American Exceptionalism and the Reality of a Competitive World Economy

American exceptionalism is the theory that the United States is different from other countries.

Working class Americans (that is most of us) are in a perpetual struggle to live a comfortable life. However, we are on the brink of a new reality. We must compete with every other country in the world. Will American exceptionalism prevail?

The Washington Post reports that American median income fell nearly 8 percent, to $45,800, in 2010. This is no surprise. It is simply a validation of what we already knew. It is not going to get better any time soon. In that same article the Post said our wealth has declined by 40%. That too is no surprise since home have values have dropped by 40% to 50% in most areas of the country.

Many will try to blame one of the two political parties. That would be a mistake. If you look at the laws passed and the trends of American business you will quickly realize that this state of affairs has been going on for decades but was accelerated by the Great Recession.

The painful reality is that Americans must become more ingenious in their struggle to earn the kinds of livings that has become part of the culture. Our politicians keep telling us that Americans are unique, creative, and exceptional.

Today that all seem like a lot of baloney.

Self Annihilation

We visited a Loew’s Home Improvement store to check their table lamp selection. My wife’s idea. She found precisely what she wanted. The price for each lamp was $14.97 and included a light bulb. The shades cost about the same price. The lamps and shades are made in China. It is an astonishingly low price. I would have been willing to pay twice that amount.

Can you imagine the pay rate for those working in the factory that manufactures those lamps and shades? Probably on the order of 50 cents an hour. That is the pay rate in Mexico.

So we Americans buy low cost products manufactured in China and that makes us feel good. Think about this. Those lamps and shades were formerly made in the U.S.A. We get bargains that put our neighbors out of work.

What is the American policy (or for that matter the policy in any other country) regarding the export of our jobs?

Personally I would gladly pay more for the lamps if I knew that Americans have the income that takes them off the unemployment rolls and welfare rolls. Am I wrong?

Capitalism is the Dominant force in the U.S.A.

Why Barack Obama Cannot Re-Make America

The American system of free enterprise is designed for people to make money. Those that are smartest find every way to earn money, as long as it is legal, no matter who it hurts.

Bain Capital is an asset management and financial services company that provides venture money for new and struggling companies. Like any privately held company it is in business to earn the highest possible return for its investors. There are many other companies like Bain Capital. The Blackstone Group and the Carlyle Group to name just another two. Sam Zell, a wealthy real estate investor in Chicago, bought the Tribune Company without investing a single dime of his own money (thanks to some ingenious financing) but the company is now bankrupt (you thought he bought it to prop up that company?).

The system has always functioned that way. The founding of the nation was all about free enterprise. Those leaders in Philadelphia were mostly rich men who objected to taxation by the crown. They invented the expression “taxation without representation” to rally the general public. The best example is John Hancock. Before the American Revolution, Hancock was one of the wealthiest men in the Thirteen Colonies, having inherited a profitable shipping business from his uncle. John Adams was a well to do lawyer living in the Boston area. Thomas Jefferson and George Washington were both wealthy land owners in Virginia.

If you do not agree with this form of economics you will have to live elsewhere. You will not be successful in changing 200 plus years of a system that has built the wealthiest nation in the world.

Alternative countries that you ought to consider are Italy, France, Germany, Canada, UK, Australia, and New Zealand. You might notice that many of these countries are part of the British Commonwealth that Americans hated in 1776. They do have capitalism but also make a greater effort at providing more social programs.

The choice is yours. Just stop complaining about our system. It is what it is!

GDP and Unemployment Performing Poorly – Welcome President Romney

The Gross Domestic Product (GDP) in the United States expanded 1.9 percent in the first quarter of 2012 over the previous quarter. That is a revision from a preliminary 2.2% estimate. Historically, from 1947 until 2012, the United States GDP Growth Rate averaged 3.3 Percent reaching an all time high of 17.2 Percent in March of 1950 and a record low of -10.4 Percent in March of 1958.

During the great recession GDP fell to -8.9%.

At the present time the economy appears to be back sliding.

Can the government really impact the growth of the economy? Most of us seem to believe the answer is yes. Barack Obama will be blamed for the situation.

Unless Mr. Obama can convince a majority that things will be worse if Romney is elected he will be a one term president.

Top 20 Jobs That Don’t Require A College Degree

LAUSD plans to require all high school students to take college prep classes in order to graduate. However there are hundreds and perhaps thousands of jobs that do not require a college degree. As reported on AOL.COM here is a list of the top 20 jobs not requiring that diploma.

Careercast.com put together a list of the top 20 jobs that don’t require a college degree, ranked by average starting salary, income growth and employment growth. Income growth refers to percentage of growth from starting earnings to the top level; and employment growth refers to the projected increase in number of jobs through 2020 according to the U.S. Bureau of Labor Statistics.

1. Dental Hygienist

Average Starting Salary: $45,000
Income Growth: 109%
Employment Growth: 37.70%

2. Online Sales Manager

Average Starting Salary: $40,000
Income Growth: 255%
Employment Growth: 25.00%

3. Web Developer

Average Starting Salary: $43,000
Income Growth: 179%
Employment Growth: 21.70%

4. Medical Secretary

Average Starting Salary: $21,000
Income Growth: 114%
Employment Growth: 41.30%

5. Paralegal Assistant

Average Starting Salary: $29,000
Income Growth: 159%
Employment Growth: 18.30%

6. Stenographer / Court Reporter

Average Starting Salary: $26,000
Income Growth: 250%
Employment Growth: 14.10%

7. Heating / Refrigeration Mechanic

Average Starting Salary: $26,000
Income Growth: 158%
Employment Growth: 33.70%

8. Surveyor

Average Starting Salary: $31,000
Income Growth: 190%
Employment Growth: 25.40%

9. Executive Assistant

Average Starting Salary: $29,000
Income Growth: 131%
Employment Growth: 12.60%

10. Insurance Agent

Average Starting Salary: $26,000
Income Growth: 342%
Employment Growth: 21.90%

11. Industrial Machine Repairer

Average Starting Salary: $30,000
Income Growth: 127%
Employment Growth: 21.60 %

12. Cosmetologist

Average Starting Salary: $16,000
Income Growth: 163%
Employment Growth: 15.70%

13. Hair Stylist

Average Starting Salary: $16,000
Income Growth: 163%
Employment Growth: 15.70%

14. Tax Examiner / Collector

Average Starting Salary: $30,000
Income Growth: 207%
Employment Growth: 7.30%

15. Sales Representative – Wholesale

Average Starting Salary: $27,000
Income Growth: 304%
Employment Growth: 15.60%

16. Construction Machinery Operator

Average Starting Salary: $26,000
Income Growth: 173%
Employment Growth: 23.50%

17. Electrical Technician

Average Starting Salary: $34,000
Income Growth: 138%
Employment Growth: 1.90%

18. Architectural Drafter

Average Starting Salary: $30,000
Income Growth: 140%
Employment Growth: 3.20

19. Teacher’s Aide

Average Starting Salary: $17,000
Income Growth: 112%
Employment Growth: 14.80%

20. Sewage Plant Operator

Average Starting Salary: $25,000
Income Growth: 156%
Employment Growth: 11.60%

Barack Obama’s Failed Recovery

It seems the president’s likeability has remained high even though his success leading the country leaves a lot to be desired. The number one issue facing him at his inauguration was the growing number of unemployed Americans.

It is accurate to say that the continuing increase in the number of unemployed has been stopped. The worst of the unemployment crises has passed. However, the number of unemployed Americans has remained basically unchanged. The apparent improved unemployment picture is the result of people giving up in searching for a job. Those giving up aren’t counted. It takes 150,000 new jobs a month to keep up with our growing population. (The number of new jobs added in April was a horribly disappointing 115,000.) Once you deduct that leveling number of 150,000 you see that real job growth has been small.

The one significant exception to this situation is the re-employment of people in the manufacture of automobiles.

Every country has something to sell to its own people and the rest of the world. The United States has one major export, agricultural products. Brazil has five. Oil, iron ore, soybeans, coffee, and steel. Brazil now holds 45% of the world’s steel production.

Meanwhile the U.S.A.has a $15 trillion economy but only has $1.5 trillion in exports. Worse we import $2.4 trillion in goods.

Thanks to the ever growing number of free trade agreements most of the things we buy were manufactured in another country. The auto industry and agricultural products are the only major industries that have not been entirely exported. Here in Southern California Costco now has a variety of fruits and vegetables imported from Latin America.

Not only are there no plans to change this situation, but Obama has signed free trade agreements with Columbia and South Korea.

Retraining programs for the unemployed? To do what?

You notice that Barack Obama never talks about the unemployed. No wonder, his “hope and change” have brought hope there is enough food stamps to buy next week’s food and his change never happened at all unless adding to the federal debt is counted as change.

As bad a Mitt Romney may be is he as bad as four more years of Obama? Isn’t it time for a change? Democrats and independents hold your nose.

Citigroup Stock Holders had Their Say

At Citigroup’s annual meeting, owners of the stock voted 55 to 45 against a $50 million executive pay package, including $15 million for CEO Vikram Pandit.

This is all thanks to the Dodd-Frank financial overhaul law.

Buried in its 2,300 pages is a requirement for public companies to hold “say on pay” votes for executive compensation.

Unfortunately the vote is non-binding (Democrats wanted it to be binding), but the chairman of Citigroup Dick Parsons said he took it seriously, and promised the board would consider it carefully.

Shareholders have every right to be upset with Vikram.

Over the last decade, Citigroup has had the worst stock price performance of the big banks, but consistently had some of the highest executive compensation.

Citi shares are down more than 80% since the financial crisis hit.
They’re down 93% from 2006.

Last year, Pandit got a $1.7 million salary, plus a $5.3 million cash bonus, and he got a $40 million retention package that pays out through 2015.

Getting a bonus should be a piece of cake for these execs, too, since the standard for the payout is an earnings track record half of what it was in 2009 and 2010 when the economy was in the tank.

Whoa! Don’t get too ambitious!

Look, to be fair to Pandit, for 2009 and 2010, he accepted just a buck in salary.

But to be fair to shareholders, Citi’s quarterly dividend is one penny.
Citigroup has announced its first-quarter profit had fallen two percent from a year earlier on a paltry one percent rise in revenue.

The Federal Reserve turned the company down on its request for a share buyback or dividend after Citi flunked the central bank’s stress test in March. And don’t forget the bank was one of many bailed out during the financial crisis.

Some people bridle at anyone earning millions of dollars a year. I am one of them.

If you can grow sales, boost the bottom line, raise the share price, then by all means you’ve earned a fat paycheck.

But what we can’t do is reward mediocrity and failure.

Last year shareholders voted down just two percent of executive pay plans. Maybe this is the start of a new trend.

When You Retire Will the Money be There?

No one cares more about your savings and investments more than you. You need to become an expert on the kinds of investments that you are comfortable with holding. Don’t let a financial adviser take control of your funds. No matter what he/she says, they do not understand your true wishes and needs. They will not be the one in pain if those savings are lost.

The unpleasant reality is that most of us do not save enough money for our retirement years. The reason is obvious. The cost of living takes our paychecks. It’s not a new situation. This has been a fact for all of history. It is the reason that Social Security was created in the 1930s. That insurance provides sufficient income in retirement years to prevent starvation. It is only enough to pay for food, housing, and other basic necessities.

The problem is that Social Security has become the only income resource for many retired Americans. (401(k) plans have not become the outstanding resource that many believed would occur. The reason is they are not a mandatory savings plan. It is a voluntary program. The average balance in all 50 million (401(k) accounts is just over $60,000 according to the Employee Benefit Institute. Even people within 10 years of retirement have saved an average of only $78,000, and more than a third have less than $25,000.

I still hear financial gurus saying that you should be receiving 10% or more on your savings. I know such investments do exist but they are not well known. Those that do pay that level of return are high risk securities that most people are not prepared to take. Even Vanguard’s High Yield Corporate Bond Fund pays 6.75%.

Even if you savings are small there are magazines you can view in the library and sites that do not charge anything. My favorite is Morningstar. You do not have to subscribe to obtain much of their information.

Start today thinking about where your income will come from when that day comes when you want to say “It’s time for me to retire.”

Economy is Job One!

May 4, 2012 Addendum. The April jobs report confirmed my worst fears. The U.S. economy added just 115,000 jobs and yet the unemployment rate is down another tenth of a percent to 8.1%. In other words more people have given up the search. This is another great day for Mitt Romney. Everything I wrote on April 28 remains valid. The difference is it has just been reinforced.

Is the recession over? Not if you are unemployed. Over 12 million Americans are in that status. Most of those people have families that have been impacted. The impact is more likely on three to four times that number. Worse is that the number is not the real number because many more people are no longer counted as unemployed. Most economists add about 50% to the official numbers to reach that real number.

The Obama administration failed to address the primary issue facing the nation. That is the condition of our economy.

Where is the plan to change our course of outsourced jobs? It does not exist.

The latest pieces of economic data support the feeling that the economy is struggling to recover from the Great Recession. New claims for unemployment benefits dropped to 351,000 in the week ending February 11 of this year but have been increasing every week since then with one exception. Gross Domestic Product (GDP) for the first quarter of 2012 grew 2.2% versus a growth of 3% in the last quarter of 2011. The president can’t be held responsible for everything in our economy but there is little he has done or proposed to improve the situation.

The problem is that Mitt Romney has not enunciated any actions he would take that would change our desperate employment situation. The number of unemployed reached over 14 million people and has now dropped to under 13 million. However the number of long term unemployed has not been significantly reduced and still remains over 5 million people. Obama’s policies did save the country’s auto manufacturers but too many products and services are now provided in other countries.

Americans are the employer of the president. We have the right to expect results. Barack Obama’s four year contract is almost up. Unfortunately the alternate candidate for the job has not told us what he would do to change our economic situation.