Obama and GE working together

“For America to compete around the world, we need to export more goods around the world. That’s where the customers are. It’s that simple,” Obama said.

Yes, and only because he and our Congress are grossly overtaxing us for the size govt we have along with our current credit and trade conditions.

GE is a major exporter, and it should now be obvious that the exporters like GE are in control of policy, promoting their interests at the expense of the macro economy.

By fostering fear of being the next Greece, they continue to shepherd us into becoming the next Japan.

Obama all for creating jobs in India

By IANS

January 23 — Showcasing a new General Electric(GE) deal with India, U.S. President Barack Obama has called for a new effort to put the economy into job-creation “overdrive” by boosting American exports.

“For America to compete around the world, we need to export more goods around the world. That’s where the customers are. It’s that simple,” Obama said visiting the birthplace of GE founded by inventor Thomas Edison at Schenectady, New York. The Schenectady plant now makes power-generating turbines that the company markets globally, including a recent sale in India.

“We’re going back to Thomas Edison’s principles. We’re going to build stuff and invent stuff,” said Obama as he named General Electric CEO Jeffrey Immelt to head an advisory panel on job creation. The panel will be called the Council on Jobs and Competitiveness, a successor to the Economic Recovery Advisory Board that was chaired by former Federal Reserve Chairman Paul Volcker.

“The economy is in a different place” than two years ago, Obama told workers at Schenectady. But, though the economy is again growing after a deep recession, the President acknowledged that “it’s not growing fast enough yet.”

Obama held up exports as a core goal, arguing that for a decade the U.S. economy has relied too heavily on debt-financed consumption by its own citizens.

“As I was walking through the plant, you guys had put up some handy signs so I knew what I was looking at. And I noticed on all of them they said, this is going to Kuwait; this is going to India; this is going to Saudi Arabia.”

“That’s where the customers are, and we want to sell them products made here in America,” Obama said.

“That’s why I travelled to India a few months ago – and Jeff was there with us – where our businesses were able to reach agreement to export $10 billion in goods and services to India. And that’s going to lead to another 50,000 jobs here in the U.S.

“Part of the reason I wanted to come to this plant is because this plant is what that trip was all about. As part of the deal we struck in India, GE is going sell advanced turbines – the ones you guys make – to generate power at a plant in Samalkot, India.

“Most of you hadn’t heard of Samalkot, but now you need to know about it, because you’re going to be selling to Samalkot, India,” Obama said mentioning the small Andhra Pradesh pilgrim town, 165 km west of Visakhapatnam, at least four times.

“And that new business halfway around the world is going to help support more than 1,200 manufacturing jobs and more than 400 engineering jobs right here in this community-because of that sale,” he said amid repeated applause.

Obama said U.S. firms are “on track” to achieve his goal of doubling exports in a five-year period.

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15 Responses to Obama and GE working together

  1. Jerrit Erickson says:

    That’s where the customers are? What’s wrong with working for ourselves?

    The cynical among us would think that we’re being set up the same way international financiers and groups like USAID set up Haiti. We’ll quit working for ourselves, pay for imports of things we no longer make with exports of things we can’t use, some accounting magic happens, and we all end up poorer in measurable ways than when we started. Decades ago, they were very poor but could grow their own food. Now, they’re still very poor but can’t eat unless they sew clothes in a Disney sweatshop. Once in that situation, there’s no exit short of a wrenching one because the local capabilities and expertise needed to make even the most basic things that they themselves need and can use have been lost. Even as basic as food and clean water, basic tools and homes to live in. That probably won’t happen to us in exactly the same way since we grow so much surplus and have a lot of know-how in reserve, but in a way that’s functionally the same as far as we as communities and individuals should be concerned.

    In computer science we talk a lot about fault tolerance, which is usually achieved these days by distributing pieces of critical infrastructure as widely as possible and designing with the assumption that anything can be wiped out at any instant. The system as a whole can survive a lot of damage and still function at some reduced capacity (this coincidentally bears a lot of resemblance to biology). Food production is about as critical as it gets, and poor countries have been tricked into giving it up. As has been pointed out (in articles like this from the Washington Post: http://www.washingtonpost.com/wp-dyn/content/graphic/2011/01/23/GR2011012304443.html?sid=ST2010101806160 ), new laws are on the horizon that will make small farming operations much harder, rationalized in the name of food safety. As a result, the USA is giving up ever more local food production in favor of big agribusiness, which is analogous to what rich food exporters have been doing to poor countries for years under the guise of terms like “food security”.

    Back to Obama’s statement, it’s even easier to fall into this trap with things less critical than food. If we shift our focus even further to making things for other people instead of ourselves, we’ll be degrading our fault tolerance, making ourselves gradually less able to survive the unexpected. Of all the things we could be doing with the abundant labor in this country, building consumable trinkets for someone else is just about the least useful thing imaginable. I’m disgusted.

    Reply

  2. roger erickson says:

    ps: Just remind Obama that we’re already the biggest value exporter in the world! We export $US. :)
    Do you think he’d buy it?
    Instead of “Rare Earth Metals”, just call it “Rare Worth Paper”, and remind him that we have the ONLY KNOWN DEPOSITS!

    Actually, the only automatic stabilizer we really need is this:
    As long as others keep buying $US with real goods, all we need is a currency index that always pays US citizens more currency than what we export.

    That, plus adequate domestic distribution, would automatically do most of the work of managing our Output Gap – plus all attendant items such as national security, jobs, innovation, etc, etc.

    Just a gross simplification of what Warren’s been saying all along. Simple enough for politics?
    A $US in every foreign hand, and 2 $US in every American’s account! (or 2x, or 7x ? what’s a desirable ratio presently?)

    That’s analogous to the DoD maxim. “We don’t care how much firepower they have, as long as we have twice as much.” etc

    Relative economic position equates to real output & capability balance, not virtual accounting, so we want 3 things:
    a) no matter what their output, ours should be bigger (where it counts)
    b) we should always be all that we can be (our Army even says so! :) )
    c) an Output Gap minimized by optimizing an inverse Currency Gap; (& knowing the operational implications)

    Reply

    Tom Hickey Reply:

    What we need is to inject enough $ to achieve full employment and also purchase all the stuff that the world wants to sell us. It is also important to keep the flow going by taxing away economic rent so that saving doesn’t collect at the top, creating leakage in nominal aggregate demand. The global problem is twofold. First, sufficient AD to purchase potential output and sustainable output. This requires discouraging rent-seeking and negative externalities.

    Again, look at the global economy as a closed system and make sure it has the “oil” it needs.

    “Money is not, properly speaking, one of the subjects of commerce; but only the instrument which men have agreed upon to facilitate the exchange of one commodity for another. It is none of the wheels of trade: It is the oil which renders the motion of the wheels more smooth and easy.”
    David Hume, Of Money (1752)

    Hume wrote this over two decades before his friend Adam Smith published The Wealth of Nations.

    Reply

    WARREN MOSLER Reply:

    and leakage in demand means spending can be that much higher or taxes that much lower

    Reply

    roger erickson Reply:

    One simple issue is that quite a few people still believe Ariostotle’s old maxim, that “money” ought to be a stable store of value.

    Records keeping technology has rendered that claim largely operationally irrelevant today – but not in the minds of many naive users. No wonder it’s so easy for banksters to separate so many from their currency supply.

    Reply

    beowulf Reply:

    Roger, interesting idea. We could fill trade deficit’s demand leakage (4% to 6% GDP) with public investment. By creating a capital budget we could could fund with debt without increasing budget deficit. See Dean Baker and Sherle R. Schwenninger papers linked below.
    It is widely accepted among economists that public investment is important for productivity growth. Investments in education and training, physical infrastructure, and basic research have contributed substantially to the economy’s growth over the last half century.
    http://webcache.googleusercontent.com/search?q=cache:tWQcT2gmMJgJ:epi.3cdn.net/401b0b64bdeaad97ea_o0m6bxrcp.pdf

    Just as private businesses and most states use capital budgeting, a federal capital budget would allow us to separate our nation’s public investment, which expands our capacity to grow, from our government’s current consumption outlays.
    http://www.newamerica.net/publications/policy/a_capital_budget_for_public_investment

    Reply

    WARREN MOSLER Reply:

    yes, but another accounting fiction that’s out of paradigm and a violation of Lerner’s law that always seems to come back and bite.

    Reply

    beowulf Reply:

    When dealing with a cargo cult, you’ll get farther incorporating their beliefs into your sales pitch than by use of logic or reasoning. Accounting fictions are the means to communicate the message, “Jon Frum sends his best wishes and asks his people to trust his brother Warren in all things”. :o)

    The idea of a messiah-like outsider was given a huge boost during the Second World War, when hundreds of Tannese men were recruited by the Americans to build roads, airstrips and bases. They were impressed by the large amounts of cargo – tanks, weapons, medicine and food – brought by the US military. The shadowy spirit figure they already believed in gradually assumed a name and a nationality – Jon Frum is believed to be a contraction of John From America, a reference perhaps to a soldier who showed particular generosity… In a thatched hut in the centre of the village a cult shrine says: Jon Promise America – One Day He’ll Be Returning.
    http://www.telegraph.co.uk/news/worldnews/1542869/Islands-cargo-cult-celebrates-50-years-worshipping-the-US.html

    Matt Franko Reply:

    Beo Frum,

    #1 I dont know where you come up with this stuff… it’s like a real version of an old “Gilligan’s Island” episode or something. And we laugh at this small group of island people here, but I see simlarities between these people and entire industrialized nations outside the west whose leadership becomes religious about aquiring western financial assets to the detriment of their own populations.

    These non-industrialized cargo people provide the offerings of costumes/dancing and homage to a US flag in hopes of accruing balances of good favor with the US. Similarly, just to pick one out, today China as their offerings, are sending us net over $200B of goods for nothing in return except to have us bless them by crediting our computer accounts in their good favor. Their economy is a bit over $2T, one could look at this as a form of religious tithing.

    It’s been the same with Japan, OPEC countries, probably some others. The type of religious beliefs that control this cargo cult, are the same ones motivating the leaderships of these contries that run the perennial surpluses with the west. They are all like zombies. Resp,

    Reply

  3. roger erickson says:

    when the entire world’s holdings are seemingly held in one “bad bank”, we can all default, switch any & all currencies, and go on about our real business?

    what can the orthodox do? except sit in the way & lament the reformation?

    if the purpose of managing currency supply is to keep it in demand, but not too much demand,
    then the defense to any imposed currency shortage is ultimately a shortage of transactions denominated in those currencies?

    this is the same story in every field; the orthodox stubbornly manage themselves out of a job by restricting all but orthogonal option paths :)

    No wonder all complex systems grow entirely by indirection! Luddites are ALWAYS in the way, but at the same time freely available as pedestals. Can’t live without ‘em, can’t live directly with ‘em. Have to go around them.

    Which brings us to an age old truth. Our Output Gap tracks our net Adaptation Gap, which is always defined as the rate of indirection bypassing our own inertia. I think Warren calls it our rate of exploring options.

    Indirection Gap = k x [1/(Inertia Gap)]? All new cultures or markets do is change the constant, k.

    Reply

  4. Alex says:

    Warren, I think we get your point that exports are a real cost, and we know it is rather ridiculous for the President to be promoting exports to create jobs, when he can create them himself.

    However, its an open market, and GE can sell to whomever is willing to pay (they shouldn’t need Obama to arrange the deal though). And increased exports can be balanced by increased imports as the American consumer returns, keeping the trade deficit nice and high!

    Reply

  5. PJ Pierre says:

    Warren:”By fostering fear of being the next Greece, they continue to shepherd us into becoming the next Japan.”

    And I am beginning to fear that aside from becoming the next Japan, They may even turn us into the next Soviet Union, persuing an export led collapse.

    Vampire Economics, except we aren’t Dracula, we are the prey.

    Reply

    roger erickson Reply:

    Now THAT’s an unexplored movie theme. How to bite yourself in the neck, when crudely shooting yourself in the foot is no longer cache.

    Vampire Squid Cannibalism? How do you tell when the blood is beaking? :)

    I’d like to propose an Inception to the rule.

    Reply

  6. Matt Franko says:

    ““We’re going back to Thomas Edison’s principles.”

    Okay B.O. let’s do it!:

    ““If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good… If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency… instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds?” – Thomas Edison

    HT Beo via Ralph

    Reply

    strawberry picker Reply:

    Matt, what government are you talking about? I am chomping at the bit like Ms. Pacman to open a bank account with one of these new chinese banks coming soon to a corner near you and have my deposits denominated in Yuan.

    If you don’t sin, Jesus died for nothing!

    Reply

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