Parting Thoughts

Things I Found While Looking for Something Else—Part 1

By J.D. Neeson, President

The U.S. and China’s manufacturing output is about the same—the Chinese do it with approximately 300 million people, while the U.S. does it with 11 million workers.

Over the summer, amidst all the yelling about the debt crisis, foreign demand for U.S. Treasuries grew by $88 billion (even though China sold around $36 billion, England purchased $44 billion). Even with the downgrade, the U.S., with its economy, is the only nation big enough to absorb so much cash. Right now, foreign ownership of  U.S. Treasuries is around $4.6 billion, which is a huge amount, but Americans own more than this amount of U.S. Treasuries, so the country isn’t really owned by the Chinese.

With all the gnashing of teeth about big evil China and how it will take over the world, it is sort of nice to remember that the GDP of the U.S. is almost three times (3x) larger thanChina’s, as indicated below.

(2010 numbers)

U.S.        $14.526 trillion

China       $5.878 trillion

Japan       $5.458 trillion

Germany   $3.386 trillion

France      $2.512 trillion

U.K.          $2.250 trillion

Some of our intrepid politicians bemoan the planned increase in the minimum wage rate stating that these raises hurt businesses and reduce job growth. However, the statistics seem to say something different. In 2008 only 3% of all workers made minimum wage. By 2010 the amount had jumped to 6% of all workers, but the Federal minimum wage had grown from $5.15 to $7.25, so most of the jump was probably from the fact that the minimum wage had gone up, while wages themselves had kept flat. In any case, it is pretty small number of people.

My stepson is convinced that Social Security will be gone by the time he retires. And he is not alone. Egged on by the doom sayers and special interest groups, an entire generation believes that SS is on death’s door. Actually, the Social Security system is fine for the next 25 years or so. From now until around 2022 there will be a surplus of collections over payments. In the year 2035, give or take, the surplus finally disappears, but there is still enough money in the fund to supply full payments through 2055 or so.

And this assumes that Congress won’t do something to fix it. My bet is that they will eliminate the maximum wage payment and will force people making over the roughly $110,000 maximum to continue to pay SS and Medicare up to their actual salaries and increase the retirement age to around 70. These two changes alone mean the fund is solvent through 2099.

End Part 1

Categories: Economy, JD Neeson

Tags: China, congress, debt crisis, England, foreign demand, GDP, manufacturing, politicians, social security

Photographic Memories The Dainty Downy Woodpecker