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"It looks like things are start to change. Immelt is the type of person Obama should have had on board two years ago. His WSJ piece says exactly what the problem---a service/consumption economy won't work---we must restore manufacturing Only manufacturing gives one the numbers ---we got 300 million people".

............ Ha! My dad told me that when America's shipbuilding and steel industries were leaving and in decline, then German and Japanese cars started showing up in volume. My earliest years were spent on an island in Maine. The "economy" was a sort of stagnant but sustainable one of "doing for ourselves" but the "foreign exchange" for "store bought" items came from the export of lobsters. At one time most of our nation was like that.

America's numbers have always been "curious" though. In the post WWII era we were the largest exporter and the largest importer, yet export and import were a tiny fraction of our economy. We've run trade deficits for most of that history. So what was going on?

To some extent something of an unsustainable Ponzi scheme dependent on the increase population and demand from the boomer generation. In another dimension, both public and private borrowing to build out the nation we have today, and which should, in its maturity, but returning dividends.

But "back then" there was Boeing and Douglas building most of the planes of the world. Today Boeing, Airbus and other competitors. "Back then" most of our energy came from within our borders. Today 70 percent of our oil is imported.

So, Inmelt is right. While it was one thing to run trade deficits while investing in our nation it's quite another when the deficit is on immediate consumption. We have to sell some lobsters to pay for our "store bought" stuff.

It was a terrible blow to America and the world when our WS thieves "loaned" the money that gave "the market" the false signal to massively overbuild our residential and commercial R/E. Those sectors account for a LOT of US jobs. Perhaps ten million of our unemployed are closely related to housing having fallen from 2.5 million starts to less than 500,000. "Coming back" after the surplus is distributed, painfully, will mean something like 700,000 starts that cover replacement and population growth.

In terms of employment, as you say the patient is, and will be on the critical list for a long time. GDP? so far nearly as big as ever. Obama & crew are right to go looking for markets, but a big IF in terms of finding them and not simple, or quick, for our companies to develop them, but yeah, time to send the sales force abroad.

In the interim? It's crucial to put our folks back to work and provide jobs for those streaming out of school in June. For starters why crimp education when there are not jobs for youth out there? Invest in them much like the GI bill.

The other pieces are more, much more effort to conserve energy and implement alternatives including cleaning up coal. Costly now, benefits later.

Then, let's see....... can we stand the deficits to ramp up the maintenance and upgrading of our tattered infrastructure? Or do we have to have a WW in order to "justify" the spending?

"Any thinking person understands that we are a "competition" with China much more complex and difficult than WWII."

............ I'm a bit bothered by the focus on China as "away team" we have to beat. Sure there are the currency and human rights problems and we should deal with them diplomatically or if need be via tariffs. If they pull their investment here, bingo! the yuan/dollar 'problem' is soon fixed. We're in competition with Japan, still one of the largest economies, India, the EU and about every one else. Our success, as one of many players in today's world is dependent on what we do, not what China does.

Take a look at your budget. Most likely way down the list is some "Walmart" stuff and perhaps electronics that we don't replace very often. We bought $335 billion from China in 2010, that's much less than we paid for imported oil and we sold them $80 billion worth. And, Chinese exports to the US have been kinda flat in recent years. Two percent of our $14 trillion economy.


Perhaps? the hurting middle and lower income earners will wake up and see that much of their pain is right here at home:


when the rising tide of productivity lifted only the yachts. While a consumer/service economy might not be sustainable as Inmelt sez, it would be a lot more sustainable if the consumer had a buck to spend.

Thanks for the conversation, Jack

Christopher Graves

Jack, I have to challenge what you said on property taxes in Texas. I live in Dallas/Fort Worth and we have the highest effective property taxes in the nation. The property taxes here are much higher than any other Southern state. I paid almost seven times as much in property taxes here last year than I did in Dekalb County in suburban Atlanta just three years before. My house here was appraised for $100,000 less than my house in Atlanta.


The quality of education, I might add, is unrelated to per pupil spending. I can supply studies here if necessary. There are also numerous studies showing the decline of American elementary and secondary education. As a child I noticed the decline of educational standards in public schools. I also noticed the tremendous disparity in the quality of education in public schools in Florida and Georgia when my family moved back to Atlanta from Orlando.

Finally, the model you are advocating sounds like what Walter Russell Mead calls "The Blue Model." Mead argues that such a vision is hardly compatible with the dignity of the person or person freedom. Paradoxically, it is based on the confining factory system that many on the left including Marx used to insightfully criticize as reducing the individual to a mere place-holding cog. Here is a link to one of his discussions on what Mead sees as an increasingly outmoded means of organizing social and economic life. Universities would fit into the Blue Model. These articles are featured on Mead's blog, *The American Interest*:


Aside to John. I would stick to making arguments and drop the personal insults.


Chris, thanks, I'll try to clarify:

"But the three states (including Washington, D.C.) with the most expensive homes -- California, Hawaii and the District of Columbia -- have some of the lowest property tax rates in the nation -- $4.77, $2.04 and $3.76 per $1,000 of value, respectively."

............. I pointed out that for all the caterwauling in CA of "going broke" that overall their tax burden is but mid-range. They're (politically) STUCK with the Prop 13 that has a number of negative aspects. The longest held properties are the least taxed by having grandfathered in home valuations of 30 years ago with taxes creeping up by a tiny percentage. Thus, they've starved out the excellent K-12 educational funding enjoyed prior to Prop 13. The state gets stuck with trying to fill the gap from income and regressive sales taxes. Not working.

"At the low end of the spectrum, states in the South Census Region -- such as Arkansas, Mississippi, West Virginia, Alabama and Louisiana -- have median real estate taxes that don't even reach $500. In Louisiana, half of all households pay less than $175 in taxes per home. With its generous homestead exemption, Louisiana has the lowest real estate tax rate in the nation, at $1.72 per $1,000 of home value."

............ Even though you'd like to make a case of little? no? correlation between school funding (mostly from property taxes) surely we'd agree that the states above are hardly front runners.

"Two states with the highest effective tax rates are Wisconsin and Texas, where rates exceed $18 per $1,000 of property value.
Median home values in the highest tax rate states -- Wisconsin and Texas -- are well below the national average."

............ Complaining of taxes in Texas? As Texas does not have an income tax they're stuck with trying to fund the place largely with property taxes (which I believe are still limited by state law) and fairly stiff sales taxes. As the chart I posted indicates, overall Texas enjoys one of the lowest tax burdens in the nation.

The $18/1000 you lament is about what we pay in Anchorage and amounts to a hefty burden on expensive homes, but! doesn't raise much money in the areas there were housing is under $100,000. Thus........ the problem of very disparate, perhaps prejudicial underfunding in "some" areas. You may recall school funding of San Antonio being three times higher on the "nice" side of town as compared to the other side. Fortunately for many Texas is under court order to reform such inequitable commitment to universal K-12 education for ALL of its youth. You've surely heard of the changes that the bitter legislature that still "felt" it had some god-given right to inequitable school funding termed "Robin Hood?"

As Texas approaches a population nearly ten percent of the nation one hopes that whatever is being done wrong down there will soon be corrected. You've a four year drop out rate of 40% and of those remaining, about half take the SAT tests and those rank in the lowest quartile in the nation. As in much of our nation you've many great kids attending many good schools and doing well, the problem is that of the funding and quality of schooling being......... well, spotty.

I read Mead's article and find it, like most half-baked, cowboy Libertarian rhetoric, a barely camouflaged pander to the ALL for the rich agenda we've unfortunately been saddled with. Today our future is inextricably linked to cooperation between Americans and to a competitive cooperation with the rest of the world. For example Texas' choice of shoddy and inequitable school funding hurts the rest of our nation when parents move and we have to provide remedial education or when as adults they lag behind in their native state or move to others.

Lastly, in the area of education, who would argue that universal K-12 education with the costs spread over most of our citizens has not paid us back many times over in having a largely educated citizenry and work force? And today? IF we are serious about our economy requiring 25% more college grads and much better vocational training, are we likely to get there via dumping yet heavier financial burdens on the individual and family?

Like K-12 if our nation and its industry and those who've benefited greatly are all to further benefit by our being educationally competitive would it not be a fair social contract that some of the educational burden is shared by all?

But! If the Libertarians have a better way of accomplishing the goal, I'd certainly be open to it.

Andrew Davis

Becker and Posner's argument for higher tuition is robust but it is essential that the caveats in paragraph six be emphasized.
Unfortunately General Assemblies are quicker to cut the institutional appropriations for higher ed than they are to make commensurate increases in funding to need based financial aid programs.
In Illinois one proposal under consideration is to significantly increase such need based financial aid with a bonding vehicle that can be paid off, the data show, with the growth of State income tax receipts that follows the college educated person.


The fiscal crisis in many states of the United States has led these states to cut their funding of public colleges and universities.

Ruth Murphy

It would reward slackers who waste years in college getting an expensive degree, without ever developing any work ethic that would put such a degree to productive use. More to the point, no government -- federal, state, or local -- should ever promulgate public policy that encourages citizens to run up debt in the hope it might be forgiven later.

Harold Helbock

Someone needs to look closer at where the money goes. When I went to USC in the early 60's the cost was $2 per student hour for classes. Now it is $60 per student hour. The inflation rate makes the $2 = $14.70 now but that still leaves about a $45 excess increase. The gross income for a one hour class of 30 students is now $1800 and, for a not unusual, class of 200 it is $12,000 per one hour class. This is insane! Where is all the money going?

Christopher Graves

Here is another problem the vast majority of American colleges: leftist bias in the Humanities and Social Sciences. Social psychologist Jonathan Haidt of the University of Virginia finds that there is systematic bias in favor of leftists on most college campuses coupled with systematic discrimination against conservatives. A summary of Haidt's research is presented in the February 7, 2011 *N.Y. Times* article "Social Scientist Sees Bias Within" by John Tierney.

"'This is a statistically impossible lack of diversity,' Dr. Haidt concluded, noting polls showing that 40 percent of Americans are conservative and 20 percent are liberal. In his speech and in an interview, Dr. Haidt argued that social psychologists are a “tribal-moral community” united by “sacred values” that hinder research and damage their credibility — and blind them to the hostile climate they’ve created for non-liberals."


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Thanks for this informative post.It tells us that the average tuition fees at American four-year public institutions was about $7,500 for in-state students, and it was over $12,000 for out-of–state students. Students at different British universities opposed the proposal to raise tuition by occupying university buildings, picketing the British Parliament building, and engaging in various acts of violence, but the bill passed anyway...

Frieght Broker

Thanks for this informative post..The point given in the blog must be noted that the average tuition and fees at American four-year public institutions was about $7,500 for in-state students, and it was over $12,000 for out-of–state students. Students at different British universities opposed the proposal to raise tuition by occupying university buildings, picketing the British Parliament building, and engaging in various acts of violence, but the bill passed anyway.

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The main benefit of the system has been that it attracts highly educated people from other countries: after all, in the US they will be paid more and taxed less, and their children are more likely to be successful than if they had to succeed on their own merits alone.


John: Something seems to happen, particularly to young men between the ages of the HS grad and 22-24 when many graduate college. It's perhaps that searching, wanderlust? or other restless immaturity that renders many not so attractive to the job market......... soooo, absent college, with only a very small percentage needed for our far flung warmongering, where should they be for those four years? Adding to the unemployment rolls?

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That is why the US cannot hope to remain a superpower, or in the long run - a great power, despite its huge natural advantages...

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Something similar is going on in countries where cash-strapped central governments finance most university expenses.

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