The New Economy

9 Aug

Old Econ.NewEcon

Apparently, the so called “New Economy” is a “Global Economy” designed to provide jobs for everyone in the world. Well, it certainly has provided jobs for people in China, India, South Korea, and Mexico – to name a few. But has it done anything for the good old USA?

So far, this move to a New Economy has made us the largest debtor nation in the world. It has exported a big chunk of manufacturing jobs and has given us a government that wants to save us by putting us in multi-trillion dollar debt.

I know I am a bit slow. After all, I’m just a cartoonist, but I am having some trouble understanding all of this. Democrats want to bankrupt us and Republicans want to export jobs to third world countries so we can have a “balance of trade” with the rest of the world.

The principle of trade balance is a good one. If I understand it correctly, we’re not supposed to export more value than we import – hence, everything stays in balance. But, it seems a bit too obvious to me that we are having trouble in that department. This value thing is kind of difficult to maintain.

One solution has been to devalue the dollar. I think it is supposed to increase the number of dollars it will take for foreign countries to buy our stuff. Or, to put it another way, our exports become cheaper making it more likely that foreign markets will buy them.

So far, our government has been very good at bringing the value of the dollar down. Both parties seem to have a real knack for it. But, according to a good web site for the economically-challenged like me, a devalued dollar does have some drawbacks.

In an 2007 essay written for economicshelp.org, the writer tells us that devaluation could lead to higher inflation and cites three reasons :

  1. Increase in exports causes rising AD and therefore could lead to demand pull inflation.
  2. Imported goods will be more expensive. American consumers would definitely experience a rise in price for many imported manufactured goods and imports of raw materials could increase costs of business.
  3. It is argued a devaluation reduces the incentive, for manufacturers and exporters, to cut costs and become more efficient.

Did you get all that?

Nevertheless, the writer of this essay says that our current economic slowdown diminishes the inflationary impact of the devalued dollar. “However, the impact of a devaluation” writes EconomicHelp, “depends on the state of the economy. As previously mentioned, the US economy is slowing down; therefore inflationary pressures are subdued and therefore inflation is unlikely to occur.”

So there you have it. We don’t need to worry about inflation from a devalued dollar because our economy is going into the tank which slows demand for our products. And we don’t have to worry about our products not selling because most of them are made elsewhere which means that someone else will be laid off. Right???

Of course, the average American is still left with the fact that his dollar buys even fewer things than it did ten years ago. That means that the people the president wanted to tax more – the ones earning more than $250,000 – are really not earning that much. This will ultimately raise taxes on people earning smaller incomes because they will soon be classified as rich.

At this rate, anyone earning more than $20,000 a year will be worthy of a tax hike. And, because the revenue from those taxes will be worth less, the government will probably have to increase those taxes higher than promised.
Imagine that.

I am not worried, however. As a cartoonist, my earnings are not likely to reach a taxable level. Whew! I can keep the 40 cents I made last year. Wait a minute… I forgot about health care.


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One Response to “The New Economy”

  1. Carmella Justice August 11, 2009 at 12:24 pm #

    Good stuff! I agree with everything you say. Keep up the good work. I will be looking forward to your next publication. Hope it will be in the near future, like today.

    Good luck
    a very grateful reader

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