E Caterpillar Confirms Kalecki's Historical Truth About The Business Cycle

 

The economy is more diverse now, than when Kalecki wrote. Industrial production is not the only business of America. Energy and technology are expanding and we have anecdotal evidence of that.

But Gregory Tassey, senior economist at the National Institute of Standards and Technology, has written a couple of fascinating articles regarding growth in technology. In his article, Make America Great Again, Tassey says:

But today, technology is increasingly developed elsewhere in the world, creating severe pressure on domestic industries and supporting infrastructures. Domestic fixed private investment (FPI) in physical assets such as machinery, land, buildings, vehicles, and technology is too low, and survey after survey of industry managers shows that the supply of skilled labor is inadequate. Government research institutions and R&D budgets are still oriented largely toward a set of social objectives such as defense and public health that only indirectly leverage economic growth. The end result has been sluggish output and income growth.

America is supposed to be a leader in technology. But the truth is, America has more income inequality than any nation on the face of the earth. Trump's tax plan, now passed, makes this inequality even worse. If America cannot finance technology, coupled with the inability to finance new factories for industrial production, then there the economy will lose steam and we could have another major setback.

According to Tassey, the Republicans are not so much interested in increasing national income as they are in redistributing it upwardly. Marc Chandler speaks to the small amount of American exports, one percent of all companies are doing the exporting. Well, Americans forget that 95 percent of all consumers live outside the United States. That is no doubt why Donald Trump blinked with regard to Chinese demands. They have the customers.

Many Republicans and Democrats want to limit China and Asia even more than Trump. But engaging with them, and trying to open their markets is essential to future US prosperity. As Tassey said:

The right-wing populist groups and the more liberal wing of the Democratic Party, led by Senator Bernie Sanders of Vermont, an Independent who normally caucuses with the Democrats, both favor protectionist philosophies, as evidenced by their opposition to the Trans-Pacific Partnership. Dumping it is basically ceding the huge Asian market to China, but President Trump agreed with these groups and terminated the agreement.

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Disclaimer: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice. The ...

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