Can you describe the "Wealth Creating Engine" that has enabled American Greatness...

[Fergasun]

I was listening to a certain national radio talk show host. I just heard him go off on a certain President who is "killing the great wealth creating engine that has enabled American greatness...".

I'd like to know tailgate, can you describe what this "wealth creating engine" looks like.

[JMS]

I think first you would have to ask whether folks believe a wealth creating engine is the reason for America's greatness....

I would argue that America had men of great wealth before the industrial revolution and long before the country truely obtained greatness..... AKA super power status obtained in the 1940's and 50's...

I would argue America's greateness is directly tied to opprotunity, which came in no small part because of wealth distribution (Social Security, WWII GI Bill, Marshal Plan, ) and social justice programs ( womans sufferege, civil rights movment, equal rights bills) rather than just wealth generation.

Early on it was the creation of the middle class, and then it was the empowerment of the middle class which made this country great.... Not the wealthy or our ability to creat wealthy folks.

[greenspandan]

since the late 1970's, the american "wealth creating engine" is whatever bubble is currently generating enough excitement and investment to violently implode 5-10 years down the road. this replaced the old, antiquated "wealth creating engine" of building stuff and then selling it for money.

examples: the housing bubble. the dot com bubble. the current gold bubble.

really, you can go all the way back to "buying on margin" in the 1920's: borrowing money to buy stock was considered completely risk-free. haha.

in short: the american economy runs on enthusiasm for bad ideas.

[generaltso]

my wealth creating engine runs on faberge' eggs.

[Predicto]

How can I possible describe it after Obama has crushed and mangled it beyond recognition?

I really was beautiful though. You shoulda seen it. Like magic.

Now it's dead.

[Hubbs]

I think first you would have to ask whether folks believe a wealth creating engine is the reason for America's greatness....

I would argue that America had men of great wealth before the industrial revolution and long before the country truely obtained greatness..... AKA super power status obtained in the 1940's and 50's...

Hold on. America became a super power by deciding to become a super power. If I'm remembering my statistics right, we had the 17th-largest military in the world when WWII began. We weren't a super power before then because we didn't want to be, and we likely would have gone back to a relatively small military (not 1939 small, but nothing close to Cold War-sized) if there wasn't another super power that survived the war and didn't like us very much.

I'm reminded of something I've heard about the end of the Civil War, although I wish I could remember the details. Before the war, the American army was regarded as a joke by European standards. By the time the war was over, a visiting European general told Lincoln that the Union army could have stood up to any European power. Despite existing for less than a century, the United States had already developed the ability to become a strong military force when it chose to.

Our ability to transform into a global super power during and after WWII wasn't developed in the 1940's or 1930's. Japanese generals weren't afraid of waking a "sleeping giant" because of programs that had been in existence for less than a decade. That sort of military potential exists because of economic strength, and America's economic strength wasn't a product of the middle of the 20th century.

I would argue America's greateness is directly tied to opprotunity, which came in no small part because of wealth distribution (Social Security, WWII GI Bill, Marshal Plan, ) and social justice programs ( womans sufferege, civil rights movment, equal rights bills) rather than just wealth generation.

Early on it was the creation of the middle class, and then it was the empowerment of the middle class which made this country great.... Not the wealthy or our ability to creat wealthy folks.

Social Security was created in the 1930's, and the other two programs happened after WWII. Are you saying that America would have been incapable of turning into a super power without a glorified pension plan?

since the late 1970's, the american "wealth creating engine" is whatever bubble is currently generating enough excitement and investment to violently implode 5-10 years down the road. this replaced the old, antiquated "wealth creating engine" of building stuff and then selling it for money.

examples: the housing bubble. the dot com bubble. the current gold bubble.

really, you can go all the way back to "buying on margin" in the 1920's: borrowing money to buy stock was considered completely risk-free. haha.

in short: the american economy runs on enthusiasm for bad ideas.

How is a gold bubble a wealth-creating engine? The tech bubble and housing bubble both steered economic activity nationwide. The gold bubble - if it is a bubble - merely creates increased revenue for anyone selling gold, and they won't go on to spend that money in anywhere near as uniform a manner. We're not going to turn into a mining economy. The fact that gold is a popular investment right now simply means that the money from gold sales will spread out through the economy rather uniformly, instead of all being funneled into a specific sector.

(This is why I got into a long discussion with PeterMP - I think it was PeterMP - about gold's big jump over the past couple of years. Increased demand for gold doesn't cause economic problems. Increased demand for gold is a result of economic problems.)

[Lombardi's_kid_brother]

That wealth creating engine was World War II.

Two-thirds of the world was in desperate need of goods and had no real way of creating them. The US could afford to pay its blue collar workers a remarkable wage to build them.

As soon as foreign companies could compete with us technologically, they had the advantage of being able to undercut our labor costs. And they did not have our legacy costs of healthcare, pensions, etc since they governments were responsible for that.

[Hubbs]

That wealth creating engine was World War II.

EDIT: Nevermind, your expanded post is much clearer. I agree.

[Lombardi's_kid_brother]

The American prosperity everyone wants to recapture is the unprecendented rise of the middle class in the 50s and 60s. That occurred because of two factors.

1. Pent-up world wide demand combined with America as the only supplier.

2. The GI Bill turning a college education into a reasonable expectation.

So, cataclysmic war combined with taxpayer-funded post-secondary education.

[Predicto]

No it wasn't. If it was, we would have been screwed. World War II turned the engine on, but it wasn't what built the engine in the first place.

That is nitpicking. When every single one of the other great industrial nations has been bombed flat, the sole unbombed survivor has enormous opportunity.

[polywog999]

How can I possible describe it after Obama has crushed and mangled it beyond recognition?

I really was beautiful though. You shoulda seen it. Like magic.

Now it's dead.

Oh, you mean this old thing....

You can have it back. It has caused me nothing but pain.

[Predicto]

I dunno man. She's pretty hot now, after the makeover.

[Hubbs]

That is nitpicking. When every single one of the other great industrial nations has been bombed flat, the sole unbombed survivor has enormous opportunity.

Yeah, I posted that before he elaborated a bit on what he was saying. I thought he was trying to argue that the war itself was the reason America had such enormous industrial capacity waiting to be unleashed. I agree whole-heartedly that the destruction of pretty much all of Europe and the Orient left an untouched America in a very advantageous position.

[ACW]

NOT WW2 :no:

Look up Bastiat's Brokwn Window Fallacy.

[Jrew1223]

Side Note: Many of the conservative radio hosts I listen to keep screaming out how tax cuts for the wealthy are the best way to promote job creation. Honestly, I would be for that path if their theory represented even a notion of reality. The reason why jobs are leaving the USA is bc corporations can make a larger profit by paying other people much less to do the same job. If you cut taxes on the wealthy, how does this automatically mean job creation in America? There's no law making the wealthy invest in America and why would you when you can make a larger profit investing in outsourced companies? Can someone of the conservative elk help me out with this logic?

[twa]

Perhaps we should look at reducing the costs of employment?

[Hubbs]

NOT WW2 :no:

Look up Bastiat's Brokwn Window Fallacy.

You misunderstand the fallacy. Breaking windows doesn't help the national economy in which the windows were broken, or the global economy as a whole. If the economy of the nation next door happens to contain the world's only window-maker, that economy benefits while the nation with all the broken windows loses.

[PeterMP]

(This is why I got into a long discussion with PeterMP - I think it was PeterMP - about gold's big jump over the past couple of years. Increased demand for gold doesn't cause economic problems. Increased demand for gold is a result of economic problems.)

Anything being misvalued is bad for the economy.

[Hubbs]

Anything being misvalued is bad for the economy.

How do you know that something is misvalued?

[GhostofSparta]

NOT WW2 :no:

Look up Bastiat's Brokwn Window Fallacy.

You misunderstand the fallacy. Breaking windows doesn't help the national economy in which the windows were broken, or the global economy as a whole. If the economy of the nation next door happens to contain the world's only window-maker, that economy benefits while the nation with all the broken windows loses.

I gotta agree with Hubbs on this one. The problem with the Broken Window Fallacy in this situtation is that you're esentially looking at a self-sufficient small town. If town X has a broken windown, and the closest window maker is in town Y 50 miles away, where the money wasn't likely to be spent, then town Y definately profits from the broken window, while town X experiences a financial setback. Similarly if France has a steel factory blown up, and the only place they can buy steel from is the US, then the US benefits financially from getting money that wouldn't have been spent there.

The US became a superpower because after WWII it was us and the USSR who had the capability to do anything, and even the USSR had plenty of infrastructure destroyed by the Nazis. We came out untouched except for a military base in the middle of the Pacific (and Hawaii wasn't even a state yet, still just a territory), and with the new manufacturing base we developed to fight WWII, we were in a unique position historically.

[alexey]

Our country is great because it was founded on progressive enlightment principles by well educated liberal elitists

[PeterMP]

How do you know that something is misvalued?

Because its current value is way out whack as compared to its median or mean inflation adjusted mean (and realistically its inflation adjusted value at most time).

Gold is like property. Long-term it can't increase at a value faster than inflation.

Now, gold alone isn't going to cause the same problems that the housing bubble did because it doesn't have the same importance in the world economy has housing.

[Hubbs]

Because its current value is way out whack as compared to its median or mean inflation adjusted mean (and realistically its inflation adjusted value at most time).

Is it? Or was its value "way out of whack" four years ago?

Gold is like property. Long-term it can't increase at a value faster than inflation.

And what's your measurement of inflation?

Moreover, according to you, that would simply mean that if gold is "out of whack" right now, its rise will eventually stall out as your measurement of inflation catches up. So what's the big deal?

Now, gold alone isn't going to cause the same problems that the housing bubble did because it doesn't have the same importance in the world economy has housing.

No, gold alone isn't going to cause the same problems that the housing bubble did because we as a society aren't going into massive, massive debt trying to purchase gold.

The debt is the key. If houses were all paid for in cash, a big decline in prices would be as upsetting as a big decline in the price of gas, which I would consider even more important than housing. Which is to say, not upsetting at all.

[Seabee1973]

The broken window fallacy is all of you are misinterperetting it if you need a furnace a car and a window and only have money for a window so you break your window and pay for it to be fixed you really havent accomplshed anything

[Burgold]

Side Note: Many of the conservative radio hosts I listen to keep screaming out how tax cuts for the wealthy are the best way to promote job creation. Honestly, I would be for that path if their theory represented even a notion of reality. The reason why jobs are leaving the USA is bc corporations can make a larger profit by paying other people much less to do the same job. If you cut taxes on the wealthy, how does this automatically mean job creation in America? There's no law making the wealthy invest in America and why would you when you can make a larger profit investing in outsourced companies? Can someone of the conservative elk help me out with this logic?

More they just haven't been. Did the Bush tax cuts create prosperity, jobs, etc?