U.S. Economy Archives - Page 11 of 107 - Money Morning - Only the News You Can Profit From
How Big Corporations Are Destroying the "Free Market"
As an economist, I wince whenever I hear someone say that we live in a true free market.
The reality is we live in a semi-free market where regulation stifles business and corporate money influences and distorts what would normally be a highly competitive marketplace.
And over the last two decades, the situation has only gotten worse for consumers, producers, and defenders of the so-called "free market."
From 2008 to 2010, 30 major corporations paid more money in lobbying fees than they did in taxes, according to the Public Campaign.
But while traditional lobbying once centered on altering tax rates and encouraging legislation to liberalize and deregulate the economy, it has now evolved into a competitive weapon for companies trying to box out competitors and raise barriers to entry in their markets.
It's a business phenomenon that I like to call the "Rise of the Fifth Rail."
You see, in traditional markets, companies compete on four specific principles: Price, product quality promotion, and place (market access). These principles are known as the "four P's."
The first three are self-explanatory in that customers want the highest quality product at the cheapest price. Companies use promotional techniques to instill a need for its products and do so by marketing against the offerings of a competitor.
The fourth principle centers on a company's ability to reach new markets and still provide low prices for high-quality products. A strong coordinated distribution network tends to make this possible.
Naturally, when all four work together, you end up with a company like Walmart (NYSE: WMT), which has the ability to provide low, everyday prices due to its best-in-class distribution network.
But over the last few decades, this new phenomenon of using lobbying as a competitive tool has altered the course of market economics, and driven fair competition into the ground.
And that phenomenon is rotting the American free market from the inside.
Symptoms Don't Lie
A good doctor will not simply make a diagnosis based on measurements. The symptoms and complaints expressed by the patient are at least as important in making a determination as the data provided by diagnostic tools.
When the data says one thing and the symptoms continuously say another, it makes sense to question the reliability of the instruments.
This would be particularly true if the instruments are furnished by a party with a stake in a favorable diagnosis, say an insurance company on the hook for treatment costs.
April Employment Report Begins to Show the Signs of the "Obamacare Effect"
Economists breathed a sigh of relief when the Labor Department reported a better than expected April employment report on Friday, but the details show cracks still remain.
Many of the job gains proved to be in lower paying fields and the average number of hours worked dipped.
In fact, April's report revealed the average workweek for private sector employees declined 0.2 hour to 34.4 hours.
The data also suggests The Affordable Health Care Act, aka Obamacare, is already having an impact on hiring since job growth has slowed most significantly among businesses with 50-499 employees.
This could be the reason why…
Is This the End of Cheap Chinese Labor?
It's been the lament of everyone for years now: Cheap Chinese labor is killing the job market.
With lower wages and lax regulation, the giant sucking sound we heard was manufacturing jobs headed from Sheboygan to Shenzhen.
But now China's new found riches are starting to turn in on themselves in the form of much higher wages.
In fact, The Wall Street Journal has found that over the past decade – while no one was watching – manufacturing wages in China have gone up – conservatively – by 20% annually.
And as those workers pocket ever-fatter paychecks, they're demanding more in the way of decent working conditions and better hours. And that costs money.
It's not that much different than what happened in the United States in the early 20th century. It's just that China is doing it much faster.
Has Sequestration Saved the U.S. Economy?
There's a Jamaican saying, "the higher the monkey climbs up the tree, the more his butt is exposed."
The point being that the more we rise, the more vulnerable we become.
That has truly come to pass for a pair of superstars of the dismal science. And it could have a big impact on how successfully (or unsuccessfully) we can get the U.S. economy back on the rails.
The Sequester Debate and Its 5 Biggest Lies
In a hurricane of contradictions there has been no shortage of whoppers told during the sequester debate.
Since political news is usually strategically written, placed and timed you can chalk it all up to politics as usual. Even seemingly off the cuff, innocent responses seldom are.
With that in mind here are five recent news reports where "the facts" have been spun to a point where they are simply untrue.
To counter, we've given you the "un-spun facts" you're entitled to as a taxpaying citizen.
Just don't expect this nonsense to ever end…it's what they do best.
The Most Dangerous Man in the World
When it comes to spending or saving, it's always a contentious debate.
But the risks are rarely as high as they are now for the U.S. and most major industrial nations. Such fundamental economic decisions will move a country forward (or backward) for decades, not months, and can't be undone quickly.
So let's choose the "winner" and "loser" of this debate carefully.
Yahoo's Daily Ticker host Henry Blodget pronounced last week that Nobel Prize winning economist Dr. Paul Krugman "won" the vicious argument fought between those who want to increase government spending as a means of rebuilding our economy, and those who want to cut spending and reduce deficits as a means of restoring confidence (and rebuilding our economy).
Myths and Realities About the U.S. Economy
When it comes to the U.S. economy, myths and misleading statistics abound.
Are taxes the highest they've ever been? Is the country's spending at record levels? Are the majority of products U.S. consumers buy produced by low-wage workers overseas?
The answer often depends on the spin.
But this Bureau of Economic Analysis presentation on myths and misperceptions about the U.S. economy gives investors a sense of what's real and what's the twisted truth.
What America's $2 Trillion Underground Economy Says About Jobs
Doing what they can to survive in a dour job market, millions of Americans exist in an underground economy that has ballooned to $2 trillion annually.
By "underground economy," we're talking about all the business activity that is not reported to the government, which includes a growing number of people getting paid for their labor in cash.
That means the shadowy figures of the underground economy – the drug dealers and Mafia godfathers, for example – now have a lot more company.
This Chart Shows the Economic Recovery is Mainly for the Rich
If you thought Americans were better off financially than a few years ago, the following chart shows that's not the case for most of us.
Instead, it looks like an economic recovery for the rich.