John Lounsbury

2009 Economic Forecasts Ignore Demographic Shift

Ray Metcalfe - - -

Excellent comment. Hope I catch your future comments. I am trying to get an article finished on the prospects for the housing market. I'm dealing with collected data. I wish I had your experience background to give more perspective to the analysis.

If you have the time to relate your experiences to current market data, it would make a good series of articles. I'm not on the editorial board for Seeking Alpha (and they do reject a majority of contributed articles), but I would hope they would recognize your credentials and that the quality of the article would be as good as I think it could be.

Just a lttle nudge. Hope you consider it.

2009 Economic Forecasts Ignore Demographic Shift

axelrod - - -

Thanks for your overly generous comments, but I am reminded of a quote I heard attributed to one of Obama's daughters when walking out in front of a cheering crowd: "Mommy, this is embarassing." I think she recognized, even if subconciously, that the applause was not really for her personally and having herself exposed to it produced discomfort.

If you do read anything else I write, I hope you give me any critical feedback you can. I learn something from writing and even more, sometimes, by reading the resulting comment stream.

Thanks again.

2009 Economic Forecasts Ignore Demographic Shift

Steve - - -

Another good article. I'd better stop other projects and finish my housing market analysis before you make my list of references to cite too long.

User327414 - Good point about the "Echo Boom", it will mitigate the retiring boomer affect, but will not balance it out entirely.

Axelrod - Commercial real estate will be a significant problem in 2009. I have not tried to analyze it, hoping it will get a good treatment from someone else soon. Too many things on my plate. I'm not as efficient as Steven Hanson at turning out well researched articles.

I agree with the recurring theme in the comment stream (Yamu, carey_jim, spondoolix and others) that the economy is shifting from a historic high percentage of consumerism and that the change will be long lasting, if not permanent (at least in terms of decades).

Economic Efficiency Cannot Be Calculated

Steven - - -

As always, a useful, thoughtful and well written article. Some of the comment stream is quite angry, though.

Onr thought on free trade: How does it affect the velocity of money? It seems to me that there should be a significant increase in velocity. Has anyone done a study?

Another thought on free trade: I have read many complaints about other countries having restrictions against American made cars being imported. I can see how this could be a valid concern with Japan (they have a high cost of labor), but I don't think the concern would apply to other countries like China (low cost of labor). See the comment by 303820. Our companies would never export to low labor cost countries; they would just go there and mnaufacture there.

Free Trade Agreements = Evaporated Jobs Worldwide

There are some common threads running through these comments that I want to elaborate on. I apologize in advance for not giving individual attribution to the many thoughts expressed above in what follows.

Free Trade does contribute to the problem everyone is discussing (employment), but it is not the only source of lost jobs. It may not even be the major source in some cases. Telephone operators did not lose their jobs because of out-sourcing. They lost their jobs to switchboard technology.

Steve Hanson mentions this in the article:

"The eventual elimination of employment. Computers controlling machines making machines. Picture HAL on 2001 – A Space Odyssey controlling the Star Wars Droid Army."

The profit motive causes a constant search for greater productivity, more production for less cost. When man is more expensive than machine, machine wins, whether he is in Ohio or China. Thus, technolgy advances enable the production of more and more, for less and less. If the means of production end up employing fewer and fewer people, the demand for production goes down (the market is diminished). Then the investment in technology can not pay for itself and a bubble collapses.

The only way we avoid this dismal scenario is for innovation to produce new products and services that will employ the retrained displaced workers. Then the productivity cycle starts anew in another industry, but the mature industry now still has customers, just not their own workers as before, but someone elses (perhaps their own retrained former employees).

The term for this virtuous cycle is "creative destruction". I apologize for not giving attribution, but I don't remember who coined the phrase. (Possibly Peter Drucker?) I believe Tom Friedman has used the term.

I'll borrow a line from a 1960's song: "The answer, my friends, is writtten on the wind": Innovate, adapt, and then innovate again. As Eleanor Roosevelt said, "It is better to light a candle than to curse the darkness."

To those who believe that we owe something to those who "are not suited to retraining", I disagree. I'll offer the Darwin model, survival of the fittest. Adaptation, survival, moving on and moving ahead is how this country became the greatest nation in history. Now you want to change a proven process?