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That leaves America today with many workers consigned to low-productivity, low-wage jobs, but growing shortages in key areas of skills. Machine operators in modern factories require at least basic programming knowledge, and the greatest risk to manufacturing industry is the absence of qualified workers. With long-term idleness comes degradation of skills. American workers are not only excluded from the benefits of the modern economy, but to an increasing extent are unqualified for the modern economy. It is into this thicket that the new president must wade. Trump has said that he wants to spend $1 trillion on infrastructure, which is in urgent need of upgrades. The stock market takes him at his word, and the stock of construction equipment manufacturers has soared since his election. Here Trump is magnificently right, as Keynes said of Roosevelt in another context. Repairing ageing infrastructure is a basic economic requirement, but it also allows many less-skilled workers to re-enter the labour force after a long and unwanted furlough. More threatening to America’s long-term economic prospects than deteriorating capital stock is the extended idleness of a large proportion of her working-age men.

The Obama recovery of 2009-2016 was the weakest on record; had the recovery achieved the same growth rates as in past recoveries, America’s economy would be about 10 per cent larger than it is today. Not only the pace of growth but its composition gives cause for concern. In America’s dynamic economy of the past, start-ups contributed more than 100 per cent of employment, which is to say that established businesses shed jobs while new businesses more than replaced them. After 2008, though, the contribution of start-ups to employment growth has been close to zero (the reported increase in employment of the largest 1,500 American companies by stock market capitalisation is roughly equal to total employment growth from 2009 to 2015).

The American economy lost its entrepreneurial character under the Obama administration. The academics will take some years to chew over the data, but a reasonable conjecture is that more restrictive credit standards after 2008 and a much higher regulatory burden dampened the animal spirits of American entrepreneurs. The Affordable Care Act, moreover, imposed substantial costs on businesses with more than 55 employees, which may explain why many businesses failed to grow. Large companies employ small armies of lawyers and lobbyists to handle regulatory issues which may prove overwhelming to start-ups. The clubby collaboration between corporate giants and the Obama administration stood in sad contrast to the paralysis of the entrepreneurial sector. Trump’s claim that the system was “rigged” was an exaggeration, but the system was skewed to the advantage of entrenched companies to an extent not seen since the 1960s.

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ancient briton
January 29th, 2017
2:01 AM
Bearing in mind the distribution of IQ along a normal bell curve, there will always be a substantial group of people who can't cope with IT, indeed who may be functionally illiterate.Such people always had manual jobs in factories, farms, and local government cleaning the streets and so on. It is a very callous and foolish society that casts such people, many of whom have estimable qualities, aside, to survive on handouts. They form a part of the group who feel themselves displaced or worse forgotten by an establishment obsessing over BLM and LGBTQ rights and so on. Other better qualified people see their factories being transferred to low-wage countries, and know through every trip to Walmart that manufactured goods which could well be made in the States, are coming in from overseas. These conditions didn't exist under Roosevelt who governed an almost completely insulated economy and who had no thought of black rights, never mind LGBTQ etc. Reagan presided for the most part over a prosperous manufacturing country, although the rust belt was beginning to emerge. Many of those residents became Reagan Democrats. I see the Trump effect as being not dissimilar but now nationwide as the famous red map shows. Voters want a lot less by way of political correctness, and a lot more by way of making America the home of mass production once again. It's a tall order, but Trump is the only one who has it in him to recognize the problem, talk openly about it, and at least try to get things done. Scepticim at this early stage is just a little premature.

January 23rd, 2017
11:01 PM
Reaganomics, that which started the US economy on the current slippery slope. The figures say it all, taking the USA from a creditor to a debtor nation. In 1981, shortly after taking office, Reagan complained of "runaway deficits" that were then approaching US$80 billion, or about 2.5%GDP Within only two years, however, his policies had succeeded in enlarging the deficit to more than US$200 billion, or 6 % At the end of the Reagan/Bush era it had was down to US$150 billion, still almost double what it had been under Carter. However the National Debt had climbed from US$995 billion, when Reagan took office, to $4 trillion by the end of Bush1's presidency, Under Reagan and Bush Republican Administrations it climbed as a % of GDP from 26% to 42%. Clinton managed hold/wind back both of them in returning the budget to a surplus of some US$280 billion and reducing the National Debt to 35% of GDP. But George, The Faux Texan and late encumbrance in the White House even managed to outdo "The Gipper" and his own Dad. He has set another unenviable record. The deficit was to be $482 billion in the 2009 budget moving from black to red ink in the order of US$750 billion from the end of Clinton's term. Lest We Forget The Faux Texan Folly of the Three Trillion Dollar Wars, The Iraq Fiasco and the Afghanistan Imbroglio followed now by the resultant wide spread conflict with Daesh. It is interesting to note that from 1978-2005 under Democratic Presidents, Federal Spending went up by 9.9%. Federal Debt by 4.2%, GDP by 12.6%. Under Republican Presidents Federal Spending was up 12.1%, Federal Debt by 36.4% , GDP by 10.7% So which is the big spending, big debt and drag on the economy party?

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