Jay Likes

January 31, 2011

How does the income of Americans compares to the rest of the world?

You are probably upset about the screaming headlines in magazines about the demise of the American empire. Yeah, magazine editors need to sell copies and blogs need traffic using scary headlines. These days, anything about India or China taking over the world is to enough to scare most of us.

However, as this chart in the Times shows, American power isn’t going anywhere, and I am optimistic that in a dynamic economy like ours, eventually, simple principles of economics will make life fine for all of us again. Yep, as more people lose jobs, they bring down wages, which allows others to hire them, and we now have a new economic order.

The Times points out:

In fact, America’s bottom ventile is still richer than most of the world: That is, the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants.
India’s poorest ventile corresponds with the 4th poorest percentile worldwide. And its richest? The 68th percentile. Yes, that’s right: America’s poorest are, as a group, about as rich as India’s richest.
How can there be so many people in the world who make less than America’s poorest, many of whom make nothing each year? Remember that were looking at the entire bottom chunk of Americans, some of whom make as much as $6,700; that may be extremely poor by American standards, but that amounts to a relatively good standard of living in India, where about a quarter of the population lives on $1 a day.

10:39am

January 24, 2011

"But let’s not kid ourselves: talking about “competitiveness” as a goal is fundamentally misleading. At best, it’s a misdiagnosis of our problems. At worst, it could lead to policies based on the false idea that what’s good for corporations is good for America."

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Indeed, for a country our size, we are as competitive as we can get. The problem is NOT that we are uncompetitive and to be very honest I do not think we want to out-compete China or India, where wages are so low that we will drive ourselves nuts doing so.

What we need to do is to tell China not to manipulate its currency and impose sanctions on Chinese products if they do nothing about it.

Additionally, all those Americans who are out of work, need to realize that their jobs can be done by someone else at much lower cost, and they either need to retrain themselves to do something else, or be content with doing low-wage jobs.