Last week on 60 Minutes there was a segment about a small town in Iowa where Maytag was located. When the Maytag factory shut down there was widespread unemployment and extreme financial hard times. This is played throughout the country and there isn't anything that the president can do about it. Manufacturing is going away because there is no way that we can compete with China if their wages are 0ne-tenth of those here, no matter what government polices we put in. On the other hand there was report from Silicon Valley that companies like Face Book and Google are raiding each others' intellectual talent. This raises the earnings of engineers and computer scientists dramatically. No government policies made a difference here either except maybe the freedom for entrepriuneers and venture capitalists to pursue their dreams.
This trend shows one reason why the Democrats got slaughtered in the heartland but did ok in the the coasts. Areas that depend on old industries are going to be in trouble just as people who do not have a good education. We must encourage better education especially in math and sciences if we are to compete in the future.
Obama' s trip to economic summits in Asia illustrate the weak position we are in. When we try to tell other country to change their economy from export driven to consumption driven like us, they laugh at us. They feel that we have no discipline and disapprove of the Fed's 600 billion dollar stimulus. I think in the long term we have to tighten our belt like not only China and India but Germany as well. Of course Obama can't do that because it will hurt in the short term and will doom his re-election bid for sure.
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