Three Cheers & One Boo for These United States

I confess that I have been peddling a lot of doom and gloom about the fiscal problems facing the Federal Government and most of the state governments. I don't think I was wrong to do so, but it's time to look at the brighter side of the ledger.

Daniel Drezner's blog at Foreign Policy is a little ray of sunshine. He presents three pieces of good news about the United States economic situation. First, and perhaps most interesting, concerns energy security. Drezner directs our attention to Richard Wachman's article in the British Guardian.

Growth in shale oil and gas supplies, along with other fuel sources, will make the western hemisphere virtually self-sufficient in energy by 2030, according to a BP summary published as an overview accompanying BP's latest energy outlook.

In a development with enormous geopolitical implications, a large swath of the world taking in North and South America would see its dependence on oil imports from potentially volatile countries in the Middle East and elsewhere disappear, BP said, although Britain and western Europe would still need Gulf supplies.

Cory Heidelberger celebrates this on his blog because he thinks it serves his great animosity against the Keystone XL pipeline. See! We don't need Keystone! I note that the BP study includes shale oil among the reasons that North America is moving toward energy sufficiency. Cory is still worried that our oil might go to those Godless communists in China. I will point out once again that refining oil here and selling it abroad when we don't need it hear makes the U.S. richer, which is a very good thing. Producing and selling a surplus is how nations, corporations, and individuals prosper. On this subject, Cory is invincibly ignorant.

Second, Drezner points out that American manufacturing is poised for a rebound. Productivity, which is the prime source of wealth, has been steadily improving and unit costs of labor have declined.

As Michael Beckley points out in a new article in International Security, "The United States is not in decline; in fact, it is now wealthier, more innovative, and more militarily powerful compared to China than it was in 1991."

That should cheer Cory up.

Finally, the United States is doing a better job of deleveraging (that is, reducing debt) than most of the other developed economies. Powerline fleshes out some of the implications of a McKinsey Global Institute report that Drezner discusses.

McKinsey Global Institute has produced an interesting report on international debt and deleveraging. It finds that a few of the world's largest economies, including the U.S., have made significant progress in reducing debt since the second quarter of 2008, while others, mostly in the EU, have continued amassing more debt.

What the McKinsey study shows is that U.S. financial institutions, non-financial corporations, and households, have succeeded in substantial reductions in debt. That is very good news as these are the sources of wealth for all private and public enterprises.

Energy security, resurgent manufacturing, and reductions in private debt, make for a pretty picture. This means that the U.S. continues to be, not only the largest, but also the most flexible, responsive, and productive economy on the globe. That means that we will probably be able to solve our most serious problem.

When you add in the enormous fiscal difficulties facing our entitlement system, public institutions are not deleveraging. Federal and state governments are still on the road to fiscal insolvency. Here is a quote from a very long memo produced by Larry Summers for President-elect Barack Obama in December, 2008. From James Pethokoukis's blog at the American Enterprise Institute:

Closing the gap between what the campaign proposed and the estimates of the campaign offsets would require scaling back proposals by about $100 billion annually or adding new offsets totaling the same. Even this, however, would leave an average deficit over the next decade that would be worse than any post-World War II decade. This would be entirely unsustainable and could cause serious economic problems in the both the short run and the long run.

Four years ago Obama was warned by the soon to be head of his National Economic Council that the national debt was growing out of control. He has made not a single serious attempt to address the problem. The same can be said of the Democrats in Congress. Tomorrow marks the 1,000^th day since the U.S. Senate has produced a budget.

The United States of America continues to be the most successful regime in recorded history. Our people and our institutions continue to show that the Founder's work was sound. We can only wait for Congress and the White House, perhaps under new management, to bring up the rear.

Comments

[caheidelberger]

Still lacking: any honest calculus demonstrating that the purported value-added benefits outweigh the costs of sacrificing private property rights to eminent domain for foreign private corporations, the ongoing environmental risk of pipeline leaks from a company that consistently underestimates its leak rates, and the foolishness of pouring more resources into our addiction. Heck, if nothing else, let's keep a kink in the hose and thus encourage China to develop its own renewable alternatives.

[Ken Blanchard]

Still lacking: arguments and evidence in place of vague generalities and code words like "addiction". One moment energy security is good because the increase in supply means we don't need Keystone XL. The next moment oil is an addiction and so, presumably, an ample supply of the drug would be bad. Your arguments are incoherent.

If you object to the idea of eminent domain, that would be worth talking about. Do you have the same objections to telling property owners they can't develop their land for environmental reasons? I expect that the eminent domain argument only concerns you when you don't like how it is being used.

At any rate, selling oil to the Chinese is clearly on the positive side of the equation as it will increase the national wealth of the U.S. and Canada and thus benefit and cement the North American alliance.

You are rather high-minded to want to starve the Chinese of oil in order to encourage them to develop their own renewable alternatives. How many Chinese are you prepared to doom to poverty to satisfy your own fantasies? A great many apparently.

[larry kurtz]

President Obama's record of job growth compared to Bush43:

http://front.moveon.org/obama-vs-bush-on-job-growth-3-long-years-1-simple-graph/?&rep=4&rc=tw.fol

[larry kurtz]

Let the Canadians refine this crap.

[Ken Blanchard]

Larry: we need to have a talk about why the pretty screen in front of you lights up.

[larry kurtz]

I'm in Santa Fe: off the grid in a straw bale house. Maybe we really should be talking about plastics.

[Stan Gibilisco]

Does our President not realize that whatever noble goals he has, however justified, however much good they might do for our society ... No matter how high his dreams might rise, they'll come crashing down around him if he does not preside over a country that lives within its means?

Larry, I'd love to see that off-the-grid house. Now there's a vision! I'd love to get off the grid, in more ways than one, right now. (Not ready to drive as far away as New Mexico, however ... yet.)

[larry kurtz]

The walls are about 24" thick: the width of the bale plus 3" concrete on each side on expanded metal lath, interior is troweled smooth like marble. It's only about 1000 sq.ft. main floor and loft; my host built it about 15 years ago. The solar panels power two houses of the same approximate size.

It's 800 miles from my house in Deadwood or about 15 hours: can drive it in one day and have enough time for wine on the porch.

Will take a pic with the phone when it gets light (60 expected here today), upload it to Blogger and post it.

[larry kurtz]

Here it is, Stan:

http://interested-party.blogspot.com/p/rabbit-house.html

[larry kurtz]

More to the point:

http://thinkprogress.org/romm/2011/11/06/359699/google-geothermal-supply-chu/

[Stan Gibilisco]

Cool! Four cheers and no boos for you, Larry! Something for us all to think about as we wean ourselves off fossil fuels ... or get forced off.

[duggersd]

Number of jobs in October, 2007 = 146,743,000 Per US Department of Labor - Bureau of labor statistics see : http://www.bls.gov
Number of jobs in December, 2011 = 132,721,000 http://unemploymentdata.com/charts/current-employment-data/
So about that job creation figure, go figure.

[Stan Gibilisco]

It could be worse ...

https://mail.google.com/mail/?shva=1#inbox/13516d863f648e89

[Stan Gibilisco]

Oops. Try this ...

http://survivalplus.com/forward/page0006.htm

[larry kurtz]

DoE Secretary Chu will be just down the road at the Sandia National Laboratories’ National Solar Thermal Test Facility tomorrow.

http://thehill.com/blogs/e2-wire/e2-wire/206571-overnight-energy

Don't you just wish Lead could be so fortunate, Stan?

[Stan Gibilisco]

People, towns, states, countries, and planets make their own fortunes.

[Ken Blanchard]

Thanks to Larry, Stan, and Dugger for keeping this thread going. I will only point out that while Larry is posting on this blog he thinks he is off the grid.

[William]

Thank GOD I wasn't drinking coffee when I read you last comment, Dr Blanchard! ROTFLMAO!!!!

Larry may not realize that some of us (partly due to age and a looming decline in income in retirement) that his frugality is much admired, no matter how much LSD he's ingested in his past =|;)

[larry kurtz]

Isn't this is the cloud, fellers?

[larry kurtz]

Isn't this is the cloud, fellers?

[Mark Anderson]

Talk of the debt, here's your personal presidential choice Mitch Daniels, from wikipedia:During his tenure as head of the Office of Management and Budget, from 2001 to 2003, the federal budget went from an annual surplus of $236 billion to a deficit of $400 billion, and Daniels's projection of a return to surplus by 2005 proved to be inaccurate.

[Dave]

And lets not forget that at the time the GOP VP Lord Vader was saying "deficits don't matter"... Nobody challenged Lord Vader on this at the time, but now it's suddenly important? If only GOPers had exercised some accountability on this when they were in power they might ((might)) have some credibility now...