Economic Analysis


Op-Ed

Trump Must Prepare for Showdown with China

 

MoriciPeter

       Peter Morici, Ph.D.

 

Dec. 5, 2016 –

Donald Trump faces immediate challenges—managing the war against ISIS, fixing Obamacare and boosting growth to create jobs.

However, as the fallout from his recent conversation with the president of Taiwan indicates, an increasingly assertive China poses the most vexing and far reaching challenges for American prosperity and security.

China has accomplished hyper growth supplying western consumers with inexpensive goods and attracting Western investment to transfer technology.

Accomplishing this, it has hardly played by the established rules and norms of global trade.

Candidate Hillary Clinton criticized China for subsidizing exports, manipulating its currency and other abusive practices, and promised to better enforce U.S. rights under international agreements.

Trump promised to slap on 45 percent tariff on Chinese imports to get a better deal through those agreements, echoing a strategy advocated by Mitt Romney.

The $320 billion annual deficit on trade in goods and services with China depresses demand for American-made products, curtails funding for U.S.-based R&D, kills millions of jobs and is a principal cause of the blight in communities like Reading, Pennsylvania and Hickory, North Carolina.

Dramatic pivot

Just as menacing, the trillions in cumulative trade surpluses China has amassed are financing a dramatic pivot in its industrial, military and foreign policies that threatens security in the Pacific and America’s standing with allies around the globe.

As wages rise in Chinese coastal manufacturing centers, jobs move further west in China and elsewhere in Southeast Asia causing major social disruptions. For example, Dongguan, near Hong Kong, has endured job losses on a scale similar to large Midwestern cities.

To buffer job losses and limit political unrest, Beijing is pursuing a two pronged strategy.

It is imposing tougher restrictions on foreign investment, which further depresses the value of the yuan, ladling on more subsidies for basic manufacturing, tightening administration restrictions on imports and consolidating state owned enterprises to enhance their monopoly power.

Simultaneously, it is encouraging more technology-intensive activities that strike at the heart of American and European competitiveness through lavish subsidies for startups, acquisitions of U.S. and European businesses, and toughened regulation of American and other foreign technology companies operating in China.

In the process, many products and components used by its basic assembly and fabrication operations, once sourced in the United States and western Europe, are now made in China.

WTO rules

Most of those tactics either violate WTO rules or are decidedly asymmetrical.

For example, the United States, Germany and European nations generally permit Chinese to purchase companies outright, whereas western investors generally must offer Chinese joint-venture partners a substantial stake when establishing subsidiaries in the Middle Kingdom.

While Chinese technology still lags western capabilities in many areas as complex and mundane areas, such as rice cookers, it has managed to leap ahead in some fields—for example, satellite technology for espionage-proof and encrypted communications.

In addition, the cash earned from its huge trade surpluses is financing a massive build up in naval and air power, militarization of the South China Sea and about 20 port facilities the Chinese navy can access in Asia, Africa, the Middle East and Europe.

And it has established an Asian International Development Bank, and the Chinese government and private investors are plowing billions of dollars into the economies in Asia and Africa through infrastructure projects and direct investment.

Chinese muscle

President Obama has been hesitant to take the advice of U.S. defense leaders in challenging China’s artificial islands and militarization of the vital South China Sea, and the combination of Chinese muscle and billions in new investment has encouraged long-time U.S. allies, the Philippines and Malaysia, to tilt toward Beijing.

The latter substantially undermines the U.S. strategy of resolving the sovereignty disputes in the South China Sea and securing the sea lanes from Chinese control by relying on the recent UN tribunal ruling denying Beijing’s claims and through U.S. military and diplomatic cooperation with regional allies.

The South China Sea has huge sea-bed mineral deposits and is a vital passage for some $5 trillion annually of international shipping.

Open access has been secured by the U.S. Navy in cooperation with regional allies since World War II, and the stability of that framework is vital not merely to global commerce but also U.S. credibility with strategic allies in the Middle East and Europe.

The new president must prepare for a diplomatic and perhaps military showdown in the Pacific and confront Beijing on the massive trade imbalance that finances Chinese mercantilism and adventurism.

American prosperity and security depend on it.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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How Trump’s Economy Will Benefit Ordinary Investors

 

MoriciPeter

   By Peter Morici, Ph.D.

 

Nov. 21, 2016 –

Donald Trump’s plans for the economy will boost deficits, interest rates and growth but also will create opportunities for ordinary investors.

Both Trump and Hillary Clinton promised sorely needed additional spending on roads and public structures—schools, railway stations and the like.

Thoughtful proposals have been put forward to pay for some of these projects with private funds—for example, encouraging private businesses to build toll roads—but most projects only deliver revenue to investors over many years and up front private borrowing will be needed.

Many projects simply can’t generate enough revenue directly through user fees to attract private capital, such as public facilities like parks and most mass transit, and those must be financed by new federal and state governments bonds.

Replacing Obamacare with direct subsidies and tax credits to help low and middle income Americans purchase health care may instigate more competition among private insurance companies, but it won’t fundamentally lower prices for drugs, medical devices and the services offered by physicians, hospitals and the like.

That would require implementing more far reaching reforms, such as the price controls imposed by the German government on its system of private insurance, and those are not likely to find much appeal in a Republican dominated congress.

Providing relief

In the end, providing relief from whopping increases in health insurance premiums for the millions of Americans who purchase individual policies on HealthCare.gov will require congress to allocate more money for subsidies—even if individuals are empowered to purchase insurance across state lines.

Otherwise, they will face even higher deductibles, copays and limitations on coverage than ObamaCare policies now impose.  That will boost the federal deficit and require more borrowing.

Lowering corporate rates and slicing rates paid by small businesses who file individual federal and state tax returns can only be partially financed by closing loopholes and will increase the deficit.

Similarly, providing a child care benefit to young families and broader individual tax relief won’t be free.

Cutting taxes may boost growth—for example, a $100 billion tax cut overall many increase GDP by $120 billion, and that could generate as much as $30 billion in new revenue, but it would still swell the deficit by $70 billion.

The impacts of more spending on infrastructure, health care and tax relief could easily accelerate GDP growth by one percentage point but only at the expense of raising federal borrowing by hundreds of billions.

Moreover, after years of austerity European governments were poised to increase deficits even before Trump’s election.

Nationalist movements

Now, nationalist movements on the continent are emboldened by his dramatic victory, and this will likely encourage sitting governments in France, Germany and elsewhere to placate voters with even more spending.

Overall, the West is headed for a mighty fiscal stimulus, and with high unemployment throughout most of southern Europe and many prime working age Americans standing on the sidelines, employment, wages and incomes will rise—a lot!

Globalists are apoplectic that Trump’s promise to redefine trade with Mexico, China and others will wholly disrupt international commerce but look for cooler heads to prevail.

U.S. manufacturing supply chains are too integrated with Mexican and Chinese facilities to be simply disrupted by huge new tariffs.

Instead, Trump has options to leverage our trading partners to renegotiate existing agreements to reduce the U.S. trade deficit. That would further increase the demand for what Americans make.

Some of this burst in borrowing and GDP will simply increase inflation but most will result in the production of more U.S.-made goods and services.

Interest rates, profits increase

Either way, interest rates and corporate profits will rise.

The elderly will again be able to obtain decent interest rates from banks on their CDs, and ordinary Americans can look forward to higher stock market returns in their retirement savings accounts.

Young adults through those in their 50s should be investing in stocks most of what they won’t need over the next five years—for example for down payments on houses, to pay college costs and as a cushion against a personal emergency.

However, it is foolish to try to beat the market and pick the industries and companies that will benefit most from Trump’s program.

Instead buy an S&P 500 index fund, which covers about 80 percent of U.S. publicly traded equities, and perhaps allocate 20 percent to a similarly broad based international fund.

At retirement, folks should be 50 percent in cash—including money market deposits that are quickly converted to cash–and only gradually invest in CDs as interest rates rise.

It’s finally time to get optimistic again!

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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How Democrats Promote Poverty and Inequality

MoriciPeter

 

 

 

 

 

By Peter Morici, Ph.D.

Nov. 3, 2016 –

Hillary Clinton has made addressing inequality a central theme of her campaign, but the remedies she proposes are often worse than the disease.

Since Ronald Reagan, successive presidents have built out the social safety net, and made it more susceptible to abuse.

For example, about one in five working-age adults receive social security disability benefits, more than double the 1990 rate, even though we now live healthier, longer lives.

As government transfer payments as a share of household income have increased, growth and jobs creation over successive economic expansions have slowed and the middle class is shrinking.

Anemic growth has many sources—declining trade competitiveness vis-à-vis China and chronic shortages of skilled labor, which make implementing the latest technologies difficult for business.

However, government policies contribute importantly too.

Poorly crafted and enforced trade agreements

Poorly crafted and enforced trade agreements that Mrs. Clinton and Donald Trump both rail against have permitted China to snatch important segments of industrial supply chains that benefit little from its cheap labor.

The resulting trade deficit depresses demand for American made products, employment and wages.

Greater emphasis on income support and health care programs in federal and state budgets to placate frustrated voters have curtailed public support for basic research at private and university laboratories, and squeezed funding for colleges of engineering and technical training at community colleges and high schools.

Businesses are increasingly establishing their own training programs or subsidizing those at community colleges but public schools place too much emphasis on diversity and social issues in the curriculum.

Consequently, about 40 percent of high graduates lack math and other skills needed to succeed in these programs.

Dead-end, low-paying jobs

Too many high school graduates and college graduates, who often lack the basic problem solving skills for even entry level administrative and managerial positions, often end up in dead-end, low-paying jobs.

All contribute to income inequality and poverty, but state and local governments are doing even more damage without any prodding from Washington.

Tough land use regulations intended to gentrify and preserve the charm of prosperous cities like San Francisco and New York severely limit new residential construction and discourage migration of workers from less prosperous areas by jacking up land values and rents.

Local government efforts to disperse the working poor to the suburbs often leave them underserved by public transportation and unable to fill jobs that require traveling from one suburb to another, and leave middle class workers unable to afford urban apartments suitable for raising families.

Similarly, state and local governments require licenses for one in four jobs today—up from one in twenty in the 1950s.

Often these requirements do little to protect public health and safety—for example, hanging a single painting in a Florida office, school or restaurant requires an interior decorator’s  license—but do much to discourage migration from states where incomes and professional opportunities are less plentiful.

Kill about 500,000 jobs

In 2014, after the Congressional Budget Office estimated President Obama’s proposal to raise the federal minimum wage to $10.10 would kill about 500,000 jobs, states like New York and California pushed those up even further.

No small wonder, even as the recovery has continued to limp along, new jobs created are down in 2015 and 2016.

All serve to depress wages and make poverty more difficult to escape these days, even for many who attended college, and income inequality is worse today than before the financial crisis.

To compensate, Mrs. Clinton proposes new subsidies for child care, to finance health insurance premiums and other social programs but just the entitlements currently in place discourage working families from improving their lot by accessing training or seeking additional employment.

Programs like the earned income tax credit, Medicaid, food stamps and Obamacare assistance for purchasing health insurance are means tested and phase out as income rises, imposing on many lower and middle income families effective marginal tax rates as high as 50 to 80 percent.

Adding to these benefits, as Mrs. Clinton prescribes, would only worsen the problem.

Genuine tax reform—for example, replacing the income tax with a value added tax and providing each adult and child a fixed federal payment to eliminate the spider’s web of entitlements—would fix the problem.

No one would be penalized for improving their skills, working harder and smarter and increasing their incomes.

Mrs. Clinton is uninterested in such solutions.  Those would break the chains of dependency between struggling low and middle income voters and Democratic politicians who champion the opium we call the welfare state.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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The Wheels Are Coming Off ObamaCare … What Now?

MoriciPeter

   By Peter Morici, Ph.D.

Oct. 27, 2016 –

ObamaCare is becoming a nightmare. Health insurance premiums will jump an average of 22 percent in 2017, and federal spending to assist moderate income families is spinning out of control.

For Democrats, the answers are simple—raise taxes on the wealthy to further subsidize a failing system—or force a single payer system—which can dictate prices to service providers and compel their participation—onto reluctant Americans.

For conservative Republicans, the issue is more vexing.

Merely repealing the law is not enough, because that would hardly return America to a free market.

Even before the Affordable Care Act, federal and state governments were paying nearly half of the nation’s health care bills.

Medicare and Medicaid reimbursements

At one extreme, Medicare and Medicaid reimbursement rates for doctors are tightly controlled and too low to sustain their practices.

Many limit the number of patients they take from these programs, and the elderly and poor often face difficulty finding a primary care physician.

Well off retirees can join concierge services, which charge high annual fees for access to primary care doctors, while the less affluent are left to scramble.

At the other extreme, the legislation establishing Medicare prescription coverage does not permit the government to negotiate prices.

Pharmaceutical companies can set whatever prices they like knowing the elderly will simply send the bill to Uncle Sam.

Concierge services have generalized from the elderly to the entire adult care marketplace and created a two-tier system of access to physicians, while Medicare reimbursements are setting drug prices arbitrarily high for everyone.

Basic premise of ACA

The basic premise of the ACA was to enroll nearly every working age American in large employer-sponsored insurance or policies sold on government run websites to create competition that would lower costs, but it has not worked out.

At HealthCare.gov, families often pay $500, $1000 or more a month for policies imposing high deductibles and co-pays and with quite limited provider networks.

Many have lost access to family doctors, encountered limited out-of-state-coverage when they travel and are generally excluded from using higher cost providers where they live.

The latter can be life threatening. As of the end of 2015, for example, none of the policies offered access to New York included the Memorial Sloan Kettering Cancer Center.

Problems are particularly acute in areas where the number of specialists are limited, and hospitals and group practices are monopolized enough to resist negotiating much on price with insurance companies.

Big losses

Insurance companies are taking big losses, resulting in the large premium increases noted above—or leaving the website markets across the country.

At least 650 of counties nationwide will have only one company offering policies next year.

Many folks won’t feel the full brunt of rate increases, as the federal government is obligated to subsidize premiums for low and middle income families, but the Congressional Budget Office estimates the ACA will cost $8.9 trillion over ten years.

We simply cannot go back to what existed before. Private plans lost in the upheaval cannot be easily reestablished.

Simple electoral calculus requires that millions of Americans now receiving subsidies continue to receive assistance purchasing health insurance.

Substandard policies

However, Americans should not be coerced into buying substandard policies at a government store, and costs must be lowered.

The German system of private insurance, like ObamaCare, requires virtually everyone to have coverage, but costs are more tightly controlled.

For example, regulators price new drugs according to how much they improve treatment over existing medicines.

Such government interference in pricing is an anathema to conservative Republicans like Paul Ryan, but the incongruity of Medicare paying whatever prices drug companies choose to set is wholly unrealistic.

Japan, Germany and other northern European countries spend about 11 percent of GDP on health care whereas the United States spends 17 percent.

In the end, if the Republicans want to avoid a single payer system that subjects most Americans to a choice between moribund and arbitrary service akin to that offered by the Post Office and IRS, then they will have to explore with the new president regulating prices inside a private marketplace.

Effective leaders work with the world as they find it, not as they think it should be.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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Fed Should Stick to a Schedule to Raise Rates

Oct. 25, 2016  –

Federal Reserve policymakers, meeting next week, should provide more clarity about raising interest rates in December.

After keeping the Federal Funds rate near zero for 7 years, the Fed raised its target range to 0.25 to 0.50 percent last December.

Quite unrelated, the economy went through another rough winter and spring with GDP advancing at only a 1.1 percent annual rate.

The economy improved in the third quarter, and added an average of 192,000 jobs each month. Unemployment has remained at about 5 percent, because adult labor force participation is ticking up as job opportunities become more attractive.

Wages are up significantly for African Americans, and unemployment is down in presidential swing states, where restructuring in manufacturing has often killed jobs.

Historically, as the economy reaches full employment the pockets more resistant to wage and employment gains— minorities and dislocated workers—experience the most robust progress.

Also, retailers are hiring earlier for the holiday season, because the starting point for this shopping burst increasingly begins around Halloween instead of Thanksgiving and they expect challenges in finding suitable workers.

Inflation

Inflation picked up in September and should be stronger going forward as gasoline, natural gas and other energy prices reflect the recent firming in oil prices.

Although inflation has not pierced the Fed’s 2 percent target, it is important for it to get out in front of wage and energy price pressures, while it still enjoys the latitude to gradually raise rates.

An abrupt interest rate response to a surge in wages and prices could kill the economic expansion even though most families and many businesses have not fully recovered from the financial crisis.

Even as the Fed raised short rates a notch last December, mortgage and Treasury rates moved lower as weakening economic conditions in China and political turmoil in Europe drove foreign investors into U.S. bonds.

Lower rates have supported a stronger recovery in U.S. new home sales.

Increasing short rates now would drive mortgage and other long rates higher, because the effects of the above-mentioned events abroad have been absorbed by capital markets.

Gradually pushing rates up would permit prospective home buyers to process the prospects for higher inflation and recognize that real mortgage rates—the nominal less future inflation—remain attractive.

Stocks are hardly overvalued given the abundance of financial capital around the world seeking higher yields.

Businesses are using capital more efficiently these days (for example, software companies require less capital than traditional manufacturers to create new products).

Together, those drive up underlying enterprise values and sustainable price-earnings ratios.

Too often when Fed Chairwoman Yellen or one of her lieutenants musses the time is drawing near to finally raise rates, stocks take a nose dive, and more certainty about future policy is sorely needed to minimize counterproductive gyrations in the stock market.

Foreign currencies

Conditions in China and Europe have pushed up the dollar against foreign currencies over the past two years, and gradually increasing interest rates would limit further appreciation that would hurt U.S.-based manufacturing and technology-intensive service activities that compete in international markets.

Real estate, stock markets and the broader economy have prospered with much higher interest rates than we have now.

In all of this, however, homebuyers and builders, investors and business leaders would like as much certainty from policymakers as a turbulent world permits.

Next week, it would be best for Fed policymakers to avoid presidential politics and stand pat on short rates, but indicate a December increase is highly likely and further rate increases will be gradual and according to a schedule.

The Fed should announce it will raise interest rates a modest one-eighth or one-sixteenth of a point at each of its forthcoming meetings going forward—and stick to the schedule unless substantial changes in the economic data warrant.

A policy of normalizing interest rates with some certainty as to pacing should permit the economic recovery to continue without labor markets overheating or inflation flying out of control.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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Why Deutsche Bank, Hillary Could Ignite another Economic Crisis

 

Oct. 17, 2016 –

According to Barack Obama and Hillary Clinton, the economy is in great shape and safe from another financial crisis. And more liberal policies to better distribute the benefits would deliver Americans into another golden age but the facts belie all this.

Obamacare, state and local minimum wages laws, new federal overtime rules, and disincentives to work imposed by the recent buildout of federal social programs have raised the cost of hiring workers.

Higher businesses taxes—especially for smaller enterprises–and tougher regulations have pushed up the cost of deploying capital.

Consequently, Americans are suffering through one of the weakest recoveries on record, and conditions in Europe are no better.

The U.S. Justice Department is proposing Deutsche Bank pay $14 billion to pay for its role in a mortgage securities scandal that contributed to the 2008-2009 financial meltdown, and other European banks still await their medicine.

Even a settlement one-third that size would require the bank to sell new stock to replace lost capital, and it is not well positioned to do so.

Still burdened

The largest bank in Europe’s largest economy has a balance sheet still burdened by dodgy securities and is badly run and not very profitable.

Virtually all European banks are suffering from slow growing economies and ultra-low interest rates that make moving bad loans sitting on their books from the financial crisis tough, and identifying suitable candidates for new loans and earning profits even tougher.

About 17 percent of loans held by Italian banks are underwater, whereas at the height of the financial crisis the figure for U.S. banks was only 5 percent. The picture is pretty bleak elsewhere on the continent too.

We are told over and over again, Deutsche Bank is no Lehman Brothers. It can’t pull down the global financial system, because the European Central Bank stands ready to lend virtually unlimited amounts of cash against the bank’s assets.

However, as was the case with Greek banks during their crisis, the ECB likely would require the German government to cosign those loans—essentially, underwrite the kind of bailout German Chancellor Angela Merkel has firmly denounced.

As importantly, many of Deutsche Bank’s assets are derivatives and difficult to value securities that could prove hard to peddle in a crisis.

Bail-in

Deutsche Bank may have to resort to a “bail-in” as recent European bank reforms require. That is, compel bondholders to take stock to replace their claims and bear huge losses in the bargain.

As panic spreads among bondholders elsewhere in Europe, the potential for a general economic collapse is enormous. In Italy, for example, ordinary depositors have been encouraged to purchase bonds in the manner that Americans invest in certificates of deposits.

Bail-ins would impose huge losses of household savings and purchasing power, and a contagious recession that could easily undo Europe’s fragile welfare state economy once and for all.

American regulators may believe Dodd-Frank regulations make U.S. banks less vulnerable to a meltdown in Europe but don’t bet on it. Deutsche Bank has wide interconnection with banks around the world, including our venerable towers of finance in Manhattan.

Cumbersome new compliance requirements have substantially reduced lending and driven down profitability. And those require big banks to write living wills that specify how they would sell off assets in a crisis.

But like Deutsche Bank and U.S. banks in 2008-2009, most of their assets and stock could prove unmarketable should the economy turn south.

Mrs. Clinton Administration

Nonetheless, Mrs. Clinton’s Administration would likely double down on these regulatory measures.

If Congress permits her to do so and expand Obamacare, impose a national $15 percent minimum wage, finance broader subsidies for child care and college tuition, and impose other new regulatory burdens—such as, federalize the California Fair Pay Act—that would likely cook the goose.

Together, those would further reduce bank lending, raise the cost of capital and labor, discourage entrepreneurs from forming new businesses, and drive existing businesses to move more operations offshore.

All that could easily push the economy from slow growth into another recession.

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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Why Fed Should Set a Schedule to Raise Interest Rates and Stick to It

Sept. 12, 2016-

The Fed should start raising interest rates again but only very gradually and according to a pre-set schedule.

After a disappointing first half, second half GDP growth will likely exceed 2.5 percent.

With job security and household balance sheets improved, consumer spending is robust but business investment has been weak—significantly owing to lower oil prices and drilling activity.

After falling to below $30 a barrel in January, oil has traded in the $40s since mid-April, and the number of drilling rigs has been steadily rising since mid-May. Apparently, shale producers can earn profits on new wells at these prices, and the oil patch won’t slow down growth in business investment going forward.

Also, the downdraft to inflation caused by falling oil prices—at the gas pump and for energy sensitive items like air fares—is essentially over.

Over the last twelve months, consumer prices—net of the volatile energy and food sectors—are up 2.2 percent.

Going forward, headline inflation will be close to the Fed target of 2 percent, and that should be enough to start it worrying about too much inflation as opposed to not enough.

Room to cut rates

Further, with the target federal funds rate set at 0.25 to 0.50 percent, the Fed simply does not have enough room to cut rates should another recession threaten.

Overall, now is the time to start moving up interest rates—but not too much and not too quickly.

Labor markets are tighter but full employment is in the eye of the beholder.

The ratio of job seekers to job openings has finally fallen to pre-financial crisis levels—about 1.3. Retailers staffing for the holiday season are offering higher wages than last year.

However, labor force participation among men between ages 25 to 54 remains alarming low—nearly 7 million are neither working nor looking for work.

Plethora of new benefits

Given the plethora of new benefits the Obama Administration has rolled out for them, it may take dynamite to get them off their couches.

However, the Fed should not assume the economy is at full employment and these men can’t be lured back into productive lives with higher wages.

Also, Fed policymakers worry endlessly that keeping interest rates artificially low encourages over borrowing and asset bubbles—for example, in big city real estate and equities.

Residential and commercial building values are rising in the more prosperous urban centers but those have much to do with Millennials’ preference for city living and tighter land use and social regulations (requiring builders to include “affordable housing” in higher end projects) that push up new project costs.

Stocks are hardly overvalued given the abundance of financial capital around the world seeking yields. Businesses are using capital more efficiently these days (for example, software companies require less capital than traditional manufacturers to create new products).

Underlying enterprise values

Together, those drive up underlying enterprise values and sustainable price-earnings ratios.

Both the real estate and stock markets have prospered with much higher interest rates than we have now.

However, it seems whenever Fed Chairwoman Yellen or one of her lieutenants musses the time is drawing near to finally raise rates, stocks take a nose dive.

It would be better for Yellen to simply state the economy is on track, equity prices should be able to absorb somewhat higher interest rates, and we need higher rates now so we can cut them later should a recession threaten.

The Fed should announce it will raise interest rates a modest one-eighth or one-sixteenth of a point at each of its policymaking meetings going forward—and stick to the schedule unless substantial changes in the economic data warrant.

A gradual one-half or one percentage point a year would give certainty to markets and establish confidence by economic actors, generally, that the Fed has the resolve to restore interest rates to a reasonable level.

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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The Genius of Trump’s Foreign Policy

Aug. 29, 2016-

The Republican Party foreign policy establishment has joined Democrats in roundly criticizing Donald Trump’s background and undiplomatic temperament.

Nevertheless, Mr. Trump has laid bare flaws in policies of recent presidents that have undermined U.S. security interests and American prosperity.

For example, President Clinton consented to China’s membership in the World Trade Organization in exchange for an agreement to open its markets to U.S. exports and investment—a promise that is yet to be fulfilled.

Beijing still maintains much higher tariffs on U.S. products than are imposed on Chinese products here, subsidizes manufacturing by rolling over state bank loans to money-losing state enterprises, and suppresses the value of its currency to keep its exports cheap and American-made products expensive in China.

American consumers do enjoy artificially-inexpensive coffee makers at Wal-Mart but at a terrible hidden cost.

Free trade destroys jobs when it admits additional imports but fails to create a comparable amount of new sales for American goods and services abroad.

Campaigning for president in 2008, Mr. Obama promised to get tough with China and redress the trade imbalance but once elected, he put no teeth in that policy.

Trade deficit

During his tenure, the trade deficit with China has increased more than $100 billion, costing American workers some 800 thousand jobs directly and 1.2 million jobs counting in those lost from workers not spending lost wages domestically.

Mr. Trump’s proposed tariff on imports to force China to revalue its currency and renegotiate its trade practices is hardly reckless.

Similar measures have been proposed by liberal New York Times columnist Paul Krugman and Mitt Romney running for president in 2012.

Mr. Obama has failed to adequately challenge China’s construction of an artificial island with significant military potential in the South China Sea, and not adequately support American allies in the Pacific when bullied by Beijing.

Whereas Mr. Trump advocates beefing up US military assets in the region and confronting Beijing’s territorial claims from a position of strength, Mrs. Clinton describes the Sino-American relationship as “positive, cooperative and comprehensive.”

Illegal immigration at our southern border has vexed American presidents for generations, but the Mexican government has generally refused to cooperate in stemming the flow.

Corrupt governments

It may not be acceptable to say in the neatly pressed society of American foreign policy elites, but Mexico has one of the most corrupt governments among members of the Organization for Economic Cooperation and Development—the club of western industrialized countries.

The weight of graft keeps Mexico City from providing its citizens with clean air and water, adequate social services and opportunities for decent wages, and those drive its citizens north in search of a better life.

In turn, many Mexicans employed in the United States send sizeable remittances to relatives back home and that helps prop up a wanton regime.

During his tenure, the trade deficit with China has increased more than $100 billion, costing American workers some 800 thousand jobs directly and 1.2 million jobs counting in those lost from workers not spending lost wages domestically.

Many advocates of NAFTA, including this author, anticipated a more open commercial relationship with the United States and Canada would help propel political reform but that has not happened.

Mr. Trump will not likely persuade the Mexican government to erect a wall along the border, however, cutting off remittances, as he advocates, would motivate it to adopt a more cooperative posture regarding border enforcement.

President Putin is asserting Russian power and extending its influence in Eastern Europe and the Middle East by among other things violating Ukrainian territorial sovereignty and supporting Syrian strongman Bashar al-Assad.

Twin realities

American options for dealing with Russia and ISIS are limited by twin realities.

Europeans, led by Germany, are unwilling to put ground troops into harm’s way to help defend freedom in Eastern Europe or to combat ISIS.

Without such a European commitment, the American public would surely not countenance substantially greater commitments of U.S. forces to face down Russia or to destroy ISIS.

In the war against ISIS, Mrs. Clinton generally shuns cooperation with Russia—characterizing President Vladimir Putin a man without a soul.

Instead, she advocates establishing a no-fly zone over Syria whose purpose is vague but would put the United States in direct confrontation with Russia more than ISIS.

The next best option is similar to the one chosen by President Truman when faced by Stalin after World War II.

No matter how distasteful, cut a deal with Russia to circumscribe Russian influence in Eastern Europe and the Middle East and more effectively combat ISIS.

Foreign policy experts in both political parties have staked their careers on simplistic assumptions and flawed policy prescriptions that have often undermined American interests.

Dealing with the world as we find it, not as we wish it would be, is hardly the inclinations of a reckless fool.

Trump’s rhetoric may be clumsy and alarming, but his instincts are spot on.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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Why Trump Is Right: Unemployment Is Much Worse than Official Numbers Say 

 

MoriciPeter

     By Peter Morici, Ph.D.

 

July 27, 2016 –

The Trump campaign is right that the 4.9 percent headline unemployment rate, touted by the Obama Administration, is misleading.

Joblessness is substantially worse and not likely to get better if Hillary Clinton is elected

In 2009, President Obama inherited a tough situation – the financial crisis and unemployment peaking at 10 percent in October.

However, the recovery has been one of the weakest on record, and most unemployed Americans don’t qualify for many of the good paying jobs becoming available.

Poorly negotiated and enforced trade agreements and illegal immigration have been important.

For example, the U.S.-Korea Free Trade Agreement, negotiated and implemented during Hillary Clinton’s term as Secretary of State, has increased the annual trade deficit by about $16 billion and killed an estimated 135,000 jobs.

Overall, poorly negotiated and poorly enforced trade agreements have pushed the annual U.S. trade gap in manufacturing to $800 billion.

Though the overall trade deficit is whittled down by exports of services, many agricultural products and some other primary materials, it is still about $500 billion and costs American workers about 4 million jobs directly.

Adding in the lost spending by those displaced workers, the damage grows to 6 million jobs.

Lower wages

In addition, the nearly 11 million illegal immigrants increase competition for jobs. Consequently, many Americans who still have a job generally earn much lower wages

President Obama has increased the earned income tax credit, broadened eligibility for Medicaid, expanded the use of food stamps, and presided over a social security disability system that breeds fraud and abuse.

For many households, the potential cost of sending a first or second worker into the labor market imposes a tax, in the form of lost government benefits, of between 50 and 80 percent of the new wages earned.

Juxtaposed with the terribly low wages many jobs pay these days, it’s simply easier to vote for Democrats and live a life of gentile poverty.

 

Don’t be fooled. Unemployment is high and for most, wages are low. Neither is getting much better nor will likely get much better if we stay on our present course.

 

Since Obama began his welfare spending spree, many Americans have decided his income redistribution machine makes working a mugs game.

Adult participation in the labor force has slid significantly, and apologists for this sorry state of affairs are quick to point to baby-boomers at or nearing retirement age.

However, Americans over 65 are seeking work in increasing numbers – they are healthier and pensions and interest on savings are inadequate to permit many to retire.

Also, nearly 7 million men between the ages of 25 and 54 – too old for college and too young for work – are not working or looking for work.

9 percent

Were the adult participation rate the same today as when Obama took office, unemployment would still be at least 9 percent.

Many of the idle don’t have the skills to apply for the good paying positions that are becoming available.

Most new positions are in technical areas like computer coding and health technology, which require either technical training most high schools don’t provide, or a college education in a specialized field, like engineering, management or health care.

Unfortunately, as tuition has skyrocketed, university presidents have been focusing on building lavish student centers, winning football teams and lavishly rewarding themselves and the growing armies of administrative personnel instead of building out expensive but practical majors that offer graduates good career prospects.

As a consequence, the labor force does not match potential employment opportunities, the economy grows slowly and Americans – but for the top 25 percent who navigate the maze, obtain a good education and job, and whose income is growing – get poorer.

Now Hillary Clinton wants to double down on these polices.

Don’t be fooled. Unemployment is high and for most, wages are low. Neither is getting much better nor will likely get much better if we stay on our present course.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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Why Americans Will Prosper Better with a Republican President

July 25, 2016 –

Hillary Clinton claims the economy does better with a Democrat in the White House—that’s simply false.

Unless a president presides over an absolute disaster—as did George W. Bush or Herbert Hoover—comparing one with another is tricky business.

Too much depends on the domestic circumstances each inherits and conditions in the wider global economy.

The best recent apples to apples comparison is between the tough situations Ronald Reagan and Barack Obama faced when they assumed high office and how the fortunes of America’s families subsequently progressed—with Reagan relying on conservative prescriptions and Obama on activist government to fix things.

Obama took office during a punishing financial crisis and recession.

Unemployment peaked at 10 percent but under his tutelage, the economy has reclaimed more than 14 million jobs and employment is up 11 percent.

Reagan’s stronger recovery

The Gipper faced tough times too—a bruising recession, double digit interest rates and unemployment reaching 10.8 percent.

Subsequently, the economy added more than 19 million jobs and employment increased 22 percent.

Reagan accomplished so much because he lowered taxes, curbed the growth of non-defense spending and relied on private decision making to guide recovery.

He cleared a path for businesses, large and small, to invest as they deemed fit and raise wages as they needed to compete for good workers.

Obama increased taxes and micromanages businesses through an avalanche of new regulations.

To pacify a middle class under siege and Americans underemployed or not working at all, he offers more government giveaways, such as writing down college loans and mortgage debt, and incessant preaching that many ordinary folks are victims of racism, sexism and the evil machinations of the well-off.

Obama’s paltry GDP

Through the first 26 quarters of Mr. Obama’s recovery, GDP growth has averaged 2.1 percent, whereas during the comparable period for Reagan, GDP advanced at a 4.6 percent annual pace.

And whereas Reagan’s social safety net assisted the unemployed, Mr. Obama’s pays the unemployed to be idle.

The 7 million men between the ages of 25 and 54 who are neither employed nor are looking for work are rewarded with food stamps, the earned income tax credit if their spouse is a low-income worker and federal health care subsidies—and even virtually free health care through Medicaid in many states.

The social indicators are terrible—the middle class is shrinkingsuicides and drug abuse are up, fertility is falling precipitouslymillions of college graduates are in low paying jobs, and home ownership is at a 48 year low.

For many folks refusing to do much to work at all, he offers an even more attractive benefit—free money in the form of a government pension.

Nowadays, Americans are living longer and healthier lives and work is generally less physically challenging, yet adults ages 16 to 64 certified as permanently incapable of working by the Social Security Disability Insurance program now stands at 5.1 percent—about double the figure in Reagan’s day.

A broken appeals system offers a decided advantage to those crafty applicants who hire a lawyer — a situation the Obama administration expresses no real interest in fixing.

Clinton’s $1 trillion tax increase

On the campaign trail, Clinton is offering Americans more of the same—$1 trillion in higher taxes to pay for free college tuition, daycare for pre-K children, bigger Obamacare subsidies, extending Medicare to Americans as young as 50, and several other initiatives.

To further micromanage the economy, she proposes to generalize to the national level the California Fair Pay Act, which requires even the smallest employers to justify to government supervisors pay and hiring decisions.

For hard working families, the difference in results is remarkable.

During the Reagan years, annual family incomes rose for white Americans and minorities alike—about $3,900 overall.

During the Obama presidency, those are down $1660 overall and about $2200 for African-Americans.

The social indicators are terrible—the middle class is shrinkingsuicides and drug abuse are up, fertility is falling precipitouslymillions of college graduates are in low paying jobs, and home ownership is at a 48 year low.

Quite simply, Clinton’s pronouncements that the economy runs better with a Democrat in the White House, and Americans would be better off doubling down on Obama’s economic policies, simply don’t bear the test of facts.

It’s time for change, time for a Republican in the White House.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

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Trump’s Challenge on Trade

 

MoriciPeter

     By Peter Morici, Ph.D.

 

July 25, 2016 –

To win the presidency, Donald Trump must overcome skepticism among many voters about his positions on free trade, immigration and many other issues. On trade, that is hardly an insurmountable task.

Lowering tariffs and other barriers to international commerce better permits businesses and workers to specialize at the activities they do best.

The U.S. electronics industry understands this. It keeps at home product design, software development and sophisticated microprocessors but outsources to Asia simpler components and assembly for items like cell phones and laptop computers.

Americans would get richer if sales of U.S. products abroad approximately equaled imports, because workers in exporting industries are nearly 11 percent more productive than those competing with imports.

Sadly, the trade deals we have signed—ranging from the comprehensive agreements administered by the World Trade Organization to bilateral pacts like the 2012 free trade agreement with Korea—have not worked out that way.

In 2015, U.S. foreign sales totaled $2.3 trillion and that permitted Americans to buy a like amount of foreign goods and services.  The resulting productivity gains from specialization lifted U.S. GDP by some $240 billion.

However, Americans purchased even more foreign goods and services—$2.8 trillion.

Destroyed 4 million jobs

The resulting $529 billion trade deficit destroyed 4 million jobs that were not replaced by exports and that overwhelmed the gains from trade.

On net, lost demand for U.S.-made goods and services directly reduced GDP by $289 billion and another $170 if we count in lost spending by idled workers and shuttered businesses.

The cumulative effects of persistent trade deficits are even more devastating.

Americans have to borrow from foreigners or sell U.S. real estate, intellectual property and businesses to finance the trade gap.

For example, the more than $1.2 trillion in U.S. Treasury securities held by the Chinese and the sale of GE appliance business and other private American corporate assets to the Chinese.

 

Just like Donald Trump in the primaries, Mitt Romney campaigning in 2012 and Nobel Laureate Paul Krugman have suggested a big tariff to bring China into serious discussions.

 

Much of the lost business activity and ownership is in manufacturing—that sector supports a lion’s share of R&D spending.

Year after year, the resulting lost investments in new and improved products reduces annual economic growth by about one third.

As a former U.S. trade official, I know our negotiators work hard to ensure new trade agreements create at least as much in new exports as additional imports but too many of our trade agreements simply don’t measure up.

Bill Clinton negotiated a deal that permitted China to enter the WTO in 2001 and liberalized bilateral trade, but as implemented the arrangement is hardly fair or balanced. China’s average tariff on imports is 9.6 percent, whereas the U.S. average levy is 3.5 percent.

Particularly important, foreign governments often push down the value of their currencies against the dollar to make their exports cheaper on American store shelves and U.S. products artificially more expensive in their markets.

According to the World Bank, if China’s currency were trading at a rate that actually reflected the cost of buying goods and services in China, it would cost 3.5 yuan to purchase 1 dollar but instead it costs about 6.7.

American businesses face similar problems with other major trading nations such as Japan, South Korea and Mexico but with globalized supply chains and the benefits Americans enjoy from fairly-traded imports, no one wants to turn to blind protectionism and shut down trade.

Renegotiate and better enforce

Instead, the next president should renegotiate and better enforce existing agreements to ensure more balanced trade.

That would boost exports, redirect U.S. consumer demand to American factories, substantially increase GDP growth and tax revenues, and reduce budget deficits.

China accounts for about two-thirds of the U.S. trade deficit but has proven particularly recalcitrant in bilateral talks to revalue its currency or ease other trade tensions.

Just like Donald Trump in the primaries, Mitt Romney campaigning in 2012 and Nobel Laureate Paul Krugman have suggested a big tariff to bring China into serious discussions.

Seen in the context of getting better terms—for example, lowering Chinese tariffs and revaluing the yuan—this is really a pro-free trade position and consistent with long held Republican goals.

It’s really just a matter of being realistic about the objective—growing the economy and getting a better deal for American businesses and workers.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

 

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Why Stocks Poised to Push Higher

 

MoriciPeter

     By Peter Morici, Ph.D.

 

July 12, 2016 –

Stock prices are setting new records but could easily charge much higher.

The U.S. economy is growing again—about 2.5 percent in the second quarter and going forward—and corporate profits are rising again.

After the Brexit vote, the dollar strengthened against foreign currencies but overall it remains well below levels recorded earlier this year and last.

That should aid in the translations of U.S. earnings on foreign operations into dollars on corporate profits statements.

Naming of Theresa May Prime Minister should firm the outlook for UK growth and stocks.

Although much uncertainty about Brexit persists and the British economy may flutter for a few quarters, its long-term prospects remain strong.

Anemic growth on the Continent and the stress imposed by the immigration crisis, half-hearted market reforms, a single currency and fiscal austerity compel the European Central Bank to continue its negative interest rate policies.

In Japan, a shrinking labor force, resistance to immigration and halting deregulation limit growth and compel accommodative monetary policies, too.

Best alternative

In China, slower growth, the absence of competent financial market regulation, reliable accounting and limits on foreign ownership make U.S. bonds and stocks the best alternative for private investors around the world.

U.S. Treasury data on capital inflows indicate continued strong global demand for U.S. corporate stocks and bonds.

If the Fed responds to a stronger job market by raising the federal funds rate a quarter point by December and further next year, the impact on 10 and 20 year Treasury rates will be minimal—mirroring 2004-2006, when the Fed last pushed up short rates.

See Professor Morici’s Comments – Stocks Are Poised for a Bull Run

The average rate of profits for the S&P 500, which comprises about 80 percent of the publicly traded U.S. equities, is 4.0 percent and compares favorably with the 1.4 percent paid on 10-year Treasuries.

At the same time, long-term sustainable price-earnings ratios for stocks are rising and make U.S. equities cheap.

Nowadays, economic growth is based much more on intellectual property—computer apps that create companies like Uber and artificial intelligence that power drones and robotics —and less on hard assets—industrial buildings and machinery.

That greatly reduces the amount of financing businesses needs to create new and better products—the foundations of stock market wealth.

Google

Google was launched with only $25 million in 1999 and grew into a $23 billion enterprise at its initial public offering five years later—the story repeated elsewhere in the tech sector.

As established powerhouses like IBM and Ford rely more on software to create value in products sold, the demand for private finance for expensive purchases of physical assets becomes more limited.

This is an important reason why established companies are flush with cash, even as they invest to improve supply chains, expand product offerings and invest in promising new ventures and buy back stock.

Lower capital requirements coupled with an abundance of financial capital, thanks to flush balance sheets and foreign money coming into America, are pushing down the expected rate of profit needed to attract funds into equity investments.

In turn, that pushes up the price-earnings (P/E) ratio markets can sustain—even if uncertainties abroad create the wider fluctuations in stock prices as recently experienced.

The S&P 500 Index is currently trading at about 2137 with a P/E ratio of about 24.15. However, factoring in expected profit growth over the next 12 months the P/E ratio falls to about 18.00.

That’s well below its 25 year average of 24.94.

Assessed against alternative investments and history and given how much more efficiently digital technologies permit businesses to create wealth using investors’ cash, stocks are hardly overvalued.

A P/E ratio at 25 is reasonable and coupled with expected growth in profits that could easily push the S&P Index up another 33 percent and past 2800.

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

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Bad Government Policies Blocking Good Jobs


  MoriciPeter

        By Peter Morici, Ph.D.

 

July 8, 2016 –

Jobs are getting scarcer, and bad public policies are making matters worse.

The Labor Department reported the economy added 287,000 in June, but that was a bounce from only 11,000 the prior month.

Over the last three months, new jobs have averaged only 147,000 — about two-thirds the pace from 2013 to 2015.

Unemployment increased to 4.9 percent from 4.7 percent in May, and wages were up only 2 cents per hour or less than one-tenth of a percent.

The U.S. economy is growing again — about 2.5 percent annually in the second quarter and going forward—but good jobs remain scarce and wage gains lackluster.

New technologies are reducing the demand for workers but poor government policies are making matters worse.

Robotics and artificial intelligence

The robotics and artificial intelligence revolution is all around us — even if we don’t yet have an android doing our housework.

Uber brings patrons cars without the dispatchers that once took calls at the local car services.

At Amazon Prime, customers point and click without the aid of sales clerks and packages are increasingly assembled by robots at fulfillment centers.

Tasks requiring complex manual dexterity have proven tougher to replace but automated checkouts are spreading, and robots are at the cusp of not just taking orders at McDonald’s but also grasping and handing you hamburgers, fries and soft drinks.

Globalization accelerates these trends by forcing more aggressive substitution of machines for high-wage Americans in factories.

More robots

The next generation of Boeing jetliners will be assembled with more robots — moving and fixing components into place.

What few people are left will be greatly assisted, for example, by Google Glass and software that aid in assembling the complex wiring and programming of cockpits.

Sweeping labor saving innovations have confronted us since the spear and the wheel but in the past, we moved redundant workers who often did repetitive manual tasks into emerging industries.

As agriculture mechanized, workers moved to repetitive tasks in manufacturing and as factories automated, workers moved into services — for example, at convenience restaurants, shopping malls and dry cleaners.

As those jobs disappear, the economy has too few new uses for workers that can’t perform complex, intellectually demanding work.

Major institutional failures make these challenges more wrenchin

Policymakers more effectively manage globalization by negotiating better trade deals, stop pandering to voters with giveaway programs and force schools and universities to shift from proselytizing about the evils of American capitalism to equipping young people with the skills they need to compete.

 

Bad trade agreements permit other nations to boost exports into U.S. markets without accepting comparable amounts of American made goods and services.

Subsidies, currency manipulation and non-tariff barriers to U.S. exports accentuate pressures on companies like Boeing and Ford to automate or outsource more.

The Obama administration promised thousands of new jobs from the 2012 Korean-U.S. Free Trade Agreement, but it boosted the trade deficit by $16 billion and unemployment by 130,000.

Cost of employing Americans

The Affordable Care Actmandatory overtime and higher minimum wages imposed by many states and cities raise the cost of employing Americans, compelling businesses to purchase labor saving devices more quickly or close.

Our high schools and colleges are better at preaching social justice than producing enough graduates who can do the complex cognitive work that machines still leave to human beings.

Skilled technicians with a year or two training and graduate engineers and systems analysts remain too scarce.

Too many Americans simply don’t qualify for the jobs that pay high wages in a globalized, technologically advanced economy.

Consequently,  average family incomes continue to cycle down, even as the upper middle class—the top 20 percent or so—gets richer.

Passing laws—taxing the upper middle class to subsidize child care or by forcing them to pay more for hamburgers to support a higher minimum wage — do not address those fundamental policy failures and leave America vulnerable to more aggressive societies in Asia.

Policymakers must more effectively manage globalization by negotiating better trade deals, stop pandering to voters with giveaway programs and force schools and universities to shift from proselytizing about the evils of American capitalism to equipping young people with the skills they need to compete.

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)

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How Britain’s EU Exit Will Impact U.S. Businesses

 

MoriciPeter

 

 

 

 

 

      By Peter Morici, Ph.D.

 

June 25. 2016 –

What impact will Britain’s decision to leave the EU have on American companies

doing business in Europe? University of Maryland business professor Peter Morici, an international trade expert, joins John Wordock in this Wall Street Journal podcast:

 

 

Editor’s Note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, former chief economist at the U.S. International Trade Commission, and five-time winner of the MarketWatch best forecaster award. (See his economic forecasts.)


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