Friday, December 21, 2012

Economy seems to be turning around, neo-Confederate hopes dashed.

With the economic crisis of 2008 neo-Confederates got very excited that there would be some upcoming breakdown of the economy or society that would allow the neo-Confederate view to get a hearing. I had blogged about it in 2008.

The League of the South has launched this website which has the heading "Get Us Off the U.S.S. Titanic." The idea that the United States is going to come to an end like the ship Titanic.

As has been observed in history during times of severe economic crisis fringe views do get a hearing because established views lose credibility when there is a failure to deliver a functioning economy. During an economic crisis there should be a critical review of how things should be run, but choosing a crazy alternative isn't an answer, and with the question before the public that an alternative might be needed some might choose the crazy alternative.

However, neither the Mayan or neo-Confederate apocalypse are going to happen.

For example there is this news item,

The housing market has turned around and housing prices are rising and buyers are starting to compete for homes. The number of foreclosed homes on the market is declining. Construction of houses is beginning again.

There are other trends which are beginning to drive the American economy in a positive direction.

One important force is the availability of cheap natural gas through new fracking technology. Natural gas has become very cheap and is about one-fourth the price of natural gas in East Asia. Factories are intensive energy users. Plastics are largely made from natural gas as are many chemical feed stocks. So the trend is to move manufacturing with plastics back to the U.S. However, even for goods that don't use much plastic, lower energy costs makes manufacturing cheaper and many other goods require lots of energy. Many goods require a fair amount of plastic.

The other thing which is helping the economy is the new trend to "onshoring" or "reshoring" as it being called. This is driven by several factors. One is that the economics of offshoring were found not to be as good as they seemed. There were hidden costs and other problems. Another driving factor is that wages in India and China are climbing quickly. In China it was reported that wages rose 18% last year. In India they have been climbing at a rate of 15% a year for some time. At 15% a year compounded that works out to doubling every five years. Now the conventional wisdom is that offshoring was over done and was a fad. There are multiple other factors which are supporting onshoring such as the elimination of shipping delays, the reduction of quality problems, and the fact that if you don't make it, you really lose the ability to design it. This article talks more about it.

I don't want to get into the business of predicting the future for anything including the economy. I tend to thing that the future is opaque. However, it seems that the economic apocalypse isn't going to be happening soon despite how much the readership enjoys imagining that it is imminent.

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