Recent comments

"Whosever said that prices would always be low?"

They didn't, and anyone who was paying attention (those of us who went through the previous gas crises, lines at the pump, etc) knew this could happen, and adjusted their lives accordingly.

We spend less than $100 a month on gas for three cars (today). Years ago we moved close to work and the children's schools, and basically arranged our lives to be less energy dependent. We have a car for our older daughter, but she has always found summer jobs within biking distance of home, and, unlike her "wealthier" friends, she took the free bus to high school every day. Younger daughter also doesn't drive much; she also found jobs and opportunities that did not require driving. We bought a hybrid car a couple years ago (Prius). It wasn't rocket science; even then it was clear that the pattern of US development (sprawling suburbs that suck energy) was unsustainable.

My volunteer job (I typically volunteer 100+ hours of my time each month, close to home) introduces me to many community members each week . . . and it requires me to speak to them about local, state, and national issues. So I think I get a good feel for the sentiment out there. Yesterday I met a family in distress (as many are now) . . . a real estate salesman who told me he was spending $300 a week for gas. I hadn't thought much about what happens to realtors, but basically he said he (and many other area realtors) no longer accept new listings because they can't make money on them. He said he often spends $800 or more to market a home (a lot of time spent in the car showing prospective customers the homes). So even if he sells one (and this is very slow right now) his commission gives him very little profit. He took another job to make ends meet, but that may be short lived because it is also in a distressed sector . . . what he told me about that was scary.

This was just one story of many that I hear on an ongoing basis . . . people are hurting. We need a mass transit intiative, for starters.

Minnesota Mom, you really need to find a really good introductory economics textbook and turn to the chapter on banking. Practically all of the wealth creation of the last couple of centuries has been bank-created wealth and, if what you posted were true, our standard of living would be about that of Bengladesh.

Stan, thanks for this post. I'm still catching up from my vacation, but this deserved a late-night post on economistmom.com. I greatly admire Governor Corzine because he's doing the right thing and trying to do so in a balanced way--on both the tax side and the spending side of the budget. But he's finding that doing the right thing on both sides of the budget also alienates him from folks on both sides of the ideological divide. It's exactly why we find it so hard to be fiscally responsible at the federal level. At least state governments typically have balanced budget requirements to force these tough choices (and force these drops in approval ratings).

Since 1950 the growth of manufacturing output has been essentially identical to the growth of the overall economy and manufacturing share of output has been unchanged.

However, there has been a massive change in the composition of manufacturing.

Since 1980 the average growth rate of industrial production of high tech manufacturing has averaged some 21% while of non-high tech only averaged 1.2%.

Concealed within this divergence is some of what he is talking about, but also enough to demonstrate that he really does not know what he is talking about.

I have an easy way to combat these high prices, and we can show Big Oil that each American can make difference. If everyone decides together to boycott one company, Exxon Mobil, the entire industry will listen. It may not work but our voice, a united voice can be heard.

I’m part of a campaign to boycott Exxon Mobil, the current leader in profits during this energy crisis. It is hosted on The Point, a new social action website. Check it out here www.thepoint.com/campaigns/send-a-message-to-the-oil-companies

Hopefully, we can all do something about this terrible injustice

Oil is such an extraordinary commodity that even if such of it that is recovered off our shores or in Alaska is never applied to transportation it will still be used in countless useful products which help make modern life, well, modern, and contribute to our wealth. Keeping these lands locked-up as a matter of federal policy seems crazed.

and thanks for the nod Pete.

I agree -- gas prices should be kept high enough to create incentives to conserve, find alternatives, etc. The oil 'feast and famine' cycle wreaks havoc on our economy -- a roller coaster ride that's extremely stressful at the individual and collective levels.

If we work together now we'll leave a much stronger economy to our kids and grandkids. Americans don't want to hear bickering and blaming over ANWAR drilling or whatever . . . this is just noise. Congress needs to act in a bipartisan way to solve the problem, and they need to show us they have a LONG TERM strategy instead of putting band aids on the arterial bleeding as they've done in the past. More drilling is fine, but everyone (who hasn't been locked phone booth for the past twenty years) knows by now that it is NOT the long term solution to the problem.

The reason why 98% fewer workers are employed in agriculture has to do with mechanized farming, hybrids developed during the "green revolution", chemical fertilizers, etc. These advances were truly miracles, and they gave us cheap and available food, freeing labor to move to the city and participate in the industrial revolution.

So it was extreme advances in productivity -- not outsourcing farm jobs overseas -- caused the decline in labor engaged in that sector. While productivity increases in manufacturing do account for a large portion of the job attrition, movement of jobs to overseas plants accounts for many job losses in manufacturing, especially in electronics (there are no TV sets produced in the US anymore), textiles (as cited above), high tech (computer chips), etc.

Late last year, the number of U.S. manufacturing jobs dropped below 14 million for the first time since 1950. It's hard to find anything else that takes us back to a time before most baby boomers (remember them?) were even born.

Well, if this fellow tells the year by job count he should really be alarmed that the 98+% loss of jobs in agriculture we're back in the 1600s!

But no, this is just another piece confusing decline in the number of jobs in a sector with decline of the sector.

The US manufactures far more than any other nation, Japan is distant second, and by my view of the BEA data US manufacturing in real dollars was every bit as big in 2007 as 1998 ($1.4 trllion 2007 dollars -- Table 6.1D).

As to the job decline in manufacturing while manufacturing itself has thrived (from the 1940s to 2000 manufacturing grew 11-fold while manufacturing jobs fell from 32% of the workforce to 12%) the real explanation is not anywhere on this guy's list of #1 through #5.

It's #6 ... Drew Carey has the hard truth ... it's the relentless inhuman enemy of US workers that's taking their jobs ... The Luddites were right!

BTW for all that Chinese manufacturing is growing it is declining as a percentage of Chinees GDP and Dean Baker himself reports that ... guess what ... China is losing manufacturing jobs!

a study of 20 major economies, found that between 1995 and 2002 more than 22 million factory jobs vanished. The United States wasn't even the biggest loser. America lost about 11 percent of its manufacturing jobs, while Japan lost 16 percent and Brazil lost 20 percent. The biggest surprise: China, which is fast becoming the manufacturing capital of the world, lost 15 percent of its manufacturing jobs.

The Earth is exporting manufactuing jobs!

Let's see a trade lawyer fix that with anti-dumping suits.

There are only three endeavors that create new wealth in a society: manufacturing, farming (agriculture), and mining.

Everything else is just redistributing that money in some way (Wall Street/banking money changers, healthcare and education sectors, various other services -- insurance, making lattes, etc).

Think about other countries that are making money and what the economic drivers are -- petroleum (mining) in mideast, Venezuela, etc., manufacturing (Asia), agriculture (USA -- we export more food than any other nation). US used to have more manufacturing, but much of it has gone overseas (mostly due to cheaper labor, and foreign governments who saw the light and supported manufacturing to build their own economies). We were an incredible power when we dominated in agriculture AND manufacturing. All great empires decline, and we are in decline, and that's pretty much the story here. Even the Roman Empire didn't last forever.

But two things could bring some of the manufacturing back -- higher oil (it costs MUCH more to transport the goods back over here from Asia right now), and universal healthcare. Healthcare costs hurt private sector competitiveness, and if we could cut the cost by half (as the Canadians have done, and their economy is now growing faster than ours) with a more efficient, cost-effective system it would greatly boost our economy, on several levels.

Most important is the fact that manufacturing drives innovation, and you've probably noticed that Asia is producing engineers at a rapid clip. These engineers will invent new technology and drive it forward. To this end the Asians are recruiting top American talent (management and engineering), to help make the transition, and offering higher wages and excellent benefits. With a weak dollar a top engineer can earn much more by working in Asia. Perhaps you haven't noticed but there is something of a "reverse brain drain (US losing key creative labor)" going on right now. I expect new technology will increasingly come from Asia, not the US. Note that Toyota leads in car technology (hybrid innovation) for example. As a result we are losing in the auto industry.

Whether it is perceived as cheap or expensive really isn't the point. The rapid run up in price has done a number across US economy -- the ensuing inflation is a ripple that effects the price of all goods.

First, In Europe and Japan taxes account for a much larger share of gasoline prices.

Second, because of the weak dollar crude prices have risen more for Americans then the Europeans and Japanese.

As a consequence of these two factors Americans have experienced a much, much larger percent change in the price they pay for gasoline.