The United States is a consumer driven economy that is based upon the purchase of product.  It cannot thrive without employment of most people at salaries that enable that continuing purchasing power. 

Henry Ford knew this when he started building the Model T.  “I will build a motor car for the great multitude,” Ford proclaimed in announcing the birth of the Model T in October 1908. In the 19 years of the Model T’s existence, he sold 15,500,000 of the cars in the United States, almost 1,000,000 more in Canada, and 250,000 in Great Britain, a production total amounting to half the auto output of the world. The expression fordize meant to standardize a product and manufacture it by mass means at a price so low that the common man could afford to buy it.

Whether it was cars, radios, televisions, or telephones it has been American consumerism that has driven our economy.  Michael Mandel, a noted economist who writes for BusinessWeek, says in this article posted on line “All told, household “out-of-pocket” spending drives roughly 40% of U.S. economic activity.”

Unfortunately big corporations do not see the benefit of high employment in the United States in their best interest.  Their primary interest is maximizing net income.  Recent corporate major growth has been outside the United States.  The reason is that this nation is a “mature” or “advanced” economy that already has an abundance of consumer goods.  After all how many more cars or televisions do Americans want or need?  Everyone in our household has a car and there are four televisions in our house.  There really are no specific things we are in the market to buy.  From now on it’s the replacement of old poorly functioning things and warn out clothes that will drive us to the mall or the car dealer.

Compare the United States with India, China, Brazil or other developing nations.  Those growing countries are looking for all the things that Americans take for granted.  Naturally corporations are going there to increase their net income.  In addition, those people will accept pay rates far below those required in our “mature” economy.  Europeans face the same dilemma as the United States.

The solution to the employment problem in the United States is innovation.  Alan Greenspan, former chairman of the Federal Reserve, guesting on last Sunday’s Meet the Press said exactly the same thing.  The problem is that the U.S. government does not have the right people in place to develop those new products.  People like Jeneanne Rae who is the co-founder and president of Peer Insight, a consulting firm focused on services innovation, points out The Problems with Obama’s Innovation Strategy in her BusinessWeek blog.

The government’s investment in companies like Fisker Automotive is the kind of step that the Chinese government makes in a big way to improve society by employing thousands of people.  Unfortunately too many members of congress are not sufficiently knowledgeable in the business arena to understand the actions needed to change America’s current path.  That results in the bureacracy Jeneanne Rae discusses.  That leaves the rescue to American business.  This situation will require action by the likes of Google to change America’s direction.

The economy expanded at an annual rate of 5.7 percent in the fourth quarter, the second straight quarter of growth.  More details on this AP report. 

Mike Allen’s POLITICO Playbook daily update includes the following item:  

LARRY SUMMERS: ‘a human recession’ — WSJ’s ‘Davos Live’ blog, Neal Lipschutz: ‘Key Obama economic adviser Larry Summers coined a telling way to look at the current American economic state of play. He said the U.S. is experiencing a ‘statistical recovery and a human recession.’ It is a phrase that should resonate through much of the industrial world, where high and long-standing unemployment is increasingly becoming a huge domestic political issue. Speaking on a panel at the annual meeting of the World Economic Forum in Davos, Summers said one in five American men aged 25 to 54 are unemployed. He said given a ‘reasonable recovery,’ that rate could improve to one in seven or one in eight. That still contrasts with a 95% employment rate for that group in the mid-1960s. He said the U.S. can gain from increased global integration, but if it is to be politically sustainable it ‘has to work for people.’ That means job creation in the U.S. is a crucial issue.’

The question is what is the unemployment rate in other industrial nations?  The U.S. Central Intelligence Agency pops up as the first source on a Google search.  We know the unemployment reached 10% in the United States so I take these numbers to be the overall numbers for the year. I have marked significant countries in bold text.

I received two messages today that are telling the future of the internet. It’s going to cost more to obtain the news and data than it does today!

You want access to the Wall Street Journal? The cost is $1.99 per week. That was their ad. The New York Times will charge for access in 2011.

What can the print world do? Newspapers and magazines are losing money and many will be going out of business. Newsweek doesn’t provide news anymore. Now it is a magazine of essays and that isn’t working well. Last week’s Newsweek (dated January 18, 2010) had 84 pages. This week’s Newsweek has 52 pages.

Consumer’s Reports subscription includes on-line access for $26.00 per year. Without on-line access the cost is $19.00. If you just want on line access for a month the cost is $5.95.

I expect that all daily newspapers and most magazines will be offering their on-line access for a fee within the next two years.