Stagnation or Leadership Failure?

Economics Without The B.S.**:

[**  Double entendre intended.]

Stagnation or Failure in Leadership?

     There is much written among the academics about the U.S. entering a period of economic slow growth, as if this is something we can do nothing about and just might as well accept the status quo.

 

Source:  http://www.federalreserve.gov/releases/g17/current/ipg1.gif

     The charts show us leveling off in our industrial capacity since 2000 and utilization below our average of over 80% (85% is considered near full capacity).

     Some 'experts' attribute this to us coming to a point in time where full resource utilization of technological breakthroughs are reaching their limit.  Or that technology improvements by way of capital investments are displacing labor inputs in productivity growth rates.  I do not accept this.  There have always been trade-offs between capital investments and labor inputs.  Sometimes one is a greater factor than the other in productivity gains.  Sometimes both contribute to the productivity gains.

     I think what these charts show is the result of decimation of the manufacturing sector of our economy (by off-shoring it) and its after effects on the rest of the economy because of the manner in which manufacturing interacts with so many other sectors of our economy.  Even if manufacturing were so productive that it now needs fewer workers for overall productivity gains, that would not account for the impact that it has in other sectors which interact with manufacturing.

     Give up your manufacturing capability and trade it for a consumer economy and this is what results -- slow growth.  Are we to accept a status quo society?  Hardly!  The leveling off we see in these charts is from a failure in leadership to inspire creativity in our economy -- like we had in the 1950's and 1960's.  We can do a lot better.  We do not have to accept this.

See my other posts with regard to leadership and manufacturing.  Also take a look at the data charts for the 1960's -- a very productive time for our economy while we ran one deficit after another and inaugurated much of our social welfare programs of today while still fighting the Vietnam War.