Don't be fooled by economists, experts, and politicians who say that JOBS can be created

If  economists, experts, and politicians say that JOBS can be created, they are creating an illusion in innocent minds.

Jobs are incidental to deliver a product or service. Jobs can't be the goal. 

The focus should be on creating a conducive business environment  where  setting up a business  to deliver a product or service is easy. The entrepreneur decides on techology, location, financing, and manpower for delivering a product or service. The role of entrepreneur is forgotten  by Government policy makers , economists, and experts who also ignore the impact of stringent labour laws, strong unions, minimum wages act, hyper active investment bankers, robotics, and automation.

Economists fail to see reality

 

Economists want name and fame and, if possible, a Nobel Prize without solving any real-world economic problem.

Economic Theory and Economists have failed to recognise combined impact of Investment Bankers, Financial Institutions, Share Market, Trade Unions, and Government policies in killing jobs and job opportunities. A singular goal to satisfy the stock market has influenced management of companies to resort to large scale automation and mergers and acquisitions that has reduced number of jobs despite GDP growing. This state of affairs will only become worse over period of time.

You manage the economy for every citizen's wellbeing and not to satisfy the stock market. A flourishing stock market is no indicator of a robust economy where people in general are not  doing good. The industries in the world needs to strike a balance between technology/manpower to ensure demand for the product and services. A factory with near 100% automation, in the absence of employees will not need, bread, butter, tea, clothing, or cars. Blind automation will kill the economy but economists will escape without seeing reality.

Investment banking and financial speculation has to be segregated from the real economy with no recourse to Government rescue or tax payer’s money. This has to be ensured for the global economy to revive.

 

Blaming Capitalism and free market for Financial Market failures is wrong.

 Blaming Capitalism and free market for Financial Market failures  is wrong. Clubbing Real Economy with Financial market failures is wrong.

Governments, Economists, Policy Makers, and Powerful Bankers are collectively wrong for repeated financial crisis. Banks are assumed to  collect deposits and lend prudently. Banks are assumed to manage their loan accounts or assets. Why should Banks trade in securities like derivatives, shirk their responsibilty to manage their loan assets by securitising them? Why should Banks lend money to speculators like hedge funds, derivative traders etc?

Ordinary citizens whether they are Americans, Europeans, Britishers, Asians  have paid a price for financial failures. 

When financial failure occurs, Banks stop lending to the real economy to give it a facade of economic crisis.

Investment Banks, Hedge Funds, or Financial Institutions trading in Derivatives should not be saved by the Government or Traditional Banks. The world economy will recover only then.

Is economics a science?

 Is economics a science?  Please  read the article by Richard Denniss in the Guardian whose link is given below:

https://www.theguardian.com/commentisfree/2019/oct/30/if-economics-is-a-science-why-isnt-it-being-more-helpful

After reading the above article you will wonder whether Economics can be treated as Science when Economists do not agree on major issues.

Scrap NOBEL PRIZE In Economics

I want readers of this blog to know that world economic crisis will not be resolved by listening to economists. All economists suggestions (tried, tested, and  failed umpteeen times) kills the very economy it intends to revive.

The global economy will be revived only with ideas that are outside the theory of economics.Period.

I have written to the Nobel Committee to scrap Nobel Prize in Economics. The letter is reproduced below:

Dear Sirs,

It is indeed perplexing that despite awarding Nobel Prize in Economics every year based on different topics the world is unable to revive its economy since the internet bubble. It means nothing in economic theory works in practice or reality. Economists ignore the combined effects of printing paper currency, artificial fixing of interest rates, trade unions, minimum wages act, taxes, stock market pressure, role of investment bankers, shirking of responsibilities by banks to manage assets by securitization, unprecedented speculation in currency and commodities many times the size of real economy etc.

The prescriptions of economists kill the very economy they want to revive. No economists are prescribing taming the reckless finance industry that includes banks for the global economy to revive. As long as the derivatives, speculation on currency and commodities etc. continues unabated aided by very low interest rates Global economic mess will persist.

I am not an economist. But, am capable of thinking in ways that can help revive global economy. For example:

1.The jargons of economists like full employment, frictional unemployment, structural unemployment is useless in reality. See the absurdity of economic concept of full employment at 4% or 6% unemployment which in reality means lakhs of people are still to find jobs. Why are economists advocating such an absurd policy as Full Employment? Focusing on jobs is wrong and am willing to debate with any economist.

2.Global trade will be performed by paying in local currency. US exporters to India will get paid in Rupee. Indian exporters to US will get paid in dollars. Trade will balance. This act will get rid of foreign currency speculation.

3. Focus of economists on consumption is wrong. This can also be proved.

Economics is anything but science. The Nobel committee should consider stop awarding Nobel Prize in Economics to save the world.

Thanking you

 

R Narayanaswamy

IGNORE ECONOMISTS IF YOU WANT JOBS

 

Economists including Nobel Laureates ignore irresponsible behaviour of Banks, Investment Bankers, Financial Institutions trading in derivatives including exotic ones which nobody understands including themselves. You (whether you are an American, Canadian, French, German, Indian, Britisher, Spaniard etc.) don't find jobs because Governments have allowed Finance to dominate economic policies.

Mergers and acquisitions in the name of efficiency destroy jobs. Pressure exerted by stock market expectations on Company Managements destroy jobs. Add to this list Trade Unions, Minimum wages act, Outsourcing effect which further destroys jobs. These combined forces resulted in large scale automation, engagement of Robots, Bots etc. further reducing employment opportunities. Capitalism which truly reflects human nature can create employment opportunities. Capitalism and Free Market have earned a bad name because Governments save irresponsible Banks including Investment banks and Financial Institutions. Free Markets do work in real economy. Retail sector is the best example of free market efficiency. Real economy can create job mobility which will reduce income disparity and push up wages. Apple phone is useless for jobs in America if it is manufactured outside USA.

The jargons of economists like full employment, frictional unemployment, structural unemployment is useless in reality. See the absurdity of economic concept of full employment at 4% or 6% unemployment which in reality means lakhs of people are still to find jobs. Why are economists advocating such an absurd policy as Full Employment?

Paul Krugman, a Nobel Laureate in economics made this statement in an interview in 2010:

"We are still at 10% unemployment in the country, with full employment being more like 5%." Mr Paul Krugman an economist can tolerate lakhs of people still unemployed at 5% Full Employment. Do we really need economists like him?

Paul Krugman also wrote a book " The Return of Depression economics and the crisis of 2008". If any government follows his advice then they can be assured of permanent presence of depression economics and persistent crisis.

Genuine Capitalism needed for economy of United States

Irrespective of who rules United States its economy will need economic policies that is different from what Paul Krugman or his likes suggest. Fixing or manipulating interest rates hasn't worked. Government spending or stimulus hasn't worked. Manipulating taxes hasn't worked. To make Americans happy economy has to be run with new ideas that are implementable.

How do we run the US economy to deliver double digit growth and create ample employment opportunities  for Americans? Some of the ideas are highlighted below:

1. Raise Government revenues without resorting to taxes and duties. This will eliminate Government borrowing. Shut the Federal Reserve Bank. The US government has the power to print currency and coins and that power will be limited by the amount of Gold in the possession of the Government.

2. Since Government doesn't have to borrow money there is no need to set interest rates by the Federal Reserve.

3. Regular Banks will function but they will be full reserve banking. Fractional Reserve Banking will be out.

4. Regular banks will pay interest to depositors based on their capacity to attract savers.

5. Regular banks will manage the assets created by them by extending loans. No securitization or off balance sheet trickery.

6. Regular banks accepting deposits will not invest money in the derivatives or futures market.

7.Pension savings of US citizens will be invested in a US government account. The US Government can use the money by paying interest. This act will ensure pensioners savings is not squandered by reckless banks or pension funds.

8. Manufacturing Companies will be funded by Preference Shares paying fixed dividend. The management of the companies will be freed from the pressures of stock market which is a key driver of outsourcing manufacturing, mergers etc which kill both economy and jobs. As fixed dividends outlay will be far lower than equity dividends companies will have more money to reinvest in the business. The value of the company will be its net worth.

9.As businesses can't be saved so jobs can't be saved. Reckless Banks or companies will not be saved with tax payers money. Mismanaged companies can be taken over by other companies.

10. As businesses or banks are free to open and close geuine capitalism will operate creating enough opportunities for people to get jobs and also raise wages. What Americans need is job mobility not job security.

11. Plenty of job opportunities or job mobility will ensure the best working conditions and also raise the wages. Trade Unions can be made redundant.

12. Global trade will be performed by paying in local currency. US exporters to India will get paid in Rupee. Indian exporters to US will get paid in dollars. Trade will balance. This act will get rid of foreign currency speculation.

I want students and professors of MIT, Stanford, Harvard to read this post. 

I also request World Bank and IMF to read this post.

I want the Noble Prize Committee for economics to read this post.

Post Covid 19 economy cannot be revived with pre covid 19 economic policy prescriptions.

Beware of economists who advocate more government control and spending because market economy has failed. In reality, Capitalism has earned a bad name because of the Government act of saving banks who indulge in greed and questionable practices. If you keep aside Banks for a moment, in the real economy producing goods and services businesses open and close down on a regular business. The outstanding example of Genuine Capitalism is in the retail sector where businesses open and close on a regular basis.

The global economy will recover if Banks that are mismanaged are allowed to die or taken over by another bank

The United States is taken as an example to illustrate the point. What is written in this post is applicable to every economy be it Germany, France, United Kingdom, Denmark, Sweden, Canada, Japan, India, Vietnam etc.

RCEP FREE TRADE AGREEMENT

The recently concluded RCEP free trade agreement needs close scrutiny. The countries that have signed it Australia, Brunei, Cambodia, China, Indonesia, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand, and Vietnam except China will need to do a comprehensive review of this agreement.

The purpose of any trade or economic policy of any country is for the betterment of its people and more importantly to maintain its sovereignty. Tariff or no tariff any country with adverse balance of trade will accumulate foreign currency liability. RCEP member countries should give a serious thought to this issue.

RCEP member countries should give a serious thought to manufacturing eco system and agriculture eco system.

For example, let us assume Laos imports all its cars. This act will create minimum jobs in dealer outlets, and in servicing. The consumer money spent in LAOS will leak out of the country to the exporting countries of cars. If LAOS imports cars whose value is more than its exports it will incur foreign currency liability. The only way it can square the liability is to borrow money or find ways to export more.

LAOS misses the benefits of a manufacturing eco system. Let us take car manufacturing as an example. If cars are locally manufactured in LAOS it will give rise to demand for factory buildings, warehousing, logistics, engineers, capital equipment, auto component units, paint, glass etc. It is a no brainer that manufacturing eco system will create more jobs.

Let us take agriculture eco system. Agriculture is very important for economic security. An agriculture eco system will support farmers, agriculture graduates, warehousing, logistics etc. Any adverse trade in agriculture will ruin the farmers and impair economic security of the country. Every country should remember that NATURE has given each country local produce suitable for local population. There is a concerted effort by vested interests to dominate agriculture/ food production. No country should allow this to happen to protect its sovereignty.

As written in my previous posts Global Trade must happen without incurring foreign currency liability for any country. Each country will pay for its imports with local currency to the exporting countries. This will force exporting countries to source products from importing countries to balance the trade. 

From 2004 to 2014 India under an economist Prime Minister incurred adverse balance of trade with China. Supermarkets were flooded with Chinese goods which could be easily manufactured locally. The Government of the day failed to notice that job opportunities will not be available for Indians if ACs, TVs, auto components, Refrigerators, Microwave owens, Mobiles, PCs, Laptops   etc. are imported into India, branded, and then sold. India did the right thing by not signing RCEP agreement.

Economists, Policy Makers, And Governments don't have a skin in the game.

Economists, Policy Makers, And Governments don't have a skin in the game. Yet they take decisions that affect the economy without having a skin in the game.

Entrepreneurs who play a vital role in the economy, take risks and bear the consequences of their risks are ignored. The reason Global Economy is in a mess is because of allowing decisions to be made by people with no skin in the business and ignoring role of entrepreneurs with skin in the business.

Global Trade or Commerce only in each country's currency

Global Trade or Commerce only in each country's currency will ensure sovereignty of each country. Keen observers would have observed that all countries got into trouble because of adverse balance of payments in a foreign currency. India is an example in 1991 when it got into deep trouble because of adverse balance of payments in dollars.

Today many countries are in trouble after receiving foreign aid because of inability to repay principal and interest in a foreign currency. The problem of a country with adverse balance of payments is compounded when it receives aid to overcome the current problem of balance of payments in a foreign currency. The institution offering loans dictates terms of the the aid or loan on terms which is euphemistically called reforms. The reforms don’t solve the problem as India's example will illustrate. India till date runs adverse balance of payments in a foreign currency in trade.

The solution suggested is simple. American Exporters to India will get paid in Indian Rupee. This will ensure Americans import something from India to balance the trade. India's exporters will get paid in Dollars. There will be no foreign currency liability. No need for foreign currency speculation. No need for foreign currency reserves. 

There will be no need for a euphemism called structural reforms which essentially means ignoring economic policy in tune with local reality to an economic policy suggested by the aid giver.

Every country that is facing trouble on the foreign currency liability like Srilanka, Maldives, India should resort to this option of trade.

PAUL KRUGMAN YOU HAVE YOUR ECONOMICS WRONG

Paul Krugman is very lucky. He is a celebrated economist. To top it he is a noble laureate. He believes strongly that Government intervention can create jobs. 

But sadly, for inexplicable reasons, he does'nt know jobs can't be created. Economists, including Paul Krugman, are deceiving innocent people who are not literate in economics with jargons like full employment.

Paul Krugman and other economists ignore the role of individuals in the economy, Federal Reserve in keeping interest rates low, Investment banks, Stock Markets, and Trade Unions. Sadly, Paul Krugman and other economists want to find a solution inside the problem. Their prescriptions for reviving the economy persists,economic problems stays as it is, and economic solution remains elusive.

Paul Krugman and other economists with their tried,tested, and failed prescriptions can think of growing the US economy by only 2 or 3 %. These celebrated economists are unable to come up with innovative solutions to raise revenue for the government without resorting to taxes.

 

The US government from 2001 to 2017 spent 51.762 trillion dollars in outlays to increase the GDP by 9.1 trillion dollars. Paul Krugman do you still want to be indifferent to deficits?

It is time Noble Committee reviews awarding Noble Price in Economics every year. Since 2000, the world hasn't been able to recover economically. Economic theory needs a revisit.

American Economy or Global Economy And Covid Pandemic

The global economy Or American Economy has suffered immense damage due to the pandemic covid 19. Before covid 19 global economy still suffered with pandemic economic policies. The global economy or American Economy cannot recover with the existing baggage of economic thoughts and prescriptions in the possession of economists including Nobel Laureates.
The Economics talked about by Economists, Policy Makers, and Politicians is anything but economics. What is talked about as economics is collecting taxes, increasing government borrowings, fiscal stimulus, and saving adventurous banks. But this talk is anything but economics as it is simply reallocation of monetary resources. Economists with influence give scant regard to the power of consumer and the truth that value is subjective. Austrian economists give importance to consumer or the individual and recognise value as subjective. But Austrian economists are condemned. So, the Economists in favour with Governments with their influence, policies, and prescriptions ruin the economy.
Just as men or women are born and they die so too businesses are born and they die. Businesses die when consumers don't want their product or service. If businesses can't be saved how can you save jobs? Jobs are incidental to any business and are not an end in themselves (Sadly economists don't recognise this fundamental truth and talk of employment, or full employment as an end in themselves). Capitalism is closest to human nature. Genuine capitalism where businesses can be started and closed without any restrictions is the need of the hour. Instead, what we see is saving of adventurous banks and financial institutions by the governments in the name of capitalism. Economists and the Governments fail to see that money is a means to an end and not an end in itself. Money is a medium of exchange for real business and not for derivatives and speculation.

Since America is taken as a role model for capitalism, it can be used as an example to illustrate the sorry state of Americans today.
Fractional Reserve Banking which enables creation of money out of nothing and increases money supply with no relevance to the real economy gives easy money to Goldman Sachs, Citi Bank and their likes to indulge in mindless speculation and ruin the economy as it happened in 2008. When a Goldman Sachs, Citi Bank and their likes are saved with Government money it increases the money supply only( Economists including Nobel Laureates don't recognise the harm of fractional reserve banking and creation of money out of nothing).
The vice like grip of investment bankers and stock market on business enterprises in USA  have made management focus on profits than the local economy. Add to this influence of Trade Unions, American businesses have merged, outsourced their production and destroyed American jobs. This action in the American economy has inadvertently delivered economic power and dollars to China which wags its tail now.
Post Covid 19 economic policies in the USA should have no Goldman Sachs and its likes. Banks should be full reserve banking. No derivatives. No options. No financial engineering that an ordinary American can't understand. No investment of pension funds in speculative stock market but in government securities only. All products consumed by Americans should be produced or assembled in USA. Economists and Policy Makers should know that income disparity has increased because manufacturing intensity has decreased.
There are only two genuine comparative advantage for any country. One raw material and two Nature (waterfalls, rivers etc.). Period.

America was used as example to illustrate the point. What is applicable to USA is applicable to every other country.

Why the Global Economy fails to recover?

The Global Economy fails to recover because economists, policy makers, and the government together have nothing new to revive the economy. All prescriptions like lowering interest rates, fiscal stimulus, deficit spending etc. have been used many times without any impact to revive the global economy.

The creation of the central banks in various countries, fractional reserve banking, and delinking currency with links to gold or silver have played, are playing, and will play a role in stifling the global economic revival. The policy of low interest rates, purportedly to revive the economy, instead of helping economic revival helps banks and governments to borrow at lower rates of interest. The people who save and matter the most for economic revival are penalised by negligible interest rate on savings. For economic revival, fractional reserve banking has to be discarded, currency has to be linked to gold or silver, and savers have to be paid reasonable rates of interest.

Banks should be forbidden to indulge in speculative business-like equity, derivatives etc. In other words, Banks should limit themselves to conventional banking.

Financing manufacturing companies with equity has done more harm than good. Management of companies instead of focusing on the economy focus on profits. Profits are essential, but not at the cost of the economy. Manufacturing involves research and development which is overlooked by management focus to satisfy the stock market. So, manufacturing companies have to be funded with preference capital which can pay a fixed rate of dividend which in turn will be substantially lower than dividend outflow for equity. This way manufacturing companies will have more retained profits to grow their companies.

Why are governments allowing finance companies with no stake in any industrial segment to speculate on a commodity concerning a particular industrial segment? Take crude petroleum for instance. The demand for petrol or diesel is determined by the number of vehicles both personal and commercial, industrial and domestic power plants, aircrafts etc. A company like Royal Dutch Shell will invest based on the demand for petrol and diesel. Let the producer of petrol or diesel and end user determine and discover the price of petrol or diesel. Why should Goldman Sachs be allowed to speculate on crude oil commodity?

Similarly, trade unions and government policies like minimum wages kill jobs. Economic Policy makers should recognise the power of customers to buy or reject a product. In other words, customers determine whether a business stays alive or is killed. So, policy makers instead of saving or protecting jobs should focus on creating job opportunities. It is natural for a business to die or a new business to be born. Job mobility should be the goal and not job security.

Mainstream banks should not fund speculative business either directly or indirectly. Speculation should be with one's own money or savings.

Economy will also be saved by manufacturing companies funded with preference capital. Pension funds can invest in preference capital with fixed rate of return. Pensioners will be happy with fixed and assured rate of return. Manufacturing companies can increase the rate of preference dividend depending on favourable business prospects.

Globalisation in its present form will not benefit large sections of the global population. What is the way out? If an Indian company wants to export to the US it should set up a local unit there. A US company should do likewise. Similarly, an exporter from the US to India will get paid in India Rupees. This will force US companies to import from India. Indian exporters will get paid in Dollars. Trade will balance. There will be no balance of payment crisis.

Medicare or healthcare can't be a business but a service to society. In its present form healthcare is expensive and unaffordable for individuals and adds substantially to manufacturing costs. The usual culprit:  Management focus of pharma companies on profits drives unethical practices in the medical profession and the cost of healthcare. If Medicare is taken care of by governments as a no loss no profit service healthcare costs will substantially come down as people will consume less medicines, unethical practices will be eliminated, and manufacturing costs will come down.

You will see from the points outlined above existing policy measures cannot deliver results.

Covid-19 pandemic has further compounded the global economic crisis. Any economic revival post covid-19 crisis will require throwing into the dustbin all tried and tested prescriptions/policies of economists including Nobel Laureates. The world badly needs out of the box thinking to revive the global economy.

Paul Krugman's fiscal stimulus

If Paul Krugman's fiscal stimulus or deficit spending had really worked as a cure to boost an economy, then the US economy would have been much bigger than 18 trillion dollars.

Let us take a simple example to understand fiscal stimulus. For illustration, let us take a family of four with Husband working to support his wife and two children. The husband is kind enough to give his wife 500$, and his two kids 250$ each per month to spend as they like. After a few months, both the wife and kids find the money they are getting per month is insufficient to spend on what they like.
The wife demands 600$ and the two kids 300$ each. The husband has two ways to fulfill the increased demand for money. One, if his income remains the same, he can reduce his saving to fulfill the demand.Two, he can find ways to increase his income to fulfill the demand. This example clearly illustrates that the husband has to work to stimulate spending by his wife and kids.

The government of any country has two ways to raise money. One by Taxation. Two by borrowing money.
Now, if you substitute Government for Husband in the above example to stimulate spending by wife and two kids you can clearly see that the Husband has to be taxed by the government to stimulate spending by wife and two kids.

It is a no-brainer that for implementing a fiscal stimulus someone has to work. Mounting debts of Governments is a clear indication that fiscal stimulus is a burden on people who pay taxes and may not stimulate the economy.

Economists and Economic Problems

The world economic crisis continues. Economic growth happens but jobs are not created. Explanations by economists of economic crisis and jobless growth is lost in jargons and complex mathematics.


That economists can solve economic problems is a myth. That economists compound economic problems is a truth. Why do economists compound economic problems? The answer lies in their prescriptions. Increase government spending to boost economy and or increase government control to manipulate money supply, interest rates, and purchasing power of money. Most economists prescribing these measures to improve economy forget that government debt and taxes keeps on raising and money supply increases with no relation to the real economy. So, their prescription only compounds a country's economic problem and results in jobless economic growth.

In India since Narendra Modi came to power in 2014, he has been subject to extraordinary scrutiny and criticism. He has been criticized, without realizing that jobs can’t be created, for not creating enough jobs. But the truth is aspiring Indian never found enough jobs since 1947. An example will illustrate this truth. India created IITs but never created opportunities or jobs to use IIT graduates. This is the reason why so many IITians are not working in India. Any economy has to create opportunity for jobs.

 

Modi faces umpteen critics including Raghuram Rajan, former RBI governor, who are themselves clueless that jobs can’t be created or Government along with central banks like RBI can’t control the economy. India doesn't need Raghuram Rajan's or any economists' ambiguous prescriptions. India needs actionable ideas for jobs. India as a country lost a golden opportunity to create a foundation for an economy that will satisfy the ambitions of aspiring Indians for jobs in the period 1947-1977 when it was ruled by Congress with negligible opposition. No political party in any country in the world got the opportunity that the Congress got in India. But the opportunity was squandered. All of MODI’s critics including economists overlook this crucial point.

 

What is true for India is true for every country in the world. Each country's economy needs economists or policy experts as critics but on one condition. They should substantiate the criticism and offer actionable ideas which have not been tried before. Critics be they economists or policy experts should realise that finding solutions inside the source of the problem is no solution at all for economic problems.

 

What happens to jobs with reckless Robotisation and Automation?

What happens to jobs with reckless Robotisation and Automation?

Let us see what happens to jobs with reckless Robotisation and Automation  with some examples from the real world.

Walmart in USA employs approximately 1.5 million people. General Motors in USA employs 180000 people. Let us assume  both these companies act to satisfy Investment Bankers and Stock market  to meet their profit targets resort to massive Automation and Robotisation. Just to illustrate the impact on the US economy let us assume Walmart reduces its employee strength to 15000 and General Motors to 2000 employees with  Robotisation and Automation.Who will be there to buy these companies' products and services?

What is preventing the USA from becoming a 40 trillion dollar economy?

What is preventing the USA from becoming a 40 trillion-dollar economy? This caption is deliberately provocative but not unrealistic.

The USA is gifted with mighty intellectuals, renowned educational institutions, noble laureates like Paul Krugman, numerous think tanks. Why should the economy grow at 2% or 4%? Why GDP cannot grow at 10% Or 15% ?

Paul Krugman's prescription of government spending to boost economy and jobs doesn’t work in reality.
All the recipes for economic growth and jobs  creation like: government spending, low interest rates, controlling money supply, and controlling inflation has been tried without much success.
The United States did reasonably well when the economy had robust manufacturing till 1970-71.
When the US economy ignored manufacturing in the name of globalisation, and started listening to investment bankers, bankers, financial institutions and select economists jobs became scarce, stock markets flourished,& investment bankers prospered.

Economic prescriptions need a revisit. The present state of economic prescriptions stifles the very economy it wants to stimulate. The USA has to generate out of the box economic prescriptions to grow its economy to become a 40 trillion-dollar economy.

Why this Global economic mess? Has Capitalism failed? No, Capitalism has 'nt failed.

Why this Global economic mess? Has Capitalism failed? No, Capitalism hasn’t failed. But interference in the working of Capitalism is the root cause of global economic crises.
Today most large corporations in the manufacturing sector are managed to satisfy stock market expectations at any cost. Every manufacturing organisation has investment in land, buildings, machinery, and people. When the market is not growing the easiest way to increase profit and satisfy stock market is to sack people as it is the easiest thing to do. When people are sacked and don't find alternative jobs economy gets affected. The companies in their blind urge to satisfy stock market will cut more jobs to cut costs and kill the economy further. This is a vicious circle.

Myopic managements are not realising that there will be no company in the absence of customers.
Unions and minimum wages act further to kill jobs by forcing companies to employ automation and robots. Myopic managements, trade unions, and advocates of minimum wages do not realise that automation and robots will not require holidays, clothes, soaps, detergents, processed food, air travel etc. What will happen to the economy?

Bloated government with massive debts and ever-increasing taxes further shrink the economy and create job losses.
Capitalism is blamed for global economic mess. Some economists call for government spending. Some other economists call for more government regulations. Some economists say capitalism has failed. All of them are wrong. Capitalism hasn’t failed. But capitalism has been made to fail by government intervention; following policies of economists recommending either increased government spending, or increased government regulation , or controlling money supply, or fixing interest rates, or by fixing minimum wage rates, or allowing greater say for trade unions; by allowing mainstream banks to enter speculative business and off balance sheet trickery.
Capitalism is closest to human nature. Every human being wants to be free, is born, and dies. In Capitalism companies will be born and some will die. Problems in capitalism arise when dying companies are rescued by government but individuals dying in debt are not only not rescued but downgraded in their financial rating to compound their problem.

Perplexed Global Citizens

An ordinary American or a Britisher or Australian Or Brazilian or an Indian who isn’t an investment banker, equity/derivatives trader, banker, head honchos of corporate sector, wealthy, doctor, or lawyer is deeply affected by what is happening in their respective country's economy. In other words, leaving aside a miniscule percentage of any country's population unaffected by the current state of economy majority are deeply disturbed.

An ordinary American or a Britisher or Australian Or Brazilian or an Indian is interested to work but he can’t find a job. He is disturbed when jobs are not available when corporates are showing record profits, interest rates are low, or stock markets are booming. He is even more disturbed when Nobel Laureate economists, policy experts, & other Pundits give explanations for state of economy which is anything but convincing. He is witness to this state of affairs of the economy since 2008.

 

GLOBALISATION- IDEAL WAY

What is suggested in this blog is the only way Americans, or British, or Canadian, or French, or Brazilian, or Russian, or Malaysian etc. can ensure jobs remain in their respective countries.

Globalisation as practised till now has failed to bring cheer to the people of this world. No two countries are identical. Pressure to satisfy stock markets has forced management of many companies to shift production to any country that can aid it to maintain its profit. Seen in this context globalisation is a facade or euphemism for protecting corporate profits.
It's a no brainer. Loss of jobs by outsourcing production is a loss to the economy that is never rectified. For example, any company that shifts production say from USA will not generate demand for any capital equipment. Hence, there will be no incentive for an investor to set up a capital equipment plant. Absence of capital equipment means no requirement for maintenance and spare parts. Job losses are obvious. So, what is the way forward?
For example if a Chinese or Japanese company wants to export to USA or India, they should set up local manufacturing. This step will neutralise to some extent incomparable conditions say between USA and China or China and India.

To avoid balance of payment crisis an exporter from China who exports to India will get paid in Indian Currency. An exporter from India who exports to China will get paid in Chinese Currency. Trade will balance.