This is another chapter in my economic series that comes from a totally different angle than conventional economics 101. If you have been reading my blogs, you know that there are two basic factors that affect a country's economics. Those are Extraction and Human Value Added.
We all know that the USA economy has been stuck in a rut with very slow growth. The fact is the growth has not kept up with the growth in population. The results is that the average person is getting poorer here in the USA. If you look deeper into the numbers and understand "real economics", you will see that economic growth due to Extraction has increased significantly. Most of this growth has been from "frac'ing" for both oil and gas. No one expected the significance of this development. Farmers have greatly increased their production too. Dairy farms now typically milk over a thousand cows. not like just a few years ago when we had many dairies farms that only milked 50 to 100 cows. My point is that the extraction portion of the USA economy has grown much faster than the "total" economic growth. What is your conclusion based on the above?
The simple conclusion is that there has been "no" growth in net worker value added. If the USA did not have all the natural geographical resources and had to depend on the value added of our work force, we would now have a serious depression. Most people only have their value added work to contribute to the economy. They are not farmers or own oil wells. Most people need to realize that they have to compete with China, Korea in terms of value added and also realize that they are getting a free ride on the extraction portion of the economy. It is not a good picture of our future.
The fact that many of our young people, who ran up big college bills, are back living at home and out of work shows that we do not understand real economics. These young people have a very sick image of their value. They think that because they went to college that they are worth a lot more than business are will to pay. They have to realize that the value of their labor is not any more than that in China or Korea. All this business about higher minimum wages is a diversion from the real problem. It is like the people on Easter Island who carved those big heads when their real problem was over population.
Bottom line is that the Extraction portion of the USA economy is doing OK, but if we can not control our population it is going to be watered down so that we will have to rely more and more on labor based value added and you know that our work force can not compete. Our work force education level is about 25th in the world and you know what that means in terms of the value of our work force. Real economics is simple isn't it?
