How about an economic forecast? The people on TV are not the only ones who know anything about economics. Ordinary people who individually drive the economy have to know some thing!
If you have followed my blogs, then you know that I have some definite views that are different from the university economists. I view the economy as a function of at least three major categories.
(1) Traditional value added labor
(2) High tech value added labor
(3) Exploitation of natural resources
Back about 100 years ago "Traditional value added labor" was the most significant component, but not any more. There has been a major shift and now the most significant factor is technology, but compared to traditional value added labor high tech is not limited in the same way. Remember the "efficiency experts"? If they were good, they could increase the efficiency of traditional value added labor, but not by much. It is like the "learning curve" where each time production quantity doubles, the efficiency goes up by 4% to 5%. Compare this to intellectual labor or high tech, which can double or triple production. As the economy shifts toward high tech, not only does it drive the economy of the future, but it is capable of growing the economy at rates never seen before. For this reason GNP growth of 4% or 5% is not the limit for the future.
Look at a few examples. How fast did companies like "Facebook" or "Amazon" grow? Compare that with companies like "Boeing" which is a first rate traditional value added labor company. Look at how fast "IBM" or "Xerox" grew when they were on the cutting edge of high tech? They both stopped growing when they were no longer high tech. If you are following this, I think that you can see that you can not predict the future by looking into the rearview mirror. You have to look at what drives the economics of the "future".
How about some "cream" on the top? That is the special case where the USA has been blessed with a lot of natural resources. Notice that today, the USA is the worlds largest producer of oil and many farm products. These are unique to the USA and can not be duplicated by most other countries. This gives us an advantage over many countries who might be able to match us on the other two economic factors.
Based on the above analysis, I feel that the economic future of the USA will surprise most economists because most only look backwards rather than at the factors that drive the future.
If you have followed my blogs, then you know that I have some definite views that are different from the university economists. I view the economy as a function of at least three major categories.
(1) Traditional value added labor
(2) High tech value added labor
(3) Exploitation of natural resources
Back about 100 years ago "Traditional value added labor" was the most significant component, but not any more. There has been a major shift and now the most significant factor is technology, but compared to traditional value added labor high tech is not limited in the same way. Remember the "efficiency experts"? If they were good, they could increase the efficiency of traditional value added labor, but not by much. It is like the "learning curve" where each time production quantity doubles, the efficiency goes up by 4% to 5%. Compare this to intellectual labor or high tech, which can double or triple production. As the economy shifts toward high tech, not only does it drive the economy of the future, but it is capable of growing the economy at rates never seen before. For this reason GNP growth of 4% or 5% is not the limit for the future.
Look at a few examples. How fast did companies like "Facebook" or "Amazon" grow? Compare that with companies like "Boeing" which is a first rate traditional value added labor company. Look at how fast "IBM" or "Xerox" grew when they were on the cutting edge of high tech? They both stopped growing when they were no longer high tech. If you are following this, I think that you can see that you can not predict the future by looking into the rearview mirror. You have to look at what drives the economics of the "future".
How about some "cream" on the top? That is the special case where the USA has been blessed with a lot of natural resources. Notice that today, the USA is the worlds largest producer of oil and many farm products. These are unique to the USA and can not be duplicated by most other countries. This gives us an advantage over many countries who might be able to match us on the other two economic factors.
Based on the above analysis, I feel that the economic future of the USA will surprise most economists because most only look backwards rather than at the factors that drive the future.
