David B., I think we should call the TMT bubble GS1 for Greenspan Bubble No. 1. He was ardently fanning the Y2K scare and pumping liquidity into the market. And the subsequent real estate bubble should be identified as GS2 because Greenspan blew up the bubble by dropping the interest rate to zero in response to the Y2K bubble bursting. And then he raised the rate rapidly! after suckering many non-vigilant homeowners into mortgages they could barely afford if the interest rate stayed at zero.

Are you sure “lark” doesn’t have a point? The first article he links to quotes someone from the Bureau of Labor Statistics, which appears to be the source of the Real Manufacturing and Employment graph from Manzi.

I know that’s not central to the point of the article, but still…

Fake, you say “The reality is that most of the so called productivity improvement in US is based on simply replacing US made parts for cheaper parts from Asia.” That idea may be popular in the press but it doesn’t make much sense to me. Most of the recent productivity improvement comes I believe from the expansion of computer technology. By the way, if you can increase productivity even by “simply replacing US made parts for cheaper parts from Asia,” that is a net gain for the US economy and for US employment. If not, the US would have been a much richer country if it continued to engage in the agricultural/manufacturing mix it enjoyed 200 years ago,.

Hui Nao, no offense but I find your comment moronic. Where exactly did I refer to “how the Chinese see themselves”? What exactly was my racial view of the topic? I assume that since I am writing about China, I can actually make references to “Chinese” from time to time, no? Is it equally offensive when I refer to the “French”? And why is it inappropriate for me to discuss “how intelligent Deng was, or how great China is, or how bad Anglo Saxon Finance is” (not that I remember doing any of those)? This is, after all, a blog about Chinese financial markets.

OGT, I agree. The disposition of debt and the related assets is probably the key issue.

James, thanks for bringing up Doug North. I am a huge fan. Of course I agree that China functions within a different institutional framework than some of the countries within which it is compared, but balance sheets are balance sheets, and they tend to function the same way – the institutional framework may determine such things as the true (versus formal) liquidity of liabilities, but in the end you need to understand balance sheets in pretty much the same way. I also discuss trade issues a lot, and since China operates within an international framework in trade (by definition), China-specific factors don’t apply.

Productivity in agriculture was enabled by oil which delivers diesel oil and many machines powered by it. There is a direct link between these machines and the number of horses and humans replaced by them. No such technology exists to explain the fake manufacturing productivity improvements.

As pointed earlier, when a $100 gizmo used to be made in US is changed to incorporate $50 from China then stats show higher productivity even though remaining US workers don’t really produce more. To really understand what is going on, change your chart to include the quantity of parts being imported into US for assembly into Made in US products.

The reality is that most of the so called productivity improvement in US is based on simply replacing US made parts for cheaper parts from Asia.

This job losses are real problem and increasing portion of manufacturing revenue is being sent to Asian part suppliers. We are now reaching the point when those Asian part suppliers starting to build their own products and brands, at which point the manufacturing part of GDP curve will also tumble.

Remember how Honda and Toyota started and where they are now!