfg employment numbers, and the mfg as
> a percentage of GDP numbers.
>
> US labor lives in a high cost structure economy so workers cannot
> afford to work cheap like emerging market workers who live in bunkhouses
> and eat rice and beans twice a day. This means that in a globalized
> trading economy US manufacturers have to minimize their use of labor
> and/or abandon low value-added manufaturing. Both of these stategies
> permanently reduce the need for US labor, unless new high value-added
> industries are developed to absorb the displaced workers.
>
> Everyone is hoping that greentech will be the savior of US employment
> but I'm not so sure. So far most greentech is not competitive with
> old tech, unless greentech is heavily subsidized. On the other hand,
> China has been doing well with its mercantilist currency pegging
> policy, keeping the yuan low while it builds up its industrial infrastructure.
> Maybe some US greentech subsidies as part of a US industrial policy
> designed to restore US mfg employment is not such a bad "socialist"
> idea after all.
>
> Over the past 25 years of globalization US spending has been maintained
> by steadily increasing public and private debt. Eventually this has
> to be repaid. The private debt was used to create employment building
> all those mortgaged houses and strip malls, but that has run its
> course and can't continue.
>
> The public debt, part of which was used to provide incomes to structurally
> unemployed US former workers, will be paid for with higher taxes
> for Americans who are still working. This is a kind of national subsidy
> of joblessness. I think it would be better to subsidize these people
> having jobs in greentech and other industries rather than pay them
> to stay home. I don't think "industrial strategy" should be a dirty
> word.

Oct 11 11:58 PM

[amusedobserver:]

untrusting,
You lost all credibility when you started quoting PBS as your data source. If you truly want to begin to understand the lies and deceit liberals spawn regarding the finest healthcare delivery system in the world, you might try reading the most recent few articles by Ann Coulter on the subject. She writes clearly, concisely--and doesn't mince words.


On Oct 11 11:58 PM untrusting investor wrote:

> Derryl,
> A) First, US healthcare reform is infinitely more productive and
> important than greentech.
>
> Consider that US healthcare costs about 17% of GDP, has among the
> worst outcomes/results in the developed world, and has 20+% of the
> population with no health insurance. When you take all of this into
> account the US has a healthcare cost disadvantage of at least 4-10x
> any other developed country in the world. How can US business and
> consumers compete with this millstone around their necks. Answer
> - they can't. It should be obvious that by the far the best thing
> the US could do to improve the country is to reform healthcare. The
> problem, as always, is our corrupt politicans, our lobbyists, and
> our self-serving oligarchs who are only interested in personal wealth
> accumulation regardless of the cost to anyone else.
>
> As an example, PBS has been running stories, documentaries, etc.
> for at least the last year on healthcare. One recent in-depth story
> compared the Netherlands healthcare system to the US system. Some
> of the highlights were:
> 1) Netherlands healthcare cost is about 7% of GDP.
> 2) Insurance is mandatory for everyone. They have a basic, intermediate,
> gold standard insurance plans.
> 3) Apparently they just adopted the national plan in 2006 and it
> is 100% run by private health insurance companies.
> 4) Nobody can be denied coverage regardless of pre-existing conditions,
> illness, etc.
> 5) Cost mentioned was about $160/month for an individual (basic)
>
> 6) Insurance companies, individuals, health professionals, government,
> etc. were all part of the documentary and the consensus was that
> basically they were all happy with the approach and all working together
> to "optimize" the system/benefits.
>
> In short, if the US were to simply reform healthcare in some rational
> manner .... the savings and benefits would far outweight anything
> else they could possibly do.
>
> B) Second .. the US military spends more than all the rest of the
> countries in the world put together on military expenditures. Surely,
> no rational person can justify this level of military expenditures
> in comparison to the rest of the world.
>
> Thus if the US really wanted to do something that would make a difference,
> they would focus on the two big things that matter the most. Greentech
> and other initiatives may have a very minor place, but they pale
> in comparison to the really big things like healthcare and the military.
> By far the next most important initiative after these two is interest
> on government debt.

Oct 12 04:17 AM

[Steven Hansen:]

Greentech, health sector, whatever.......

look, the issue here is jobs creation. we have kids graduating, and no where to work. the boomers have even took their jobs at mcdonalds. smart kids will get jobs. the kids who used to learn trades are the ones in trouble, not to mention the 10 million people who lost their jobs and just want another.

when you decide to prevent dirty industry being your neighbor, you need to decide what to do in its place. where we have just stopped our growth, and not found alternatives - have added to our problems.

i have yet heard any special interest movements - greens, banking, aarp, nra - grasp that we need jobs for the survival of our country.

actually, there are many reasons we are faced with our jobs situation - and unrestricted free trade is a huge factor also.

we are where we are. the trends since 2000 are SCARY. we are back to the 1980's levels of employment (workforce to population ratios).

we need to explore all avenues for creation of jobs. the automation trend is continuing to build. the expense of employment is growing and soon will be double the wages paid. it is cheaper for walmart to install self check out counters than employ a cashier.

we cannot afford repair anymore either. products are cheaper and more durable. we simply throw them away when broken. think of the length of service cycles on cars versus what they where in the 1960's.

even non-repetitive tasks will be under attack with the next generation of robots. instead of worrying about competing with the wages paid to the Vietnamese factory worker - you can start worrying about the cost of robots.

i can tell you that if you elect me president, this would be one of my biggest concerns.

i don't have the answers but the issue scares the shit out of me. i can guarantee social problems. And we will not have to wait until SkyNet activates.

Oct 12 04:56 AM

[Michael Clark:]

'Worthless parasites'? I'm not sure who you mean by this? Is this just expansive language or are you targeting some part of the population for extermination?


On Oct 11 12:21 PM The Geoffster wrote:

> The U.S. makes millions of worthless parasites sucking off the productive
> 53% of federal income tax payers.

Oct 12 05:54 AM

[apppro:]

Steve,

SkyNet will only activate when it sees its' options expiring at a loss.
Jobs will be created in mass when we take all that money being used to foster our 'Trader/Traitor Nation' and put it into rebuilding our infrastructure and into fostering small businesses. Unfortunately, we spent the last 2 decades educating our prime youth in financial chicanery and not into how to build the 'NEW' energy future.
In reference to your clean energy jobs as not the solution, Obama's clean energy yeah - Boone's NG solutions will.

Oct 12 07:31 AM

[Living4Divi...:]

Steve - Because of your good reporting, I read any article you publish. I have to admit I was also drawn to read this article because of the title's double negative.

Good article - keep em coming

Oct 12 12:23 PM

[untrusting ...:]

amusedobserver,
What utter nonsense. You deny the facts which are very simply that the US healthcare system at 17% of GDP, has among worst healthcare outcomes/results in the developed world, and 20+% of the entire population has zero healthcare. These are simply FACTS. When you combine these facts together it amounts to the US healthcare system being somewhere between 2-10x as costly and inefficient as any other healthcare system in the entire developed world. Again just a FACT, not a political statement like yours. But then again you right-wing idealogues are more than welcome to try and compete against every other country in the world with 200-1,000% cost disadvantages just based on healthcare alone.

Further to the above, one has to acknowledge that the US is primarily a private sector system of healthcare. Therefore a rational person has to assign blame to the private sector for what is probably the most inefficient and expensive healthcare system in the developed world.

With regard to PBS, they are a far more credible, balanced, and reliable source of information than political hacks like Ann Coulter or Rush Limbaugh, who push their agenda in order to enrich themselves from it.

When you actually have a solution, that compares to anything anywhere in the developed world, just let us know. It is actually pretty easy to compare and evaluate healthcare from a big picture/overall viewpoint. In fact every other country in the developed world has already done it. Guess it is just the clueless Americans that can't figure it out, as they are more interested in enriching lobbyists, special interest groups, and politicans.

On Oct 12 04:17 AM amusedobserver wrote:

> untrusting,
> You lost all credibility when you started quoting PBS as your data
> source. If you truly want to begin to understand the lies and deceit
> liberals spawn regarding the finest healthcare delivery system in
> the world, you might try reading the most recent few articles by
> Ann Coulter on the subject. She writes clearly, concisely--and doesn't
> mince words.

Oct 12 09:19 PM

[phdinsuntan...:]

Steve, we really appreciate your work, please take the excelent comments you received specially the first one, for your next insight. Robots? Skynet? Come on, look around to the 17,000 islands south of you + 7,000 east, I just see a lot of rice fields and area for future Chinese-Japanese manufacturing growth there. The US will clean their mess via devaluation fast or slow, and business as usual at the end.

Oct 15 06:01 AM