US Economy Forecasts

John Parks asked:


When the Obama administration takes office in January, it has promised to hit the ground running with a job stimulus plan that will start moving the economy forward. It’s a good idea, and certainly not without precedent, since many believe the Works Progress Administration (WPA) of the 1930’s was instrumental in keeping many in valuable jobs creating some of our nation’s finest public works and monuments. This program employed 8 million workers from 1935 to 1943, and anyone was eligible to take the WPA jobs. The hourly pay was at local labor rates.

While most of the talk about the job stimulus plan centers around building a greener energy infrastructure and fixing crumbling bridges and highways, who is likely to benefit? The new administration wants to create 3 million jobs, but those workers are going to be mainly in the engineering, construction, energy, and financial sectors. Even though that leaves out the important sectors of retail, and services, workers all across the board stand to benefit from the job stimulus plan, no matter how it takes shape.

The jobs in the sectors that the Obama administration wants to create have high multipliers. That’s a term that means for every job created for engineers, two or three jobs might be created in a related or unrelated field. A real life example is to look at home building. When home building was at its peak, the construction workers were by and large making good incomes, which allowed them to buy things. The demand for products was high, so manufacturers added workers. Those products had to be sold in retail stores, so stores were able to add staff.

When the construction industry stopped building as many homes due to the credit crisis, the construction workers were laid off, and they stopped buying. Manufacturers stopped making things to sell, so retailers had to lay off workers. And that’s what the Obama administration wants to reverse. They want to create a job stimulus plan that will have a positive ripple effect throughout the entire economy.

Their plan is not clear yet, but historically, jobs that are in the sectors that they are targeting almost always create new jobs. Employment in these sectors usually pays quite well for almost everyone involved. As these individuals find new jobs, they will start spending their money on things, which will set the recovery in motion. And it’s not just spending for their homes and families. It’s the spending that will be required to fix those bridges and highways, and build those solar panels and wind turbines.

As the effect of the job stimulus plan begins to be felt at local levels, the increased revenues will eventually trickle across the entire economy, and gradually, the country will come out of this deep recession, which is the greatest benefit of the using federal dollars to stimulate the economy. It’s been done before, and history has proven that it works, so let’s hope that the job stimulus plan happens quickly, and some of that money can be put to work creating more opportunities, better roads, and cleaner energy.

For more information on the job stimulus plan, visit http://jobstimulusplan.com.

Manora asked:


The government adapted strict monetary and fiscal policies to control the rate of inflation during this period. Rigid monetary policies were used to limit credit expansion in the private sector. The fiscal policies were mostly the levying of import and export taxes. The export taxes were imposed on some commodities, such as rice and sugar, as a means to control domestic prices. The import tax on raw materials used for manufacturing was reduced. There was also a tax on raw materials used for manufacturing was reduced. There was also a tax rebate for importing raw materials for producing export commodities.

The Fourth Plan (1977-1981) : The Economic Recovery Period

During the Third Economic and Social Development Plan, Thailand was affected by the world economic fluctuations as were other countries. Regional, political instability also acted to weaken the Thai economy, as many neighboring countries changed from democratic to socialist countries. This resulted in investors losing confidence in Thailand. The consequence was a higher rate of unemployment.

By the end of the Third Plan, inequitable income distribution was a major problem. Therefore, one of the main objectives in the Fourth Plan was to distribute economic growth and social services to the remote regions of the to country. The population was targeted to increase at rate 2.3 percent a year. It was expected that this rate of growth was appropriate for cohabitation with the existing natural resources and would be suitable for economic development.

The Fourth Plan was set to be an indicative plan instead of allocative plan, as all earlier plans were. This indicative plan was intended to be a practical guideline for government agencies to improve their policies and set up practical objectives. The Fourth Plan was designed to resolve the economic recession and to maintain economic stabilization. It also intended to solve the basic economic and structural problems. It was planned not only to stimulate economic growth but also to reduce the economic inequality in society.

Concerning disparities in income distribution, the Fourth Plan was unable to find a solution to this problem. The per capital income in the agricultural sector was 5 times lower than manufacturing and commercial sectors, and 2 times lower than the service sector. The people in the Northeastern part of Thailand suffered the most poverty. Per capita income in Northeastern Thailand was five to seven times lower than in Bangkok in 1981. The proportion of regional production relative to GDP declined from 15 percent in 1976 to 14.3 percent in 1981.

With respect to social services, toward the end of the Fourth Plan, the rate of population growth was reduced to 2.2 percent. The government was unable to meet the targeted goals for provided were close to the goal, but not in all regions of the country.

Overall, the Fourth Plan was more successful than the Third Plan. The GDP increased at a rate of 7.5 percent a year. This high rate of growth was the result of attempting to maintain an economic stabilization policy to fight worldwide economic fluctuation. The government increased public investment spending from the target set at 14.6 percent to 24.8 percent a year. Economic expansion on terms of production sectors showed a higher growth rate than the target set in almost every sector except for agricultural and manufacturing sectors. The agricultural sector grew less than anticipated in the plan because of the limited planning area and the deterioration quality of planting soil. The manufacturing sector was curbed by the world wide economic recession so that the export of manufactured goods during the Fourth Plan was not as high as the Third Plan.

Manora asked:


Economic Background for Investment in Thailand

Until quite recently, Thailand had a reputation for being primarily a country which relied heavily on commodity exports, it used to be the world’s largest rice exporter.

However, this is no longer true, the agricultural exports used to represent more than 40 percent of the country’s export in the mid-80s. Now its share of the total export has dropped to only around 20 percent. The pace of industrialization and the growing proportion of exports taken up by manufactured goods reflect the increasing volume of investment which is going into industrial development. Thailand has enjoyed consistent economic growth for more than three decades whereby during the ’60s and ’70s average annual growth exceeded 7 percent, an impressive rate by any standards. But only over the last half decade or so has it become the real industrial powerhouse of the region

Economic growth in the year since 1987 has run at over 10 percent per annual, a rate which made the country the fastest growing in the region and perhaps the world. With the growth has come and influx of foreign investment, growth of the service sector, especially tourism, reduced unemployment and manageable levels of inflation. It has also brought significant changes in the structure of the economy. The principal change has been a general drift away from the agricultural sector which has shrunk in overall importance to the manufacturing sector whose share of overall production growth from 21.5 percent in 1986 increased to more than 30 percent in 1991. Its share looks set to increase still further in the years ahead.

Economic Development through National Development Plan

The economic development in Thailand began about 30 years ago when the country, for the first time, formulated and adopted the National Economic Development Plan in 1961. Before that period economic development was implemented without planning or direction. The National Development Plan became the main tool in achieving the target of the strategies in National development. Various development programs and projects were identified and coordinated umbrella, and human and financial resources were mobilized and accelerated the national development during each specific 5 year period.

The Royal Thai Government declared a “National Economic Development Plan” as the guidelines for economic development under three objectives. First, the Thai economy would be pushed forward to expand under the guidelines of the “National Economic Development Plan” Secondly, the Thai economy would develop without much restrictions and constraints. Finally, private sector would play a major role in investment and industrial development.

The economic development plan was accomplished by incorporation of the plan into the government and private sectors, as well as accounting for foreign investment and trade. This was done by analyzing the development of capital, natural resources technology and human resources in Thailand.

The First National Economic Development Plan continually emphasized development in Thailand. The Second National Economic Development Plan continually emphasized the development of infrastructure in such areas as communication and transportation. The Third Plan was named, the National Economic Development Plan, as it combined social economic development along with economic development in efforts to improve the quality of life for all Thais.

C. Read asked:


Keynesian exuberance for the powers of stimulating demand or the ‘consumer’ has been in vogue since the 1930s. It is sheer nonsense which is taught in every school across the globe. Keynesian economics is little more than intellectual pablum used by those in power or by a technocratic and largely illiterate elite to increase their power; enhance government; print money and otherwise destroy normal economic relationships. Keynes’ theory, so believed by professors is in practice a disaster.

Keynes was a left wing wall flower and a member of the deranged Bloomsbury group of inter-World War British pacifists. He was an arrogant theorist who truly believed in the magical elixir of large government and in the technocratic dream of controlling billions of personal, business and economic decisions, to programmatically construct a perfect world order. Keynes gave intellect and jargon filled cover and rationale to politicians and demagogues who would cite his book, ‘The General Theory of Employment, Interest and Money’, to justify state interventionism.

According to this theory which has failed in practice every time it has been tried, governments can stimulate an economy through granting consumers, workers and businesses sums of borrowed money. This is termed a ’stimulus’. This debt or current deficit financing stimulus, is then paid back or retired, when the economy strengthened by consumer spending and business investment, produces a surplus of tax revenues. The stimulus is needed, so argued Keynes, to overcome business cycles, downturns and unexpected events which would decrease jobs, increase unemployment and impact state revenues. By macro and micro-managing economic and production processes, the state, so thought Keynes, would avoid cyclical variations and ensure that the lowest level of unemployment could be maintained. Government power was thus indispensable to full employment and income equality.

There are many problems with such a counter-rational plan to economic management. None of Keynes’ core assumptions make sense when they are analysed either separately or together. Business cycles have historically been caused by governments, and they are usually a response to government policies to increase the size of the state through trade barriers, higher taxation, more spending, more regulation and programs of fear and compliance. The Great Depression, the 70s Stagflation and the current financial crisis are all obvious examples of this fact. Government causing economic malaise would appear to mean that government programs are not the solutions required to either get out of an economic downturn, nor to prevent future derailments from taking place.

The main impact of Keynesian economic stimuli is to increase debt; raise future tax rates and distort the normal functionings of economic markets and personal and corporate decision making. Governments choose winners and confirm losers. The winners will include companies which get bailed out, those receiving welfare, unions and others having their jobs protected, those receiving redistributed incomes and those paid off for political support. The losers invariably include firms both domestic and international who want fair and free trade; higher income families; small businesses who are classified under high income categories; future generations who must pay off the debt; and consumers who pay a higher costs for all products and services.

Under Keynesian philosophy, government and technocrats assume the role of God. Given the poverty of God heads throughout history, this is probably not a noble supposition to support.

Brian Reidl from Heritage Institute wrong an excellent article recently on the fallacy that government spending, or what is termed Keynesian deficit spending, run by God-heads, is beneficial (see Reidl

http://www.frontpagemag.com/Articles/authors.aspx?GUID=220a4261-b3c8-4338-a5be-62bcc3f3b8d3). In this article he makes the following important points about demand-side management and the Keynesian fetish for economic control.

“Government cannot create new purchasing power out of thin air. If Congress funds new spending with taxes, it is simply redistributing existing income. If Congress instead borrows the money from domestic investors, those investors will have that much less to invest or to spend in the private economy. If Congress borrows the money from foreigners, the balance of payments will adjust by equally reducing net exports, leaving GDP unchanged. Every dollar Congress spends must first come from somewhere else.

This does not mean that government spending has no economic impact at all. Government spending often alters the consumption of total demand, such as increasing consumption at the expense of investment.”

When stimulus packages are created the money has to come from someone via taxes, or be printed. Both are net negatives to the economy. Economic growth only results from producing more goods and services (not from redistributing existing income), and that requires productivity growth and growth in the labor supply as productivity not only increases wealth but also wages and wage opportunities.

Historically of course government spending has reduced productivity and long-term economic growth due to some obvious reasons. As government spends more it raises taxes which reduces profits, productivity and wage and job creation. As government incurs more debt through stimulus and demand side packages it reduces the incentive to produce and displaces money by removing the more productive private sector from the economic equation and replacing it with a far less effective state dollar, taxed or printed on government printing press. The inefficiency of government policy in health, housing, education, and general industry are obvious creating huge costs which must be borne by ordinary taxpayers – ineffective solutions at a higher price one can say.

And as Reidl sources and proves:

“Mountains of academic studies show how government expansions reduce economic growth:

1.Public Finance Review reported that “higher total government expenditure, no matter how financed, is associated with a lower growth rate of real per capita gross state product.”

2.The Quarterly Journal of Economics reported that “the ratio of real government consumption expenditure to real GDP had a negative association with growth and investment,” and “growth is inversely related to the share of government consumption in GDP, but insignificantly related to the share of public investment.”

3.A Journal of Macroeconomics study discovered that “the coefficient of the additive terms of the government-size variable indicates that a 1% increase in government size decreases the rate of economic growth by 0.143%.”

4.Public Choice reported that “a one percent increase in government spending as a percent of GDP (from, say, 30 to 31%) would raise the unemployment rate by approximately .36 of one percent (from, say, 8 to 8.36 percent).”

It is obvious that Keynesian economics and demand management are tools for fools. Wealth, a better society, a cleaner world, a higher level of development is not coerced by government. It only occurs when free people operating in free markets are allowed to interact and determine the price and supply of various goods and services. Government involvement ensures the opposite and is a theory mired in cultish theological absurdity.

Manora asked:


The First National Economic Development Plan continually emphasized development in Thailand. The Second National Economic Development Plan continually emphasized the development of infrastructure in such areas as communication and transportation. The Third Plan was named, the National Economic Development Plan, as it combined social economic development along with economic development in efforts to improve the quality of life for all Thais.

The Fourth Economic Development Plan was instituted during the economic recovery period and mans significant Economic and Social Development plan, although there was worldwide economic fluctuation, Thailand concentrated on eradicating rural poverty, increasing domestic productivity and developing the eastern Seaboard area. The Sixth National Economic and Social Development Plan could be lebeled the golden period as the Thai economic growth in every sector was substantially increased. Currently, the Seventh Economic Development and Social Development Plan emphasized equitable income distribution and environmental awareness in order to conserve sacred environmental resources.

Throughout the process of performing the seven National Economic and Social Development Plans, new goals of development to accomplish were growth, stability, employment, income distribution and balance of trade. Each of the seven plans had contributed to outcomes of one or another of those goals. Determining the effectiveness of Thailand: national development is a long process in which the better quality of living and well being of the nation are concerned.

The first plan (1961-1966) : A new era of economic development

The first plan can be divided into two periods, between 1961 to 1963 and between 1964 to 1966: however, these time frames are more for illustrative purposes as no actual National Economic Development Plan had been officially declared. The Plan consisted of a variety of development projects: moreover, statistics and data necessary for economic planning were not available to the planning agencies at that time.

The First Plan succeeded in setting the Thai economy onto a new track. Economic growth increased by 6.1 percent a year. The economy became more balanced by reducing the size of the agricultural sector from 38.3 percent of GDP in 1961 to 33.9 percent in 1966. Although the agricultural sector was a major part of the GDP. This sector become more diversified by producing more new crops.

Thai international Trade traditionally consisted of exporting a small amount of commodities and importing consumer goods. Seventy percent of exports consisted of rice, rubber, tin and teak, but in 1960, these efforts were reduced to 52.6 percent. Imported consumer goods were reduced from 35.0 percent of total imports in 1960 to 25.5 percent in 1966, while the import of capital goods increased from 24.6 percent of total imports in 1960 to 30.8 in 1966.

The Second Plan (1967-1971): The Foundation of the Infrastructure

The Thai economy was now in a new era of development since the initiation of the First Plan. Toward the end of the First Plan.

Thailand had an increase in political conflict. Both internally and externally. These conflicts led to higher government expenditures for bureaucratic administration and for strengthening of internal affairs in order to protect Thailand from external threat. The budget for economic development declined from 30.3 percent of the government expenditure during the First Plan to 17.4 percent in the Second Plan.