http://www.nytimes.com/interactive/2013/06/26/business/Signs-of-the-Sequester.html?emc=eta1
http://economix.blogs.nytimes.com/2013/08/08/more-on-sequestrations-effects-on-the-private-sector/
***************
"Assumptions are the termites of relationships." (Henry Winkler)
***************
Catherine Rampell observes in today's nytimes.com that there are private industries whose employment is most dependent on defense funds, and which are therefore most likely to suffer from sequestration. She provides an excellent chart on "Military Dependent Employment by State." The definition of that term refers to the Top 5 Private Industries Whose Employment Is Sensitive To Changes In Defense Spending:
* Facilities Support Services: 51% Share of employment within each
* Ship & Boat Building: 43% industry that is dependent on
* Aerospace Product and Parts Manufacturing: 34% military spending
* Scientific Research & Development Services: 31%
* Navigational, Measuring, Electromedical & Control Instruments Manufacturing: 21%
So, as many have pointed out, while private industry employment is struggling to stay in the black each month (125,000 new jobs each month barely covers new entrants into the workforce), government cutbacks don't just reduce government employment but also reduce "dependent" private employment. It looks like Washington State is ranked first in terms of share of employment reliant on military-dependent industries, followed by New Mexico.
So, here's what I'm seeing: the U.S. did not do enough spending into its own economy as the Great Recession hit (here I am joined by Warren Buffet and Paul Krugman) to come out of it with decent GDP growth. This was followed by "sequestration" that causes weak government spending into an economy where job growth isn't strong enough - there's a "subtraction" where there should be an "addition" each month in direct government and indirect government (private sector jobs dependent on government spending) spending.
There's still time to spend on things like infrastructure (much needed in the U.S.). Get growth back to 4% per year and then gradually reduce government spending where that's needed. At that point, tax receipts are coming in and government employment can be gradually reduced where appropriate (am I repeating?).
Where are the economists?
Subscribe to:
Post Comments (Atom)
Some budgets are cut. Some budgets are expanded:
ReplyDeletehttp://www.whitehouse.gov/omb/budget/Overview
They are increasing healthcare and decreasing defense, for now at least.
The OMB reports an interesting numerical narrative. Table S-6 looks like the best summary: Budget as a % of GDP. Expect higher taxes and less government spending. Net interest rising rapidly freaks me out.
Krugman and Buffet are admirable. I enjoy Krugman's articles, papers, and speaking events. Buffet pointed me in the right direction to Benjamin Graham and offers great advice of Youtube. However, growth occurs primarily through innovation. The past few centuries were characterized by emergence of new industries. We might not be able to count on new ones forming. Maybe Kurzweil was wrong. The singularity is not near. They mentioned, in past publications, a bunch of points on income inequality and employment that make sense. Infrastructure just looks like a dent in the problem, a short term solution. Research and development is the way to go. There should be more incentives to make new things that make the economy more efficient. The New Geography of Jobs argued that the U.S. should be investing double what it currently does into research. I would really like to see the evidence suggesting research investment is not a higher priority than social security and healthcare... infrastructure too. I thought some manufacturing was moving to back to the U.S. too? Where is the NYTimes on that? Who knows... maybe research, infrastructure, and manufacturing arguments all can be achieved with the proper political potion.
This post is surely an awesome one, thank you so much for sharing it.
ReplyDeleteAlso, visit our website if you are looking for assistance with your nursing assignment:
Nursing Assignment Help