BEFORE YOU READ TODAY'S LIFE-KNOWLEDGE SHARING ENJOY THE ABOVE
Animated map showing the development of
colonial empires from 1492 to present...Have fun watching as the map
scrolls through milestone years portraying the wealth "distribution"
from nations who had wealth to nations who were poor through
of entire humanity by a few humans....
INVENTED AND LED BY USA FOR DECADES
IS BEING NOW PROMOTED
BY STILL NO.1 SUPERPOWER USA AS
used to be a one-way street that led away from America. e bringing opportunity back home to America.
Welcome to the era of localnomics....
.....THE HILITES OF LOCALNOMICS....
1. As oil prices increase, it becomes more attractive for U.S.
businesses to manufacture closer to their market.
2. Foreign countries are have more corrupt business cultures and are
3. As wages in China outpace productivity increases, it becomes even
cheaper to hire high-skilled domestic workers to control robots that
handle the physically demanding work that used to be done manually.
4. Smaller more local banks, which can serve the needs of local small
businesses, will dominate post-financial crash.
5. The world has a surplus of low-skilled workers, and a shortage of
medium and high skilled workers.
6. All job creation over the next 4 years will require at least a two
7. There is a growing gap between what employers want and what degrees
and skills students are graduating with.
8. Amid political gridlock, employers are taking matters into their own
hands, setting up degree programs with local community colleges to meet
their skilled labor needs.
....AND LOCONOMICS CAN BE REALIZED IN FIVE RULE STEPS....
RULE NO. 1:
Hometown Bankers Know Best
RULE NO. 2:
RULE NO. 3:
Blue Collar Jobs Go High-Tech
RULE NO. 4:
Closer Is Faster, And Faster Is Good
RULE NO. 5:
Local Leaders Must Step Up
|The above national economics-revival philosophy demonstrates the continuing and
seemingly eternal superpower strength of
USA and its and
its citizens on this planet Earth...a showcase of how their beautifully
human Declaration of Independence:
these truths to be
all men are created equal,
that they are endowed by their
creator with certain
inalienable Rights, that
among these are Life, Liberty and the pursuit of Happiness."...
|.....is still as live as
it it was at its birth some 225 years ago "spearheaded"
by the minds and thoughts of
New England Puritans...
|PVAF as per its mandate to share Life-sciences Knowledge with the
entire humanity on this planet Earth today shares a very profound
article with the above noted title and content summary which PVAF
believes will help earthlings in all nations to see the long-term light
at the end of the tunnel after the 2008 world-wide financial
meltdown...which melted welfare, well-being and happiness of majority of
earthlings to a degree...may be sometimes with some short-terms gains
here and there...
|Today's sharing is so profoundly simplistic but with pregnant
potential as wordsmithed by Time Magazine's evergreen financial
wizard Ms. Rana Foroohar, is an assistant managing editor for
Time magazine....who surgically presents every week complex
financial life-topics with bare Truth so that one wonders why the
leaders of earthlings everywhere cannot emulate and apply the Truth to
lead earthlings to short-medium-long term happiness.....
|And sharing thus....without further much ado...click on the next line to
enjoy the Truth on the next webpage and may be you can lead your leaders
to the Truth....remembering that you can lead a horse to water but you
cannot make it drink....and just a reminder for you to share your take
on this sharing today by just clicking the
COMMENT button in the header
of this sharing....and please do go after the hyperlinked words by PVAF
volunteers at your convenience......
to real reading today....
...and of course lighten up with some chuckling...but please stay
Shea for TIME
Caterpillar workers at the company's recently expanded plant in
The Economy's New Rules:
|If there's a single company that illustrates the huge range of
opportunities and challenges facing the U.S. economy today, it might be
Caterpillar, the heavy-machinery giant based in Peoria, Ill. Like most
other firms, Cat took a hit following the financial crisis. But since
then, it's bounced back--and how. After a strong second quarter, the
firm is on track for a second record-breaking year in a row and will
likely sell $70 billion of its famous yellow earthmovers, tractors and
mining equipment globally.
As productsAs products roll off the line at the recently expanded East Peoria
factory, every one is marked with a flag that designates its final
destination. There are a lot of Chinese, Indian and Australian flags.
But there are plenty of American ones too, and their numbers are
growing. "We put those flags on a few years back. I wanted our workers
to understand that globalization isn't necessarily about someone taking
your job," says Caterpillar CEO Doug Oberhelman. Indeed, Caterpillar
thinks less about a single world market than many regional ones. The
company is global, but where it can, it sources and produces locally,
which is a natural hedge against everything from oil prices to currency
risk to changing customer tastes. The bottom line: jobs and growth are
split more or less equally between the U.S. and the rest of the world.
This isn't how globalization was supposed to work. Until quite recently,
it was seen as a one-way street. American companies, which led the
charge four decades or so ago into growing global markets, were its
ambassadors, and American workers, whose wages and upward mobility were
flattened, were the victims. The core idea was that globalization,
technological innovation and unfettered free trade would erase
historical and geographic boundaries, making the world ever more
economically interconnected and alike. (Foreign-affairs writer Tom
Friedman famously encapsulated this notion with the title of his book
The World Is Flat.) In this vision, all nations would be on an even
playing field, and the U.S. would come under more and more competitive
pressure from eager upstart nations. It worked something like that from
the mid-1980s to 2008, a period of unprecedented market calm that
economists call the Great Moderation. Not so much anymore.
The truth is that the world was never as flat as we thought, and it's
getting bumpier. The flaws in the premise are coming into focus.
Consider the following: when energy prices and political risk go up,
far-flung global supply chains make less economic sense. Low-wage
workers in China look attractive--until robots operated by highly
skilled laborers at home are able to do their jobs even more cheaply.
Unfettered free trade seems great until the world's fastest-growing
economies won't play by the rules of the game.
Since the financial crisis, fragmentation rather than unity has become
the norm. You can see it everywhere, from the euro-zone crisis to
Communist Party infighting in China. In just the past few months,
Argentines renationalized their biggest oil company, and several nations
put capital controls on their currencies. Rich and poor regions from the
E.U. to Japan and from China to Turkey are ramping up tariff increases,
export restrictions and self-serving regulatory changes. World Trade
Organization director general Pascal Lamy calls the rise in
protectionism "alarming" and frets that we are headed back to the 1930s.
Given all the risks out there in the world, the 2% economy--in place of
our historical 3%-to-4% yearly growth--has become the new normal for the
foreseeable future. So is it possible to survive or even thrive in the
The answer is yes, but only if you know where to look and how to pivot.
A key truism in this new age of volatility is that "everything local
will take clear priority," says Peter Atwater, a financial researcher
who studies social mood and the markets. That means much more focus on
regional economic ecosystems and how to foster job creation at home
instead of relying on global markets to raise all boats. In short, we
need to be aware of the myths of globalization and how we can unleash
untapped economic power closer to home. Here are some of the new rules
RULE NO. 1
Hometown Bankers Know Best
During the Great Moderation, finance was the industry that ruled the
world. It greased the wheels of globalization, spreading capital like
pixie dust, and came to represent some 30% of total corporate
profitability in the U.S., up from about 11% in 1975. Even after the
financial crisis, banks represent a greater percentage of the economy
than ever before. Slowly but surely, that's changing. The Dodd-Frank
banking legislation, which is still under construction, may well be
toughened in the wake of several new banking scandals. Regulators on
both sides of the Atlantic are making a new push to rein in banks, and
even the Fed may be considering ways to goose the mortgage market by
forcing banks to lend.
As public cries for a safer financial system grow louder, it's quite
likely that banks will eventually be broken up into smaller, more
manageable pieces and forced to hold more capital, moving the industry
away from global laissez-faire business as usual and toward a more
traditional banking model.
Already, in Europe, banking is balkanizing along national lines. There,
the rollback of the decade-long, cross-border integration of banking may
turn out to be a bad thing, because it underscores a lack of faith in
the euro and will expose deeper rifts in the continental economy as a
But in the U.S., the shifts in banking may be a happy event.
Too-big-to-manage institutions may be reined in or even split up,
allowing smaller entities to focus on what they do best, be it
high-flying trading or local lending. (Being closer to the ground, such
commercial banks will know their consumers better, which could mitigate
risk and increase capital flows to small businesses.) As profit margins
shrink, the fees banks charge may get higher. But banking may also
become more the way it is in It's a Wonderful Life, "which has certain
advantages in terms of reconnecting people back to their local
communities," says Atwater.
RULE NO. 2
As finance fades into the backdrop, manufacturing takes center stage,
and each hometown accomplishment brings crucial carryover effects for
the surrounding economy.
It's not being overly dramatic to say that the world is on the verge of
a new industrial revolution as manufacturing regains its traditional
role as a global growth driver. Manufacturing's share of global output
is 17.4%, the highest it's been in over a decade. The growth has been
driven not only by China but also by the U.S. (the second-biggest
factory nation by output), which got a boost from the government's
Detroit bailouts. Indeed, if the U.S. manufacturing economy were a
nation, it would be the ninth largest in the world.
Government support is certainly one of the reasons for the boom.
Manufacturing is politically very important because it's one of the few
areas of the economy that is creating solid middle-income jobs. (See
Rule No. 3. Export-oriented jobs pay 9% more on average.) The reason the
latest U.S. jobs numbers aren't worse than they are is that Detroit has
been holding its own. A weaker dollar and more-competitive global wage
rates have also helped U.S. manufacturing, as have two other key trends:
the rise of emerging markets, which buy a growing chunk of American
exports, and a homegrown energy boom in shale gas and oil, which is
goosing other parts of the economy like commercial construction and
agriculture. This underscores manufacturing's important spillover effect
for the rest of the economy. The Bureau of Economic Analysis calculates
that every $1 of manufacturing GDP drives an incremental $1.42 of
activity in the nonmanufacturing economy.
That fact was recently heralded by, of all people, Airbus CEO Fabrice
Brgier in a July 2 announcement in Mobile, Ala., where the European
aircraft giant is opening a new plant, citing a more competitive labor
and growth climate in the U.S. as compared with Europe. It was a bitter
day for the French and the Germans. Manufacturing is a key source of
innovation, accounting for 70% of private-sector R&D and 90% of patents
issued in the U.S. When a high-end manufacturing operation like Airbus
sets up shop in a community, the benefits stay disproportionately within
the local ecosystem. Spillover benefits decline by half when you go 700
miles beyond a manufacturing site, according to economist Wolfgang
So how to create more of these local hubs? Ensure access to a highly
skilled labor force, connect educators to job creators, and help smaller
businesses become suppliers to big firms. (See Rules 3 and 4.)
RULE NO. 3
Blue Collar Jobs Go High-Tech
At the Caterpillar factory line in East Peoria, yet another important
trend of the new normal is on display: labor bifurcation. Extremely
cheap workers--robots--now do much of the tedious, physically demanding
welding at the plant. Other work is done by high-end technicians, many
of whom need computer skills to manipulate the robots. The number of
human employees hasn't actually decreased over the past few years as the
firm has added robots, but their skill level has increased. Welding is
no longer a job for someone with only a high school degree. It's
something that requires advanced in-house training or a
This situation is a microcosm of the global labor market. Even as Apple
recently announced it would work with its supplier Foxconn to cut hours
and boost pay for laborers in its Chinese factories, Foxconn itself has
plans to deploy about 1 million new industrial robots in factories
across the Middle Kingdom over the next three years. Chinese workers are
getting more expensive, with pay rising about 17% a year, but their
productivity isn't increasing quite so fast.
That's one reason the Boston Consulting Group estimates that within five
years, as many as 3 million manufacturing jobs could come back to the
U.S. But they won't be old-style, cheap-labor jobs. They'll be
high-skill, high-demand positions.
Indeed, 63% of U.S. jobs will require postsecondary training by 2018.
The U.S. economy will create more than 14 million new jobs over the next
10 years, but only for workers with at least a community-college degree.
These jobs--for people like dental hygienists, electricians and
entry-level software engineers--would allow millions of people to move
from living on the edge to being middle class. The problem is that a low
percentage of college students in the U.S.--30% at four-year colleges
and 1 in 4 at two-year colleges--finish their degrees.
Some of that is about money, but it also reflects a relative lack of
effort in the U.S. to connect educators with companies, particularly
compared with what's being done in growth machines like Germany. The
result is a mismatch between degrees and jobs that some economists, like
Harvard's Rosabeth Moss Kanter, believe is responsible for as much as a
third of the increase in unemployment since the Great Recession.
Tech-oriented community colleges with links to industry are an obvious
solution, and the Obama Administration's latest budget proposes $8
billion to fund such institutions. But political gridlock has stalled
the proposal. So businesses like Caterpillar and Siemens are taking
matters into their own hands, setting up programs with local community
colleges. (Cities, take note: these programs can be job magnets.
Caterpillar set up an engineering design center in South Dakota because
of a strong community-college system there.) High-tech service companies
like Microsoft, Cisco and IBM are starting six-year combined high school
and community-college programs designed to churn out qualified midlevel
employees. One such program, P-Tech, a public-private partnership led by
IBM, has been adopted by Mayor Michael Bloomberg of New York City and
Mayor Rahm Emanuel of Chicago as part of an effort to boost employment
and growth. Expect private companies to take on an even greater role in
education while local leaders become major economic actors.
RULE NO. 4
Closer Is Faster, And Faster Is Good
One of the most amazing things about globalization is that for all the
press it gets, it's not nearly as broad-based as you would think.
European business-school professor Pankaj Ghemawat's recent book World
3.0 lays out in detail how the world was never really all that flat to
begin with. His numbers, which tweak some official tallies to account
for what he believes are various errors in calculation, are compelling:
by his estimates, exports account for only about 20% of the world
economy, cross-border foreign direct investment is only 9% of all
investment, only 15% of venture-capital money is deployed outside home
borders, less than 2% of all phone calls are international, less than a
quarter of Internet traffic is routed across a national border and about
90% of the world's people will never leave the country in which they
were born. "The challenge isn't too much globalization," says Ghemawat.
"It's too little."
But that's a hard sell politically at a time when the dark side of
globalization--namely, growing inequality within nations--has resulted
in a strong sense that an elite group of people and companies are flying
safely above all the troubles in the global economy while the majority
of those on the ground suffer. This was brought front and center earlier
this year when an Apple executive being interviewed by the New York
Times about why the iPhone is mostly made outside the U.S. was quoted as
saying, "We [Apple] don't have an obligation to solve America's
The statement implied that not only should Apple put jobs wherever it
was cheapest to do so globally (which is still mainly in Asia) but that
this was a relatively seamless process. But the company's recent labor
problems with its supplier Foxconn in China prove that doing business
globally is hardly simple. And companies with complex global supply
chains have not only labor issues to contend with but also natural
disasters (remember how last year's tsunami and earthquakes in Japan
disrupted auto-supply chains and sank industry growth for several
quarters), high energy costs that make shipping more expensive and risks
of corruption (as in the case of Walmart's scandal in Mexico). The
laissez-faire attitude toward globalization that prevailed during the
Great Moderation seems decidedly naive today. "For much of the last 15
years, it seemed like the attitude was that anytime you could find a
lower cost anywhere in the global supply chain, you did it, with no
thought of the difficulties or risks that things could go wrong," says
Gene Sperling, head of the National Economic Council. "More U.S.
companies are rethinking that calculation, and that holds open the
promise of more location and insourcing here."
UPS, which moves 2% to 3% of global GDP annually, says it views
supply-chain disruption as the No. 1 risk facing multinational
businesses today. Mitch Free, who runs MFG.com one of the world's
largest online marketplaces for the manufacturing industry, says he's
seeing a big trend toward regional and local insourcing not only because
of risk mitigation but because consumer demand for all things to be
newer, faster, better is shortening the life cycle for products (as
little as six weeks from production to market in many cases). The trend
toward hyperlocal product customization to suit individual customer
needs in everything from jeans to ditch diggers also favors
just-in-time, local supply chains. "The dynamic is not so much that
American firms are bringing jobs back to the U.S. from abroad as it is
that companies everywhere are bringing jobs and operations closer to
where their customers are," says Free. "It's all about regionalization
and localization rather than globalization."
Indeed, Caterpillar nurtures a network of about 2,000 local suppliers in
the Illinois area alone, many of whom make a good living designing and
producing customized goods for the firm--items destined for particular
U.S. markets or specialized needs. Where things can be sourced locally,
they are, in every Caterpillar territory internationally. "It allows us
to better understand the needs of the local market and adjust the
product quickly," says Oberhelman, "but it's also a natural currency and
Companies are also starting to realize that localnomics can help support
their revenue growth. Suppliers can also buy things from their
customers, and customers can be suppliers too. IBM, which sells a lot of
its products and services to small and midsize firms, recently founded
an online network to source more of its business needs from such
companies in the U.S. Sixteen other companies, including Caterpillar,
Dell and AMD, are taking part. Since the project, called Supplier
Connection, went live in March, the companies have booked tens of
millions of dollars in new business from small firms. This has an
exponential growth effect. A recent study by the Center for an Urban
Future found that most small businesses that became suppliers to
multinationals saw their employment go up, on average, 164% within two
years. For the large firms, it's just smart business; many of the small
and medium-size enterprises they fuel will undoubtedly become customers
at some point.
RULE NO. 5
Local Leaders Must Step Up
Localnomics has great potential. But how much can governments do to
nurture local economies? And how much should they do?
Economists on both sides of the political spectrum have begun to argue
that we need to rethink laissez-faire trade policies when we are up
against state-run capitalist systems in places like China, which openly
gives preference to homegrown firms and limits foreign capital even as
it exports massive amounts of cheap goods. Groups like the Council on
Foreign Relations and the Information Technology and Innovation
Foundation agree that the U.S. needs to get more aggressive about
pursuing trade violations and punishing violators. Some economists call
for sanctions or temporary tariffs.
There's even a push in some quarters for the U.S. to shed its Alan
Greenspan--era taboo on economic planning. "Manufacturing is thriving in
China, Germany, Sweden and Singapore only because their governments set
up specific vocational institutes to prepare workers for new
industries," wrote Kishore Mahbubani, head of the Lee Kuan Yew School of
Public Policy in Singapore, in a Financial Times op-ed. "China has
rapidly overtaken the U.S. in green technology because of a coordinated
national response, not because Chinese businesses alone invested in
In the U.S., industrial policy remains a third-rail notion. (See what
happens if you mention Solyndra.) And developing policies to support
localnomics is tricky, as many factors that support it--currency, oil
prices and even labor rates--can change quickly. In just the past couple
of months, manufacturing in the U.S. has begun to soften a bit as Europe
and emerging markets slow down.
There's a risk of pitting state against state and city against city in a
battle for short-term gains that can easily become a race to the bottom.
Caterpillar decided to put a new factory in Texas because of, according
to a spokesman, "port access, proximity to supply base and a more
positive business climate." A good chunk of that last factor has to do
with superlow tax rates and nonunion labor. But states that try to outdo
one another on tax cuts may eventually undermine infrastructure and
services needed to fuel longer-term growth. And localnomics doesn't mean
the pressure on labor ends. Caterpillar creates lots of jobs, but even
as profits and revenue rise, the company is seeking worker concessions
and is embroiled in union skirmishes.
Yet many economists continue to believe that localnomics is America's
best hope for a real recovery. The McKinsey Global Institute recently
published research noting that a large portion of the difference in
economic growth between the U.S. and Europe is due to America's more
vibrant cities and regional centers of growth, rather than just a few
large capitals that generate most of the nation's wealth.br />
So count on cities to become more aggressive about protecting their
economic future. Witness how Californian communities like San Bernardino
and Stockton, driven to bankruptcy by mass foreclosures and frustrated
by banks' reluctance to renegotiate mortgages, have announced plans to
seize loans on underwater homes and forcibly restructure them. Or how
Ohio and Tennessee are making sizable commitments to attract high-tech
research institutions. Or how Seattle and Philadelphia are cementing
niches in the global clean-tech arena. All these initiatives represent a
bracing response to gridlocked politics as usual in Washington. And they
also add up to local-centric approaches that may someday take us beyond
the slow growth of a 2% economy.
.......HUMANITY'S ETERNAL GRATITUDE...
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